A new mobility business model for sustainable auto innovation

©Sergiy Serdyuk via 123RF

A change in business model

The research, 'Environmentally sustainable innovation in automotive manufacturing and urban mobility', suggests that consumer trends towards ‘on demand’ access rather than product ownership is prompting car manufacturers to consider ride-on-demand business models. When combined with the integration of smart vehicles and smart roads and cities, all connected, these business models will lead to fewer and more efficient journeys, reducing journeys in private cars overall by 360 billion kilometres per year within the next decade.

These developments stand to reduce carbon dioxide (CO2) emissions by 56 megatonnes per year in 2025. That is an amount equivalent to more than half the yearly emissions from transport in the UK. A further reduction of 121 megatonnes of CO2 equivalent emissions could be achieved by automotive companies due to the reduction of the global car output by 20 million vehicles per year.

By introducing sustainable production methods, including lightweight materials, expanding the use remanufactured parts and better integrated supply chains, the embodied carbon impact could be reduced by another 89 megatonnes of CO2 equivalent in 2025.

The research suggests that this new era of mobility business models has a user-centric, service-led approach to delivery and is leading to a potential shift away from car ownership to the use of mobility services in several cases. Through smartphone-based on-demand solutions, connected parking solutions, and integrated mobility services, technology is playing a critical role in carving out new urban mobility solutions that are rapidly moving from niche to mainstream transportation options. These new personal mobility services all require highly connected IT solutions with access to real-time data.

According to the study:

• Smart parking solutions, using a connected infrastructure of sensors that draws on numerous data sources in real time to allow the most efficient routes to vacant parking spaces to be calculated, could deliver £49 billion in productivity and fuel savings and reduce yearly carbon emissions by 23 megatonnes in 2025.

• Ridesharing platforms that facilitate spontaneous use of spare capacities in private cars could bring a reduction of 40 billion kilometres travelled, which would generate savings of £15 billion for users and reduce carbon emissions by five megatonnes.

• Ride-on-demand models, where users hire cars on a pay-per-minute basis, could remove 10 million vehicles from the road in 2025, eliminating 15 megatonnes of emissions.

IoT transformation

“These findings show that IoT solutions will transform the entire industry. Traditional car manufacturers are rethinking their business models and will become personal mobility service providers,” says Hubertus von Roenne, vice president global industry practices, BT. The challenge to car manufacturers isn’t limited to reducing pollution. Changing needs and habits of a young, always-on generation increasingly open to using mobility as a service (MaaS), and less likely to own a car, pose a challenge to traditional automotive companies.

“ICT solutions are enabling service providers to overcome some of the challenges inherent in urban mobility, whilst improving the user experience and encouraging more sustainable travel. New mobility business models can achieve exactly this,” says Martyn Briggs, industry principal, Frost & Sullivan.

With technology enabling a new way to approach urban mobility, a paradigm shift from the current ‘predict and provide’ of transportation to a ‘sense and respond’ will be introduced, using historical analytics and real-time information to deliver mobility services on-demand.

“The logic of our analysis was to reveal both the potential impacts and benefits of new mobility business models. We quantified the potential reduction in embodied carbon from vehicle manufacturing with the future reduced volume of vehicles required,” Briggs continues.