A Crucial Battle to Win the Mobility Ecosystem – How Business Networks are shaping the Future of Mobility
“Over the next 100 years there is no guarantee that automobile manufacturers will continue to play leading roles in mobility.”
Authors: Karin Rombach and Former Member
With more than 100 sensors creating up to 25GB of data per hour; modern cars have roughly seven times more code than a Boeing 787. Enormous amounts of data get collected and OEMs are facing new revenue opportunities in monetizing data from connected cars. Traditional value chains and revenue sources will be shaped by the patterns of the digital economy going forward.
Current market trends force OEMs to compete with new players, mainly digital companies like Uber, Google or Apple, which challenge the OEM’s dominating position in the car-human interface. To survive, established car makers must adapt to this digital change and establish new and innovative business models.
The Future is here:
Flying Car, the collaboration between Airbus, Audi and Italdesign presented at Geneva Autoshow in March 2018
Future business models are mainly driven by agile mobility platforms. Traditional car manufacturers are partnering with cloud companies to create platform-based business networks. In addition, startups like Tantalum and Otonomo are building OEM independent mobility platforms. A compelling value driver of a successful business network is the variety of participating players. In the mobility world, industry-lines are blurring and it is not just about Automotive OEMs but also major players from other industries like Utilities, Insurance, Fleet & Rental and Public & Private Transport and many more. Mobility platforms will combine capabilities from all of those players, and will be designed in a horizontal, not industry-vertical, manner.
To mention a few existing OEM-centric platforms and startup-mobility platforms:
- General Motors OnStar & Marketplace: Subscription models for emergency, security, navigation and commerce platform for on-demand reservations and purchases of goods and services.
- BMW CarData: Platform allowing BMW’s drivers to access their vehicle data or share it with any 3rd party service providers registered on the platform.
- Toyota Connected: Suite of connected mobility solutions called “e-Pallete”, which leverage Toyota’s Global Mobility Services Platform to develop advanced vehicle and related mobility services. Partners include Amazon, DiDi, Mazda, Pizza Hut and Uber.
- Tantalum: London-based cloud startup who is offering an ecosystem of services, built on car data that is processed by a cloud platform.
- Otonomo: Israel based startup already working together with 10 OEMs to exchange data between the OEM database and third-party companies.
Agile IoT platforms could be the basis for what Hol Varian, Google’s chief economist, calls “combinatorial innovation”. New mobility services are best thought of as experiments based on such platforms. One current example is Daimler’s new subscription service “Mercedes me Flexperience”; which reminds me of Spotify or Netflix in the sense that it gives car lovers the ability to “own” a Mercedes-Benz car on a month-to-month basis. Of course, it runs on an application where subscribers choose and configure their car online, aligning it with their desired monthly payment. Car subscriptions seem to be a clear bid to win favor with tech-savvy millennials in busy metropolitan areas – a demographic that was pegged as avoiding car ownership.
Usage-based Insurance (UBI) is another use case for data-based mobility concepts. The concept known as “pay as you drive” calculates the insurance premium dynamically, based on data collected from the vehicle such as: speed, time-of-day, historic riskiness of the road, driving actions, distance, and time travelled. UBI can be beneficial for both insurers and consumers. Drivers with good driving habits will receive significantly lower insurance premiums than they may have otherwise. New types of insurance will offer affordable insurance to young drivers. Drivers will now pay for how they drive, instead of paying for irresponsible peers. Better alignment of insurance with actual risk insurance will allow companies to improve their customer segmentation.
The vision of an agile cross-industry ecosystem is more than a technological solution. Players from a wide range of industries can combine their services and knowhow to solve new problems. Sustainable mobility solutions will drive simpler logistics, cleaner energy, and smarter cities – allowing for a higher quality of life. Due to higher efficiency of all mobility assets, the new automotive ecosystem will have positive and far-reaching impacts on society and the environment – solving major challenges of future mobility.
What do you believe to be the greatest impact new mobility will have on society? Let us know in the comments.
About the authors:
Karin Rombach is an Automotive Senior Consultant at SAP Consulting Germany, interested in Future Mobility and New Business Models for Automotive.
Former Member is a working student in the SAP Industry Business Unit Automotive, currently writing his master’s thesis about Digital Business Models for the Mobility Sector.