NatWest Future Fit: transformation in transport

On the third day of the NatWest Future Fit Week, speakers predicted the travel habits of the future in a world offering ride-sharing, autonomous vehicles and Mobility as a Service.

The event, named ‘The future of mobility and transport’, showed that the countdown for this revolution in how we travel has already begun. Simpson admitted that three years ago he would not have thought he would be part of a cross-industry working group, creating a fleet of autonomous taxis in London in the next two years – nor that TfL (Transport for London) would be discussing how to award the first batch of licences for them.

Data predicts that, in 10 years, 100% of new cars will be connected, 10% to 15% of them will be fully autonomous, and in China and India 100% of cars will be electric. “We keep saying these transformations are five years away, but they’re not. We’re in the middle of them now. And the decisions we make now will have significant impact in the next 10 years,” Simpson warned.

“We're heading into a maelstrom of disruptive change in mobility and transportation … for your own business models, for your supply chains, for your opportunities and threats,” said Ian Isaac, managing director of Lombard.

Isaac pointed out that mobility is one of the future technologies that will affect us all, even if it is just our journey to work, “and so whenever you talk to anyone about the future of mobility, everyone has an opinion”.

In a quick poll, he asked the audience to tell him which words they associated with the impact of innovation in mobility. It generated almost as many descriptors of the impact as there were members of the audience, ranging from “annoying” to “heaven”. But two words dominated the responses: it would be both “challenging” and an “opportunity”. Ian Isaac, managing director of Lombard.

Every part of society will be encouraged, or forced, to change its attitude to travel. Government regulators are trying to incentivise the transition to electric vehicles (EVs), but also trying to work out how they provide the infrastructure for them. Car manufacturers, public transport providers, power companies and regulators are finding ways to co-operate, realising they need each other if these changes are to be successful. And, of course, as citizens we have to work out what sort of transport we want in future, and how we want to access it.

Changing strategies

The cost of developing those electric and autonomous vehicles, designed to last for longer and maybe used almost continuously as they are shared, is already upending the economics of the auto-manufacturing business. In January 2019, Ford and Volkswagen announced that they had entered an unprecedented alliance to co-operate in building light trucks, electric and autonomous vehicles.

Fiona Ghosh, a partner at Addleshaw Goddard, is lead external legal adviser for Volkswagen. “This is the largest industrial alliance in the world,” she said. “It is of market-changing size.” Each side will manufacture for the other – for example, Ford will manufacture the Amarok van for VW, based on its Transit chassis. And VW will provide an electric mobility platform to Ford.

From left: Fiona Ghosh, partner at Addleshaw Goddard and lead external legal adviser for Volkswagen, and Maler James, group corporate & regulatory, M&A and foreign holdings of Volkswagen Group.

“R&D costs are rising at an exponential level. The only way to remain competitive in niche markets is to co-operate,” added Maler James, group corporate & regulatory, M&A and foreign holdings, at the Volkswagen Group. “We cannot continue to conduct our business as we have in the last 100 years.”

Part of the reason traditional manufacturers are being forced to adapt is the huge number of new entrants in the EV market, which don’t have 100 years of history. Max Toozs-Hobson, who works in business relationships at Tesla, explained that the company’s cars are manufactured, costed, sold and serviced using a fundamentally different concept to traditional manufacturers.

R&D costs are rising at an exponential level. The only way to remain competitive in niche markets is to co-operate. We cannot continue to conduct our business as we have in the last 100 years

Maler James
Group Corporate and Regulatory, M&A and Foreign Holdings, Volkswagen Group

“I mean this nicely, but once you have purchased a car from us I don’t want to see you for three years,” he joked. “90% of Tesla faults can be diagnosed remotely, and you can book an engineer to come to you using our app.”

Max Toozs-Hobson works in business relationships at Tesla.

New competitors are letting their imaginations run ahead of current regulation, building for the future. For the last three months, Tesla has been shipping all its cars with the hardware to make them fully autonomous in the future, but only when the regulator permits it. “You know how annoying it is in car parks when you can’t find your car. So imagine if your car came to find you? This is where we are today, with the technology we already have,” Toozs-Hobson added.

Creating new habits

But perhaps the biggest innovation will occur in our behaviour. There is already evidence of changing habits: Generation Z don’t have the same driving need to own their first car when they have Uber, and applications for driving licences among teens have been falling for many years.

FiveAI is testing its autonomous driving software in two London boroughs at the moment, and has just started taking members of the public on its test runs. This is partly to find out how much customers will want to know about what an autonomous car is doing, said Lucy Yu, director of public policy at the company. “A driver spends 200 hours in congestion in London every year. Think how we could use those extra days that will be given back to us,” she says. But to get back those 200 hours, we have to learn to relax without our hands on the wheel. If we’re given too little feedback about what the autonomous software is doing, we might feel unsafe as a car manoeuvres through city streets. But, given too much information, we might become overwhelmed, and be no better off than if we were driving it.

Lucy Yu, director of public policy at FiveAI.

We may also adjust our transport choices. Already, 60% of today’s car trips are in the “micro mobility market” of less than five miles, explained Jean-Marie Vial, automotive senior expert at the digital-platforms provider Conduent. In urban environments, we are replacing these trips by mixing modes of transport for a single journey, hiring e-scooters, hopping on to buses, using taxis if we need speed. Co-ordinating this mix-and-match creates Mobility as a Service (MaaS) applications, managing various forms of transport in a single on-demand service.

Jean-Marie Vial, automotive senior expert at Conduent.

Already there are nascent MaaS services springing up in cities like Helsinki, where citizens use an app called Whim. It offers a pay-as-you-go option, as well as a monthly contract from around £99 that includes unlimited access to public transport, taxis and car hire. Conduent is helping to create the software for this type of MaaS, but Vial warned that it will require creative public-private partnerships to work much better than it does today.

There is an incentive to co-operate. The prize for getting mobility right is huge. By 2030, KPMG research predicts these efficiencies may be an opportunity to increase UK GDP by between £50bn and £100bn, while simultaneously creating a greener environment. “We are often asked which sectors are being impacted by this,” Simpson added, “but it’s quite hard to find one that is not being impacted.”

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