Did you know about shared mobility?
- More than 40,000,000 e-hailing trips have been booked every day on the two largest e-hailing platforms
- E-hailing Market accounts for more that 90% of consumer spending in shared mobility worldwide?
- The number of e-hailing trips nearly tripled over four years, and the number micromobility trips more that doubled in one year?
- Auto players only made 5 percent of all investments within the shared mobility sector?
- According to McKinsey’s 2020 ACES consumer study, more that 60% of respondents would share their shared-mobility ride to a stranger if it would add less than 15% to their travel time and reduce their cost.
The concept of shared mobility is deeply rooted. The idea of shared mobility dates back to 1940s Switzerland. It has since expanded to include micromobility options such as bicycles from the 1960s. Since then, the modern ride-hailing industry has seen significant growth.
New services and modes have emerged in recent years. These include peer-to-peer car-sharing (driving someone else’s car), shared electric scooters and pooled ridesharing. This indicates a large potential market for the mobility sector. Autonomous taxis (also known as robo-taxis), and airborne versions are the next big thing. These have experienced a significant investment acceleration and traction over recent months. Sidebar “Shared mobility’s many modern face” provides more information on how segmentation affects shared mobility.
This article explains the different segments of the share-mobility market. It also provides an assessment of the market today and a perspective on its current status. Particular attention is given to market size, investments and consumer sentiment. Our outlook for the future is also presented.
Understanding today’s shared-mobility market: Market size
In 2019, the global share-mobility market, as defined in the sidebar, accounted for $130 billion to $140 million in consumer spending. E-hailing was the most popular, accounting for $120 billion to $130 million, or more than 90% of the market. Peer-to-peer and car-sharing account for less that 10 percent of the market. This is due to e-hailing’s greater convenience, where the customer can drive, spend time on other activities and doesn’t have to park.
The statistics shows how trip development has changed over time. All data indicates how e-hailing remained a dominant player in the shared-mobility marketplace from 2016 to 2019. It showed massive growth (trips tripled) over these four years. The evolution of shared micromobility is even more impressive. While electric-scooter sharing was not a dominant role in the market before 2017, it increased in 2018 and 2019, from fewer than 1,000,000 trips in 2017 to over 160 million trips in 2019, if you look at the biggest players. Micromobility, which includes shared and private micromobility, could have a global consumer-spending potential between $300 billion and $500 billion by 2030. This is three to four times greater than the current global e-hailing market. As the pandemic ends and normal activities resume, this amount could rise even more.
Understanding today’s shared-mobility market: Investments
More than $100 billion has been spent in shared-mobility businesses since 2010. When you look deeper at the types of investors involved in investing in shared-mobility businesses, you will see that it is not just automotive companies. Venture capital and private equity have accounted for around 72 percent of all disclosed investment since 2010. This suggests that investors are betting on the future, rather than existing and sustainable business models. At 21 percent, tech players come in second place while investments in automotive companies are at 4 percent. The traditional automotive industry’s poor showing could be due to shared mobility’s potential disruption of an automotive player’s core business. Some OEMs have tried to address the problem internally rather than investing in new start-ups. This shift in mindset is a result of shifting from selling cars to sharing-mobility services. However, the latter could even negate OEMs’ core business selling cars to individuals.
“Since 2010, over $100 billion has been invested into shared-mobility businesses.”
More than $95 billion has been invested in e-hailing. Nearly half of all ehailing investments have been made by the three largest global players. Investors seem to find e-hailing attractive because it allows them to have (asset-free!) access to drivers and customers, rather than building vehicles and fleets. It’s an investment in the future, however. The potential for robo-taxis and shuttles to be a game-changer in the e-hailing industry (due to lower operating costs than driver-based services) is why investors are eagerly awaiting for industry players to commercialize autonomous driving technology and make it profitable on a large scale.
The market for shared-micromobility continues to grow and has seen a significant investment acceleration. Although shared electric scooters were introduced to the market on a large scale in 2017, share-micromobility players already have funding investments of over $9 billion. This puts them second behind ehailing. This is due to the rapid uptake of shared-micromobility trips, as described in the section on market size.
At $3 billion, investments in car-sharing are smaller than e-hailing investments. Some OEMs create car-sharing services in-house, and can offer their customers the chance to add their vehicles to the fleet at a lower price point. This gives start-ups an advantage in terms of operating costs. The market changes outlined in the preceding section also reflected the lower investments. Although the number of car-sharing trips was relatively low, the number of e-hailing rides almost tripled. The number of electric-scooter trips increased exponentially. This indicates that asset-light businesses such as those that offer micromobility or e-hailing require lower investments than businesses that have high asset requirements, like car sharing. E-hailing is able to solve some of the consumer problems and challenges that car-sharing services face. These include driving in congested traffic, finding and walking to your vehicle and parking it at the destination.
The most rapid increase in investment in advanced air mobility has been in flying taxis. This sector saw an exponential rise over two to three years, with more than $8 billion invested as of June 2002. This capital is also more concentrated among a handful of players, which could give these players the financial power to make advanced air mobility a reality within the next decade.
Shared-mobility companies have been able to surpass traditional automotive companies in terms their valuations. Global leaders in e-hailing have the highest valuations, surpassing long-established German automotive OEMs. Although the share-micromobility market’s valuations are lower than today, they have shown strong acceleration and some players even achieved unicorn status within a few years.
Understanding today’s shared-mobility market: Consumers
Private vehicles are still the most preferred mode of transport in nearly every country. Globally, 67 per cent of respondents to the survey said that they used their private cars frequently (that is, at most once a week), while 38 percent reported using public transport frequently. Consumers today use car sharing less than they used public transportation, reflecting the smaller number of trips. Consumers in Brazil, China and the United States are most likely to use e-hailing. In China, 90% of respondents stated that they use ehailing at least once per week.
Survey respondents stated that convenience is their primary reason for using shared mobility. This is due to the dominance of ehailing over all other shared-mobility modes. Shared-mobility services are characterized by safety, which may be due to the COVID-19 crises at the end 2020. They also offer competitive prices and accessibility. This last aspect may be crucial for shared mobility’s long-term ability to replace private car ownership. German consumers consider availability to be the most important aspect.
Private vehicles are the preferred mode of transportation for commuting, the most important use case in mobility, particularly in the United States. China has a similar preference, largely due to the uneven distribution and use of cars. However, if all modes of transportation were available, 33% of Chinese respondents would prefer shared mobility for commuters, with private cars in second.