I recently set out to look into all electric car sharing programs, like the one recently started in San Diego by car2go. After a little research into the program – run by a wholly-owned subsidiary of Daimler, stocked with Daimler Smart Fortwo EVs, and using ECOtality charging infrastructure – I became even more interested in the diversifying products of auto manufacturers. A number of auto OEMs around the world are starting to look like one-stop-shop transportation companies, investing in car sharing programs, transportation applications, and public transit. What are the catalysts for such diversification and what do these new mobility services achieve for auto OEMs?
If we follow the almighty dollar and look at the group with growing buying power around the world, it’s Generation Y. This tech-savvy and highly connected group is in the midst of starting their careers, something they are redefining with their own creativity. We (I say “we” because I too am a member of the Generation Y clan) sit on the cusp of change in countless sectors: the power industry, personal computing, and transportation, and others. We approach business and community in a different way than our predecessors – our childhoods spent online, texting, and chatting nurtured that. There is an expectation of choice and independence like never before. The transportation needs and desires of our demographic are a reflection of all these characteristics.
I have good reason to believe auto manufacturers are paying attention. Gen Y’ers are an underlying force in the urbanization trend around the world, bringing with us a desire for personalization in the products and services we use, and the ability to share our experiences conveniently and constantly. While it seems daunting to design products and services that fit all of these criteria, it appears that auto OEMs are expanding their product lines and engaging with service offerings to do just that. From Toyota’s youth division to Ford’s partnership with Pandora, and BMW’s investment in transportation-related smart phone applications, auto manufacturers are attempting to dodge the bullet of obsolescence by embracing transportation in all its forms, and make them appealing to up-and-coming Gen Y consumers. This concept of transportation services – car sharing, parking assistance, and even city guides – looks like the commoditization of transportation, which will change the way we think about mobility, and particularly sustainable mobility. Or perhaps they are just playing catch-up with Gen Y’ers take on it.
So how do auto manufacturers make money if they don’t sell cars? Well, they’re not going to stop selling vehicles; they are going to offer a suite of transportation services to accommodate the wide variety of mobility needs that people actually have. BMW has committed significant resources, to the tune of about $100 million, to mobility services. This includes everything from electric vehicle car sharing to applications for mobile devices that support congestion mitigation and some that aim to diminish parking woes. Daimler’s car2go, which recently launched the first all electric car sharing program in the United States, is aiming to eventually make all of its car sharing programs interoperable, granting subscribers mobility across the country without any of the constraints of owning a vehicle.
These kinds of programs target inhabitants in what are quickly becoming the world’s mega-cities, where car ownership can be neither practical nor desirable. But where there are fewer personal vehicle sales, car companies are identifying other opportunities for revenue. Car sharing programs charge an annual membership and then for use by the minute or hour for service. In addition to this revenue stream, auto OEMs also gain a guaranteed customer for their vehicles (Daimler requires car2go to purchase the EVs in its fleet) and an audience for their other products, hybrids, electric vehicles, and ICE vehicles with more advanced features. Consumers gain risk-free opportunities to test new technologies. Perhaps by the time Gen Y’ers have kids or decide they need a vehicle, they will be more comfortable buying an all-electric vehicle thanks to their EV car sharing experiences.
If Gen Y’ers (or anyone for that matter) still decides to purchase a vehicle, they may make decisions based on which in-car services are available. Ford is integrating Pandora with ten of the company’s vehicles and two Lincoln products, so drivers can access their custom online radio stations and stream them in the vehicle. The same service is available in 2011 BMW models. At the 2010 Consumer Electronics Show, Ford announced the introduction of a Twitter application in its vehicles which the vehicle reads Tweets aloud to the driver. It appears that Ford is treating their vehicles as yet another platform for the internet and connectivity. While services such as these have yet to prove their full value, they are squarely aimed at the tendencies and preferences of Gen Y’ers.
Auto manufacturers around the world are also embracing other forms of more sustainable transportation. The market for electric, two-wheel vehicles is growing much more quickly in parts of Asia and Europe, and a bicycle sharing program with those could be a lucrative next step. The University of Tennessee has tested such a service. You will also find BMW involved with designing public transit systems through the design consultancy DesignworksUSA. (They have been tapped to design the future BART subway system in San Francisco). As transportation preferences change for Gen Y’ers and others across the globe, it appears that auto OEMs are positioning themselves to be go-to providers for all kinds of mobility needs, including sustainable mobility that might not involve traditional ICE vehicles. With public and private transportation accounting for roughly 20 percent of an average city’s greenhouse gas emissions, innovative approaches to transportation may also lead to partnerships with major cities around the world. Smart Cities projects around the world are demonstrating many variations of intelligent and sustainable transportation systems. This may be just the tip of the iceberg as far as the future of transportation goes – keep an eye out for Pike Research’s upcoming report on Intelligent Transportation Systems.
Article by Brittany Gibson, appearing courtesy the Matter Network.