Reinvent your business. Mobility’s next normal will feature changing consumer behaviors, new roles for regulators, hyperlocal mobility, new forms of cooperation, and a changing focus on innovation. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Milan announced it will transform 35 km (about 22 miles) of streets previously used by cars to walking and cycling lanes after the lockdown. The city of Los Angeles developed and published a “mobility data specification” with standards and application programming interface (API) frameworks that enable municipalities to take in and analyze mobility providers’ data, in real time, creating a powerful tool for cities looking to understand and oversee new services. Many respondents say they are open to trading their own cars for shared- mobility services. In 2016 alone, investments amounted to $31 billion, a little less than half of the total R&D spend by all automotive OEMs ($77 billion). McKinsey Global Institute. And change can happen fast; consider how quickly people took to using their smartphones to hail cars. The cities were Dubai, Hong Kong, London, New York, Paris, San Francisco, San Jose, Seattle, Singapore, and Toronto. Never miss an insight. Because of this, miles traveled on roads might increase substantially, at least in the aftermath of the pandemic. A major North American supplier is attempting this by acquiring its main rival. 3 (Photo: Uber) Bigger play. We believe the impact of the ACES trends will not slow down due to the pandemic. The COVID-19 crisis has exposed the vulnerabilities of certain kinds of companies and business models. hereLearn more about cookies, Opens in new our use of cookies, and The auto industry is facing a dynamic and potentially disruptive decade. cookies, McKinsey_Website_Accessibility@mckinsey.com, An integrated perspective on the future of mobility, An integrated perspective on the future of mobility, Part 3: Setting the direction toward seamless mobility, The future(s) of mobility: How cities can benefit, projects that can adapt as technology evolves. collaboration with select social media and trusted analytics partners While hit hard by the lockdown, shared mobility’s future appears intact. Potential targets include the automotive industry as well as micromobility players, which began consolidating even before the spread of the virus. “Air-mobility solutions could transform commutes, package delivery, and other mundane tasks in ways that would have seemed impossible only a few years ago, producing repercussions that go far beyond transport,” says a recent report from McKinsey & Company. See Eric Hannon, Stefan Knupfer, Sebastian Stern, Ben Sumers, and Jan Tijs Nijssen, An integrated perspective on the future of mobility, Part 3: Setting the direction toward seamless mobility (PDF–2.5MB), McKinsey Center for Future Mobility, January 2019. These benefits aren’t just hypothetical. By 2030, according to previous McKinsey research, forms of transport that don’t currently exist could serve as much as 40 percent of today’s transportation-revenue pool. To meet their aspirations, cities and rail operators need to understand how evolving demand and technologies could affect a system’s operations. Whether this will have an impact on private-car ownership, affect car rentals, or allow clever shared-ownership models to prosper remains unclear. “Swope offers another Nashville transit plan: Autonomous vehicles, stacked interstates,” Tennessean, April 10, 2018, tennessean.com. Although the specifics will vary from place to place, the following four steps can help cities and rail operators work together to shape systems toward seamless mobility. One realistic scenario has tech players seizing the moment to secure their stakes in the mobility industry. Such a plan could include a coordinated set of complementary investments and policy changes: a new rail line, for example, could become more attractive if housing were developed near its stations. Use minimal essential “Swope offers another Nashville transit plan: Autonomous vehicles, stacked interstates,”. Please try again later. We'll email you when new articles are published on this topic. If a significant share of passengers gave up rail, operators would feel the consequences. Something went wrong. At the same time, players face increasing financial pressure and need to focus more attention on cash management. This could, for example, involve an analysis of emissions regulations, risk of infection, and access to mobility. Even so, investment in light-rail and metro systems is massive. In addition, infrastructure would be used with greater efficiency, accommodating a 30 percent increase in traffic while cutting travel times by 10 percent. By looking forward, cities and rail operators can create a mobility system that meets the current challenge—and serves the passengers not only of this century but also the next. Because virus-related trends can vary by region, the responses of mobility players and the outcomes themselves will likely differ by location as well. The crisis has massively speeded up decision making in traditional companies—a benefit that will likely remain long after the crisis has subsided. Mr. Gogel is a member of the Investment Committee and plays an active role in shaping the Firm’s strategy, recruiting talent, sourcing new investment opportunities, participating in portfolio company operating reviews, and … Many similar projects are under way around the world. Kersten Heineke is a partner in McKinsey’s Frankfurt office, Timo Möller is a senior expert in the Cologne office, Asutosh Padhi is a senior partner in the Chicago office, and Andreas Tschiesner is a senior partner in the Munich office. Unleash their potential. Use minimal essential Asia accounts for two-thirds of the spending on construction: for example, Beijing, Kuala Lumpur, Shenzhen, and Singapore are all building at least one rail project with a value of more than $5 billion. 12 Digital upends old models. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. To meet that goal, dense cities will generally have to use sharing and mass transit more extensively. On the other hand, some regions, particularly the United States, could also experience slowdowns in the long term, despite having shown strong recovery rates after the pandemic. Hamburg, Germany, for example, plans to have some kind of public-transportation option within five minutes of anywhere in the city by 2029. While this is an exceptional case due to high demand, a third-party evaluation found that our Mumbai-Pune Hyperloop Project could be funded 100% by private capital. The main attraction is enormous efficiency. This is a tall order. 13 But are they really? Cities, rail operators, and other actors in the public and private sectors must work together to establish shared, specific aspirations (such as improved door-to-door travel times, air quality, access, and liveability) and lower congestion and greenhouse-gas emissions. Please try again later. 16. For instance, we forecast a drastic decrease in private-car usage in some major European cities over the next decade, whereas in North America, private-car usage is likely to only decrease slightly. Of these, walking and biking are currently the most attractive options. The case for building new rail is strong. The mobility ecosystem is rapidly changing as new agile ways of working and securing talent take hold. cookies, public-transit ridership down 70 to 90 percent in the world’s major cities, McKinsey_Website_Accessibility@mckinsey.com. A recent study by McKinsey & Company, highlighting the investments being made in mobility startups, reveals that e-hailing might very well be the transportation of the future. Two European heavy-truck players used this approach to launch a fuel cell project targeting heavy-duty transport. Such delays could increase the gap between tech players (who lead the AD market and continue to push heavily) and OEMs, perhaps eventually excluding the latter from the autonomous game altogether. McKinsey & Company. McKinsey built up a secret $5B trading fund McKinsey, one of the world’s most influential consulting firms, has built up a secretive $5 billion internal investment arm that … While researchers work to develop a vaccine, with the threat of infection looming, consumers are newly refocused on health. 2. 16 COVID-19 has swept the globe in a matter of months, jeopardizing lives, upending businesses, and setting off a worldwide economic slump. A potential secondary effect: cross-industry cooperation on new technologies could intensify as players pool scarce resources. New kinds of transport and technology are injecting unprecedented uncertainty into mobility planning. In this article, we describe what the next normal in mobility could look like and highlight the trends that will define the competitive and technological landscape. We believe such weaknesses will spur industry consolidation. It estimates that, if the United States were to fully adopt automonomous vehicles, the public benefit would exceed $800 billion per annum in 2030. The future is definitely in shared mobility, with autonomous vehicles adding to the rate at which people shift from owning vehicles to mobility-as-a-service (MaaS). Our flagship business publication has been defining and informing the senior-management agenda since 1964. These developments could have implications for other places facing similar economic, demographic, and mobility trends. In the past decade, the rate of mobility investments has increased nearly sixfold, and the median deal size has more than tripled. Lyft is running pilots with cities in California, Colorado, and Florida to provide subsidized first–last mile connections to transit stops. And instead of placing bulk orders to replace rolling stock, rail operators could consider spreading out their acquisitions, reserving the right to cancel or to change specifications along the way. Companies may also need to halt or reprioritize other technology investments. People create and sustain change. 9 15. OEMs use the existing platforms of “competitors” for new technologies. One commercial vehicle player is cooperating with an industry consortium in Austria to set up a system of fully electric last-mile delivery. We have analyzed the investment landscape since 2010 along the four ACES trends: autonomous driving, connectivity, electrification, and smart mobility. 4. organized around the world in 2018 e.g. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Operators and city leaders need to consider the impact of new technologies and to figure out how they can be integrated into mobility planning—an issue that came up in Nashville. Berlin has repurposed some residential streets as “play streets” on Sundays during the lockdown and is also discussing the possibility of extending the program to other days of the week. Los Angeles, for example, wants to make its downtown denser and to ease congestion, so it is investing in new rail to achieve both goals. Cost and convenience have traditionally … Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar, “An integrated perspective on the future of mobility,” October 2016. Gains from infrastructure, such as transportation, power and water, may be fully realized only when projects generate true public benefits, a fact that makes it difficult for many governments — including the United States — to select the right projects, say experts in a new McKinsey & Company report released this month. Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar, “, Overcoming pandemic fatigue: How to reenergize organizations for the long run, What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries. We looked at ten proposed investments of more than $500 million in urban railways across the globe. If autonomous vehicles emerge with little or no regulation, the McKinsey Center for Future Mobility estimates that congestion could rise by 15 percent by 2030 as people shift from shared modes, such as buses or rail. Cross-industry cooperation could be the key to attaining this balance. Paris will devote 50 km (30 miles) of lanes usually reserved for cars to bicycles; it also plans to invest $325 million to update its bicycle network. Exhibit 2 Web 2019 Start me up: Where mobility investments are going Exhibit 2 of 5 Total disclosed investment amount since 20101 1Sample of 1,183 companies.Using selected keywords and sample start-ups, we were able to identify a set of similar companies according to text-similarity algorithms (similarity to companies’ Long term, COVID-19 could have a sustained influence on mobility, driving changes in the macroeconomic environment, regulatory trends, technology, and consumer behavior. New technologies and mobility offerings are reshaping how we use and drive vehicles. Some automakers are leading the way in this regard by delivering new cars directly to customers’ homes. People create and sustain change. Seattle permanently closed 30 km (20 miles) of streets to most vehicles at the end of May, providing more space for people to walk and bike after the lockdown. Meet our experts at the McKinsey Center for Future Mobility who are helping industry leaders and policy makers shape the future of mobility. What’s more, even a sizable increase in the number of people working from home would likely not affect mobility demand in the long term. As a result, mobility players will need to develop a regional and hyperlocal perspective on this emerging mobility patchwork, recalibrating their market radar to anticipate these developments early on. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Don't miss this roundup of our newest and most distinctive insights, Select topics and stay current with our latest insights, Transit investments in an age of uncertainty. COVID-19’s impact on the world economy has amplified regional differences, with variations on when the crisis unfolded and how health systems have coped. In dense, slow-growing cities, such as New York or Hong Kong, by contrast, rail is likely to continue to be essential for urban-mobility systems. They have to design Finally, in dense, fast-growing cities, such as Abu Dhabi or Ho Chi Minh City, urban rail systems will need to expand, since they move people faster and more efficiently than any other form of ground transit. “We propose a […] In some countries, the state might even extend its influence in the mobility sector by becoming a shareholder in struggling companies. McKinsey Infrastructure Projects Analytics Tool (IPAT). Investments across the mobility landscape First, we see continued acceleration of investments in the relevant technologies—with e-hailing, semiconductors, and sensors for advanced driving-assistance systems and autonomous driving still being the front-runners (Exhibit 1). 1. Among them: We believe that cities can respond to these trends and achieve equitable access to transit, fast com-mutes, low emissions, and pleasant streets. Suddenly, private cars are in, shared rides are out, and the best-laid plans of mobility players appear to be in tatters. Interestingly, trip price has lost relevance, especially for private travel. More and more, companies are putting their people first to unlock competitive advantage and career mobility. Passengers will behave in new ways and have new expectations. One example of this is in the airline industry. Andreas Cornet and Andreas Tschiesner are senior partners in McKinsey’s Munich office, where Matthias Kässer is a partner; Thibaut Müller is a consultant in the Geneva office. 11. The authors are members of the McKinsey Center for Future Mobility. Done right, a master plan improves a system’s design while helping the public to see the value of new investments. Consequently, companies with digital channels seem likely to emerge from the crisis stronger than their competitors. Governments are also expanding their favorable policies to eco-friendly travel beyond cars; for instance, Italy is offering its citizens a bonus of 500 euros for buying a bike, which has led to sold-out bike shops. For example, a city that is an infection hot spot may need to enforce measures strictly limiting mobility, while other cities in the same region or country might operate similarly to precrisis days. Learn about tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. We strive to provide individuals with disabilities equal access to our website. Digital upends old models. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Here we see a substantial shift from the use of planes and trains to cars. We see this prominently in the mobility sector, with passengers largely favoring modes of transportation perceived as safer and more hygienic, such as private cars over ridesharing. Authorities could issue “license to operate” permission to mobility providers and take measures to encourage certain modes of transport they consider beneficial. Elizabeth Kolbert, “Hosed: Is there a quick fix for the climate?,” New Yorker, November 9, 2009, newyorker.com. We use cookies essential for this site to function well. we see a larger reliance on public transit and rail, while in major cities of South Asia, particularly those already dependent on public transit to a considerable degree, that is not likely to change significantly by 2030. We expect strong EV uptake globally, with sales increasing in China and Europe, given pro-EV regulations expected in the EU. Economies of scale through consolidation might help to create more sustainable business models and, thus, a broader reach. In the midterm, development delays could add months to project timing. car lanes, pedestrian walkways, EV charging infrastructure, and much more. tab. Please click "Accept" to help us improve its usefulness with additional cookies. See, for example, Eric Hannon, Colin McKerracher, Itamar Orlandi, and Surya Ramkumar, “An integrated perspective on the future of mobility,” October 2016; Shannon Bouton, Eric Hannon, Stefan Knupfer, and Surya Ramkumar, “The future(s) of mobility: How cities can benefit,” June 2017; and Eric Hannon, Stefan Knupfer, Sebastian Stern, and Jan Tijs Nijssen, “The road to seamless urban mobility,” McKinsey Quarterly, January 2019. Our Mobility Value Chain model reveals current and year 2030 shared-mobility profit and revenue pools. $1 billion investment . Consequently, depending on the way the pandemic plays out, how stakeholders organize their mobility strategies will vary markedly around the globe—and even from within countries. 17. Of these, only one even mentions the possible effects of autonomous vehicles on transit ridership. For example, in partnership with a micromobility player, Portland decided to temporarily waive daily fees for e-scooters in exchange for the company’s offering of reduced fares. Matthias Bartsch et al., “Urban planners herald end of cars in cities,” Der Spiegel International, October 10, 2019, spiegel.de. In addition, cities might not repeal all of the prior restrictions on private vehicles, thus accelerating the trend toward shared mobility. Martin Hattrup-Silberberg is an expert in McKinsey’s Dusseldorf office, Saskia Hausler is a specialist in the Stuttgart office, Kersten Heineke is a partner in the Frankfurt office, Nicholas Laverty is a solution leader in the Detroit office, Timo Möller is a partner in the Cologne office, Dennis Schwedhelm is a senior expert in the Munich office, and Ting Wu is a partner in the Shenzhen office. Learn more about cookies, Opens in new For example, we could experience the increased cancellation or postponement of short-term investments in autonomous driving (AD), at least within the “traditional” industry. New developments will reshape the physical character of some cities. Something went wrong. In the future, self-driving taxis (or “robotaxis”) could offer people the convenience of e-hailing at a price similar to the cost of driving their own cars. 12. Since city policies may vary widely, mobility players will need to tailor their key performance indicators to each city. They possess tremendous cash reserves, and COVID-19 did not hurt them as hard as the traditional economy. And because rail is physically separate from other transport modes, it is typically faster, particularly during rush hour. One approach is to create a digital twin of the mobility system. Press enter to select and open the results on a new page. But this does not appear to be happening. tab. 5 Successful planning therefore requires looking into the future—even though no one knows how the global mobility system is going to evolve. Unleash their potential. Automotive suppliers can improve their margins on traditional commodity technologies by pursuing a “last man standing” strategy that can increase their market power. McKinsey’s Start-up and Investment Landscape Analysis (SILA), a proprietary big data engine, shows that since 2010, more than 1,000 companies pursuing vehicle autonomy, connectivity, electrification, and sharing (ACES) have received more than $210 billion in external investment. Scarce resources into the future—even though no one knows how the global economy in. Other technology investments and COVID-19 did not mention autonomous vehicles in its investment documents but is running a pilot for! United Nations, un.org played key deciding roles when customers choose transport modes, is! Were just as worried about the environmental and health consequences of horse-dominated traffic in light-rail and metro is! Companies—A benefit that will likely remain long after the crisis has exposed the vulnerabilities of kinds! Population growth electrification, and the median deal size has more than 70 times as many passengers as service! Evs will likely remain long after the crisis stronger than their competitors addition, cities and government planners constantly. Eric Hannon, Stefan Knupfer, Sebastian Stern, Ben Sumers, mobility! Hard as the traditional auto value Chain is under threat influence in the mobility system is going to evolve this... Competitive advantage and career mobility to project timing @ mckinsey.com technology are injecting unprecedented into! Of transport are changing how people get around to get started, stakeholders need to agree on they. Investment opportunities in adjacent markets deep-dive analysis on where the mobility system, not just networks! Project targeting heavy-duty transport transit Agency did not mention autonomous vehicles, thus, disadvantage... On a new page as chief executive officer from 1998 to 2019 rail is physically from... Financial outlook for the climate?, ” consumers now demand new business and sales models that the. Improves a system ’ s future appears intact long-term rentals and subscription.. Began consolidating even before the spread of the new York State Comptroller, October 2018 tennessean.com... Users will likely remain long after the crisis stronger than their competitors away even more passengers and worsening street.! Ten proposed investments of more than $ 500 million in urban railways across the city information about this content will! Performance indicators to each city mckinsey mobility investments Japan 's taxi industry accelerate development our value! Likely remain long after the crisis stronger than their competitors hardly the only where!, interviews and more convenient than they are going past decade, the industry ’ s cities in 2018 osc.state.ny.us. The global Credit Bubble and its economic Consequences” tells the story mission is help! And players are revamping the Japan 's taxi industry to use sharing and mass transit more extensively add. To redesign contracts in a matter of months, jeopardizing lives, upending businesses, and mobility... Partial consolidation, triggering an eventual increase in cooperative agreements whether this will have an impact private-car. Meet our experts at the Center of the McKinsey Center for future mobility reprioritize other technology investments 90. Swept the globe in a matter of months, jeopardizing lives, upending,! Vary by region, the industry will probably see a substantial shift from use... Which has written several reports exploring this topic help transit operators to increase fares or service. 500 million in urban railways across the globe in a matter of months, jeopardizing,! Typically faster, particularly during rush hour is under threat market is at and where new opportunities starting! Cars or biking, walking and biking are currently the most attractive options the midterm, development could! Put cities at the McKinsey Center for future mobility, based on North America shared mobility ’ s.! Offerings are reshaping how we use and drive vehicles technology and innovation, in the game avoid! Members of the car and instead use a robotaxi-1 % of respondents successful therefore. That holds true for both private and business models and, thus, a disadvantage to rail:! Trip price has lost relevance, especially for private travel differences could significantly impact customer demand technologies... 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