8 Mobility Predictions for the Next 12 Months

Screenshot of the website of The Vintage apartment building in Washington DC, home of the world’s first Uber Room.

We are at a particularly steep point on the change curve of transportation innovation, or mobility, as it is now trendy to call it. App-based ride hailing, TNCs, and the promise of autonomous vehicles just over the horizon, as well as changing land use patterns facilitated by a generation of consumers and workers tired of the suburbs and the ball and chain that the personal automobile has become, are changing local transportation at a rate we haven’t seen since the arrival of the automobile onto city streets a century ago; maybe faster. This is a little bit of amateur numerology, but we are exactly halfway between 2009, when Uber was founded and Google launched its self-driving car project, and 2025, a completely arbitrary date, but one by which it seems reasonable to think that we might have visibility into the next 15 years in a way that we do not today.

So, having essentially given myself the excuse that visibility today is very poor, here are my predictions:

A Waive electric vehicle, monetized by the advertising on its exterior and top. Drivers can rent these vehicles for up to two hours for free. Photo from the Waive.com website.

1. Non-transportation based business models for mobility-as-a-service providers gain traction. These include in-car retail, such as Cargo, which provides an in-vehicle “kiosk” for riders to buy gum, snacks, Advil, etc . — things that in a personal automobile world would have been bought at a gas station; car-exterior advertising, such as Waive, an electric vehicle sharing company in LA where your first two hours are free as long as you don’t mind rolling up to your destination in a giant billboard; and experiential advertising that combines the above and whatever touches the creators would like, as in these campaigns by Coca Cola in Mexico and France. Much of this will be driven by the desire to establish a pole position for when autonomous vehicles arrive with their various and many secondary disruptions of industries other than transportation.
2. States and municipalities start seriously considering their AV strategy, if they have not already created one. At the time of this writing only 12 states and the District of Columbia had autonomous vehicle legislation in place. If you’re a local gov’t and you wait until 2018 to start thinking about how to handle AVs, you are behind the curve.
3. TNCs get serious about shared rides. Uber’s investors, current emergencies aside, are not going to be satisfied with modest, 10% annual growth in their current valuation. They want a 2–3x return for the risk they are taking; this means that Uber has to get to $140–210Bn in market cap in the next 3–5 years. The only way Uber can grow that big that fast is by taking over a substantial portion of trips that are currently being filled by transit or car, and the only way they can do that is by providing service at the lower prices of their pooled service. Uber and Lyft have talked up UberPool and Lyft Line, but now that these offerings have been in service for a couple of years, it is time to demonstrate whether the commitment is real or just lip service and start scaling. As a further benefit to Uber, the more rides it can put on the shared platform, the more it will fulfill on its promise to take cars off the road and alleviate congestion, and the more it will help rehabilitate Uber’s image.
4. Cities get serious about sharing data. Uber thoroughly trounced cities in the first round of Uber vs the Municipalities, convincingly portraying itself as the David against the Goliath of a backwards taxi lobby in a fight over whether Uber would be allowed to operate. Most people’s experience with the taxi industry leaves no love lost, especially outside of NYC; Uber by comparison was magical [1]. It was an easy battle for public opinion.
   This time around though Uber is Goliath, and the debate is not over whether TNCs should be allowed to operate but over what responsibility they have to local governments, transit agencies, and the public at large, as the private companies with perhaps the largest free utilization of public infrastructure in the country (1.2 billion miles driven in 2016 in NYC alone). I expect cities to take advantage of Uber’s current image woes to ratchet up the pressure for them to share the ride data that Uber has zealously guarded and that could be so valuable to cities for transportation and land use planning. New York City already passed rules in February that will requiring all rideshare companies to share data on passenger pickups and dropoffs, starting in August. [2]
5. One or more Uber competitors raise massive rounds to capitalize — literally — on Uber’s current woes. I was speaking with a VC friend over lunch about how crazy it would be if Lyft kept growing while Uber stalled until the latter became the #2. I think this is unlikely for the simple reason that if Uber looked like it was going to decline that much, their extensive list of marquee investors would desperately start matchmaking until they could find a way to get an exit (see below for one possibility). A more likely scenario is that Lyft, as well as smaller competitors like Juno and Via — whose efforts seemed quixotic only a few weeks ago — go out and use the opening created by a wounded Uber to quickly raise expansion capital. How much have these series of missteps hurt Uber, really, in the place where it hurts them the most? In the two weeks following the start of the latest #deleteuber campaign Lyft’s share of ride-hailing receipts jumped by more than a quarter, from 16.5 to 20.8%.
6. “Uber rooms” gain traction as an amenity for upscale residential rental buildings trying to appeal to car-free millennials. The Vintage, an apartment building in DC (see screenshot of their web site at the top of the page), made a splash last year by announcing that it would not have parking but would have an “Uber room” where residents could wait for their ride in style, oriented so that people can view their Uber car pulling up, and filled with ways to pass the time while waiting like a TV, magazines, and fireplace, as well as a TransitScreen, a realtime display of local transportation options. Expect to see more such amenities as part of the toolkit cities use to encourage and facilitate a car-free lifestyle. It will be interesting to see if any municipalities adopt the “Uber room” into their TDM code. On the one hand its presence nudges residents in the direction of the car-free lifestyle as well as greater awareness of other transportation options through the TransitScreen installation. On the other hand, if the only mode shift that results is people who were already car-free taking more Uber rides in lieu of biking or transit, then it will actually be contributing to street congestion.
7. Personal transportation spend tracking and optimization becomes a thing. The average American household spends nearly $10,000 on transportation — the second largest expenditure category after shelter. While in a low-data, low density, single-mode (personal car) world all decisions were made on an immediate time horizon basis, generally not rising above the complexity of, “Should I save money by looking for free street parking or save time and pay $20 to park in a garage?”; in a high-data, increasingly dense, multi-modal world, consumers have a dizzying array of options [3]. Then you have the different ticketing options — monthly/weekly/daily pass vs single ride, bulk discount on transit tickets (e.g. 10% for a book of round trips), solo vs pooled ridesharing (e.g. UberPool, LyftLine). There is no way you can keep track of how much — or simply how — you are spending on transportation. And there is a good chance you are not spending it efficiently. Should you get that monthly pass for the bus, or would it be better to pay per ride? If you pay per ride, how much should you put on your card? How many late night Ubers are you taking, anyways; how much money would you save if you switched those to UberPOOL, or Via; vs how much extra time do you save by not taking these? Should you sell that car you’re paying for parking and insurance on right now, but not really using? What about the time you save from being able to drive point-to-point when you do need it? Or the time you lose, because of the traffic and the need to park? Etc.
8. Uber exits in an M&A transaction to an auto industry OEM. This is my “thought experiment” prediction, the one that is the greatest reach to actually come true, and yet is not impossible. If the exodus of talent at Uber continues, and the business ever really starts cratering, investors will become desperate to get out. Early investors, because many of them have staked a huge part of their reputation on being “early investors in Uber” (imagine going from having the reputation of an early investor in Facebook to that of an early investor in Friendster, and you can get a sense of what it must feel like to be Jason Calacanis right now); late investors, because they have poured enormous sums of money into this company that they would prefer not to lose. The biggest challenge, as my VC lunch date pointed out, would be clearing the preferences. With over $17Bn raised, the preferences could easily reach $25–30Bn. Given the size of the industry at stake and the number of players that are terrified for their future, however, it is not outlandish to imagine such a transaction happening. For a company like Toyota, with a market cap of around $180Bn and $47Bn in cash on their balance sheet, who has already partnered with Uber and made a strategic investment, this is easily digestible (on the financial side at least). For Daimler, at $80Bn market cap and ~$25Bn in cash, it would be a little tougher but not impossible. Then there is the whole block of OEMs in the $40–50Bn range, including GM, Ford, Honda, and Tesla[4], for whom this would be more of a merger, at least financially. There are a lot of practical and company cultural issues with this idea but at least the change of management would reassure the riding and driving public and prevent those constituencies from jumping ship.

[1] Even Bruce Schaller, author of the headline-grabbing report finding that Uber is creating additional gridlock in NYC, admits Uber has a great product that six years after launch is still light years ahead of the yellow cab experience.

[2] Perhaps some cities will offer a sweetener to get the TNCs to go along, and this will also be the year that we see the long-discussed “curbside access” get traded to the TNCs in exchange for this concession. I suspect, however, that in most cities the political will is not there yet for the loss of parking that this would create, except, perhaps, for a trial corridor.

[3] So many in fact, that even listing out the set of options that came to me in the moment, I decided to list them in a footnote rather than clog the main post: two-way car share (ZipCar), one-way car share (Car2Go), ridesharing apps (Uber, Lyft, etc), dynamically routed transit (Via), old-fashioned street-hail taxis, carpooling, subway, bus, regional rail, bike share, personal car,and of course walking

[4] Of all of the OEM exit outcomes I’ve theorized, giving Uber to Elon Musk by merging it into Tesla would no doubt be the choice of Uber’s Silicon Valley investors, and it is interesting to contemplate how that combination might do.