How might mobility services adapt to COVID?
Many owners of loss-making mobility ventures have chosen the crisis to permanently close the door. Free2Move have closed their carsharing operation in Frankfurt, GM abruptly terminated MAVEN, their US carsharing business, and Daimler and BMW’s Reach Now free-floating car sharing schemes have exited North America. Arguably, many carsharing models were loss making and would have closed at some point regardless. However, concerns over hygiene may well be an added a complication and cost too far for many mobility as a service business models. Would you use a car that someone else has driven in the last hour? Would you be comfortable knowing that someone else might be using the car after you, potentially someone in a more vulnerable category?
If these doubts suggest personal, dedicated, and private car use is well and truly back, can mobility services survive? Society is learning to living with the reality of COVID, and whether users will return in some sectors and segments will depend on personal attitude to risk and the broader experience of the society through the pandemic. Whilst Zipcar and other carsharing providers have seen clear declines in bookings during the first few months of the pandemic, I was surprised when I was recently told that AIMO, a Swedish carsharing operator, had apparently seen a big increase in rentals over the early COVID pandemic in Sweden, with users preferring these short use cars over public transport. This may be an outlier, as Sweden, notoriously perhaps, did not go into a full lockdown, although this difference may also be an indicator of how some societies might adapt over the medium term to managing risk. At the individual level, some people are more risk averse than others, and for a range of reasons including personal anxiety and comfort, desire to shield and protect family, and attitudes to social responsibility; a daily rental operator I spoke with recently said that they were seeing many customers arrive with their own cleaning products and preparing the car to their own satisfaction before use. Here in the UK, the London transport authority has recommended that taxi and private hire drivers clean the rear of the car thoroughly between passenger rides, and many sharing economy operators have rushed through similar operational changes to try to address user concerns. Airbnb were quick to produce new guidelines for hosts, and as the UK government (belatedly) required users of public transport to wear masks, Uber told their drivers that they and their passengers should do the same.
However, at this point, it is clear that the prognosis for shared mobility and the sharing economy as it had evolved up to 2020 in general does not look good in the face of post-lockdown uncertainty. The floatation of Airbnb has been postponed and they have cut a quarter of their workforce, and whilst Uber’s share price has recovered around half of the value lost in March, they have lost 14% of their own workforce and driver’s incomes have collapsed. So, can they survive by changing their offering? In work we undertook last Autumn, MaaS start up entrepreneurs pointed to the flexibility of their business models and their ability to ‘repivot’ and change direction, an argument that can be extended more digital sharing economy start-ups in general. Airbnb has moved into offering online experiences (as have event planning platforms such as Meetup and Eventbrite). Airbnb may have to change more radically still – for example, residential long let rentals in London have gone up 45% year on year, and they have been asked by a London council to reposition itself as a portal for such longer residential lets. UberEATS food delivery service has seen an 89% year on year increase in demand (excluding India where they sold out to a competitor) and is growing internationally including expansion in grocery delivery in Latin America. Whilst both have publicly struggled to keep expenses below incomes well before the arrival of COVID, it is possible that new and ancillary services might allow for an evolution of the business that may allow them to survive in the COVID economy.
However, it’s worth remembering how the – largely ideological - dream of the sharing economy, post the financial crisis, was to increase asset utilisation through turning products into services and in doing so increase access to assets at lower cost. It seems likely that COVID will add costs and cut utilisation to mobility and other shared services. The dilemma is very much like that facing restaurants and bars looking to reopen in the COVID economy, where prices may have to rise to accommodate lower capacity utilisation. And beyond what are essentially trading platforms such as Uber and Airbnb, business that are more asset heavy, such as carsharing operators with dedicated fleets, may have even more difficulty in adapting their offers. For example, as we have shown in past work, most carsharing businesses struggled to post a profit (pre-COVID) due to failure to balance the trade-offs between pricing, availability, and utilisation.
So where does that leave mobility as a service? It is not the responsibility of carmakers to provide mobility for all, although arguably they have come close to it through the provision of new and used cars. It is very much the responsibility of governments to maintain access to safe and affordable transport, especially in the face of informed advice to avoid public transport. And if a decent society attempts to avoid marginalising people in the process, services should, at least to some degree, be subsidised beyond those willing and able to pay market rates. Whilst trying to square these goals, my thoughts drifted to my brother. Tim had severe learning difficulties and support needs, and so was unable to either drive or take public transport safely. His mobility relied upon family and the support of local government and the voluntary sector. Which at various times meant a car or minibus driven by a known carer, and for a long time meant Ron, the taxi driver who knew Tim well, understood his needs, and became a good friend to Tim and his friends and family. Perhaps the problem with mobility as a service is anonymity and the automation of trust. Customers may trust brands if they confer a degree of certainty and accountability, but in the absence of certainty, people trust people more, and they do so via personal interaction rather than process. In my mind, there remains a very real opportunity to build trusted relationships between short term car users and providers, whether that be taxis or car rental, and there is also a strong argument for transport subsidy (via a range of mechanisms) to underpin these relationships where there are clearly no alternative means of delivery. We cannot know how the COVID situation will develop and how long economies will have to adapt to living with it, but questions around how to best provide personal mobility and who will pay for it will not go away. Innovative start-ups and platforms may find a way to square such circles and although hard to imagine today, may provide new answers to these questions.