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How sharing the road is likely to transform American mobility

Resource from:  McKinsey & Company Likes:129
Apr 15,2019
Increased passenger density and decreased vehicle footprint should bring strong growth for ridesharing in the decade ahead

Getting around is about to get a lot more interesting. The mobility sector could well undergo a major overhaul in the next ten years, significantly upsetting traditional elements of the transportation industry and accelerating the shift from purchasing (or leasing) a vehicle as a product to consuming mobility as a service.

Four essential innovations are rapidly redefining modern mobility: autonomous vehicles (AVs), connected cars, electric vehicles (EVs), and shared-mobility services. These technologies will likely converge—think autonomous, electric-powered robo-taxis—and contribute to a new era of personal mobility (Exhibit 1).

When those technologies at last take hold, shared mobility—driven by fleets of autonomous robo-taxis—could generate the biggest slice of new revenues. That prize could amount to some $1.5-2.0 trillion in 2030. But while the dozen or so years until 2030 is not exactly a lifetime, it’s still a long time, especially when the larger ridesharing companies continue to make significant billion-dollar investments each year and have not yet reached profitability.1 Currently, a rideshare driver’s net income consumes half of the total fares collected, and he or she must book two to three rides of 5-6 miles in distance to net $14 to $15 per hour—a pay level that’s increasingly available for less demanding jobs in a tightening labor market. Driver retention is also one of the biggest costs in a rideshare company’s profit-and-loss statement, and that cost can only go up.

Factor in that ridesharing currently only represents about 1 percent of US passenger-miles traveled (PMT) and that ridesharing’s practicality decreases dramatically the further away from a city you happen to be, and one can understand the doubters. Is ridesharing destined to be confined to a small urban core? Investors might also fairly put the question another way: Just where is all the growth supposed to come from before the robo-taxis arrie?

(McKinsey & Company)
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