Mobility-as-a-Service: The Future of Mobility | In Practise

Mobility-as-a-Service: The Future of Mobility

Former VP Mobility and Clean Technologies Division at Faurecia.

Learning outcomes

  • The future shape and structure of transportation solutions in cities over the next decade
  • Key technological developments shaping the trends towards Mobility as a Service (MaaS)
  • Discussion of the various new MaaS business models
  • Outline the repercussions of the move towards autonomous vehicles for public infrastructure, OEMs, fleet operators and ridesharing service providers.
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Executive Bio

Peter Lakin

Former VP Mobility and Clean Technologies Division at Faurecia.

Peter has thirty years experience in the automotive industry with a focus on bringing new technologies to market within large corporations. He started at Lucas Automotive in 1999 where he was Head of Sales and Marketing for the Diesel Systems before spending six years at Delphi as Head of Energy and Chassis Sales managing an order book of $1bn. In 2006, Peter joined Faurecia as Executive VP in Exhausts Systems before moving to VP of Mobility and Clean Technologies and responsible for EV and new green mobility products. Peter is the President of the INSEAD Alumni Auto and Mobility Club and is an advisor to the European Parliament on vehicle emissions and he has written several articles on the future of mobility. Read more

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Peter, what are the major pillars that you're looking at in terms of mobility as a service?

I think mobility as a service works well when you talk about stability in the city. I've listened to a lot of people on this, and generally everyone's trying to sell something: why electrical scooters are the way forward, why bicycles are the way forward or why electric cars and city charging points are the way forward, why public transport is the way forward.

In Paris, we're spending a fortune now on this project called "Le Grand Paris," which is basically a new rail infrastructure that’s going to be set up around Paris and needs to be operational for the Olympic games in 2024. There's a number of people who are now questioning why we're spending so much money on this, given that you've got other forms of transport now becoming available. Robo-taxis was the one a lot of people were talking about, where the fixed cost is much lower than it would be to put a rail network in place.

So, for me, mobility as a service is specifically or particularly pertinent to the city, so anything around city transportation. My view or my pitch is that you need to have different types of transport. You can't just have one type of transport. You need to have different types of transport and an interaction between those different types of transport to have the optimal solution, because not everybody has the same requirements.

The young urban individual who's in his twenties or his thirties has different travel requirements and mobility requirements to a mother of two kids or to an older person who doesn't feel comfortable riding a bicycle or an electric scooter. The options have to be there for all the different people that live in the city. The advantage of mobility as a service actually integrating all that together is that people can switch from one to the other as they wish. I also believe that you're going to have to have some kind of passenger car available as one of the options. I don't think a combination of public transport, bicycles, electric scooters and things like that is going to be sufficient. You're going to have to have some amount of cars in the city to actually respond to the needs of everybody. Mobility as a service could allow people then to have cars in the city without actually owning the cars. You know, taxis are the obvious solution today but taxis tend to be not very affordable and not necessarily the best way of getting from A to B. So, for me, mobility as a service is specifically looking at city transport and the integration of different types of city transport. I think what they're trying to do in Helsinki and elsewhere is a great experiment.

So that's my first point; why I think mobility as a service is of interest to the city. The second point is that it has some issues. We've got people like Uber, like Waymo, who are private companies trying to come in and say they will manage the mobility as a service for the people who live in the city. And then you've got the public transport authorities in the city saying "Hang on a sec, that's our responsibility". And there's a bit of a battle going on between these private companies and the public authorities as to who's actually going to be in charge. I think the private companies say, "We've got the technology and we've invested in the technology; we're willing to take the risks and we're willing to change things." Whereas a lot of the public authorities tend to be slower, it's administration generally. Public service tends to be slower than the private sector. They've been pushed now by these private companies to start doing things. At the end of the day, public authorities should be the ones who actually manage mobility as a service.

How are they thinking about that, Peter? How are the public authorities or the cities thinking about organizing their cities?

I haven't talked to many people, but the ones I've talked to just around here in Paris, I think, initially saw it as a threat, that they were going to lose control of what goes on in the transport system in the city. Now, they're seeing it more as an opportunity and saying "Look, the technology's now here, it's coming out, we can't resist it, so we're better getting on board with it, and starting to invest ourselves into how we do it." The counter-side of that is that private companies are having to smooch up a lot to the public authorities and say "Look, let us help you, we'll do this." So there's this dance going on at the moment between the private companies and the public sector, at least in Paris, I'm not sure in other cities so much. I mention, in my article, that Whim has been struggling a bit to get access to all the transport options from the City of Helsinki Transport Authority. I'm not sure what the latest is on that. I'm sure that Sampo [Sampo Hietanen, CEO of Whim] will touch on that in one of his presentations soon. But I feel there's a sort of dance going on at the moment between the private companies and the city authorities as to how they can work together. Because the city authorities recognize that the private companies are in the lead. They've invested in the technology. They came up with the idea. But they're also reluctant to let go of this responsibility.

Are they preferring certain methods or not? In terms of the transportation methods, you've got e-bikes, scooters, obviously Uber, Lyft and Mytaxi, or Waymo or whatever it may be. Is there any preference from the authorities on different types of transport, between private companies?

I don't know. I think that what we've seen. I'll give an example, in Paris again, the train company, the RATP, runs a lot of the trains in Paris. They're now trying to do a deal with one of the electrical bike companies so that they will have special bike stations next to the railway stations. So that when people get off the train, they can immediately get onto a bike and they can ride the last mile or the last kilometer, using a bicycle. That's a plan they want to put into place this year and next year. So it's a strategy that they're going to put into place and it's a partnership with a cycle company and the public authority on trains. The other thing is that in the second half of this year, they will make electrical bicycles available for people to rent on a monthly basis. So rather than just turning up and using the bicycle and then dropping it off at a station, you can actually rent your own electrical bicycle to go from your house to the station and back to your house when you come back in the evening. So they're trying to encourage people to use electrical bicycles.

So that's the city partnering with a private company, right?

Yes. For example, the Vélib' in Paris is managed by a private company. Previously, the contract was won by a company called JCDecaux. They make publicity at bus stations and billboards, things like that; so street furniture is their strength. They won the initial contract for the Vélib' in Paris, but they lost the second contract to another company, Smovengo. But it's been having some problems getting those bicycles out into the street. They had a severe delay when they first tried to renew their bicycle park but I think they're now caught up on that. The fact is that it's a private company again. So what the City of Paris is doing is they're giving these contracts to private companies to run these sort of things.

What do you think the outcome will be in terms of the relationship between the Whims and the Ubers and some city authorities in Europe?

I think it'll vary from city to city, to be honest. I think the smaller cities may very well have brought it to them and say, "Given the investment that's required and the technology and the software, it's probably easiest for us to outsource it to you." I don't see anywhere like Paris outsourcing it completely to Uber, for example. I don't think that would be politically acceptable. But the smaller cities may well do that. Again, it's a personal opinion. I haven't talked to the Mayor of Paris or any of their team. My view is that I find it difficult to see Paris doing that, particularly with the political climate in France at the moment, there's a lot of protest as I'm sure you've seen on the television. To outsource what some people would perceive to be a public service to a private company could cause some issues. But I think smaller cities, the economic argument would be quite strong to say, "Look, we're not going to invest ourselves to do this, we'll have someone do it for us." I know there are some cities in the east of France, like Strasbourg and Mulhouse, which are already operating some sort of mobility as a service, but I don't know for sure whether they're doing it themselves or whether they subcontracted it, so I need to double check that point.

How do you look at the major players of each part of the value chain and their positioning in the face of the shift that we're currently seeing? Firstly, how do you view the OEM's position?

Well, I think, as I said earlier, when Ghosn and Dudley were interviewed, they said they made more money from the services than they did from selling the product. In the case of Daimler, that's probably still true as well, even though their product is somewhat more expensive than Renault. I think it's probably still true that they make more money from the services, so they're going to want to keep hold of the services as long as possible. The issue is that someone needs to pay for and own the vehicle. But the finance of these companies is very strong, and if they are making the vehicle then they can operate the financing of the vehicle. What they're saying here is that they could even own the vehicle and lease the vehicle out I suspect.

Does that make sense to you?

I think it does. That's where they make their money today; they have to sell the vehicle in order to catch the customer. When I look at these boxes over here: asset provider, fleet operator and service platform. The first two is what they do today, it's part of their business model today and it's quite a significant profit generator. Financing and maintenance and servicing is a significant profit generator for them. What they don't do today is have a mobility service platform. And there seems to be more competitors over there on the service platform side than there does on the others. The service platform is where there's a risk that they could lose the customer.

I think there's another question around the shift to EV that you said that you spent time on. Because they make their money in ICE [internal Combustion Engine] vehicles, as the shift to electric takes place, I think there's a question around the profitability of the OEMs on a per vehicle basis, in manufacturing and selling these vehicles. The manufacturing process changes, the supplier base changes and the value in procuring and assembling battery versus IC engines is completely different. How do you view the profitability relative to ICE vehicles for OEMs?

Absolutely right. If it was a startup company and they didn't have all this legacy investment in place, then actually you would say this is a great business model. It's an electric car, it will cost less to manufacture, the batteries don't need to be as big, and therefore there's a real opportunity to set up a company - like Tesla has done - and make profit. The challenge on the electric vehicle is that the battery is a huge chunk of cost. So whatever their strategies are going to be regarding batteries, whether they choose to make or buy is absolutely key. Tesla has decided to make their batteries and I think they believe that that gives them an advantage over a company that buys the batteries because they can control their costs, they can engage in continuous improvement to bring down their costs et cetera. Plus, they may have some technology advantages as well that they can only benefit from by doing it themselves. The Germans are going down the same route, they want to make the batteries themselves - even though they will buy the basic cells from Asia - they want to make the battery packs and things themselves, and that's the same model as Tesla. So I think that's quite important when you look at whether you're going to make money from electric vehicles or not.

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Mobility-as-a-Service: The Future of Mobility

November 12, 2019

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