The future of mobility

How transportation technology and social trends

are creating a new business ecosystem
The Future of Mobility is a publication from Deloitte LLP. Deloitte provides industry-leading audit,
consulting, tax, and advisory services to many of the worlds most admired brands, including
80 percent of the Fortune 500. Our people work across more than 20 industry sectors with one
purpose: to deliver measurable, lasting results. Clients count on Deloitte to help them transform
uncertainty into possibility and rapid change into lasting progress. Our people know how to
anticipate, collaborate, and innovate, and create opportunity from even the unforeseen obstacle.
About the authors

Scott Corwin is a director in Deloitte Consulting LLPs Strategy and Business Transformation
practices. He brings over 25 years of experience working closely with corporate leaders to develop
and implement strategy-based transformations, specifically around globalization, advanced R&D/
technology innovation, and new business models. Corwin works with clients across a wide range of
industries, including automotive, technology, industrial, media, consumer products, retail, health-
care, telecommunications, public sector, and not-for-profits. He serves as the leader of Deloittes
Future of Mobility initiative and lead consulting partner for a number of the firms key accounts,
including a global leading automotive OEM.

Joe Vitale is the global automotive industry leader for Deloitte Touche Tomatsu Limited and
serves as the global lead client service partner for one of the largest automotive OEMs. He is
responsible for delivering Deloittes multidisciplinary solutions, including consulting, enterprise
risk management, tax, and financial advisory services to automotive companies worldwide. Vitale
specializes in corporate strategy, mergers and acquisitions, supply chain optimization, and new
product development.

Eamonn Kelly is a director with Deloitte Consulting LLP and chief marketing officer of the Strategy
and Operations practice. He has, for more than two decades, advised senior leadership at leading
corporations across multiple industry sectors, key global and national public agencies, and major
philanthropic foundations. Prior to joining Deloitte, he was a Monitor Group partner and also
served as CEO of the think tank Global Business Network, where he led thought leadership about
the future, writing two books and numerous articles and delivering insights and new methodologies
for mastering change and uncertainty.

Elizabeth Cathles is a manager in Deloitte Consulting LLPs Strategy & Operations practice. She
has over 10 years of experience in strategy and innovation, specializing in growth strategy, market-
ing and customer strategy, organizational management, R&D, and product-launch strategy. Her
experience includes building and implementing new processes and structure for product develop-
ment, developing growth and launch strategies for products across multiple geographies, helping
to design organizational training systems to challenge global leaders, and implementing innovative
approaches to customer experience.
The future of mobility

Contents

Introduction|1

The importance of the automobile industry|3

Two divergent visions|5

Four futures will coexist|8

How much per mile?|11

The course of change|13

The future for the extended automotive industry|16

Conclusions|20

Endnotes|21

Acknowledgements|25

Contacts|26

iv
 How transportation technology and social trends are creating a new business ecosystem

Introduction

T HERE is a critically important dialogue

going on across the extended global
automotive industry about the future evolution
Innovative technologies are changing
how companies develop and build vehicles.
Electric and fuel-cell powertrains tend to offer
of transportation and mobility. This debate greater propulsion for lower energy investment
is driven by the convergence of a series of at lower emission levels.1 New, lightweight
industry-changing forces and mega-trends (see materials enable automakers to reduce vehicle
figure 1). weight without sacrificing passenger safety.2

Figure 1. Converging forces transforming the future evolution of automotive transportation and mobility

Battery and fuel-cell electric vehicles offer higher

Maturing powertrain energy efficiency, lower emissions, greater energy
technologies diversity, and new vehicle designs

Lightweight Stronger and lighter materials are reducing vehicle

weight without sacrificing passenger safety
materials

New vehicles are being outfitted with

Rapid advances in vehicle-to-infrastructure (V2I), vehicle-to-vehicle
connected vehicles (V2V), and communications technologies, so every car
can know precisely where every other car is on the road

Younger generations are leading the way toward

Shifts in mobility pay-per-use mobility in place of owning a car; nearly
50% of Gen Y consumers like using a smartphone app for
preferences
transport and already plan travel so they can multitask

Autonomous-drive technology is no longer a case of

Emergence of science fiction; the question is when and how will it
autonomous vehicles become more mainstream and widely adopted?

Graphic: Deloitte University Press | DUPress.com

1
The future of mobility

Further breakthroughs are advancing the capital asset, which fundamentally challenges
introduction of autonomous vehicles; increas- todays consumption model centered on per-
ingly, daily news reports suggest that driverless sonal ownership of cars.7
cars will soon become a commercial reality.3 All told, a system that has been well estab-
We have already seen rapid advances in the lished for a century is on the verge of a major
connected carinnovations that integrate transformation that could result in the emer-
communications technologies and the Internet gence of a new ecosystem8 of personal mobility.
of Things to provide valuable services to driv- Todays debate centers on whether the
ers.4 Vehicles outfitted with electronic control extended automotive industry will evolve
modules and sensors that enable vehicle-to- incrementally toward some future mobility
vehicle (V2V) and vehicle-to-infrastructure ecosystem or whether change will occur at
(V2I) communications can proactively sug- a more radical pace and in a highly disrup-
gest re-routings to avoid road hazards and tive manner. No one knows the full scope and
call for assistance in the event of an accident.5 magnitude of the changes that are to come,
Soon, cars will routinely gain precise-enough what they entail, or how they will evolve, yet
awareness of where they are in relation to other these forces have the potential to alter current
vehicles and potential hazards to take preemp- industry structures, business models, competi-
tive action to avoid accidents.6 tive dynamics, value creation, and customer
Simultaneously, young adults, along with value propositions. We may be on the thresh-
urbanites, are gravitating toward a model old of change as great as any the industry has
of personal mobility consumption based on ever seen.
pay-per-use rather than upfront purchase of a

2
 How transportation technology and social trends are creating a new business ecosystem

The importance of the

automotive industry

T HERES no mystery about why we pay

such close attention to the ups and downs
of the auto industryits extended value chain
auto manufacturers, suppliers, dealers, finan-
cial services companies, oil companies, fuel
retailers, aftermarket services and parts, insur-
is an essential engine of global economic ance, public and private parking, public-sector
growth. In the United States, the sector gener- taxes, tolling and traffic enforcement, medical
ated $2 trillion of annual revenue in 2014 (see care, and others.
figure 2)11.5 percent of US GDP9from

Figure 2. 2014 extended automotive industry revenue

Wholesale and dealer vehicle sales and

service; suppliers; and mechanics
Rental vehicles, taxi and limo
services, private parking garages
Automotive
$735B Auto financing
Finance
Transportation
Aftermarket parts and $59B $101B
service channel
Auto insurance
Retail Insurance

$24B Current extended $205B

automotive industry Oil companies and
gas stations
Radio advertising, revenuesa
outdoor advertising
Media
$2T Energy

$16B $573B

Medical Public
Emergency services and hospital sector
Fuel, licensing, and auto sales taxes;
& legal
costs; legal fees associated with traffic enforcement; tolls; public
accidents $35B $251B transportation; parking

Source: Deloitte analysis based on IBISWorld Industry Reports, IHS, DOT, US Census, EIA, Auto News, TechCrunch. Current revenue represents
2014 figures (or earlier if 2014 data not available) in the United States.
a
Total revenue is $1.99T.
Graphic: Deloitte University Press | DUPress.com

3
The future of mobility

At Deloitte, weve been engaged in a deep

and broadly ranging study of the extended auto
industry, the economics of alternative future
states, and the potential impact of each on
related industries.10 We have concluded that
change will happen systematicallya rising
tide, not a tsunami. At no point will the world
be presented with a Manichean choice and
collectively decide to plunge all-in to a system
of driverless, pay-per-use travelor else to
change nothing at all. Rather, the new personal
mobility ecosystem will likely emerge unevenly
across geographic, demographic, and other
dimensions, and evolve in phases over time.

4
 How transportation technology and social trends are creating a new business ecosystem

Two divergent visions

T HERE are two profoundly different visions

of the future of mobility. Fundamental dif-
ferences center around whether todays system
The insider view believes that todays system
can progress in an orderly, linear fashion, in
which the current industry assets and fun-
of private ownership of driver-controlled vehi- damental structure remain essentially intact.
cles remains relatively unchanged or whether The disrupter view envisions a tipping-point
we eventually migrate to a driverless system of approach to a very different future, one that
predominantly shared mobility. There is also a offers great promise and potential societal
critical difference about the pathway forward. benefits (see figure 3).

Figure 3. "Insider" and "disrupter" views of the future of mobility

Insider view Disrupter view

The industry will evolve A whole new age is
naturally and incremen- dawning featuring fully
tally toward a future autonomous cars
mobility system that accessible on demand
retains its roots in what
exists today Before long, a tipping
point will occur, after
The key players, major which the momentum of
assets, and overall change will become
structure of the current Future of unstoppable
ecosystem can remain
intact while change
mobility New entrants, notably
progresses in an orderly, Google, Uber, and Apple,
linear fashion are catalysts for
transformation
The incumbent mindset
appears dually focused Unlike the stakeholders in
on sustaining the current todays system, they do
model while testing not have vested stakes
change in small ways to protect

Source: Deloitte analysis, based on publicly available information and company websites.
Graphic: Deloitte University Press | DUPress.com

5
The future of mobility

Within the high-tech community, compa- Speed of deliveries quickens and costs
nies are working to arrive at something radi- decrease through the rise of fully autono-
cally different than todays system of personally mous networks of long-haul trucks that can
owned driver-driven passenger automobiles. operate for more extended time periods
According to this perspective, which we label and cover longer distances with lower
the disrupter view, a new age is dawning, labor costs.
featuring fully autonomous cars accessible on
demand. Progress toward it might be measured Seamless multimodal transportation
at first, but before long, a tipping point will becomes the new norm, as greater system
occur, after which the momentum of change interoperability enables consumers to
could gather speed. Imagine a world where the get from point A to point B via multiple,
following statements are all true: connected modes of transportation on
a single fixed price charged on a single
Vehicles hardly ever crash. Autonomous payment system.
operation removes the cause of almost all
Much of the technology already exists to
accidents: human error.11
turn this vision into reality, and disrupters
are working toward implementing it, catalyz-
Traffic jams are rarities, thanks to sensors
ing the transformation. Googles driverless
allowing for less space between vehicles and
cars have already driven more than 1 million
guidance systems with real-time awareness
miles in autonomous mode, and the company
of congestion.
is running pilot and testing programs with
small fleets of fully autonomous vehicles in
Energy demand drops, since smaller mass
Mountain View, CA, and Austin, TX.12 Less
and weight allow cars to be propelled by
technologically dazzling but equally disrup-
more compact, efficient, and environmen-
tiveand far more matureare carsharing
tally friendly powertrains.
and ridesharing: The movement that started
with Zipcar has more recently spawned the
Trip costs plummet, with average cost per
ridesharing concepts of Uber and Lyft; Uber
passenger mile dipping from todays ~$1
alone delivers 1 million trips per day world-
per mile to approximately 30 per mile,
wide13 and is growing rapidly.
thanks to dramatically higher rates of
Still, these industry-changing technologies
asset utilization.
may fail to reach transformational scaleor at
least fail to do so within a strategically relevant
Infrastructure is funded by charges for
time frame. Insiders, heavily invested in the
actual usage, since connected-car technol-
current auto industry, see change evolving
ogy allows systems to precisely calculate
slowly toward a future that retains its roots in
personal road use.
what exists today.
We see the major auto companies pursuing
Parking lots disappear, as the rise of
strategies that address the converging forces
autonomous-drive and carsharing models
incrementally, creating future option value
diminish need.
while preserving flexibility. These industry
players efforts and investments are yielding
Law enforcement ceases to concern itself
a steady stream of benefits for customers. For
with traffic, since autonomous vehicles are
example, in introducing connected-car tech-
programmed not to exceed speed limits or
nology, manufacturers offer drivers many of
otherwise violate traffic laws.
the benefits associated with autonomous drive

6
 How transportation technology and social trends are creating a new business ecosystem

without fundamentally altering how humans stability control, backup cameras, and telemat-
currently interact with vehicles. icsacross higher-end vehicle lines and then
Automakers are experimenting and invent- move down market as scale economics take
ing, and have passionate voices within their hold.19 In our ongoing conversations with
ranks describing much-altered futures. Most auto-industry leaders, they repeatedly and
have set up offices in Silicon Valley to gain collectively argue that outsiders simply do not
greater proximity to technology development appreciate the sheer complexity of developing a
and early-stage funding. Among the note- vehicle today, the challenge of introducing new
worthy examples of forward-thinking initia- advanced technologies into a vehicles architec-
tives are Fords 25 mobility projects,14 BMW ture, or the rigor and inertia of the regulatory
iVentures,15 Daimlers engineering advances environment. All of this encourages incum-
in intelligent driving,16 and Cadillacs super bents to believe that they can be at the center
cruise functionality.17 In addition, public-pri- of actively managing the timing and pace of
vate partnerships such as the recently opened these converging forces.
Mcity in Ann Arbor, MI, provide a platform to But the interplay of the converging forces
enable more efficient and effective automated of change may be less predictable and lead to
vehicle (and feature) testing.18 faster upheaval than they think. Automakers
This approach is consistent with historic might be overestimating how much power they
norms, in which automakers invest in new have to manage the course of future events.
technologiese.g., antilock brakes, electronic

7
The future of mobility

Four futures will coexist

G IVEN the disparate forces shaping the

landscape, we envision four different
personal mobility futures emerging from the
Vehicle ownership (private versus shared)
Our analysis concludes that change will
happen unevenly around the world, with dif-
intersection of two critical trends (see figure 4): ferent populations requiring different modes
of transportationwhich means that the four
Vehicle control (driver versus autonomous)
future states may well exist simultaneously. In

Figure 4. Four potential future states

Future states of mobility

Extent to which
autonomous vehicle
Autonomous*

technologies become The driverless A new age of

pervasive: 3 revolution accessible autonomy 4
Depends upon
several key factors
as catalysts or
Vehicle control

deterrentse.g.,
technology, Low Asset efficiency High
regulation, social
acceptance
Assist

Vehicle technologies
will increasingly
become "smart;
the human-machine
interface shifts
1 Incremental A world of
2
Driver

toward greater change carsharing

machine control
Personal Vehicle ownership Shared
Extent to which vehicles are personally owned or shared:
Depends upon personal preferences and economics
Higher degree of shared ownership increases system-wide asset efficiency

Note: Fully autonomous drive means that the vehicles central processing unit has full responsibility for controlling its operation and is inherently
different from the most advanced form of driver assist. It is demarcated in the figure above with a clear dividing line (an equator).

Graphic: Deloitte University Press | DUPress.com

8
 How transportation technology and social trends are creating a new business ecosystem

other words, business leaders will need to pre- finding parking spaces. Plus, the system offers
pare their organizations to be capable of oper- options for non-drivers such as seniors, low-
ating in four different futures, with distinct sets income families, and minors without licenses.
of customersbeginning in as little as 515 In this future state, as the cost per mile
years. Here we offer a high-level description decreases, some come to view ridesharing as
of each future state and the conditions that a more economical, convenient, and sustain-
promote its eventual emergence. able way to get around, particularly for short
point-to-point movements (see below for our
Future state 1: analysis of the economics of mobility). As
shared mobility serves a greater proportion of
Incremental change local transportation needs, multivehicle house-
This most conservative vision of the future holds can begin reducing the number of cars
puts heavy weight on the massive assets tied up they own while others may abandon ownership
in todays system, assuming that these assets altogether, reducing future demand.
owners will neither willingly abandon them
nor eagerly transfer capital into new enter-
prises with uncertain returns. It sees private
Future state 3: The
ownership remaining the norm, with consum- driverless revolution
ers opting for the particular forms of privacy, The third state is one in which autonomous-
flexibility, security, and convenience that come drive technology proves to be viable, safe, con-
with owning vehicles. Importantly, while venient, and economical, yet private ownership
incorporating driver-assist technologies, this continues to prevail. Collaboration between
vision assumes that fully autonomous drive leading academics, regulatory agencies, and
wont become widely available anytime soon. businesses accelerates progress toward this
With so little change envisioned, this future future.21 Both technology and automotive firms
state reinforces automakers reliance on a continue investing heavily to increase V2X
business model that emphasizes unit sales. (V2V and V2I) capabilities; in parallel, driver-
They continue to invest in the development less technology matures, with the success of
and introduction of new vehicle lines with early pilots fostering quick adoption.
advanced technologies, and dealers retain Given that this future state assumes most
responsibility for the customer experience. drivers still prefer owning their own vehicles,
Other industry players are similarly incented individuals seek the driverless functionality
to rely on the practices and structures that have for its safety and other potential benefits but
been well established for decades. continue to own cars for many of the same
reasons they did before the advent of autono-
Future state 2: A world mous drive. They might even invest more in
their vehicles as a new era of customization
of carsharing dawns and it becomes appealing to use vehicles
The second future state anticipates con- tailored for specific occasions and circum-
tinued growth of shared access to vehicles.20 stances.22 That said, the features in which
In this state, economic scale and increased owners are willing to invest, and the design of
competition drive the expansion of shared the vehicles themselves, may change; this new
vehicle services into new geographic territo- segment of the market may offer lighter, more
ries and more specialized customer segments. technically advanced vehicles that embrace
Here, passengers more heavily value the design principles counter to todays four-door,
convenience of point-to-point transportation driver-in-front-on-left, gripping-the-steering-
created through ridesharing and carsharing, wheel reality.
saving them the hassle of navigating traffic and

9
The future of mobility

Future state 4: A new age autonomous shared vehicles could spread from
urban centers to densely populated suburbs
of accessible autonomy and beyond.
The fourth future state anticipates a Advanced communications technolo-
convergence of both the autonomous and gies coordinate the customers point-to-point
vehicle-sharing trends. In this future, mobil- mobility experience: Intuitive interfaces enable
ity management companies offer a range of users to order a vehicle pickup within minutes
passenger experiences to meet widely varied and travel from point A to point B efficiently,
needs at differentiated price points.23 The earli- safely, and cost-effectively. Vehicle and traf-
est, most avid adopters seem likely to be urban fic network systems operators, in-vehicle
commuters, given the potential for faster trips content-experience providers (e.g., software
thanks to reduced distances between highly and infotainment firms), and data owners (e.g.,
automated vehicles, and routes enhanced telecoms) could have further opportunities to
by real-time awareness of conditions. Over monetize the value of passengers attention in
time, as smart infrastructure expands and transit as well as additional metadata pertain-
driver usage nears a tipping point, fleets of ing to system use.

10
 How transportation technology and social trends are creating a new business ecosystem

How much per mile?

W E conducted an analysis to calculate

the average cost per mile under each
of these future states; this analysis shows that
According to our calculations, personally
owned vehicles today impose costs of approxi-
mately $0.97 per mile. This includes vehicle
consumers could benefit from lower per-mile depreciation, financing, insurance, and fuel, as
travel costs in future states 2, 3, and 4 (see well as the value of the individual drivers time.
figure 5 for a summary of these costs by future By adjusting these key variables for each future
state, and figure 6 for a more detailed break- state, we have developed high-level directional
down of associated costs).

Figure 5. Per-mile summary cost calculations for each future state

Cost per mile, by future state

Personal Vehicle ownership Shared
Autonomous

The driverless A new age of

3 revolution accessible autonomy 4
~$0.46 ~$0.31
Vehicle control

~$0.97 ~$0.63
Assist

1 Incremental A world of
2
Driver

change carsharing

Low Asset efficiency High

Source: Deloitte analysis, based on publicly available information (US DOT, AAA, etc.).
Note: Fully autonomous drive means that the vehicles central processing unit has full responsibility for controlling its operation and is inherently
different from the most advanced form of driver assist. It is demarcated in the figure above with a clear dividing line (an equator).

Graphic: Deloitte University Press | DUPress.com

11
The future of mobility

Figure 6. Cost per mile breakdown for each future state

$1.00
Cost of driver's time

Ridesharing profit
$0.80

Cost of hired driver

$0.60 Vehicle maintenance

Insurance
$0.40
Fuel

Vehicle financing
$0.20

Vehicle depreciation
(autonomous tech)
$- Vehicle depreciation
Incremental A world of The driverless A new age of (automotive)
change carsharing revolution accessible
(current) autonomy

1 2 3 4
Graphic: Deloitte University Press | DUPress.com

estimates of per-mile costs for each future state the drivers time and productivity. Based on
at maturity. conservative estimates of this time value,
Our projections indicate that in future state future state 3 would cost approximately $0.46
2 of shared mobility, the economics become per mile.24
more favorable compared to private vehicle And in a world of autonomous shared
ownership, due to greater asset utilization and vehicles (future state 4), our analysis finds the
reduced consumer time spent driving. Over economics to be highly favorable: Cost per
time, the efficiencies of greater asset utiliza- mile could drop as low as $0.31 for single-
tion offset the higher costs associated with person tripsin other words, lower by roughly
employing a driver. Our analysis suggests that two-thirds than the cost of driving today.
a fully scaled shared-service model would cost Savings partly result from key assumptions
approximately $0.63 per mile. around the availability of lighter-weight vehi-
If personally owned autonomous-drive cles (for example, two-person pods for as little
vehicles become widely adopted (future state as $10,000) reducing capital costs, high rates
3), projecting the cost per mile becomes of asset utilization (much higher than todays
trickier, since calculations depend on the 4 percent), and the value placed on freeing up
assumptions made for the value of reallocating driver time for more productive purposes.

12
 How transportation technology and social trends are creating a new business ecosystem

The course of change

I N our view, moves from the current state of

mobility will likely occur fastest in the direc-
tion of shared access, in turn catalyzing the
Step 1: Gradual adoption
of shared access
(upward) adoption of autonomous drive. We The move from pure personal ownership
see this progression occurring in a number of of vehicles to a system more reliant on shared
steps, as illustrated in figure 7. access (i.e., from quadrant 1 to quadrant 2 of

Figure 7. The course of change

Extent to which
autonomous vehicle
Future states of mobility
technologies become
pervasive:
Autonomous

The driverless A new age of

Depends upon 3 revolution accessible autonomy 4
several key factors
as catalysts or
deterrentse.g.,
Vehicle control

technology, STEP 2 2 STEP 2

regulation, social EP
ST
acceptance

Vehicle technologies
Assist

will increasingly
become "smart; STEP 1
the human-machine
interface shifts
toward greater
1 Incremental A world of
2
Driver

machine control change carsharing

Personal Vehicle ownership Shared

Extent to which vehicles are personally owned or shared:

Depends upon personal preferences and economics
Higher degree of shared ownership increases system-wide asset efficiency

Note: Fully autonomous drive means that the vehicles central processing unit has full responsibility for controlling its operation and is inherently
different from the most advanced form of driver assist. It is demarcated in the figure above with a clear dividing line (an equator).

Graphic: Deloitte University Press | DUPress.com

13
The future of mobility

figure 7), is already under way in some parts However, we also see change progressing
of the United States. For example, carsharing along a second, parallel northward vector
services, such as Zipcar, have roughly doubled from a world of carsharing toward a new age of
their customer base in the last six years,25 while accessible autonomy. Along this path, a power-
ridesharing services, such as Uber, have been ful, additional boost toward driverless adop-
adding 50,000 drivers per month and com- tion is also under way. Uber recently partnered
pleted 140 million rides worldwide in 2014 with both Carnegie Mellon University and the
alone.26 The software and hardware systems University of Arizona to open an Advanced
these services employ to match drivers with Technologies Center in Pittsburgh and test
riders are evolving rapidly, incorporating infor- driverless cars and optics for mapping tech-
mation about observed behaviors to improve nologies.30 Ridesharing services have eco-
rider and driver experiences.27 Furthermore, nomic incentives to accelerate the adoption of
intense competition offers the prospect of autonomous vehicles, since it could reduce one
reducing market prices as improved economics of the biggest operational costs in this system:
related to increased asset utilization take hold. the driver. These companies could capture a
significant share of the consumer surplus value
Step 2: Tipping-point generated by reducing this cost. If autonomous
drive becomes viable for ridesharing services,
shift to driverless it could dramatically accelerate broad adop-
Currently, wide acceptance of autonomous tion, as consumers have greater opportunity
operation seems much further away than a to experience the technology while simultane-
broad carsharing/ridesharing culture.28 Sources ously realizing significant reductions in the
of delay include the need to address exist- cost of personal mobility.
ing technological limitations, such as sen- Finally, other high-tech players are forging
sor functioning in all weather and the wide a third path to autonomous drive. For example,
availability of 3D mapping, as well as concerns Googles self-driving car program is testing
over cyber security and liability.29 How quickly cars that do not rely on driver-assist progres-
these and other issues are addressed will be a sion but, rather, immediately jump to fully
key determinant of the pace of adoption for autonomous; Google has stated publicly that
autonomous drive. taking the driver out of the loop is the safest
Automakersboth in partnership and path.31 And in the long term, it is still unclear
competition with tech firmsare sequentially whether Google intends to choose between
and systematically pursuing a shift of control supporting shared autonomous mobility, per-
from driver-only to driver-assist to autonomous sonal ownership, or both.
drive. If driverless technology were the only Rather than following the historical pattern
vector of change, uptake might gradually gain for technological innovation, autonomous
steam, following the pattern of adoption that driving, when it arrives, could constitute a
has become classic to the automotive industry. step-change. And the ensuing changes to the
In our view, this is the pathway from quadrant personal mobility ecosystem could unfold
1 to quadrant 3, incremental change to driver- much more quickly than many compa-
less revolution, which is well under way. nies can imagine. (See Forces of delayor
acceleration.)

14
 How transportation technology and social trends are creating a new business ecosystem

FORCES OF DELAYOR ACCELERATION

The inertial forces slowing down the process that Joseph Schumpeter called creative destruction32 in the
realm of personal mobility are not to be underestimated. The table below summarizes the key drivers that
could either significantly delay or accelerate the adoption of new technologies.

Forces of delay
Changes in and/or impacts
or acceleration

Global, federal, state, and locallegislation and regulation

Regulation and government Taxation and revenue
Laws governing capture, usage, storage, and transfer of data

Perceptions about role of human and machine interface, longstanding notions

around vehicle ownership and usage, etc.
Social attitudes
Safety
Continued growth of shared economy

Results from early experiments and pilot programs

Technology development
Emergence of innovation or technology breakthroughs

Cyber-security and communication standards and protocols

Privacy and security
Protection of personal identification information

Corporate valuations
Wall Street Investment capital availability
Level of investment (technology, market introduction, etc.)

Potential changes to current employment models, including dislocation effects,

costs, and change management
Future employment growth opportunities (nature and size)
Impacts to key stakeholders
Stakeholder reactions and next steps (e.g., workers, unions, dealers, employers,
government, etc.)

15
The future of mobility

The future for the extended

automotive industry

D ELOITTES recent Business Trends report

Business ecosystems come of age33
describes a broad pattern by which many of the
in which the ability to capture, aggregate, and
analyze mobility-related data becomes a tre-
mendous source of value. In this vision, value
industries that make up the global economy will accrete to those who:
are undergoing a kind of metamorphosis.
1. Provide end-to-end seamless mobility
What we inherited from the 20th century, the
paper states, were narrowly defined industries
2. Manage the mobility network
built around large, vertically integrated and
operating system
mainly self-contained corporationsbut in
recent years, thanks largely to digital technolo-
3. Holistically create and manage the in-
gies, those monoliths have been fracturing into
vehicle experience
independent, tightly focused, highly intercon-
nected businesses, many of which perform Rewards could be great for players that
their specialized functions across former are able to capture, analyze, and (securely)
industry lines. We argue, The fundamental monetize the awareness of where people travel
boundaries that have specified the relation- to, the routes they take to get there, and what
ships, interactions, and possibilities of most they do along the way. While third parties will
businesses are rapidly blurring and dissolv- no doubt pay for access to this information,
ing.34 The basic human needs that industries perhaps the greatest value will be realized by
were built to serve remain, but serving them is new entrants who emerge as trusted advisers
now the work of much more fluid ecosystems. to help all of us navigate the new ecosystem
In the future mobility system, the mobility and increase our return on mobility. These
needs that todays industries were built to serve companies may also enable the ecosystem to
remain, but much more fluid ecosystems will monetize new services and ownership models.
likely emerge to serve them. And this por- The future mobility system will also need
tends significant change to current business firms to develop and manage the vehicle-oper-
modelsand partnerships (e.g., between insid- ating and traffic network information system
ers and disrupters) will be critical to deliver that helps direct and control the movement
new mobility. of autonomous vehicles and shared mobility
Complementary analysis from Deloittes fleets. Technology companies already have
Center for the Edge argues that a new mobility access to passenger data and seek to capture
ecosystem could spark a virtual value chain this value, but they will likely face challenges

16
 How transportation technology and social trends are creating a new business ecosystem

from entrants with new business models.35 113 million vehicles annually, while sales hover
Vehicle manufacturers could design and around 70 million.39 In addition, regulatory
develop vehicles not to accommodate drivers requirements (such as CAFE, zero-emission
but, rather, to emphasize passenger experience, vehicles, and safety standards) are becoming
potentially giving rise to new vehicle structures ever more stringent and costly.40 And con-
and forms. sumers relentlessly demand that automakers
In the meantime, it is reasonable to antici- integrate the latest technologies.
pate a healthy tension between automakers, OEMs will need to determine if they should
heavily invested in todays product-centered evolve from a (relatively) fixed capital produc-
system, and technological innovators looking tion, first-transaction, product-sale business
to realize a more virtually dependent world into one centered on being an end-to-end
of mobility options.36 And in this case, since mobility services provider. This would repre-
shared driverless cars could decrease total auto sent a profound business-model change and
sales, its no wonder why carmakers might be the development of entirely new capabilities to
reluctant to embrace such a vision. be competitively and sustainably viable.
But theres little question that some ver- At a minimum, they will need to weigh
sion, perhaps multiple versions, of a new how to meet the needs of a changing landscape
ecosystemone based on shared access and as consumers increasingly use shared mobil-
autonomous drivingwill indeed eventu- ity and become interested in highly tailored,
ally emerge. Where and when it does, the customized, personally owned autonomous-
change could be profound: lower cost per mile, drive vehicles.41 This could require transform-
improved safety, reduced need for parking lots ing product-development and innovation
and traffic enforcement, dramatically lower capabilities and reconfiguring supply chains
overall environmental impact, and more. and production operating systems to be even
Questions revolve around what will happen more lean, flexible, and smart customization-
to todays automotive sector and how these enabled. At the same time, consumers could
will affect auto OEMs, suppliers, dealers, oil begin demanding shared autonomous vehicles
companies, fuel retailers, aftermarket service for different kinds of trips, which could spur
and parts companies, insurance companies, the creation of more varied vehicle forms. This
public and private parking, public-sector traffic could drive the development of high-speed,
enforcement, and others. However the forces low-cost vehicle assembly operations to create
of change unfold, every company may need to and produce vehicles with lightweight frames,
determine, in Roger Martins succinct phras- custom experience-focused software, and
ing, where to play and how to win.37 highly customized, design-focused interiors.
What follows is an initial overview of the Light autonomous-drive vehicles can be made
enormous scope of change that could affect the to be highly energy-efficient and, with a longer
key stakeholders in the current system as well driving range, might make electric vehicles
as in the new mobility ecosystem. more viable and help automakers meet strin-
Global automotive manufacturers gent regulatory standards.
(OEMs) face momentous and difficult deci- Automotive suppliers will have to adjust
sions. The auto industry currently struggles as OEMs transform. As sales of autonomous-
with the fundamental economics of an drive vehicles grow, suppliers will need lean,
intensely competitive business with enormous agile operations to serve the highly varying
capital requirements; operating margins and needs of the personally owned segment. While
return on invested capital remain low.38 The most of the core powertrain, chassis, brake
industry operates with sizeable excess produc- systems, and electronic wiring components on
tion capacity: Globally, it is possible to produce such vehicles may be standard, giving suppliers

17
The future of mobility

some benefits of operational scale, the packag- future mobility ecosystem could alleviate. In
ing for personally owned vehicles will likely the most ambitious version of the future, cargo
be tailored and customized. Building the transportation and delivery systems could
more standardized vehicles needed for shared become predominantly driverless through
mobility solutions could offer large volumes, daisy chains or remote operationan appeal-
and the demand will likely be for less complex ing scenario, considering the US trucking
and lower-value-added products; therefore, industrys growing labor shortages, with as
the economics in this new marketplace will many as 30,000 driver positions unfilled
strongly favor the lowest-cost producers. and an annual turnover rate of 92 percent.43
Technology firms are driving much of the Autonomous vehicles offer a way to overcome
change under way. Earlier we referred to these restrictions on hours driven and increase capi-
firms as the disrupters; their strategic vision tal utilization. Given long-haul cargo transpor-
is that toppling longstanding institutional tations $700 billion in annual revenues,44 major
structures and frameworks can generate mas- fleets such as UPS and USPS have a sizeable
sive value. Unlike the manufacturers and asset economic incentive to actively explore how to
holders in todays system, they have few vested operate for more extended time periods, cover
stakes in the current automotive ecosystem, longer distances without stops, and reduce the
and they view the market for mobility as a cost of drivers (accounting for 26 percent of
new frontier. They share a conviction that the operating costs).45 With such compelling eco-
systems dominant source of value could be in nomics, this sector could become an early test
creating and managing the operating system bed for driverless technologies.
and in-transit experience as well as mining the Insurers face a complex set of strategic
data generated. questions in how they will serve various seg-
These companies have shown to be adept at ments, geographies, and demographic groups
building large, complex information networks depending on which future states take hold.
and operating systems, introducing artificial With $205 billion in premiums for personal
intelligence to help minimize human error liability, collision, and umbrella insurance in
and randomness, creating compelling envi- play, the stakes are high. Operating within a
ronments that drive consumer behavior, and heavily regulated environment, insurers will
creating digital communities. They view the have to continue supporting the classic insur-
vehicle as another platform in a multidevice ance model, in which accidents are often the
world. Vehicle sensors and personal devices result of driver error, while also adapting to
could generate ever-greater amounts of data, an autonomous-drive world where the risk is
with insights producing personalized customer more technical, related to systemic failure of a
experiences and delivering targeted advertising self-guided vehicle. Where risk pools change in
and services.42 Integrated information systems demographic composition, dramatic changes
can enable effective intermodal transportation. in cost structure could ensue. Alternatively, the
And mobile, wireless, location-based systems flood of new information provided by con-
can create new opportunities for dynamic- nected vehicles offers the opportunity to more
pricing, single-payment, and consumption- accurately judge risk.
based models to become much more prevalent. The US public sector will likely have to
Technology leaders in general, relative to figure out how to offset anticipated declines in
traditional auto-industry leaders, are in highly the $251 billion annually generated from fuel
advantaged positions to capture this informa- taxes, public-transportation fees, tolls, vehicle
tion and virtual-based value. sales taxes, municipal parking, and registra-
Cargo delivery and long-haul trucking tion and licensing fees. All these revenues are
currently face significant challenges that the tied to todays reality of individually owned

18
 How transportation technology and social trends are creating a new business ecosystem

and operated vehiclesfor instance, the decline significantly and potentially offset
need for parking diminishes with the rise of some of the public-sector revenue decline.
autonomous-drive shared mobility. Agencies The value shifts for these and other
may need to evaluate alternativese.g., taxing industries could have a tremendous impact
movement versus ownership. Monetization on revenues across the ecosystem. Figure 8
for road usage in the future could transition to summarizes some of the potential effects of
a much more dynamic model based on time of the shift to the future mobility ecosystem. The
day, market demand, routes traveled, distance, graphic also includes potential societal benefits
and vehicle form, aligning the use of public expected as a result of autonomous drive and
assets more directly to usage than todays shared mobility technological advances. The
system. On the other hand, as vehicle volumes analysis does not yet account for new business
decline, municipalities might experience models that could evolve within the future
reduced wear and tear on infrastructure and ecosystem; it is meant to illustrate the poten-
have the opportunity to reallocate parking and tial effects/directional impact that autono-
other space to more value-adding purposes. mous cars and shared mobility may have on
Government costs (such as the DMV) could todays ecosystem.

Figure 8. Potential value shifts

Decrease in personally owned vehicle sales and increase
in fleet vehicle sales due to shift toward shared mobility

Shared fleet vehicles could substitute demand for Wider range of vehicle designs could emerge
traditional taxis, limos, and rental vehicles Value shifts from asset ownership and driving
Increased automation creates new business models for performance to software and passenger experience
long-haul trucking, movement of goods Lighter vehicles could enable OEMs to more easily meet
CAFE and ZEV requirements

Automotive
Increased mobility of underserved
Growth in fleet financing
segments (e.g., seniors) could increase Transportation
retail sales
Finance Shifts away from personal vehicles
Expands home delivery options could lead to a decrease in auto loans
and leasing
Changes retail landscape in response
to city demographics shift
Retail Insurance
Potential opportunities for
experience-based insurance
Emergence of autonomous drive
operating system players
Potential effects of products
Shifts from personal liability to
Autonomous cars and shared shift to future catastrophic systems-failure
Technology insurance could lead to a decrease in
mobility would likely lead to the rise
of mobility management providers
mobility Energy
insurance sales
ecosystem
Increased demand for connectivity and Potential for increase in miles driven
reliability could result in additional Public Improved vehicle efficiency could lead
Telecom
bandwidth requirements sector to lower energy consumption
Autonomous technology could further
Medical enable a transition to alternative fuels
Greater time available through autonomous drive and Media
& legal
shared mobility increases consumption of multimedia and
information Reduced number of automobiles could
decrease current revenues (e.g., licensing fees,
Increases in advertising and subscription revenues and
fuel taxes, etc.)
data monetization opportunities
KEY New consumption-based, dynamic taxation
models could offset tax revenue decline
Value creating effect
Fewer auto-related accidents and fatalities could reduce costs for Potential change in mix and usage of public
Value diminishing effect
emergency medical services and related legal fees transportation
Mixed impact

Societal 40% 90% 32K+ 100B hours

benefits decrease in emissions of productivity
lives saved b
from automobiles a recoveredc
a
Deloitte analysis; annual percentage decrease is calculated prior to any changes in fuel mix and is equivalent to a decrease of 10% to 25% of overall US emissions.
b
2013 figure for US only; global figure is 1.24 million annually (WHO)
c
Deloitte analysis based on miles driven in the US in 2014 (DOT) and average travel speed in miles per hour (Columbia University)
Source: Deloitte analysis Graphic: Deloitte University Press | DUPress.com

19
The future of mobility

Conclusions

I N the four futures of the mobility ecosystem,

sources of value shift profoundly. With this
evolution toward a new ecosystem still taking
longer term, when autonomous and shared
mobility become more mainstream.

shape, we want to share some reflections on 4. The insiders and disrupters need each
the strategic and operational implications for other. Unquestionably, fierce competition
legacy incumbents, extended industry partici- will characterize the commercial environ-
pants, and disrupters as they weigh their future ment around personal mobility. Yet, despite
direction. Specifically: their wariness and differing outlooks and
perspectives, automotive incumbents and
1. Industries rise and fall. Cycles take
challenging new entrants will together
long periods to play out, but eventually
make up a new ecosystem with high
change occurs.
levels of interdependency, mutualism,
and symbiosis.
2. The potential system benefits and funda-
mental economics of the disrupter vision
5. Profound disruption will extend far past
are compelling.
the automotive industry. Every aspect of
the modern economy based on the assump-
3. There is a pathway for the existing
tion of human-driven, personally owned
extended auto industry to lead the transi-
vehicles will be challenged. Each company
tion to the future of personal mobility,
in this new ecosystem will have to deter-
but it will require fundamental and
mine where to play and how to win. As in
expeditious business-model change.
any time of large-scale transformation, we
Competing effectively in the future mobil-
can expect to see new players, with differ-
ity ecosystem requires building new and
entiated capabilities, emerge and change the
different capabilities. Everyone in todays
fundamental dynamics of where and how
extended automotive sector needs to reas-
value is created. Ultimately, the market, in
sess how they will operate and create value
its relentless quest for higher performance
while the four states coexist and in the
at lower cost, will decide who wins and who
loses.

Deloitte will continue to periodically share insights about this evolution as part of an ongoing series. We aim to
contribute to the dialogue as we all collectively wrestle with the impact and implications of the future of mobility.
Our objective is to help to build a bridge between a highly uncertain futuristic vision, the realities of todays
industries, and potential pathways to alternative future realities.

20
 How transportation technology and social trends are creating a new business ecosystem

Endnotes

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cons-a-reality-check-on-alternative-fuels/ www.onstar.com/us/en/services/emergency.
index.htm, accessed September 14, 2015. html, both accessed September 14, 2015.
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aluminum in its new F-150 trucks, reducing cars: 10 automakers to make automatic
weight by 700 pounds per truck. See James emergency braking standard, Forbes, Sep-
R. Healey, 2015 Ford F-150 makes radical tember 11, 2015, www.forbes.com/sites/
jump to aluminum body, USA Today, January lianeyvkoff/2015/09/11/automatic-emergency-
14, 2014, www.usatoday.com/story/money/ braking-to-be-standard-on-10-manufacturers/,
cars/2014/01/13/redesigned-2015-ford-f- accessed September 14, 2015.
series-pickup-f-150-aluminum/4421041/, 7. Craig Giffi and Joe Vitale, 2014 Gen Y
accessed September 14, 2015. automotive consumer study: The changing
3. In September 2015, Google hired John Krafcik, nature of mobility, Deloitte Automotive, 2014,
an auto industry insider, to head its driverless www2.deloitte.com/content/dam/Deloitte/us/
car project, leading to news sources speculat- Documents/manufacturing/us-auto-global-
ing that the company is moving quickly to automotive-consumer-study-100914.pdf.
commercialize autonomous vehicle technology. 8. What do we mean by ecosystem? Botanist
Alistair Barr and Mike Ramsey, Google Arthur Tansley developed the concept to de-
brings in chief for self-driving cars, Wall Street scribe co-evolved and co-dependent networks
Journal, September 13, 2015, www.wsj.com/ of organisms in the natural world; by analogy,
articles/google-brings-in-chief-for-self-driving- in the commercial world, its the set of separate
cars-1442199840, accessed September 14, 2015. but interrelated entities and capabilities that
4. For a more complete discussion of the together comprise a solution to a human need.
connected car, see Simon Ninan, Bharath All these components, in Tansleys words, in-
Gangula, Matthias von Alten, and fluence each other, and their environment; they
Brenna Sniderman, Who owns the road? compete and collaborate, share and create re-
The IoT-connected car of todayand tomor- sources and co-evolve; and they are inevitably
row, Deloitte University Press, August subject to external disruptions, to which they
18, 2015, http://dupress.com/articles/ adapt together. In the realm of transportation,
internet-of-things-iot-in-automotive-industry/. these components include vehicles, infra-
5. There are multiple examples of these structure, forms of energy, services, and more.
technologies, including BMWs Real Time Danone, Arthur Tansley: The founding father
Traffic Information, a navigation system of ecology was an honnte homme, Down to
for traffic avoidance re-routing, and GMs Earth, August 14, 2012, http://downtoearth.
OnStar automatic emergency crash re- danone.com/2012/08/14/arthur-tansley-the-
sponse. BMW, Make progress instead of founding-father-of-ecology-was-an-honnete-
homme/, accessed September 14, 2015.

21
The future of mobility

9. 2014 annual GDP listed at $17,420.7 billion. US en//selfdrivingcar/files/reports/report-0715.

Bureau of Economic Analysis, Gross Domestic pdf, accessed September 14, 2015. One
Product: Fourth quarter and annual 2014, million in this sentence refers to the amount
released January 27, 2015, www.bea.gov/news- driven in self-driving mode, vs. the total.
releases/national/gdp/2015/pdf/gdp4q14_adv. 13. Philip Cardenas, Uber head of global
pdf, accessed September 18, 2015. safety, Our commitment to safety, De-
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losses, or shifts in value for each industry safety/, accessed September 14, 2015.
across each of the four future states described 14. Ford, Ford at CES announces smart mobility
in the paper. Deloitte first analyzed the total plan and 25 global experiments designed to
cost per mile for road passengers today to change the way the world moves, January
evaluate consumers cost of mobility. The 6, 2015, https://media.ford.com/content/
components of cost per mile include depre- fordmedia/fna/us/en/news/2015/01/06/
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maintenance, etc. html, accessed September 14, 2015.
Since the cost-per-mile calculation does not
capture all of the changes implications for 15. Austin Carr, BMW to launch NYC tech
each industry affected by the transformation to incubator with $100 million investment
the future mobility ecosystem, we developed fund, Fast Company, March 31, 2011, www.
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17. Anita Lienert and John ODell, GM and Toyo-
cost per mile today and mapping each cost to
ta take major step toward autonomous driving,
the industry that collects the corresponding
Edmunds, September 8, 2014, www.edmunds.
revenue. We conducted further analysis to
com/car-news/2017-cadillac-cts-to-take-
estimate a future steady state that incorpo-
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specific timeline or adoption curve. Rather, it is project, and former corporate vice president
a blended model of four potential future states of R&D at General Motors, February 2015.
intended to provide directional insights about
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usercontent.com/media/www.google.com/

22
 How transportation technology and social trends are creating a new business ecosystem

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23
The future of mobility

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The future of mobility: How transportation technology and social trends are creating a new business ecosystem is an
independent publication and has not been authorized, sponsored, or otherwise approved by Apple Inc.

24
 How transportation technology and social trends are creating a new business ecosystem

Contacts
Scott Corwin Philipp Willigmann
Senior director Senior Manager
Deloitte Consulting LLP Strategy
+1 212 653 4075 Monitor Deloitte
[email protected] Deloitte Consulting LLP
+1 347 549 2804
Joe Vitale [email protected]
Global automotive industry leader
Deloitte Touche Tomatsu Limited Elizabeth Cathles
+1 313 324 1120 Manager
[email protected] Deloitte Consulting LLP
+1 510 914 0612
Eamonn Kelly [email protected]
CMO, Strategy & Operations
Director Yvette Ellis
Deloitte Consulting LLP Senior manager
+1 415 932 5358 Deloitte Services LP
[email protected] +1 212 653 5905
[email protected]

25
The future of mobility

Acknowledgements

The authors would like to issue special thanks to the following advisers and contributors whose
insight and expertise were invaluable for the creation of this paper: Andrew Adams, Andrew Blau,
Matthew Budman, Jonathan Copulsky, Mark Cotteleer, Craig Giffi, John Hagel, Tim Hanley,
Julia Kirby, Michelle Drew Rodriguez, and Steve Schmith.

Externally, Lawrence Burns, professor of engineering practice at the University of Michigan,

an adviser to Googles self-driving car project and the former corporate VP of R&D and planning
at General Motors, and Ron Goldsberry, retired Deloitte director and Ford executive, provided
significant guidance and deep knowledge in their respective areas of expertise.

In addition, many Deloitte colleagues contributed with their time and industry-specific insight.
Key additional contributors include: Bruce Brown, Andrew Dinsdale, Masa Hasegawa, Joseph
Kwederis, Sean Peasley, and Thomas Schiller from the automotive sector; Christian Grant,
Kevin Matthews, and James Hendrickson from the energy sector; Joe Guastella, Neal Baumann,
Cindy MacFarlane, Bill Mullaney, Sandeep Puri, and Malika Gandhi from the insurance sec-
tor; Gerald Belson from the media sector; William Eggers, Tiffany Fishman, Felix Martinez,
Jim Templeton, and Peter Viechnicki from the public sector; Dan Haynes and Joann Michalik
from the manufacturing sector; Steve Atkins, David Couture, Atin Gupta, Simon Ninan, Andy
Daecher, Arun Perinkolam, and Irfan Saif from the technology sector; Jack Fritz, Nitin Jain,
and Phil Wilson from telecommunications; and Karen Bowman and Scott Rosenberger from the
transportation sector.

We appreciate the strong support and endorsement from Deloitte leadership, including Sam
Balaji, Michael Canning, Ambar Chowdhury, Amy Feirn, Jason Girzadas, Tom Marriott, Jim
Moffatt, and Rich Penkoski.

Last but not least, the authors would like to thank the core team that dealt with the day-to-day
activities and was instrumental to the development and delivery of this paper. The team included
Jacob Darby, Elizabeth Kong, John Krentz, John McGlynn, Katerina Petraki, Veronica Saron,
Zach Shore, Andy Sussman, and Philipp Willigmann.

26
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