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Insights

Smart mobility: How tech is transforming transport

By Daniel Lyons, Director, TMT Advisory

The views in this blog post are the views of the author, not EY.

On-demand services, self-driving cars and other new technologies are set to increasingly transform the way we go about our daily lives. Here I set out some thoughts on how to define smart mobility, what is fuelling this trend (pun intended), and what advances we might expect in the next few years.

Much has been written about the transport sector facing its biggest transition since motor vehicles replaced the horse and buggy – this transition is an evolution into what many are calling ‘smart mobility’. For me, smart mobility can be defined as a way to move people and goods using new technology that is faster, cleaner, more accessible and less expensive than traditional options. It is about striving toward frictionless, automated and personalised travel on-demand.

According to the UN, 60% of the world’s population will live in cities by 2030 – that’s nearly 1.5 billion more than in 2010. This rapid urbanisation is prompting governments to upgrade infrastructure, alleviate congestion, address pollution and build new greener ’smart cities’from the ground up. Advances in battery technology, artificial intelligence and automation are resulting in longer-range electric vehicles and the emergence of self-driving cars.

Auto manufacturers, threatened by a decline in individual car ownership, are investing in new direct-to-consumer services that will provide alternative sources of revenue. But since the barriers to entry are low, countless start-ups have also launched mobility services offerings, fragmenting the market. And consumers, whose expectations have been shifted by experiences in other industries, are embracing new mobility services as they are increasingly demanding flexibility, predictability, affordability and convenience. All of these factors are creating the perfect conditions for advances in smart mobility to accelerate over the coming months and years.

Clusters of activity

It is clearly a hot topic, evidenced by the flurry of mega-deals, acquisitions and exits for start-ups and technology entrepreneurs playing in this space. Smart mobility accounted for the second-highest number of transactions last year, with the highest deal values being attributed to connected car technology (for more information, see EY’s Global technology M&A report). This has prompted dozens (if not hundreds) of accelerators, incubators and venture funds to focus resources on developing solutions for smart mobility.

In the last year alone, there has been an explosion of small-scale private providers, each innovating with specific services – everything from ride hailing, carpooling, and peer-to-peer car clubs, to dock-less bikes, on-demand busses and smart parking.

In my role as part of EY’s Global Smart Mobility Team, I have been helping clients conceive, develop and launch live solutions related to smart parking, ride-sharing, multi-modal journey planning and city analysis.

Increasingly, we are being asked by service providers to help accelerate expansion into new cities and to help develop strategies for collaboration with city regulators and local officials (an approach we call “City as a Customer”).

We are only just getting started

As a trend, smart mobility is going to grow. It is really only in its infancy. If collectively, all the on-demand taxi services, car-sharing and ride-sharing services we see today make up “Mobility 1.0”, then “Mobility 2.0” is just around the corner. This next phase will be characterised by increasing uptake of specialisation, niche offerings and a focus on experience. Beyond this, “Mobility 3.0” will be enabled by the very latest technologies, where we will see the wide adoption of fully autonomous vehicles and blockchain-enabled fractional ownership models.

As smart mobility solutions continue to take hold, governments will face a duel challenge of needing to upgrade or invest in new infrastructure, at the same time revenues from fuel excise decline. Business models for “Mobility 3.0” services are likely to look very different from today, with some commentators already touting network usage-based charging (read more in this article from The Times) being directed at service providers, not just consumers.

For innovators in the space, perhaps now is the time to partner with city planners and help define the services you want, in return for the fees you may have to pay in the future.

Contact us

Daniel Lyons

Director, TMT Advisory

@danlyo22

danielbenjaminlyons