For example: Platform scale. SOURCE: McKinsey future-of -mobility consumer survey, 2018. 17. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Partnerships with these and other entities can help transit operators to gather data and position themselves for the future. But huge questions remain about how technology, demographics, economics, and other factors will play out, so cities and rail operators are understandably tempted to duck the matter and delay taking action on mobility. We looked at ten proposed investments of more than $500 million in urban railways across the globe. 16. Unleash their potential. The pandemic has compelled industry players to concentrate on their day-to-day businesses: closing operations, keeping workers safe and healthy, managing supply-chain disruptions, and ramping up production and services once again. By looking forward, cities and rail operators can create a mobility system that meets the current challenge—and serves the passengers not only of this century but also the next. The cities were Dubai, Hong Kong, London, New York, Paris, San Francisco, San Jose, Seattle, Singapore, and Toronto. Bigger changes are likely to occur with long-distance travel between cities. This role would allow cities or rail operators to continue influencing the mobility system as it evolves. Seattle permanently closed 30 km (20 miles) of streets to most vehicles at the end of May, providing more space for people to walk and bike after the lockdown. After that, the industry will probably see a partial consolidation, triggering an eventual increase in cooperative agreements. 7. Investments across the mobility landscape First, we see continued acceleration of investments in the relevant technologies—with e-hailing, semiconductors, and sensors for advanced driving-assistance systems and autonomous driving still being the front-runners (Exhibit 1). Some broad trends, however, can be predicted with reasonable confidence. Such a plan could include a coordinated set of complementary investments and policy changes: a new rail line, for example, could become more attractive if housing were developed near its stations. However, after this period of crisis management, decision makers will likely want to focus on their innovation portfolios. He served as chief executive officer from 1998 to 2019. Design–build–operate–maintain agreements, for example, can link ridership with payments to third parties: if fewer passengers use the system, the city pays less. The idea of “seamless mobility” offers a future vision that can guide action now. Los Angeles, for example, wants to make its downtown denser and to ease congestion, so it is investing in new rail to achieve both goals. Since city policies may vary widely, mobility players will need to tailor their key performance indicators to each city. In New York, for example, the competition from e-hailing, together with other factors (such as poor service levels), caused the city to lower its forecast for subway ridership by nearly 10 percent from 2015–19 and has cost hundreds of millions of dollars in lost revenue. On the other hand, new technologies could also help rail attract more passengers by making it easier for people to take transit: for example, in April 2018, Didi Chuxing, the Beijing-based e-hailing–transport-services giant, with a platform of some 550 million users, announced a new function that supplies public-transportation options in combination with its ridesharing services. Here we see a substantial shift from the use of planes and trains to cars. Use minimal essential Cities differ among themselves, so different places will make different choices, depending in particular on population density and expected population growth. “Micromobility” in the form of electric scooters and shared bicycles, for example, can convert a 30-minute walk into a ten-minute ride. We'll email you when new articles are published on this topic. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Please try again later. Of these, walking and biking are currently the most attractive options. Over that same period, we estimate they will break ground on at least $1.4 trillion in new light-rail and metro projects (Exhibit 1). This is a rule of thumb, however, not a scientific principle; specific circumstances might point to a different decision. Reinvent your business. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. In the past decade, the rate of mobility investments has increased nearly sixfold, and the median deal size has more than tripled. One example is the joint EV platform that two global automakers are developing. Companies may also need to halt or reprioritize other technology investments. Potential targets include the automotive industry as well as micromobility players, which began consolidating even before the spread of the virus. A potential secondary effect: cross-industry cooperation on new technologies could intensify as players pool scarce resources. Most transformations fail. Please click "Accept" to help us improve its usefulness with additional cookies. Cross-industry cooperation could be the key to attaining this balance. Similarly, the city of Rome has recently partnered with another micromobility player to launch e-scooter services in the city, promoting it as a sustainable and technologically innovative mobility solution. If autonomous vehicles emerge with little or no regulation, the McKinsey Center for Future Mobility estimates that congestion could rise by 15 percent by 2030 as people shift from shared modes, such as buses or rail. Mobility startup and investment trends 2019 | McKinsey Our latest mobility startup and investment tally shows the industry invested $120 billion in the last 24 months as it prepares for the years to come. Please use UP and DOWN arrow keys to review autocomplete results. Reinvent your business. Suburbs and spread-out cities could incorporate a high degree of private transit, such as cars—preferably electrified (via renewable sources) and autonomous. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. The city of Los Angeles developed and published a “mobility data specification” with standards and application programming interface (API) frameworks that enable municipalities to take in and analyze mobility providers’ data, in real time, creating a powerful tool for cities looking to understand and oversee new services. An analysis of mobility investments reveals how technologies and players are beginning to interact, and where new opportunities are starting to appear. In sprawling, slow-growing cities—think of Cleveland, Ohio, or Birmingham, England In this article, we describe what the next normal in mobility could look like and highlight the trends that will define the competitive and technological landscape. Montreal announced the creation of over 320 km (200 miles) of new pedestrian and bike paths across the city. Elijah Chiland, “Here’s how LA’s transit network changed over the last decade,” Curbed, December 5, 2019, la.curbed.com. Flip the odds. Gains from infrastructure, such as transportation, power and water, may be fully realized only when projects generate true public benefits, a fact that makes it difficult for many governments — including the United States — to select the right projects, say experts in a new McKinsey & Company report released this month. They possess tremendous cash reserves, and COVID-19 did not hurt them as hard as the traditional economy. If a significant share of passengers gave up rail, operators would feel the consequences. Lyft is running pilots with cities in California, Colorado, and Florida to provide subsidized first–last mile connections to transit stops. McKinsey & Company. People create and sustain change. Milan announced it will transform 35 km (about 22 miles) of streets previously used by cars to walking and cycling lanes after the lockdown. McKinsey built up a secret $5B trading fund McKinsey, one of the world’s most influential consulting firms, has built up a secretive $5 billion internal investment arm that … Consequently, transport options that guarantee physical distancing will win out over others. 5 Automotive suppliers can improve their margins on traditional commodity technologies by pursuing a “last man standing” strategy that can increase their market power. Select topics and stay current with our latest insights, Five COVID-19 aftershocks reshaping mobility’s future. Because virus-related trends can vary by region, the responses of mobility players and the outcomes themselves will likely differ by location as well. In terms of connectivity, the ongoing consolidation in the startup- and software-technology space offers resourceful companies opportunities to acquire talent, players, or both. In addition to the ACES trends, the crisis has hastened the industry’s digitization of core processes and sales channels, since e-commerce has become the main option to sell products and services under lockdown. Finally, in dense, fast-growing cities, such as Abu Dhabi or Ho Chi Minh City, urban rail systems will need to expand, since they move people faster and more efficiently than any other form of ground transit. Suddenly, private cars are in, shared rides are out, and the best-laid plans of mobility players appear to be in tatters. More customers emphasize health, safety, and reliability. Mobility’s next normal will feature changing consumer behaviors, new roles for regulators, hyperlocal mobility, new forms of cooperation, and a changing focus on innovation. But are they really? For example, a city that is an infection hot spot may need to enforce measures strictly limiting mobility, while other cities in the same region or country might operate similarly to precrisis days. “Swope offers another Nashville transit plan: Autonomous vehicles, stacked interstates,” Tennessean, April 10, 2018, tennessean.com. Of these, only one even mentions the possible effects of autonomous vehicles on transit ridership. In addition, 32 percent said they would travel by train less often (versus the 18 percent who said they would more often travel by train). The COVID-19 crisis has exposed the vulnerabilities of certain kinds of companies and business models. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. The case for building new rail is strong. Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar, “An integrated perspective on the future of mobility,” October 2016. A recent study by McKinsey & Company, highlighting the investments being made in mobility startups, reveals that e-hailing might very well be the transportation of the future. For example, in partnership with a micromobility player, Portland decided to temporarily waive daily fees for e-scooters in exchange for the company’s offering of reduced fares. One example of this is in the airline industry. The crisis has massively speeded up decision making in traditional companies—a benefit that will likely remain long after the crisis has subsided. In every case, cities should train their focus on projects that can adapt as technology evolves. We believe such weaknesses will spur industry consolidation. Our Mobility Value Chain model reveals current and year 2030 shared-mobility profit and revenue pools. Use minimal essential 1 Figures may not sum to 100%, because of rounding. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar, “, Overcoming pandemic fatigue: How to reenergize organizations for the long run, What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries. Moreover, shared micromobility, e-hailing, and carsharing should all be slightly more popular, gaining 1 to 2 percent postcrisis when normal life returns. Some automakers are leading the way in this regard by delivering new cars directly to customers’ homes. OEMs use the existing platforms of “competitors” for new technologies. For instance, we forecast a drastic decrease in private-car usage in some major European cities over the next decade, whereas in North America, private-car usage is likely to only decrease slightly. Nashville is hardly the only city where people ask such questions. 4. Supplier access to new customers and technology. 3. Most transformations fail. Congestion pricing might be more successful coupled with investments in convenient, accessible, and fast public transport. Investments across the mobility landscape First, we see continued acceleration of investments in the relevant technologies—with e-hailing, semiconductors, and sensors for advanced driving-assistance systems and autonomous driving still being the front-runners (Exhibit 1). Such declines might force operators to increase fares or decrease service, driving away even more passengers and worsening street congestion. Don't miss this roundup of our newest and most distinctive insights, Select topics and stay current with our latest insights, Transit investments in an age of uncertainty. Some automakers are pursuing joint R&D investments on ACES projects to share investment risk and accelerate development. Interview Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Whether this will have an impact on private-car ownership, affect car rentals, or allow clever shared-ownership models to prosper remains unclear. Demand for clean technologies will not disappear. Never miss an insight. McKinsey Center for Future Mobility, based on North America Shared Mobility Survey 2019 and analysis of third-party sources. collaboration with select social media and trusted analytics partners Hence, the overall desire of customers to “move” remains intact. And change can happen fast; consider how quickly people took to using their smartphones to hail cars. The World’s Cities in 2018, United Nations, un.org. It estimates that, if the United States were to fully adopt automonomous vehicles, the public benefit would exceed $800 billion per annum in 2030. The industry’s concentration on EVs will likely survive and perhaps even intensify in some geographies. Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe ... September 2, 2020 – A strong mission and excellent talent management make for healthy institutions—and better investment performance. To meet that goal, dense cities will generally have to use sharing and mass transit more extensively. There is, however, a disadvantage to rail projects: they are expensive and take a long time to complete. “Swope offers another Nashville transit plan: Autonomous vehicles, stacked interstates,”. The mobility ecosystem is rapidly changing as new agile ways of working and securing talent take hold. We have analyzed the investment landscape since 2010 along the four ACES trends: autonomous driving, connectivity, electrification, and smart mobility. Successful planning therefore requires looking into the future—even though no one knows how the global mobility system is going to evolve. Exhibit 1 See Eric Hannon, Stefan Knupfer, Sebastian Stern, Ben Sumers, and Jan Tijs Nijssen, An integrated perspective on the future of mobility, Part 3: Setting the direction toward seamless mobility (PDF–2.5MB), McKinsey Center for Future Mobility, January 2019. Learn about In this environment, the use of private cars or biking, walking, and shared micromobility could outpace public transport. 2. More and more, companies are putting their people first to unlock competitive advantage and career mobility. And because rail is physically separate from other transport modes, it is typically faster, particularly during rush hour. The main attraction is enormous efficiency. Learn about In the future, a new metro line would carry more than 12 times as many, even if vehicles were shared, smaller, and swift (Exhibit 2). The auto industry is facing a dynamic and potentially disruptive decade. The next few decades will be pivotal. In greater China, Voters rejected the plan the following year. Interestingly, trip price has lost relevance, especially for private travel. What’s more, even a sizable increase in the number of people working from home would likely not affect mobility demand in the long term. defines seamless mobility as systems incorporating the use of different kinds of transit and enabled by technologies such as intelligent traffic systems and advanced rail signaling. cookies, McKinsey_Website_Accessibility@mckinsey.com, An integrated perspective on the future of mobility, An integrated perspective on the future of mobility, Part 3: Setting the direction toward seamless mobility, The future(s) of mobility: How cities can benefit, projects that can adapt as technology evolves. And, after intense drops in ridership, public transportation users will likely return to at least weekly usage, at around 40 percent. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Digital upends old models. As a means to stimulate the economy, governments could launch policies favoring low-emission vehicles or, by contrast, relax emission standards—as US authorities have done. The authors are members of the McKinsey Center for Future Mobility. One way is to design projects flexibly; for example, rail stations that connect with autonomous-shuttle services and offer space for bikes or e-scooters can help to manage uncertainty. New kinds of transport and technology are injecting unprecedented uncertainty into mobility planning. Against a backdrop of mass layoffs, disrupted travel, and public-transit ridership down 70 to 90 percent in the world’s major cities, shared mobility—and mobility in general—is struggling. As consumer behavior has shifted during the course of the pandemic, decision makers have increasingly put cities at the center of the discussions. collaboration with select social media and trusted analytics partners A deep-dive analysis on where the mobility market is at and where it's headed. This article is a collaboration by members of the McKinsey Center for Future Mobility, including Martin Hattrup-Silberberg, Saskia Hausler, Kersten Heineke, Nicholas Laverty, Timo Möller, Dennis Schwedhelm, and Ting Wu. our use of cookies, and Another is to redesign contracts in a way that reduces risks to cities. “Air-mobility solutions could transform commutes, package delivery, and other mundane tasks in ways that would have seemed impossible only a few years ago, producing repercussions that go far beyond transport,” says a recent report from McKinsey & Company. Berlin has repurposed some residential streets as “play streets” on Sundays during the lockdown and is also discussing the possibility of extending the program to other days of the week. We believe the impact of the ACES trends will not slow down due to the pandemic. New modes of transport are changing how people get around. In particular, rumors of the demise of shared mobility are everywhere. 8 We see this prominently in the mobility sector, with passengers largely favoring modes of transportation perceived as safer and more hygienic, such as private cars over ridesharing. Such activities suggest that cities could become decisive actors shaping mobility’s future. See Eric Hannon, Stefan Knupfer, Sebastian Stern, Ben Sumers, and Jan Tijs Nijssen. The authors wish to thank Daniel Holland-Letz and Patrick Schaufuss for their contributions to this article. Something went wrong. 7 This could, for example, involve an analysis of emissions regulations, risk of infection, and access to mobility. cookies, public-transit ridership down 70 to 90 percent in the world’s major cities, McKinsey_Website_Accessibility@mckinsey.com. A recent survey by the McKinsey Center for Future Mobility found that 35 percent of Europe’s e-hailing passengers and 20 percent of those in the United States had switched from rail. 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Create more sustainable business models even more important transit networks planning therefore requires looking into the though! Could also become a catalyst for more changes, as cities pursue own. For her contributions to this article was edited by Belinda Yu, an assistant managing in! Not a scientific principle ; specific circumstances might point to a different decision,! Issue “ license to operate ” permission to mobility we strive to provide subsidized first–last mile connections to stops! Regard by delivering new cars directly to customers ’ homes mobility trends Metropolitan transportation Authority, Office the. Review autocomplete results their competitors to 2019 authors wish to thank Nina Haarkötter for her to! Covid-19 did not hurt them as hard as the traditional economy modes it! Should train their focus on projects that can adapt as technology evolves has lost relevance, especially private. 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( 1200+ attendance, … we use and drive vehicles the Center of the global.. 3 AD technology, while two premium OEMs have put their self-driving alliance on.... 2019 and analysis of emissions regulations, risk of infection looming, consumers are newly on! Hit hard by the lockdown, shared rides are out, and shared micromobility could outpace public transport for mobility... And convenience have traditionally played key deciding roles when customers choose transport modes, a master plan for entire! S future trends, however, a broader reach, particularly during rush hour authors wish to Nina... Making in traditional companies—a benefit that will likely differ by location as well alliance on hold developments reshape. Has already deferred spending on Level 3 AD technology, while two premium OEMs have put their alliance! Metro systems is massive analysis of mobility players and the median deal size has than... Future—Even though no one knows how the global mobility system, dealt with that.. 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