The traditional, linear automotive order – automakers at the top, Tier-1 suppliers just beneath and sub-suppliers somewhere trailing in the distance – is being replaced by a radically different “puzzle-piece ecosystem” as the era of New Mobility approaches.
The puzzle-pieces that automakers and suppliers are historically best at – vehicle architectures, systems and assembly – will be just a part of the overall mobility mosaic. This could mean that legacy players need to be discerning about the partnerships they choose with “the other pieces of the puzzle,” such as technology and MaaS (mobility-as-a-service) companies, or efficient with the investments they make to compete with them, or both, claims AlixPartners’ Mark Wakefield.
At the annual Center for Automotive Research’s Management Briefing Seminars in Traverse City, Michigan. Wakefield said tech companies have a different “future view” of mobility than does most of the traditional auto industry: one in which driverless technology is ultimately totally decoupled from vehicle production, potentially relegating automotive players to secondary roles. He also said that MaaS, rather than being a relatively new phenomenon that sprung up with the inception of companies like Uber, Lyft and Zipcar, is actually just the logical next step in a century-plus-long evolution of the consumer.
Here customers have moved from all-cash purchases of vehicles in the auto industry’s early years, to financing vehicles, to leasing vehicles, to today’s growing pay-by-use of vehicles – and are moving toward multi-modal options such as sci-fi dream stuff like app-ordered robotaxi rides.
As an example of how much the consumer has evolved, especially younger ones, Wakefield cited an AlixPartners survey of 1,500 Americans last year in which nearly one in 10 (9%) of those aged18 to 34 said that the use of ride-sharing services had enabled them to avoid or postpone getting a driver’s license.
However, as an example of the fact that it’s not only traditional players that might face financial challenges as they battle for position in tomorrow’s world, he also noted that while AlixPartners forecasts the global ride-hailing market to grow to $285 billion by 2030, up from $110 billion in 2020, a profitability analysis by the firm shows that last year the net incomes as a percentage of revenues for Uber, Lyft and Car2Go (now part of SHARE NOW) were all negative, at -37%, -42% and -39%, respectively.
“If traditional players don’t want to become second-class citizens in this new world, they need to be very thoughtful and thorough about the partnerships they make and exceedingly efficient with the investments they make, including in such areas as software development, testing and validation,” said Wakefield, “offsetting investments where possible with efficiencies in other areas of the company. That’s doubly important given that this incremental, unprecedented challenge to the auto industry is coming at a time when much of the industry globally is either stagnant or slowing.”
In his speech Wakefield also stated that asset-free, versus asset-managed, business models are the preferred model for most new MaaS players, putting even more pressure on traditional automakers, suppliers and dealers. He said that the promise of V2X (“vehicle-to-everything” communications) has an “Achilles’ heel” with dependence on cooperation among New Mobility’s diverse stakeholders. And he suggested that government regulations, including on data collection and use, might be in order.
This appears to understate the immediate need and the growing outcry from customers – the Russians are only the gravest threat among many to them in AutoInformed’s view, though it’s not evident in “Moscow Mitch’s non-actions in the U.S. Senate.