Mobility as a Service business model

Exploring the mobility as a service value chain (part 4)

Mohsen Khalkhali
Sep 3, 2019 · 2 min read
Adapted from Smart, Connected Products by Michael E. Porter

In previous posts, we discussed how the “smart vehicle” is at the center of new mobility. Phones evolved from antennas in our pockets to supercomputers in our pockets. Vehicles are evolving from engines on wheels to supercomputers on wheels.

We also discussed how these smart connected and automated vehicles are leveraged by fleet operators that we called AV Network Operators. The services these companies provide are upending the traditional business model of selling a single car to individuals and families one at a time. They are changing it to selling many cars to one or multiple large fleet operators who can lower the overall cost of transportation thanks to superior technology that is being used in their products (vehicles) and operations (networks).

So in effect the business model is evolving from a one-time transaction to an on-going service. Hence, Mobility as a Service.

In the same way that mobile data communication, has become a utility where we either pay on a pay-as-you-go or monthly basis, the business model for mobility as a service will adopt the same familiar model. The ultimate customer benefit is measured in miles traveled, regardless of mode of transport.

MaaS promises to reduce transportation costs to $0.20 per loaded vehicle mile compared to $1.50 we’re currently paying.

Lawrence Burns, a former vice president of research, development and planning at General Motors, and an advisor to Waymo since 2011, writes in his recent book, Autonomy, that a tailor-designed, electrically driven, two-person, shared, autonomous vehicle would cost on the order of $0.20 per loaded vehicle mile. Comparing this to the $1.50 estimate of the cost of owning and operating a car, new mobility system would decrease the expense of convenient transportation by a whopping $1.30 per mile.

Elsewhere, he adds, “for the first time in over a century we’ve got a convergence that lets people have a better experience at lower cost, you can make money by supplying it and it deals with all negative side effects of traditional automobile transportation.”

This is the ultimate customer benefit, better, more convenient, sustainable service at lower cost!

This is the fourth and final post in a series of articles exploring the value chain in Smart Mobility. Caliber AI is a design and deployment partner for AI Pioneers in Smart Mobility, Legal & Compliance and Utilities & Resources. Start building your AI here.

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