On November 10th, INVERS held its first ever mobility meet-up – INVERS Share. This exclusive gathering with selected industry leaders in mobility took place aboard a solar-powered CO2-neutral conference ship sailing in the Spree River in Berlin, the European mobility capital. This shared mobility event, which included curated panel discussions, was also a great networking opportunity for the 70 C-suite and mobility experts attendees from 40 companies, and 12 different countries.
The main goal of the event was to bring Shared Mobility’s greatest minds together to discuss the hottest industry trends, to share experiences, find solutions for pressing challenges, and to create partnership opportunities. At INVERS, we believe that by joining forces we can push the shared mobility market even further.
Below is our recap from the INVERS Share event’ main discussion topics:
Blurring of Business Models
We have seen many forms of shared mobility business models arise; from free-floating and station-based to corporate carsharing, peer-to-peer, rentals, subscription, leasing, and many others. Despite these different evolving usership models vying for customers, now more than ever we see a strong trend towards cooperation, merging of business models, and new partnerships taking place. Some examples we discussed at the event:
- Players from the carsharing space are looking to cooperate with car rental platforms. MILES and FLOYT (previously known as Billiger-Mietwagen.de) working together are a good example here.
- Carsharing operators like MILES have just recently launched their car subscription services.
- Car subscription players are partnering with peer-to-peer sharing players to increase asset utilization, for example Hiyacar, a P2P player launched “Subscribe and Share”.
- Leasing companies (such as ALD Automotive) are entering the car subscription space.
- Car manufacturers are experimenting with new forms of mobility – carsharing, subscription, long term rental. Some examples include: Toyota Kinto, Volvo on Demand, and Renault Mobilize.
Consequently, there are immense growth and collaboration opportunities within the shared mobility space.
Costly, Under-Utilized Assets
Private car ownership is costly.
- For the owners, cars are one of the most expensive assets they own, and ever-increasing fuel prices are raising operating costs.
- For the environment and our cities, in terms of pollution, congestion, and parking spaces that could otherwise be put to much better use.
And yet, they sit unused for 96 percent of the time. To lower these costs, we need to invest in building a cultural and mindset shift, away from vehicle ownership. We should create early awareness and understanding of the environmental ramifications of every person’s mobility choice. Although somewhat late, this movement has already started. Millennials are opting for environmentally friendlier mobility options and short-term cost reductions. That is why, private car ownership rates within this demographic have dropped dramatically in some developed countries, and the demand for rental cars has skyrocketed in recent years, with forecasts of even steeper growth in the years to come (from 200M in 2022 to an estimated 602M by 2026).
Privately-owned cars, being costly and under-utilized, can be the fuel to push people out of private ownership and into shared mobility alternatives. However, accelerating the movement from ownership to usership requires providing mobility solutions fit for our times.
Access is the New Ownership
Creating an effective, integrated urban mobility system starts with understanding consumers’ expectations. Users are becoming increasingly tech-savvy and are looking for on-demand mobility services that are effortless to use and integrated into their daily lives. They want fast, reliable, keyless, contactless, app-based services; different mobility options, whenever and wherever needed; getting a ride at the push of a button, or easily renting or sharing a car that also complements and supports the use of public transportation; all while being affordable and fair-priced. In a nutshell – accessible, in every aspect possible.
But the question remains, how can cities and shared mobility operators provide more accessible mobility options?
Solving the Mobility Challenge in Megacities
City authorities and shared mobility operators need to work together to remove all barriers and friction in the use of public and shared fleet alternatives. That means providing a completely seamless user experience from the start to the end of the journey.
From the city authorities’ side, they need to rethink public policies and offer more lenient regulations to shared fleet operators. An example brought up among the event’s panel participants was that authorities could reserve preferred parking and curb-side spaces in attractive locations (e.g., central business districts, shopping/retail areas, etc.) for shared or pooled mobility only. They could provide these parking spaces at a significantly discounted rate compared to privately-owned vehicle parking rates. Some cities have already implemented such measures, Oslo was discussed as an example.
On the shared mobility operators’ side, they need to stop thinking in terms of silos. They should look beyond short-term business gains and competition for market share and get into a collaborative mode. For example, open data sharing with other operators and city authorities can help cover peak-hour mobility demands and curb traffic and congestion.
All relevant stakeholders should acknowledge shared mobility as an integral part of the broader mobility landscape that helps reduce CO2 emissions, and contributes to creating greener, more liveable cities.
The Road to Profitability
Reaching break-even and becoming a profitable and thriving business is easier said than done in shared mobility. The main obstacle is the high initial capital investment needed for the procurement of sharing fleets with high unit-costs, reliable sharing hardware and software, insurance of assets, city and parking fees, marketing, operations/customer support team, and more, all before having even launched.
Some food for thought from our panel participants based on their own experiences on profitability are:
- There is no one-size-fits-all: There is no single blueprint in one city that you can replicate across different cities. Every city is unique and has its own set of benefits and challenges.So, before thinking about starting your operations in any city, find out about the municipal support for shared mobility operations. Research their legal requirements such as permissions, tenders, fees, and parking policies. Also, you should have a clear understanding of the local market characteristics, such as infrastructure, competitive landscape, population density, consumer habits. This will help avoid any surprises down the road and make it easier to find the best city-fit for your business.
- Slow and steady wins the race: Focus on reaching profitability in one city first, before expanding to another. This way, the profitable city can carry the financial load of the new city, until that city also surpasses the break-even point. This is the an approach to mitigate risk and reach profitability faster.
- Go green from the ground up: Growing a green business needs to come with an actionable game-plan across the whole value chain, and it needs to be top-of-mind from the starting point. If you want to run a profitable long-term business, the only way forward is green. Making retrospective changes later will have major operational considerations and costs involved. Other benefits of thinking and acting green from the get-go is that you can benefit from the governmental incentives currently offered to EV sharing businesses such as:
- VAT exemptions for BEVs, one-off registration taxes that increase if a car emits more emissions,
- lower annual ownership taxes for BEVs,
- exemptions from road tolls and reduced ferry toll rates for BEVs,
- differentiated parking fees,
- significant public investment in charging networks,
- bus lanes opening up to BEVs.
Our panelists mentioned Norway (in specific the city of Oslo), as a great example here, and that the government’s incentives have had a big influence on their choice of vehicles. Fortunately, cities in other markets are starting to follow the same trend.
In a Nutshell
- There are huge opportunities for operators to collaborate across business models and increase the utilization (and monetization) of their fleets. Operators can immensely benefit from innovations that allow ways to share costs across the value chain of shared mobility.
- Shared mobility operators (including those backed by OEMs) want to reduce the number of cars on the street and actively participate in a shift from ownership to usership/access.
- Nationwide or EU-wide regulations are necessary to accelerate the growth of shared mobility in general and carsharing in specific. For example, parking costs for a private vehicle in most cities are still much lower than parking costs for a shared vehicle, even
- though a shared vehicle has much higher utilization over its lifetime. Hence, the need to revisit existing shared mobility regulations, and create standardized playing fields for operators.
- When it comes to profitability and growth, there is no ONE road to success. Before starting operations in any city, you need to do thorough research. Don’t underestimate the legal requirements. Slow and steady growth is more sustainable in the long run. And think green from the beginning, it saves you from having extra costs and complications later.
We hope you enjoyed the recap of our INVERS Share – The Mobility Meet-up event. Apply below if you’d like to be considered for the next invite-only INVERS Share gathering.