Three Distinct, Emerging Automaker Business Models
At the beginning of this year, I discussed my predictions for the automotive industry in 2020; at the top of the list was the idea that there are three distinct MaaS (Mobility-as-a-Service) business models emerging on the market for OEMs to consider. These models are the result of a major convergence of trends – electrification, connectedness, autonomy, ridesharing, data, urbanization, etc. – and if automakers do not consider how they will be impacted by these models, they’ll be in danger of missing an incredible opportunity.
The convergence of the three business models on MaaS and the robo-taxi market is currently being considered a major crossroads by many large-scale OEMs. After months and months of interviews and research into this subject, it’s clear that this could be a big shakeout of the industry, especially when the new entrants are companies like Google, Lyft and Uber. Existing, smaller automakers could be forced to scale down or merge to survive.
MaaS and robo-taxis, in conjunction with advancing automotive technology, could drastically change what it means to drive in the not-too-distant future. If modernized, accessible, affordable and autonomous ridesharing is made available to people – especially in large, tightly populated metropolitan areas – individual vehicle ownership could plunge. The ripple effects of this are numerous, from a reduction in emissions and traffic accidents to an increase in highly personalized experiences and data generation.
At present, OEMs like GM and Tesla are investing in the development of the three business models emerging from this convergence of new technology and services. We could be seeing the actuation of their strategies as soon as this year, though all will need to start relatively small before they’ll be capable of overturning the market. The three business models are as follows:
1. Vehicle and Fleet Operations
Tesla is currently investing heavily in the concept of designing, manufacturing, and operating autonomous vehicles as a fleet for ridesharing. Designed to compete with both public transportation and other ridesharing companies like Uber and Lyft, this service, deemed the “Tesla Network,” could be the first enterprise built on this model to arrive on the market.
The primary difference between existing ridesharing companies and the one that is proposed by this model is the centralization of software and data. Uber and Lyft operate using their proprietary software, of course, but within the Tesla Network, for example, all fleet vehicles would be operable by the same software and technology as only Tesla vehicles will be permitted to be part of the fleet.
2. The “Boeing” Model
The Boeing Model is an option that would allow automakers to maintain a foothold in this market without completely overhauling their existing day-to-day. As others will surely rise to compete with the likes of the Tesla Network, there will be an increasing need for companies that can design, build, supply, and service fleet vehicles all in one fell swoop. The best example of this business model is FCA supplying vehicles for Waymo’s robo-taxi fleet.
Automakers who don’t necessarily have the capital or resources to invest in robo-taxis, fleets, or premium autonomous vehicles may find that the Boeing model is the most realistic way of supporting this urban market. While it won’t require the same level of investment as something like the Tesla Network, it will still require investment in the development of personnel and equipment needed to manufacture parts for electric, autonomous and connected vehicles in the future Robo-taxi fleets.
3. Premium Car Builder
For all the people who will benefit from a driving economy dominated by autonomous ridesharing, there will still be those who wish to own their private vehicles that are not necessarily connected to and operated by a central program (like Tesla’s model). This demographic will likely be suburban and certainly be wealthy – therefore driving a need for a luxury alternative to autonomous vehicles.
Automakers who choose this path will, by necessity, be able to upcharge for the premium quality of parts, software and features. These vehicles could be highly bespoke – think BMW and Mercedes – with the connectedness and intelligence of a Tesla.
Ultimately, these three models represent three different avenues automakers and OEMs can pursue to get on board with the emerging MaaS market. Considering how major players are considering MaaS as the next big shake-up of the industry, companies who have not yet determined how they’ll participate in the future of the automotive industry must consider how they might capitalize on these opportunities.
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