The stakes are high for automakers in the future of mass transportation.
At a conference in metro Detroit, Andreas Mai, who recently served as the director of smart connected vehicles at Cisco Systems, estimated the size of the mobility industry -- which would include autonomous vehicles, ride-sharing networks and connectivity -- to be worth about $5 trillion over the next decade.
The additional value of mobility will be created from the transfer of the market from one stakeholder to another, Mai said. “Some people will lose.”
To mitigate the threat of losing out in an environment that is becoming increasingly crowded with technology giants and young startups, automakers are pivoting to alternative revenue streams and technologies.
“This addressable market out here is three times our traditional addressable market,” said Ford Motor Co. Executive Chairman Bill Ford. “If we do nothing … we would be a low-margin assembler of other people’s technologies.”
The key to tapping that value is turning to low-fixed-cost and less capital-intensive revenue streams, Ford said, citing the automaker’s acquisition of shuttle service Chariot and partnership with bike-share program Motivate.
Other automakers see consumers’ willingness to pay for autonomous technology as a way to augment traditional sources of revenue. Volvo CEO Hakan Samuelsson said the automaker’s self-driving software, which it is developing in a partnership with Autoliv, could be sold at an additional $10,000.
“We believe it is a product we can sell commercially,” Samuelsson said. “We feel that this is something that makes a premium car very attractive, and it makes a premium car more profitable.”
While automakers are acknowledging the need to diversify and enhance their offerings to consumers, there still are many issues to address, including regulation, ethics and the rate of adoption.
“We have to be incredibly open-minded, incredibly nimble and not presume to know anything,” Ford said. “It’ll be like the early days of the auto industry. Business models will spring up, many will fail … there will be lots of reforming of ideas, and eventually, collectively, we’ll get to the answer.”