Is the auto industry preparing to introduce a new product+service category for the future of mobility? Could software and sensing systems transform the chariot or pod form factor into a commercially viable mobility-as-service solution in the years ahead?
Or is this all just for auto show eye-candy, PopSci magazine covers, and Hollywood sets rather than city streets?
The answer depends on whether you think the future of mobility will be much of the same, or different!
GM Continues to Rethink Mobility Solutions
This week a unique and globally symbolic partnership of General Motors-Segway-SAIC unveiled their EN-V (Electric Networked Vehicle) concept category at the Shanghai World Expo. The EN-V, which displayed fully autonomous operation, is the descendant of the P.U.M.A. (Personal Urban Mobility and Accessibility – video below) platform which was demonstrated on the streets of New York and Brooklyn in the Spring 2009. Three separate EN-V models, each designed by teams located in different regions around the world, were branded as: Jiao (Pride), Miao (Magic) and Xiao (Laugh).
Confronting ‘Red Ocean’ Reality of Global Auto Industry
Where might these new form factors and software systems fit into future growth within the mobility industry?
First, we must recognize the lack of good options for global auto industry executives. The industry’s new vehicle and finance revenue-based business models are challenged on almost all fronts. Few doubt worldwide growth prospects as we look forward, but competition is very intense and it has become difficult to find a manufacturing-based competitive advantage (remember, ‘most cars are made by the same robot‘). Industry insiders recognize the structural challenges to managing costs and capacity utilization around combustion engine vehicles. (We still do not understand the implications of China unleashing its full capacity as it comes online!)
The other challenge is that growth is shifting from traditional western suburban to more urban Asian markets. Let’s not forget about servicing markets changed by aging populations! And wouldn’t it be interesting to break open the market demographic to access beyond 16-18 year olds who require an operator’s license.
Back to the present! Competing for incremental market share gains within existing ‘red ocean‘ markets is not easy and not always profitable if you have to give incentives to earn every buyer! Not only is it easier to build quality vehicles, but with the right budget resources you can hire a fantastic marketing and ad agency to build your brand in any market you desire!
I struggle to see profitable boom years ahead based on ‘business as usual‘ strategies and suspect that industry leaders are exploring more radical shifts in their cost structures and business models.
Software + Service as a ‘Blue Ocean’ Strategy
If the global auto industry does succeed in creating a new rung on the mobility value chain it will likely be a combination of product plus service. And I imagine they will follow a ‘low end disruption‘ path to growth by avoiding direct competition with traditional vehicle ownership and instead focus on creating new demand around aftermarket, software enhanced driving experiences, and service/access mobility solutions.
I see the EN-V as a candidate for both future software and service solutions. Most people will recognize today’s ZipCar service-access business model – but it is essentially a car ownership alternative. (I am for the record, pro-ZipCar!)
EN-V like pods and chariot formats are likely to offer other mobility solutions such as ‘last mile‘ point-to-point connections to mass transit hubs and high traffic destinations, as well as short point to point trips. They are easily organized and managed as distributed fleets and if we assume the timing of their emergence will coincide with remote-controlled or autonomous operation, we might be looking at a fundamentally new business model on the horizon.
Still think it is just auto show eye-candy?!
These futuristic pod chassis have been demonstrated at car shows for many decades, but the hardware and software systems that make them viable are changing. And there are big profits waiting for the industry beyond the mechanical combustion engine chassis!
Pods and chariots are ripe low cost platforms for developing telematic software and ‘drive by wire‘ control systems that assist drivers and turn vehicles into sensing devices. They are ideal for helping the global auto industry evolve towards new manufacturing platforms based on wheel based electric motors powered by integration of batteries and fuel cells. (i.e. It is much easier to build 2 wheeled fuel cell vehicles that weigh several hundred pounds, than a monster SUV).
One finally comparative note – there is a different product life cycle here! So the strongly held assumption that all new ‘cars end up being on the road for twenty years’ might have to be questioned!
Skeptics vs Mobility Entrepreneurs
Yes, I know, that these concept cards are easy pooh-pooh targets. Skeptics point out ‘where is storage’, ‘getting side swiped by an SUV’, ‘lead to more congestion if it replaces walking’, et al. All valid observations, but these are not the types of people capable of creating new value, they are simply interested in capturing marginal returns by extending today’s transportation ecosystem forward. When we try to think about substituting new for legacy it seems silly when human behavior comes into play.
The entrepreneurs search for new ways to enter the market and platforms that help shift revenues from per new car sales to aftermarket upgrades and per mile software-service mobility experiences.
Skeptics will see the future of the auto industry as simply selling cars and SUVs to suburban soccer moms. And focus only own ownership.
Entrepreneurs will look beyond 2015 and see global growth markets around aging segments, urban Asian markets- and seamless integration with mass transit (e.g. high speed rail; rapid bus transit) that all benefit from access /service business models.
Skeptics will focus on the old, crusty combustion engine form factor that they think customers want (i.e. faster horse approach). And they will assume that scared drivers will always prefer big vehicle armor as their safety strategy.
Entrepreneurs will see opportunities around new designs based on sleek skateboard electric vehicle chassis. And these innovators will see software as the most effective safety strategy. They will build communication networks so that ‘connected cars’ do not crash. The way forward is not hiding increasingly distracted drivers behind bigger cars, it is transforming our assumptions about safety by increasing the human’s situational awareness and holding them accountable to their safety performance.
Skeptics will roll their eyes at autonomous vehicles, entrepreneurs will see an opportunity to bring entirely new cohorts (e.g. no driver’s license required!) into the mobility industry.
Ok, I am done…
Optimistic but Still Waiting for Innovation!
So that is a vision for the global auto industry! But for now, we must accept that the EN-V type pods and chariots are not going to be on the streets anytime soon. Until then, they remain easy targets as futuristic eye-candy!
I do not want to be accused of over-hyping the future, but this low capital cost platform is ripe for innovation – and the service market is a viable disruptive business strategy that could surprise us post 2015-25! For now, I am just glad to see GM and Segway continuing to evolve the EN-V autonomous operation and form factor!
[Full disclosure: I do not own GM stock, but I have had a man crush on the company ever since Larry Burns popularized the Autonomy Skateboard Chassis! And I have always believed in Segway. So there is the source of my bias and optimism!!]
More images, videos of GM-Segway PUMA and related posts
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Photos by General Motors (CC License)