Summary
- Mobility in 2024 is achieved in a variety of ways, including Mobility as a Service (MaaS) via ridesharing, ride-hailing, and rent-per-use options
- The market value of MaaS is not to be underestimated as it was $678.1 billion in 2023, and is expected to breach $1 trillion in 2027
- This has had a direct effect on automakers, as many family cars and smaller SUVs have had their rear leg room and comfort increased specifically as a response to ride-hailing, and small cars are now being designed with ridesharing partially in mind
- Because more people are sharing rides and even not owning their own vehicles, it has had a positive effect on easing congestion as well as reducing the environmental impact of mass traffic
- The biggest leap in the future will be autonomously driven vehicles, but we think for now that MaaS as it stands is excellent for heavily urbanized areas and makes sense, especially for those that live in dense cities like New York City and don’t need/want to own their own vehicle
The landscape of global transportation is undergoing a marked shift in how consumers interact with it. It started with public transportation improvements in cities that could support the need for it such as New York City in the USA and London in the UK, but in the late 2010s and early 2020s, the new shift is towards Mobility as a Service (MaaS). This model, underpinned by digital platforms and apps, is redefining traditional vehicle ownership and usage patterns.
By offering an veritable smorgasbord of transportation services, including car-sharing, ride-hailing, rent-per-use, and more, MaaS presents a unified, efficient, and eco-friendly alternative to traditional vehicle ownership.
Within this article, we’ll delve into the multi-dimensional impact of MaaS on the automotive market, backed by 2023 data and projections, to explore its implications on consumer behavior, environmental sustainability, urban infrastructure, and the strategic direction of traditional automotive manufacturers.
Market Dynamics & Consumer Shifts
MaaS’s growth trajectory is influenced by a complex interplay of technology, environmental concerns, and a notable shift in consumer preferences, especially in the realm of mobility and finances.
The market value of MaaS and its projected growth rate are simply staggering in the face of the entire automotive industry, with a 2023 global valuation of $678.1 billion, and an estimated compound annual growth rate (CAGR) of 11.6%.
With these numbers, the estimated market value as early as 2027 is estimated to pass through $1 trillion, and be worth at or greater than $1.8 trillion as early as 2032.
This valuation has come about because of consumer preferences shifting from the status symbol of vehicle ownership toward practicality and economic sense of shared mobility. Demographic information regarding highly urbanized areas reveal a significant decline in vehicle purchases, new or used, falling by as much as 2% to 5% per annum since 2015.
Conversely, in areas without as much density, such as suburbs and rural areas, vehicle purchase rates are remaining consistent, with a variance of about +/- 4% per annum.
Impact on Automakers
Automakers are at a crossroads, facing diminished demand for personal vehicles while also encountering strong demand and other opportunities within the MaaS ecosystem.
Rent-Per-Use/RideShare Vehicles
It is for this very reason that Apple Computer Inc. was working on an EV called the Apple Car that would follow two models, one of traditional consumer ownership, but the other aimed towards the MasS market with a rent-per-use model in place and advanced self-driving capabilities.
That project was very recently cancelled in February 2024 due to the total costs and time involved, but the idea made a lot of sense. Companies such as ShareNow (formerly Car2Go), Communauto, BlaBlaCar, and the like are heavily investing into EVs and AI-based self-driving vehicles as the future of that market.
Even Tesla is invested in the MaaS market, with plans to have their own EV rental service up and running across North America before 2030. Many automakers have also developed their EVs and hybrids to be used both for personal, private owner use as well as their most economical models coming ready to be modified with ease into rideshare vehicles.
Ride-Hailing
If one looks at recent sedan and family car trends, there has been a notable increase in attention given to rear seat legroom and comfort. One would expect this to be because of the luxury car market trickling down some of their premium ideas to the mass market, but the truth is that manufacturers are vying to have their cars bought by ride-hailing operators.
Compared to traditional taxi models, the ride-hailing market within MaaS is one of the strongest segments. There is a reason companies like Uber and Lyft have multi-billion valuations, and are welcoming new operators every single day to their infrastructure. Uber alone pulled in $37.2 billion in 2023, a 16% increase over 2022. This was divided into $19.6 billion from ride-hailing, $12.1 billion from delivery, and the rest from small freight services.
Nearly 200 million people per month use ride-hailing in the USA alone, and automakers have sat up and paid attention. Because the vehicles used for these services are operated by owners, market surveys and owner-feedback reports have become some of the biggest driving forces in production decisions, while also balancing against the general consumer needs. As the saying goes, competition always benefits the consumer, and we’re getting nicer cars with more comforts and luxuries without much increase in overall pricing.
Environmental Implications & Impacts On Urban Planning
MaaS has already shown significant enhancements to urban mobility and a reduction in environmental impact. Studies suggest that MaaS has reduced urban traffic congestion by approximately 6% since 2020, which has had a knock-on effect of lower transportation-related CO2 emissions by nearly equivalent 5.5%.
In heavily urbanized cities such as Los Angeles and London, a further knock on effect is that air quality has improved, with daily scoring at under 30 US AQI (Very Good) compared to scoring before 2020 often in the 50 to 150 score range (Moderate to Unhealthy for Sensitive Groups).
Urban planning and infrastructure are also adapting. Investments in smart city technologies to support MaaS systems, including IoT-enabled traffic management and digital payment infrastructures, are on the rise. WiFi repeaters and cell signal boosters are popping up in nearly any major parking area so that rideshare and rent-per-use apps have stable connectivity.
As well, many major cities are redesigning public spaces to accommodate shared mobility hubs. As these are multi-million, sometimes multi-billion projects in terms of overall costs, this shows that MaaS is not only here, but here to stay.
Regulatory Landscape
The growth of MaaS is forcing some dramatic regulatory restructuring. Governments and transport authorities are developing frameworks to ensure the safety, reliability, and accessibility of MaaS platforms, while insurance providers have had to create entirely new divisions regarding ridesharing, ride-hailing, and other MaaS transport types against the “old” owner-vehicle relationship.
As well, since many of these services are app-driven, data protection, cybersecurity, and identity protection have all become key areas of concern. Regulatory frameworks are constantly evolving, including input from telecom companies, to meet these challenges.
Future Outlook
Looking ahead, the integration of autonomous vehicles into MaaS platforms represents perhaps the biggest “next step” for this rapidly growing market. Autonomous technology holds the promise of enhanced efficiency and safety of MaaS offerings, once it has been tested, validated, and approved for mass market use.
Therein lies the rub, however, as autonomous technologies, despite promises made almost every year, is still at Level 2, defined as partial automation with driver supervision. The most advanced form of this is Tesla’s Autopilot, which still needs owners to be aware and pay attention to traffic, conditions, and be ready to assume control at a moments notice.
That said, MaaS has definitely moved from the “Trend” definition to now being a cornerstone of the transportation market. We think that this is a very good thing for highly urbanized areas, as since prices for almost everything are rising, traditional vehicle ownership may no longer be truly viable in an economic sense.
What we mean by this is that by removing the costs of car payments, fuel, insurance, service, repairs, and reducing everything to a simple payment for every time you use MaaS, it can save the average American thousands of dollars per year. Families will likely still have at least one vehicle, but for those that do not need a vehicle constantly, MaaS is here to stay and will very likely become the next big thing next to public transit.
