Future of Mobility Podcast with WSP
Kenny Fennell is a Consultant in WSP-USA’s Future of Mobility group. He advises mobility providers and state and local governments on the future of mobility. You can read previous work on the intersection of public and private innovation in transportation on Loup’s Blog with Mobility as a Service isn’t an App, It’s a System and Three Ways Governments and Startups Cross Paths in Emerging Mobility.
3 Takeaways
- Fennell believes the pandemic is a one year set back to the future of mobility. Prior to the pandemic, cities were operating with full capabilities and resources. However, these same cities now lack resources such as time and money. Expect cities to be fully re-engaged in the first half of 2021.
- Cities in California are leading indicators of mobility trends. For example, the city of Oakland has reallocated 74 roadway miles from pedestrians and bikes. Similarly, San Francisco has allocated 34 roadway miles. Philadelphia, Denver, and Minneapolis have all announced that they will be following suit.
- Cities are reducing the number of companies they are partnering with, which is a long-term advantage to Lyft and Uber.
Show Notes
- [1:39] What conversations were ridesharing and mobility companies having with cities in December of 2019?
- [3:39] Why is it so hard to get a lane in the street provisioned for different modes of transportation?
- [5:47] What were cities doing around micro-mobility when the pandemic hit?
- [8:38] How was the tone of cities in advancing mobility changed since the pandemic?
- [11:00] What are the other big topics on the minds of cities in regards to mobility?
- [12:22] What’s California doing in terms of provisioning public space for charging stations for EV’s?
- [15:10] What is the long term impact, and how do you think people will view ridesharing and Jump Scooters?
- [18:33] What does a typical US city look like in 5 years in terms of shared spaces?
- [20:40] With what you know about Lyft and Uber, is one better positioned with the way they handle regulators?
- [23:23] What advice would you give a startup that’s looking to get provisions to operate in a city?
- [25:06] In 10 years, as you’re exiting a restaurant, what does a street look like?
Lyft & Uber’s Autonomous Catch-22
We’re updating our expectations on the timing of the initial availability of level 5 autonomy. Previously, we expected full autonomy to see limited availability between 2022 and 2025. We now expect most AV players to have limited availability of level 5 autonomy beginning in 2021 through 2025. We expect wide availability of level 5 technology by 2030.
The shift to autonomy is a catch-22 for Lyft and Uber: over the next 5-10 years it will boost profitability but beyond 10 years autonomy will attract a measurable increase in competition.
Autonomy is foundational to Lyft and Uber’s future
Lyft lists the inability to develop autonomous vehicles as a top ten risk factor. Uber has long classified the shift to autonomy as an “existential” risk. Once autonomy is “solved,” Lyft and Uber will gradually replace their human drivers with never-tiring robots.
AVs will lift ride sharing take rates from 35% today to 85% or more and quicken the long-awaited path to sustained profitability. Given the two companies’ customer bases of 130 million and growing, the early years of autonomy will bode well for their bottom line growth. The long-term, however, will likely prove to be more challenging as Tesla, Google, Apple, Amazon, and several auto OEMs that have influential consumer brands begin to offer their own autonomous transportation services.
Near-term (5 plus years) tailwind
We expect full autonomy to see limited availability as soon as next year. However, we continue to believe that wide availability will take longer than most expect but will impact the world in ways we aren’t imagining. Rather than emerging from a decade(s) long R&D project with a level 5 autonomous vehicle prepared for full autonomy, we believe the rollout of level 5 tech will be more incremental, starting with fixed routes, controlled areas like campuses, or small, well-monitored, geo-fenced regions.
Habits are powerful. When we need to go somewhere, we open Lyft, Uber, or Google Maps. As each of those companies begins to offer autonomous transport (Google via Waymo), they have the built-in advantage of demand from hundreds of millions of committed customers looking to go somewhere. Even if early autonomous offerings can only operate in small areas at first, Lyft and Uber are all but guaranteed to have customers that want to travel within that area. Just as public transportation can’t take you everywhere but serves nicely as an additional offering for Lyft and Uber, the initial autonomous vehicle service would act as another channel in the app.
Given the channel strategy, Lyft and Uber may have a near-term advantage over autonomous only offerings. If an autonomous fleet can go some places but not everywhere, consumers are unlikely to download a new app for only certain routes instead of Lyft or Uber who can also leverage their human driver networks for a comprehensive offering. Since transportation is a commodity, unless a fully autonomous service has similar wait times, coverage, and prices to conventional ridesharing, it is unlikely to be successful on its own.
Long-term (10 plus years) headwind
While autonomy will make Lyft and Uber’s businesses more profitable, it also decreases the value of their two-sided network effects by making drivers less important over time. It will also increase competition because the go-to-market approach for most full autonomy projects seems to be a fleet of autonomous taxis.
Even though we expect the rollout of autonomous transport to be incremental, at some point autonomous vehicles will be widely available and capable of driving anywhere. In this future, “driver” supply has to be considered differently. Full autonomy changes the network effect of ridesharing completely. Supply may come from autonomous vehicle owners lending their vehicles to the network to make money or from transport services buying and operating their own fleet of vehicles. Wait times will gravitate to parity across a handful of providers, commencing a race to the lowest price.
In the long-term, autonomous taxis may look more like the airline business, where loyalty is the primary basis of competition. In-vehicle experience, which Lyft and Uber would have greater control of if operating their own fleets, might be a point of differentiation, but would be easily copied. Competing on brand will be a challenge for existing ride-sharing companies as Tesla, Google, Apple, Amazon, and several auto OEMs with influential consumer brands begin offering autonomous transportation services. While AVs will, in the near-term, provide a road to profitability for existing ride sharing companies, in the long-term they will likely open the door for increased competition.
Initial rollouts begin somewhere between 2021-2025
As mentioned, we believe that autonomy will take longer than we expect but will impact the world in ways we aren’t imagining. Not surprisingly, given the mix of unknowns around the tech and regulation, most of the major companies pursuing this future have been reluctant to speculate on the timing of public availability. Based on the most recent public comments, the key players are targeting initial level 5 availability anywhere from 2021 to 2025 to fully roll out their autonomous vehicle fleets.
Ford has publicly stated that they are aiming for 2022 to release a fleet of their own self-driving cars, numbered in the thousands. Aptiv, another self-driving car company, has said they expect widespread adoption of self-driving cars by 2025. Thus far, Waymo has been the leader with over 20 million miles driven with their autonomous vehicles. Uber has said they have driven “millions” of autonomous miles. Ford has indicated they’ve driven 650,000 miles. Cruise drove over 800,000 miles in 2019, but it is unclear how many total miles they have driven. In terms of the technology these companies are employing, all are using a combination of LiDAR, radar, and cameras. Tesla is the exception here and has vocally spoken out against LiDAR. Instead, they rely on radar, GPS, maps, and other sensors.
Advancing What Only Apple Can Do
Apple’s WWDC20 event featured the typical annual software updates, disappointingly in-line with expectations. A closer look, however, makes it clear that the company is advancing capabilities within its ecosystem that only Apple can do.
Apple is expanding the depth and breadth of its moat. Here are a few examples from the announcements at WWDC20:
1. Apple Silicon
As expected, Apple formally announced the transition from Intel chips to its own Apple silicon for Macs. Apple’s track record with the A-series of chips for iPhone and iPad should instill confidence. Beyond performance per watt benefits, Apple has proven its ability to deliver differentiated hardware capabilities like the Secure Enclave for privacy-centric features, on-device machine learning, and improved power management.
We expect custom Apple silicon on the Mac to unlock a host of new capabilities that will separate the Mac from Windows-based computers with features that PC makers can’t match. iPhones, iPads, and even Macs have increasingly featured custom Apple silicon, like the Apple T2 Security Chip with the Secure Enclave coprocessor for better, faster, more secure authentication (Touch ID, Face ID, Apple Pay, and many other services that work across Apple devices without storing personally identifying data in the cloud).
2. New Features for AirPods Pro
In what feels like a first for the headphones industry, Apple announced a free software upgrade for AirPods Pro that will bring two new value to customers:
AirPods Pro will now feature spatial audio, like surround sound for headphones. In order to deliver on spatial audio, Apple uses 3-dimensional data from the source device (iPhone, iPad, or Mac) and from the AirPods Pro (using gyroscopes in the AirPods).
Automatic switching between Apple devices is now coming to AirPods. Previously, AirPods were simple to pair with your Apple device and would appear on any device logged into the same Apple ID. But switching from, say, your iPhone to your Mac as the audio source was manual. Now, switching from device to device will be automatic, based on whichever device you’re using.
Spatial audio and automatic switching are two great examples of features only Apple can deliver, and another reason that we think the AirPods story is just starting.
3. Sleep and Fitness Apps
Apple announced new Apple Watch capabilities for sleep tracking and fitness. Both leverage apps on multiple devices (Apple Watch and iPhone) to capture data related to user behavior and display insights from the data for the benefit of the user. A smartwatch company can’t access the same level of detail about a user’s activity and motion from a watch alone, because Apple can use data from the phone, too.
Digital health remains a largely untapped opportunity for Apple, and the device ecosystem is one reason we remain bullish that Apple can offer health-related products and services that competitors cannot.
4. Privacy
Across every software platform (iOS, iPadOS, macOS, watchOS, even tvOS), Apple emphasized privacy and security. Some features, like the examples in the T2 Security Chip described above, are features that only Apple can offer across its wide range of devices. Others, like advanced messaging features coming to iOS, iPadOS, and macOS, leverage Apple’s tightly integrated hardware, software, and services offerings. The secure tracking of device location for applications like Find My is made possible by Apple’s business model. Instead of selling ads like Google and Facebook, Apple can offer features like a new level of clarity on the information that apps access, and a sort of scorecard to keep app developers honest.
Apple is unifying your digital life.
Imagine if your doorknobs, your oven door, and your car door each operated with consistent design, user experience, and simplicity. That level of consistency is increasingly a reality as our digital life becomes a larger portion of our entire life, and Apple owns the experience.
WWDC20 saw Apple leverage those unique assets it has across a multitude of touchpoints in our lives. As the company’s influence expands, so too does its moat, compounding the opportunity for future hardware, software, and services offerings.