Impact of COVID-19 on Shared Mobility

Covid-19 and Shared Mobility

The Covid-19 pandemic is leaving a deep mark on the mobility sector globally. The mandated lockdowns, particularly in urban centers, have reduced public mobility. Individuals & businesses have limited travel to only essential needs as a precautionary measure for their safety. Accordingly, daily ridership for “shared mobility” services has decreased significantly in the past months (Feb 20 – So far), even though the mass mobility options (city buses, Metros, etc.) are much more significantly disrupted. The Impact of COVID-19 on Shared Mobility includes:

• Uber is making 70% fewer trips in cities hit hard by the coronavirus
• 81% of Uber and Lyft drivers have said they’ve seen a decrease in demand
• People are spending 21% less on ride-hailing services like Uber and Lyft
• In 2019, Uber lost $8.5 billion, and Lyft $2.6 billion was predicting to be profitable in 2020 and 2021, but COVID is making it harder to become profitable.
• 66% of Chinese consumers indicated a preference for private vehicles for commute post the COVID-19 crisis, as compared to 34% before the crisis
• Preference for taxis and car-hailing services went down by 15% post the COVID-19 crisis.

It has been, however, good for goods mobility. Many players in this space suddenly got a lifeline. The case for automated delivery systems, which observed a few years of heavy investment and was losing steam, also got a boost.

For example, Uber’s money-losing food delivery service, Uber Eats, is suddenly in higher demand. Lyft has also announced that it will be launching a meal and grocery delivery service.

In the long term, the situation is very unclear. Still, indeed a once-in-a-lifetime situation like this is bound to have a transformational impact on all industries with winners & losers. There are certainly a few well-informed possibilities. Players can base their scenario planning & prepare for the long term against these eventualities:

• Slow Return to Normalcy
• Shared Rides Go Away
• Adoption of Autonomous Vehicles

Goals and Activities of Key OEMs & Suppliers

Features & Technologies around hygiene and biological safety will become attractive value-proposition for OEMs & suppliers to offer to their customers. The innovation and R&D in technologies like passenger health monitoring, anti-bacterial / viral coatings, cabin air quality, sterilization, etc. will increase dramatically.

Most players have already oriented their R&D roadmap in this direction. Though a robust and well-integrated output of this is a few years down the line, we already see some makeshift solutions or activities in this direction. Below are some recent developments:

Goals and Activities of Shared Mobility Service Providers

The scenario & potential outcomes for mobility service providers are much more consequential & divergent. The mobility service providers need to develop processes and adopt technology to ensure the fight against the spread of deadly diseases. The adoption of the right technologies and processes will create brand value & customer confidence.

On the business front, they need to be very nimble and respond to emerging needs to find & deliver the solutions rapidly. They also need to be very lean & careful – Scale combined with low profitability could be their downfall.

Few examples of quick action on part of mobility service providers are listed:

Post Covid-19 Scenarios for Shared Mobility

The first time a virus has managed to unearth the epidemiological aspect of shared mobility on a global scale. With social distancing becoming a potentially recurring need, we will need to rethink the future of public transit & shared mobility. There are apparent & significant impacts on shared mobility due to lockdowns, social distancing, etc.  But in the long term, Covid-19 will significantly change the landscape owing to multiple inter-related factors like impact on overall economy, jobs & incomes, change in consumer behavior & preferences, and so on. Without analyzing all factors, we can look into possible outcomes & scenarios for shared mobility:

• Slow return to Normalcy
• End of Shared Mobility
• Rise of Autonomous Taxi

Slow Return to Normalcy

Brilliant minds across the globe are working on resolving the medical & economic problems associated with Covid-19. A vaccine or an effective treatment for COVID-19 could suddenly make this much less concerning. The long-term impact might also be curbed by the fiscal & monetary policies being deployed to combat pandemic-generated economic challenges.

Survival today should be the main goal for services and players. Inclusion of makeshift vehicle technologies (sensors, sanitizer, etc.) & processes (driver checkup, health monitoring, etc.) that enhance customer confidence will be key areas of investment. Cutting costs to make operations leaner and finding new avenues (food, goods delivery, etc.) to create some revenue will provide a lifeline in the short run.

End of Shared Mobility

The increase in virtual meetings, remote working & less dense urban centers may also reduce the need for shared mobility below the tipping point where it becomes a viable business model. Even though it is highly unlikely, it seems there is a possibility that demand for shared mobility might not recover if social distancing becomes a cultural norm and consumer anxiety over infectious diseases persist.

Shared mobility giants like Lyft and Uber have temporarily stopped offering pooled rides during the pandemic. Given that most of these players were much more focused on growth, the weak fundamentals might wash them away in tough times.

These players must explore the possibility of new business models around goods mobility and offering, like deliveries.

Rise of Autonomous Taxi

Autonomy hype was slowly dying out before the COVID-19 hit the scene; however, Covid-19 has rekindled interest in it. It has added one more reason to think of Robotaxi as the ultimate eventuality for the future of mobility. This not only relates to personal mobility but also the delivery of services like food and groceries.

For better or worse, governments worldwide are trying to monitor and control the flow of traffic and citizens. Investments in concepts of smart cities & Intelligent & autonomous systems are cropping up everywhere.

Systems such as “ACE Transportation Engine” which integrates AI with infrastructure, equipment, services, and industry governance will be a necessity as it provides real-time insights, instantaneous responses, and intelligent decision-making capabilities.

The mobility players must focus on enhancing their vehicles and systems to be ready for the adoption or integration of such technologies. Adoption or lead in AV & Connected technologies may also bring them some additional revenue and a competitive edge to sustain somewhat harsh times ahead.

Future Outlook – Challenges for Automotive & Shared Mobility Players

In general, we have observed that Covid-19 has a drastic impact on the mobility industry in the short to immediate term. Apart from a few positive cases around goods mobility, the impact has largely been massively negative for the automotive & mobility players.

The outlook for the industry, however, is very convoluted with multiple factors contributing to the success & failures of technologies & business models. Restricted tourism, shutdown, etc. have long term, unclear impact on work & the economy in general. As the recession hits the globe, this will also have geopolitical implications like reduced trade, push for self-sufficiency & local production, etc. Further, the adoption and push for trends like working remotely, delivery of services & goods, automation, etc. will simultaneously affect the need for travel in different ways.

As always, the disruption will create winners and losers; only the strong value proposition will survive to witness the future. The players in the industry must realign their strategies and activities in the context of the massive shift COVID-19 is about to bring in the short, mid, and long term. There are several questions that they must answer, a few of them are:

• Which vehicle features will be needed in Shared vehicles? Which are the best technologies to enable those features?
• Which processes need to be implemented in a shared vehicle to ensure public health?
• What are the regulations and policies around acquiring consumer health data (about COVID-19) in a shared mobility scenario?
• What will be the impact on the goods delivery market? How big & fast it will grow?
• Technologies in specific areas: e.g. latest air filtration technologies for a safe vehicle interior environment?