‘Mobility as a Service’ may be a bigger shake-up to the car industry than electric vehicles
Volkswagen, the company that alternates with Toyota for the title of world’s biggest carmaker, shook up the global industry last week when it announced it would begin accepting orders for its new electric car, the ID.3.
With a price and a 550 km range that challenge the Tesla 3, the new Golf-sized battery-powered car signalled a startling shift for the German automotive sector that only a few years ago seemed locked into its historic specialization in fossil fuel technology.
But just as skeptics have repeatedly underestimated the ability of the car business to adapt to climate change, there is early evidence of a potentially bigger transformation underway: the move to abandon car ownership altogether.
“I had an F-150, so when I did drive it was quite expensive,” said Calgary resident Damien Prud’homme, who gave up his Ford truck about six months ago. Besides the price of gas, the other expenses for the 10-year-old truck, including growing maintenance bills and insurance, just didn’t seem worth it because he drove it so seldom.
Instead, the telecom technician, who drives a company vehicle when on the job and who could afford to own a car if he wanted one, now uses car-share service Car2Go for occasional private trips. Prud’homme estimates his total cost for car sharing at about half of what he paid every month for insurance alone.
As General Motors shuts down plants in Canada and the U.S. and carmakers scramble to catch up to Tesla, many car analysts say a move away from private car ownership could be a hitch the industry hasn’t foreseen, and the reasons are not just economic.
In my family, after selling our beloved VW wagon back to the company last October as part of the “dieselgate” scandal, and stumped over what to buy next, we decided to wait a while and try going without. Since then, it seems I keep encountering more people who have abandoned their private cars.
So far, anecdotal information about a decline in Canadian car ownership is not backed up by the stats, according Denis DesRosiers, one of Canada’s best known automotive number crunchers.
10 million more cars on the road
“Vehicle ownership in Canada is at all-time record levels, and it’s been increasing,” said DesRosiers, citing figures showing there are now 10 million more vehicles on the road than there were in the year 2000.
Recent figures have shown sales growth tailing off, which some have blamed on rising interest rates, although DesRosiers said the decline is likely temporary and sales remain at historic highs. DesRosiers said car ownership has never been evenly spread. He notes that his own daughter, an urban dweller in her 30s, does not own a vehicle, but he himself owns three.
Charlotte Yates, a longtime car industry analyst who is now vice-president at Ontario’s University of Guelph, says other research may indicate something else happening: like DesRosier’s daughter, younger urbanites are delaying car ownership or abandoning it altogether.
Strapped by the high cost of housing, a downtown lifestyle, salaries that aren’t as high as previous generations and a growing variety of alternatives to car ownership, there are signs that fewer young people are getting driver permits, and many more are adopting a lifestyle that just doesn’t include a car.
That will grow as cities become more dense, something that has already happened in places like Hong Kong and New York.
“What I’m talking about is not a snapshot,” said Yates, referring to DesRosiers’ statistics. “This is about what we are projecting is going to be the long-term effect of shifting consumer demand amongst young people.”
Current research by urban planning specialist Ahmed El-Geneidy at Montreal’s McGill University seems to confirm Yates’ analysis, with studies that show urban 30-year-olds today take public transit far more often than people in the same age group 20 years ago.
El-Geneidy’s research in Toronto shows that while some better-off urban dwellers may buy a car once they move to the suburbs to start families, high downtown housing costs force low-income families to move out along existing transit routes to avoid the cost of car ownership.
Public transit use, along with services like Uber and Lyft, car sharing and bike sharing plus traditional car rentals are all elements of a new way of looking at transport called “Mobility as a Service,” or MaaS. The term implies people will increasingly hire their transport as needed and as appropriate rather than investing in the capital cost and upkeep of a private vehicle.
Wilson Wood, a senior executive with the Canadian car-sharing service Communauto, is one of the people profiting from that change. Founded in Quebec City 25 years ago, the company, a global pioneer in car sharing, has spread to 13 cities across Canada, from Edmonton to Halifax, with a branch in Paris that Canadian members can use as well (if they dare).
Wood said his figures show that every Communauto vehicle represents about 30 members who decades ago might have owned a personal vehicle.
Not everyone can drive
While car-share numbers remain tiny compared to private cars on the road, Wood said his company continues to grow and continues to be profitable as people reconsider buying cars that sit unused most of the time.
The fact is that in jammed urban cores with highrise population densities it’s simply impossible for everyone to travel in a car, whether you own it yourself or rent your ride — something that Marco D’Angelo, CEO of the Canadian Urban Transit Association, realized before getting rid of his own car about six months ago.
“Someone’s not going to use a ride-sharing program 100 per cent of the time,” he said. “But once they’ve moved away from having a privately owned vehicle that’s parked 96 per cent of the year, all of sudden all of the options are on the table.”
That’s certainly true in our household. We have not ruled out buying another car. If VW’s new ID.3 had been available when we turned in our diesel last October, it is very possible we would spent the rebate on one of those.
But now that we’re living comfortably without a car, without car insurance, without snow tire changes and maintenance bills and parking hassles, never mind considering the tens of thousands of dollars in purchase price and our carbon footprint, like others who decided to wait, we’ll have to find a very good reason to go back.
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