Automotive Revolution 2030:

Perspective on Shared Mobility

KNOWLEDGE REPOSITORY
DECEMBER 2016
Shared mobility may grow steadily in today's industry structure – or become
an entirely different market by 2030
Hypotheses on shared mobility markets in 2030
Will we have steady growth in today's … or an entirely different
industry structure until 2030 … market by 2030 already?

Steady growth Fast acceleration

based on through AVs and
convenience and city initiatives
economics

Convenient and
economic alternative
to taxi/public New user experience
transport and monetization
options with
purpose-built vehicles

Consumer
Technology preferences Regulation
SOURCE: McKinsey 2
Shared mobility may grow steadily in today's industry structure – or become
an entirely different market by 2030
Hypotheses on shared mobility markets in 2030
Will we have steady growth in today's
industry structure until 2030…
Steady growth based on convenience
and economics
▪ Cannibalization and expansion of taxi
Market
1 size market – 2% of new vehicle sales
▪ Profitable business cases in dense/
urban areas only, e.g. 20-30 cities
globally for car sharing
Convenient and economic alternative
to taxi/public transport
▪ Based on existing vehicle portfolio and
Offer-in
2 gs integration of other mobility concepts –
monetization based on rides
"Winner takes most"
▪ 1-2 platform players capturing 80% of
Industry market per region (controlling liquidity
also for AVs, which are owned
3 struc-tu
re de-centrally)
SOURCE: McKinsey
… or an entirely different
market by 2030 already?
Fast acceleration through AVs
and
city initiatives
▪ Substitution of car ownership and
re-design of public transport –
>15% of new vehicle sales
▪ Business profitable even in low
Newdensity/remote areasand
user experience
monetization options with
purpose-built vehicles
▪ E.g. based on personalized
infotainment and advertising, low
cost and clean vehicles
Platform business model will be
shaken up
▪ Cities regulate robo taxis (similar
to today’s public transport)
▪ Fleet managers/OEMs operate
AV fleets (as car sharing today)
▪ Small AV fleets prevail (as taxis
today) 3
Already today, developments on shared mobility vary significantly by city –
driven by different regulations, city initiatives, and customer preferences
Illustrative examples about todays' shared mobility markets

LOW INCOME – DENSE URBAN

HIGH INCOME – DENSE URBAN FORM FORM

New York Berlin Beijing

Low central planning High regulation of public transport Strong central planning/regulation

▪ ~ 750 USD mn market – pushed
Market by convenient low cost e-hailing,
size cannibalizing and expanding the
taxi market
▪ Mainly e-hailing with different
Offer- service levels, e.g. Uber Pool,
ings Uber Black
▪ "Winner takes most" – Uber with
Industry 74% market share, taxi regulation
struc- not effectively enforced on Uber
ture
SOURCE: McKinsey, company websites, press, web research
▪ ~ 20 USD mn market – driven by
convenient car sharing
▪ Mainly car sharing with different
service levels, e.g. Car2Go black
▪ Regulation ensures players
co-exist: Limited e-hailing based
on taxi regulation, city supports
car sharing through parking rights
and favors parallel existence of
multiple players
▪ ~ 770 USD mn market – driven by
convenient low cost e-hailing and
license plate restrictions
▪ Mainly e-hailing,
government-backed e-hailing
platform introduced to strengthen
competition, private
e-hailing facing heavy
governmental inhibitions
▪ "Winner takes most" – Didi
controls almost entire market,
recently legalized (but now
restriction on driver subsidies)
4
 1 Recent growth in shared mobility to large extent driven by cannibalization
of the taxi market – players develop the market with low fares
Example New
York In the US, Uber has developed the market
Rides per month with better customer experience and
in mn subsidized prices

+1.8
(+12.2%) Driver subsidies: Ø fare of Uber ride 1/3
below taxi1. In NY Uber’s losses were
60% of revenues (Uber has lost at least
16.5 4 USD bn in the history of the company)
14.7
0.3 +5. Convenience/customer satisfaction: In
5.4 1 the US, users rate their experience with
Uber at 4.7 versus 3.8 with taxis (on a
scale 1-5)

14.4 Expansion of offerings: Different

11.1 -3.3 service levels (e.g. Uber Eats, Uber Pool
& Uber Black) and ancillary services for
business travelers (e.g. expense
reporting) emerge
Geographic coverage: In the US, Uber
June 2013 June 2016 covers 184 cities

~2/3 of Uber's growth driven by cannibalization

of taxi markets, only 1/3 by expansion of market

1 Based on business traveler's receipts

SOURCE: New York City Taxi and Limousine Commission, Uber, The Economist, Certify 5
 1 That growth could continue gradually – or on a completely different curve
based on AVs and city initiatives
Shared mobility market 2030, in bn USD … % of new vehicle sales

LOW DISRUPTION SCENARIO EXTREME SCENARIO

Steady growth based on convenience Fast acceleration through AVs and
and economics city initiatives

Total 2 16
2,000
200
Small towns/
rural areas 0 5

+37% 900
p.a.
Urban
sprawl +23% p.a. 3 18

400
20 900
Dense 180
cities 3 23
17 200 17

2015 2030 2015 2030

What ▪ Customers hesitant to adopt robo taxis:
you need to Increasing demand in wealthy urban cities but
large customer segments hesitant to use AVs
believe in
▪ Few cities with profitable business cases:
Only urban areas due to low AV adoption
▪ Cities do not push robo taxis: Lower
urbanization, other public transport sufficient
SOURCE: McKinsey
▪ Customers push robo taxis: >25% decrease
in fares fuel demand for robo taxis, reaching
30% of trips in some environments
▪ High number of profitable business cases:
AVs enable profitable business in remote/low
density locations
▪ Cities push robo taxis: Traffic regulated in
favor of robo taxis (e.g., dedicated lanes)
6
 1 Introduction of (semi-) autonomous car sharing solutions will dissolve
existing roadblocks to growth of car sharing
Current roadblocks preventing a higher adoption
of car sharing
Population size and density (no. of inhabitants in
total and per square unit): car sharing not
economically viable in cities/areas <700k inhabitants
Population
Sociodemographic characteristics (age/income
structure, education, etc.): car sharing requires a
certain clientele, esp. young affluent and students
City traffic flow patterns (no./distribution of city
centers/hot spots, traffic flow between centres, etc.):
car sharing works better in cities with “local
subcenters”
Traffic Ease of parking (no. of available lots near
infra-struct hubs/centre): parking needs to be plentiful for car
ure sharing to work
Availability and efficiency of public transport
(avg. distance to next bus/train station, frequency of
service, etc.): car sharing works best in cities with
inefficient public transport
City government support/interest (subsidies for
car sharing, level of central planning/city
involve-ment, etc.): car sharing needs governmental
Mindsets support
Customer mindset/preferences (level of private
vehicle ownership, acceptance of shared economy,
etc.): car sharing needs (young) people with
“sharing” mindset to increase initial adoption
SOURCE: McKinsey
How AVs can help resolve this roadblock
▪ Reduced fix cost base for repositioning of vehicles,
refueling, cleaning, etc.
▪ Self-repositioning of vehicles allows adequate
coverage with smaller fleets
▪ Smaller differentiated sub-fleets targeting different
“segments” economically viable
▪ Reduced fix costs allows for low-cost models
▪ Self-repositioning of vehicles allows adequate
coverage with smaller fleets
▪ Self-parking vehicles take away the pain point of
shared vehicles adding to inner city congestion
▪ “car-2-come” even further increases convenience
of car sharing versus public transport
▪ A fully autonomous and esp. electric car sharing
solution that reduces congestion will increase
governmental acceptance
▪ A better car sharing solution (with regards to
convenience, esp. car-2-come) will increase
customer uptake
7
 2 Purpose-built vehicles could provide the basis for a new user experience
and improved value proposition to win new drivers
Design element relevant for driver Design element relevant for customer

Flexible room usage Sustainability/

concepts for shared electrification
Comfort (e.g. comfortable
mobility (e.g. private cells)
seats, interior design)
Low TCO, e.g., through
electric power train

Comfort/cleanliness
and convenience (e.g.
child seats)

Different car sizes with Convenient handling in Personalized

flexible seating, e.g., urban centers, e.g. infotainment setup
rotating swivel seats turn-on-spot steering with external screens
technology

Professional fleet
management to
Low maintenance optimize rides/utilization
interior (e.g. velour for
seating)

SOURCE: Mercedes; McKinsey 8

 2 There are 3 options for setting up the production of a purpose-built
vehicle, all of them already feasible today

Feasible volume Recent check:

Option Applicable if ... Number of cars p.a. All options already
feasible today

...an OEM already has a

Set up a dedicated modular component 300,000
shared mobility layout and several – >1,000,000
derivatives of a 400,000 Uber drivers globally
platform purpose-built vehicle are
planned.

Build a stand-alone ...a single model of a

purpose-built dedicated purpose-built
vehicle is engineered
250,000 –
300,000
315,000+
vehicle Lyft drivers globally
from the scratch.

Build a shared ... the number of features

mobility variant
of an existing vehicle can
be reduced to meet
10,00 14,000
0 vehicles in Car2Go's
of an existing vehicle shared mobility needs. global fleet

SOURCE: McKinsey, press, IHS Automotive 9

 2 With focus on necessary functionality and electrification, purpose-built
vehicles can be produced and operated at lower costs
Vehicle price Cost change
USD thousands Percent Rationale
-15
30.0 %
R&D 1.8
Overhead Corporate
3.0 25.5
Overhead
-25 Less complexity in vehicle design with only one variant
Electronics 1.8 1.4
Body & 2.3 Decreases proportionally to vehicle price
-25
Structur 2.4
e 2.0 High-end entertainment system for improved customer
+10
experience
1.7
Compo-nen Powertrain 6.0 -30 Simple design with reduced need for HSS due to slower
ts driving speed

7.8 +30 Opposite effects:

Other ▪ Increase in powertrain cost due to additional battery
3.9
Components
▪ Decrease in powertrain cost due to
– lower performance needed as powertrain is
optimized for urban driving
3.9
Assembly Assembly 6.6 – only one motor variant

5.6 -15 Decreased complexity of assembly (due to lower no. of

components/specifications)
Distribution Distribution 4.5
0.9 -80 Large fleet purchases without advertisement and dealer
margin
Average Purpose-
ICE vehicle built EV
TCO/mile1 0.58 0.39 -32 ▪ Lower operation costs due to electrification and
USD vehicle weight
▪ Depreciation distributed over higher annual mileage2
1 15,000 miles for ICE, 70,000 miles for shared vehicle & 4 years holding period
SOURCE: McKinsey, BofA Merrill Lynch Global Research, Center for Automotive Research, AAA 10
 3 Currently, E-hailing is a "winner takes most" market – car sharing looks
1
different based on higher asset intensity and stronger role of cities
Market size by region, USD bn, 2015
Car sharing (incl.
Market share of No. 1 player E-hailing (incl. P2P)1
P2P)

~14
~70 ~ 7.6 %
%
~ 5.6

80%
~ 1.7

USA Europe China

▪ Market leaders Uber and Lyft ▪ Car sharing is highly fragmented ▪ Didi2 clear market leader with
with combined revenues of USD market with mostly regional players ~ 80% market share
6.5bn
▪ For car sharing, city regulations ▪ Government recently legalized
▪ E-hailing subsidized by Uber and play a larger role (esp. parking) e-hailing but restricted subsidies
Lyft wanting to secure No. 1
market position
▪ E-hailing more regulated (similar ▪ Car sharing is only a small
for taxi), limiting subsidies segment, no dominant player
▪ Top 4 car sharing players with
combined share of 95% – but small
market size
1 Excluding taxi hailing via app 2 Including Uber China (recently purchased by Didi)
SOURCE: McKinsey, company websites, web research, market reports 11
STRATEGIC OPTIONS FOR OEMS

OEMs need to decide whether to use shared mobility as a channel

or to address the wider value pools
Relevant if you believe
shared mobility to …

… grow in … become a
Strategic Potential considerations today's industry different market
options for an OEM structure by 2030
A Prepare for ▪ Be the first to develop a purpose
purpose built built vehicles
vehicles
Use shared
▪ Cooperate with platform player to
mobility scale quickly/gain market share
as channel B Use shared ▪ Leverage shared mobility to
mobility as
– Ensure fleet emission
indirect
compliance (through EV fleet)
channel
– Test new technologies/vehicles
– Gain access to customer data
C Become ▪ Invest/cooperate to tap into
platform platform business
player
▪ Develop strategy to achieve critical
customer base

Access wider D Become ▪ Select and develop relationships

fleet operator with key cities
value pools
▪ Invest in capability building
(e.g., through car sharing)
However, global players need to be prepared for both scenarios, as shared
mobility will most likely pick up in a different pace in different regions!
SOURCE: McKinsey 12
STRATEGIC OPTIONS FOR SUPPLIERS

Suppliers may use shared mobility as an indirect channel

or get ready for purpose-built vehicles
Relevant if you believe
shared mobility to …

… grow in … become a
Strategic Potential considerations today's industry different market
options for a supplier structure by 2030
A Leverage ▪ Provide components for fleet
for product vehicles and leverage shared
testing and
data mobility to
Use shared
mobility – Test new technologies/
as indirect components
channel – Gain access to customer data
B Become ▪ Be the first to develop components
an expert for purpose-built vehicles
▪ Build/invest in capabilities and
become thought leader on
Prepare for component design
purpose-built
vehicles C Become ▪ Build/strengthen relationships with
fleet operator leading OEMs and cooperate/
initiate dialogue on purpose-built
vehicles

However, global players need to be prepared for both scenarios, as shared

mobility will most likely pick up in a different pace in different regions!
SOURCE: McKinsey 13
Authors

Saskia Hausler Kersten Heineke Timo Möller

Research Analyst Partner Senior Knowledge
Munich Frankfurt Expert
Cologne

Anne Alexander Hefele Daniel

Grosse-Ophoff Fellow Holland-Letz
Engagement Munich Working Student
Manager Munich
Munich

… special thanks to Ulf Heim, Alex Brotschi, and many more thought partners from
the A&A community!
14
For further information, please refer to our recent publications and practice
documents Description Year
Shared mobility in the This PD analyzes and quantifies trends in shared mobility in the US by Forth-c
US – perspectives 2025 and provides a comprehensive view of the future mobility landscape oming
towards 2025 by examining different scenarios for technology, consumer behavior, and
impact on industry revenue.

An Integrated A number of social, economic, and technological trends will work together 2016
Perspective on the to disrupt mobility, potentially creating three new urban models by 2030.
Future of Mobility

Urban Mobility 2030: In the study presented here, McKinsey & Company examined how Berlin, 2016
How Cities can Realize Germany’s largest city, can profit from intelligent mobility solutions. The
the Economic Effects – key finding: by 2030, urban mobility can generate up to 14,000 jobs in
Case Study Berlin Berlin.

Automotive Revolution, There are four disruptive technology-driven trends: diverse mobility, 2016
Perspective Towards autonomous driving, electrification, and connectivity. Yet although the
2030 widespread sentiment that game-changing disruption is already on the
horizon, there is still no integrated perspective on how the automotive
SOURCE: McKinsey
industry will look in 10 to 15 years as a result of these trends. With this
publication we aim to make the imminent changes more tangible.

Urban mobility at Solving the mobility challenge will require bold, coordinated actions. 2015
a tipping point Technological advances and commercialization, funding, intelligent
policies, and business-model innovation will be needed to realize
productivity improvements while creating more sustainable environments
in our cities. We have developed a framework to help stakeholders
understand underlying forces and how they interact. 15
16
Appendix

▪ Shared mobility market size and growth

– Growth drivers and indicators
– Role of cities

– Customer preferences

▪ Current and future offerings

▪ Industry structure

17
Appendix

▪ Shared mobility market size and growth

– Growth drivers and indicators
– Role of cities

– Customer preferences

▪ Current and future offerings

▪ Industry structure

18
What disruptions and “bold moves” will fuel the rise of shared mobility? EXAMPLES

Likelihood to occur
Within 5-10 Within 10-20
Disruption/bold move (examples) years years
Germany and other European countries remove
legal roadblocks to Uber Pop services
City of San Francisco allows for unrestricted
Regulatory parking of car sharing vehicles
Germany and other countries allow for fully
automated driving on national streets
Several European cities restrict city center traffic
to electric/shared autonomous vehicles
Google and Tesla launch first fully autonomous
Technical
vehicles
Uber drastically reduces prices for Uber pop
services in major European cities
Competitive Uber cooperates with leading OEMs, car sharing,
and rental companies to roll out shared AV1-fleet
Tesla launches own car sharing service based
on shared AV-fleet
> 50% of urban population favors shared
mobility over private vehicles
Customer
Leading European companies require employees
to use shared mobility offerings for road travel

1 Autonomous vehicles
SOURCE: McKinsey
SOURCE: McKinsey 19
Already today we can see some indicators that predict the growth
of shared mobility Detailed on the following pages

Indicator Example
Regulatory changes in favor of public European Commission publishes guidelines in
transport through private drivers support of Uber Pop services

Step-by step consideration of automated Germany allows for partially automated driving
Regulatory driving systems in national laws on German roads

Regional regulatory initiatives to reduce Germany establishes low emission zones in city
exhaust emissions in cities centers

Announcements of AV launches BMW announces first fully autonomous vehicle

Technical by 2021

Price reductions by major e-hailing Uber reduces prices for Uber Pop services in
providers Chicago and other high volume cities

Competitive
Shared mobility business models turn Uber operates profitably in most US cities
profitable as a result of regional
winner-take all outcomes

Decreased demand for privately owned 6% decline in number of privately owned

vehicles vehicles per household in the US (2006-2012)
Customer
Drop in number of <25 year olds holding a 7% drop in percentage of <25 year olds holding a
driver’s license driver’s license in the US (2000-2013)
SOURCE: AAA Foundation Highway Safety, Department for Transport (UK), Vancouver Transportation Department, Has motorization in the US peaked?
University of Michigan (Jan 2014), http://www.nachhaltigkeit.wienerstadtwerke.at/daseinsvorsorge/oepnv/modal-split.html,
20
http://theconversation.com/why-are-young-australians-turning-their-back-on-the-car-35468,
Many OEMs are pushing hard on the development of NOT EXHAUSTIVE

autonomous passenger vehicle technology

Autonomous driving development state Key insights

▪ Many OEMs
with ambition to
have
self-driving cars
Full 2020
Self-Driving
Automation ▪ Premium
XC90 OEMs take
gradual
approach,
introducing
more and
more ADAS
Limited features and
Self-Driving A8 moving from L2
Automation over L3 to L4
▪ Several OEMs
A6, (e.g. Toyota,
Combined A7 Chevrolet,
Function 7 series Hyundai) take a
Automation leap and plan
E class direct
CT6
introduction of
autonomous
2014 2015 2016 2017 2018 2019 2020 2025 driving

SOURCE: Press search; Team analysis 21

At 2015 price structures, e-hailing is more cost efficient than owning a car for
36% of the population – with reduced cost through AVs up to 89% by 2030
Shared Ube New Owned Share of
AV r Car users1
New Owned vs. Uber, breakeven 2015 New Owned vs. Shared AV, breakeven 2030

Annual cost of mobility Cumulative share of people ▪ 2015: Today mobility solutions like
USD Percent
Uber are more cost effective than
25,000 100 owning a car if users drive less than
89% 6,000 km per year, which applies to
90 36% of the urban2 population
20,000 80 ▪ Not requiring a human driver,
70 shared autonomous vehicles
further reduce TOC, which makes
15,000 60 mobility services even more
attractive to users
50
10,000 36% 40
▪ 2030: In the future with shared
autonomous vehicles available,
~20,000 km 30 such mobility solutions are more
~6,000 km cost effective than owning a car
5,000 20 if users drive less than 20,000 km
10 per year, which applies to 89% of
the urban2 population
0
0 5000 10,000 15000 20,000 25000 ▪ This also explains the high interest
of mobility service providers such
Total driving distance per year as Uber in autonomous driving
in km research
1 Share of users in urban conglomerations travelling less than x km per year
2 Washington, DC; ultra-high-density cities like NYC and London exhibit even higher threshold values
SOURCE: McKinsey, mobility survey data 22
Appendix

▪ Shared mobility market size and growth

– Growth drivers and indicators
– Role of cities

– Customer preferences

▪ Current and future offerings

▪ Industry structure

23
Given infrastructure requirements of shared mobility, cities may take
on a strong role in establishing shared mobility solutions

Since the design of an integrated shared … cities are expected to take on a

mobility offering places requirements on city strong role in establishing holistic
infrastructure… mobility offerings

Integration of public transport: ▪ Select and coordinate players along

Alignment of public transport shared mobility value chain to ensure
schedules with shared vehicle seamless integration of offerings and
offerings to ensure seamless avoid redundant infrastructure
passenger connections investments
▪ Adapt public transport offering to
Charging networks: Roll-out of complement shared mobility solutions
charging stations in cities to allow (e.g., optimize public vs. individual
for recharging of (shared) electrical traffic flow and connection points)
vehicle fleets
▪ Adjust regulation to accelerate shared
mobility adoption (e.g., restrict city
Parking solutions: Provision of center traffic to shared electrical
efficient parking solutions for vehicles) and remove barriers for
shared vehicle fleets shared mobility players (e.g, restricted
parking)

Traffic regulation: Optimization of

traffic through big data based
steering of vehicle fleets

SOURCE: McKinsey 24
While steady state outcomes are mainly driven by infrastructure
charac-teristics, cities may develop at different speeds due to other factors

City archetypes Factors determining speed of mode share development

1. Established mega-cities London Singapore

2. Rising mega-cities
▪ Organic ▪ Planned
City growth

3. Developing mega-cities
▪ Progressive with ▪ Planned
4. Mature advanced cities Society
conservative core
5. Lagging cities
▪ Moderate ▪ Tropical
Climate
6. Underdeveloped cities

7. Developed towns
▪ Mainland ▪ Island
Geography
8. “Suburbia”

9. Rural towns ▪ European/UK ▪ Autonomous

Regulation

Mobility ▪ Ownership ▪ Driver services

behavior

SOURCE: McKinsey 25
Appendix

▪ Shared mobility market size and growth

– Growth drivers and indicators
– Role of cities

– Customer preferences

▪ Current and future offerings

▪ Industry structure

26
Customer mobility needs and preferences in cities are expected to change
significantly throughout the next 20-40 years

HOW we move WHY we move

Degree of
change Shift in mobility needs as a
result of changing lifestyles,
work environments and
social behavior

Change of transport modes due

to evolving customer preferences
and technology

Now Time
Time
10-20 years 30-40 years
frame

▪ From using private car to using ▪ From going out for shopping to
shared vehicles have purchases delivered home
Example ▪ From moving alone to sharing ▪ From commuting to virtual
changes rides with others collaboration
▪ From self-driving to using ▪ From attending events in person
(shared) autonomous vehicles to virtual reality

SOURCE: McKinsey 27
Generation Y is demanding and could be a game-changer for
intra-city mobility
Technology

Event-based use Ecology

Convenience

Individualism

Versatility

SOURCE: McKinsey 28
Generation Y features distinctive characteristics that translate into far
reaching implications for their mobility behavior

Indicators for mobility behaviors

Experience Generation Y has a spending preference Experiences can be provided not only by the car
based use for unique experiences rather than plain itself, but also through events around the car
material goods such as travel adventures

Convenience For Generation Y convenience is top of Generation Y has a higher interest in easy
the list and a necessity for any product or access to mobility compared to full ownership
service they use

Technology Growing up with plenty of technology Generation Y is more open to autonomous

generation Y is used to have anything at driving features, which could accelerate the
a finger tip change of today's cars

Ecology Generation Y tends to care more about the Generation Y requires mobility offerings to be
environment than previous generations environmentally sustainable

Versatility Based on their lifestyle, generation Y has a Generation Y has a highly flexible demand for
highly flexible demand that fits all life mobility solutions across different mobility
circumstances modes

Individualism Generation Y is less oriented in the broader Personalization of mobility offerings is key to
community and more focused on meet generation Y’s expectations not only
self-expression and personal freedom regarding product customization, but also by
providing tailored services

SOURCE: McKinsey 29
CAR SHARING

Next to existing car sharing models, corporate car sharing is a new area
with additional potential

Background Operating models of corporate car sharing solutions

▪ Travel departments of Exclusive Semi-public

large companies are ▪ Provision of corporate car
increasingly urging sharing fleet solely for use by
employees to use public companies' own employees
transportation systems
▪ Operated either by companies'
▪ Use of public systems
travel/corporate fleet
reduces need for own management or an external
corporate fleet and provider
expensive alternative
travel modes (e.g., taxi, ▪ Considerable risk of low fleet
limousines) utilization
▪ Typical use case: travel
between different sites of
company and to/from airport
▪ Corporate car sharing system
accessible to employees of
several participating companies
(typically within geographic
proximity)
▪ Lower risk of low fleet utilization,
but need to ensure certain
availability of cars during peak
times
▪ Typical use case: travel to/from
airport; plus (to some degree)
between different sites of
participating companies

SOURCE: McKinsey 30
Appendix

▪ Shared mobility market size and growth

▪ Current and future offerings

▪ Industry structure

31
Various forms of shared mobility business models currently coexist
in the market place
Type Company examples Key observations

OEM owned ▪ Large growth potential driven by

Car sharing mobility concepts in urban areas
sharing Independent ▪ Free-floating B2C models are
becoming prevalent
Traditional ▪ Traditional-station-based providers are
Car
rental being challenged by peer-to-peer
Peer-to-peer
offerings
Ride Ride sharing ▪ Ridesharing is still a niche market,
sharing however with strong growth potential
Traditional
▪ Traditional taxi market shows limited
Driver growth and is under attack by
services E-hailing (incl. app-based taxi/limousine (booking)
peer-to-peer) services (e-hailing)

Multi-modal ▪ Door-to-door itineraries integrate

Multi-mo previously fragmented routing and
dal ticketing/ payment – growth potential
for connected players
Bus

▪ Intra-city rail transport increasingly

Train complemented by intra-city bus
offerings (e.g., Flixbus), thus posing a
Non-car threat to traditional rail companies
Bicycle
▪ Strong growth of non-car, inter city
mobility offerings such as bike and
Scooter scooter sharing

32
In the future traditional mobility business models will merge to build hybrid
and differentiated forms of shared mobility offerings
Mobility landscape
Traditional Today Future

Driver services
Driver services
P2P Driver
Rid driver services
e services Ownership
Vehicle ownership Vehicle
ownership shar Ride sharing
ing Car sharing
P2P
rental Car rental
Car rental
Car
Car rental
sharin
g

▪ Driver services, vehicle ▪ Separate business models with
ownership, and car rental as partial overlaps (e.g., P2P driver
separate business models services at intersection between
Mobility driver services and vehicle
offerings ownership)
▪ New services emerge as
differentiated version of existing
businesses (e.g., car sharing as
differentiated version of car rental)
▪ Limited competition between ▪ Increased competition between
Competi-tiv suppliers of different mobility traditionally separated models (e.g.,
e dynamics solutions increased pressure on taxi
providers due to rise of P2P driver
services)
▪ Fully integrated mobility
landscape with blurred
boundaries between business
models (e.g., vehicle own-
ership with contribution to shared
AV fleet when not used)
▪ Highly differentiated spectrum of
offerings, covering a broad range
of customer needs and situations
▪ Competitive landscape organized
along shared mobility value chain
(rather than traditional organization
along business models)
33
With merging mobility offering landscape, existing players start to
differentiate and expand their offerings
Initial Expansion and differentiation

From OEM over

car sharing to
+ + + multi-model
service provider

Vehicle Car sharing Car sharing Multi-modal

ownership (basic) (luxury) services

From OEM to
provider of car
+ + sharing/driver
services
EV AV ownership with
ownership contribution to Tesla operated
sharing pool shared AV fleet

From basic
e-hauling over
+ + ride sharing to
commercial
Driver services Ride sharing logistics
(Uber pop) services Food
delivery
SOURCE: McKinsey 34
Various shared mobility business models may emerge to EXAMPLES

optimally address customer needs Covered spectrum

Potential shared mobility business models

Shared AV fleet Short term rental AV ownership Integrator

▪ Operation of Shared ▪ Offering of short term ▪ Offering of middle and ▪ Offering of multi-
autonomous vehicle rental of autonomous upper class modal trip planning
fleets, providing driver vehicles autonomous vehicles and booking software
services to customers ▪ Availability of various for private use/
▪ Included option for car types (e.g., ownership
ride-sharing to reduce limousines, muscle ▪ Option to contribute
cost for passengers cars, moving trucks, car to shared vehicle
etc.) fleet (when not used)
in exchange for money
Ownership
(owned-shared)

Business Duration
model (Short term-
charac-ter long term
istics
Service level
(self-drive-
driver services)

Frequency of
travel (low-high)

Customer
Traveled distance
demand/
(short-long)
segment
No. of passengers
(low-high)

SOURCE: McKinsey 35
Appendix

▪ Shared mobility market size and growth

▪ Current and future offerings

▪ Industry structure
– Competitive landscape
– Profitability

36
Appendix

▪ Shared mobility market size and growth

▪ Current and future offerings

▪ Industry structure
– Competitive landscape
– Profitability

37
CAR SHARING

Although car sharing market is fragmented with large number of local

players , some cross-regional leaders have established
Chin US
… Revenues 2015 a A
Europ
USD Mn ROW
e
Regional splits 2015
Percent of total revenue by player and region Key insights

▪ So far, global players mainly

present in Europe and the US
Europe and just recently entered the
Chinese market (e.g. Car2Go
in April 2016)
▪ In some regions of the US,
parking regulations as major
barrier for car sharing
USA (DriveNow discontinued its
services in San Francisco in
November 2015)
ROW

~140 ~50 ~440

Who will become the dominant player by region?

What disruptions may cause a major shift in the
competitive landscape?

SOURCE: 38
CAR SHARING

Players can be categorized using 5 key criteria – operating model and

vehicle pool are key parameters

While existing players can be categorized ... some trends for operating model
using 5 business model criteria ... design can be observed
Characteristic of
emerging leaders Free-floating will become the
Typical characteristics prevalent model
In Germany, memberships of
Operating Round trip Point-to-point Point-to-point
free-floating grew by 25.8%,
model station-based free-floating
station-based by only 13.2% in 2015

Multiple cities Multiple cities Alternative engines in car

Only one
Scale within one across fleets used for marketing and
selected city
country countries
branding purposes
Vehicle pool Only one type Small selection Multiple different While fewer than 1% of registered
(breadth) of car of models models cars in Europe are Evs, the share for
car sharing fleets is significantly1
higher
Vehicle pool Only standard Mix of standard
Only ZEV Players charge higher prices
(engine) engines and ZEV for premium fleets
Adjacent Example price levels:
Scope Car sharing
ser-vices, e.g.,
Other services, Smart 29 ct/min, Mini 31 ct/min,
only e.g., multi-modal BMW 34 ct/min
rental

1 E.g. DriveNow has 20% EVs in its car sharing fleet

SOURCE: McKinsey 39
CAR SHARING

Most players are active in the car sharing market to protect and/or
extend their core business by leveraging existing capabilities
Rationale Company examples

▪ Manufacturers have best access to cars

▪ Forward-integration as protection against
OEMs
potential new powerful buyer groups
▪ Branding and promotion of cars as secondary
objective
▪ Run adjacent business model of renting with
Car rental partly overlapping capabilities (e.g., customer
players interaction)
▪ Protection of core business model to rent cars
for a specific period of time
▪ Established players in mobility market,
“Conver-g e.g., railway operators
ence” ▪ Provision of additional mobility services to
players
complement existing offer (e.g., journey to/or
from train station) and thus protect core business
▪ Start-ups seeking to capture high growth
potential of shared mobility in local markets
Start-ups

SOURCE: McKinsey 40
E-HAILING

Although market dynamics appear to differ by region, some cross-regional

Chin US
players have established … Revenues 2015
a A
1

USD Bn Europ
ROW
e

Regional splits 2015

Percent of total revenue1 by player and region Key insights

China ▪ US market dominated by Uber

and Lyft
Europe
▪ Chinese market controlled by
Didi, Uber's attempt to enter the
market failed (merger of Uber
China and Didi on August 1st
2016) 🡪 reasons: barely any
customer service (no hotline),
USA Uber lacks knowledge of local
market conditions

ROW

~1,51 ~0.31 ~1.01

Who will become the dominant player by region?

What disruptions may cause a major shift in the
competitive landscape?

1 Company revenues accounting for ~20% of overall e-hailing fairs/market size

SOURCE: McKinsey 41
E-HAILING

Players can be categorized using 4 key criteria – platform supply side

characteristics is key parameter
While existing players can be categorized ... some trends for operating model
using 4 business model criteria ... design can be observed
Characteristic of emerging
leaders

Typical characteristics

Single taxi Multiple taxi Private driver based

Platform Private
service service e-hailing will become the
supply side drivers
provider providers prevalent model

Multiple cities Multiple cities

Only one
Scale within one across
selected city Support of driver
country countries
networks to finance
Upscale vehicles
opt-ions
Vehicle No selection Upper-class Uber launched a financing
available (e.g.,
pool possible models only program to help drivers
limousine,
SUVs) purchase vehicles at
discounted rates
Adjacent
Other services,
services,
Scope E-hailing only e.g.,
e.g., car
multi-modal
pooling

SOURCE: McKinsey
42
Powerful cooperations have been established across industries
OEMs Tech players

Apple
investment in
Chinese
GM invests $500 mn in By acquiring German mobility
Lyft and wants to test Mytaxi and British Haila, market

self-driving taxis in 2017 Daimler creates App

Robo-taxis integration
Europe’s largest WAZE Lyft integrates
e-hailing network WAZE service
Shared into its app to
mobility
E-haili offering improve
ng efficiency of
Ford, Google, Uber
players routes and
launch coalition to further
Joint app development pick-up/drop-off
Shared
push federal action for
and special car leasing mobility self-driving cars
offering
conditions for Uber
drivers
Integration
with local
App integr. Robo- Self-driving digital
App integr.
leasing taxis car coalition
Google Maps services
in China

JV A fleet of Uber integrated into

DriveNow
self-driving XC90 Google maps to
Car taxis to be show estimated
rental launched in pick-up times and
JV Car2Go
com-pa Pittsburg in Aug ’16 fares
nies
Car sharing Car sharing
partnership partnership

SOURCE: McKinsey, Press 43

Potential game changers for shared mobility competitive landscape
Potential game changers Rationale
▪ Rise of autonomous vehicles may lead to ▪ Convergence of car sharing,
a convergence of business models,
thus intensifying competition and
leading players to cooperate and/or
Autonomous vehicles
drive each other out of the market
▪ Regulatory changes in favor of
electronic vehicles may create
competitive advantages for players with
strong EV-solutions
▪ Introduction of low cost EV-batteries
Electronic vehicles reduces cost of vehicle ownership, thus
enabling shared mobility players to
compete with more cost-efficient
fleets (and lower prices)
▪ New, powerful cooperations (e.g.,
between shared mobility providers and
OEMs) allow for more cost efficient
operations, thus creating competitive
Cooperations
advantages over stand-alone players
▪ Technology players take on integrator
role to bring variety of regional shared
mobility options to customers, thus
Business model
stripping away margins and exercising
integrator
leverage over shared mobility players
SOURCE: McKinsey
Example
rental, and E-hailing business
models cause Uber to coope-
rate with DriveNow to
operate shared AV fleet
▪ Tesla leverages advanced
char-ging network to provide
shared mobility solutions in
cities with regulatory
disadvantages for combustion
engine vehicles
▪ Lyft establishes own EV fleet
with significant cost
advantages over players
operating combustion engine
vehicles
▪ Uber partners with Toyota to
bring down total cost of vehicle
ownership for drivers
▪ Google rolls out mobile
application to compare and
book available mobility
offerings across European
markets
44
Appendix

▪ Shared mobility market size and growth

▪ Current and future offerings

▪ Industry structure
– Competitive landscape
– Profitability

45
CAR SHARING

Car sharing business follows regional logic with limited potential for
cross-regional synergies … Incurred cost along value
chain, % of total
Observed minimum level of integration

Implications for
Car car sharing
sharing Operations Platform (customer players
value Vehicle
~ (vehicle related) ~ facing and analytics)
~
chain ▪ Given high level
1 5 3
of value chain
5 5 0
integration of
Company
car sharing
examples
players (incl.
regional
▪ Supply of car ▪ Operation of fleet ▪ M&S, brand building opera-tions with
sharing fleet (e.g., fuel, clean, and ~55% of cost),
Descri-pti vehicles to insure fleet vehicles) …▪ Supply of matching/ cost structures
on car-sharing operator brokerage platform offer limited
▪ Supply and operation (incl. underlying potential for
of local car sharing analytics) cross-regio-nal
infrastructure synergies
▪ Need to achieve
▪ High proportion of fix cost with fleet size and ▪ ~50% of cost incurred profitability on
regional infrastructure requirements being by central M&S and city level by
Cost
main cost drivers platform ops. (scalable optimizing
structure
across regions) infrastructure and
▪ Limited potential for cross-regional synergies vehicle
▪ ~50% of cost locally
triggered1 utilization

1 E.g., Local M&S

SOURCE: McKinsey 46
CAR SHARING

Fleet related cost as largest cost drivers along car sharing

value chain
Potential levers for
Cost, % of total Insights cost reduction

Vehicle Vehicle cost/depreciation ▪ ~15% of total cost for ▪ Development of

vehicle depreciation/ de-dicated, more
Fuel 15 financing cost efficient
vehicles
▪ Fleet maintenance/repairs ▪ Increased use of
Vehicle cleaning and fuel as largest cost electric vehicles for
drivers car sharing fleet to
Parking fees reduce fuel cost
▪ Cost mostly fix depending
Opera-tion
on fleet size (e.g., insurance)
s Insurance
or variable with regard to
(vehicle
Store utilization (e.g., fuel)
related)
rental/infrastructure ▪ Some regional scale
Local personnel economies for local
personnel and infrastructure
Subtotal cost
operators
M&S, brand building1 ▪ M&S/brand building as ▪ Full realization of
largest cost drivers – 15% of local and (limited)
G&A, IT, legal cost incurred locally with cross-regional
Platform regional scale economies scale economies
Customer service,
(customer and cost synergies
call center
facing and
Fees, taxes, other
analytics)
expenses
Subtotal customer
facing services
Total

1 15% local M&S, 3% cross-regional M&S and brand building

SOURCE: McKinsey 47
CAR SHARING

Car sharing business cases are calculated on a city level –

limited synergies across cities

Typical business case structure per city

Revenue
Hamburg Usage by customers, registration fee, factoring fee, car
sale

Hannover Fleet- and rental-related costs

Berlin
Fleet maintenance and repairs, fleet depreciation, fuel,
vehicle cleaning, parking fees, insurance
Dusseldorf
Location costs
Location marketing and sales, store rental and
Cologne
infrastructure, local personnel costs
Frankfurt
EBIT

Synergy potential across cities and

Stuttgart
country/region HQ costs
Marketing and brand building effects
Munich
G&A, IT development, legal
Customer service and call center
Fees, taxes, other operating expenses

SOURCE: McKinsey 48
CAR SHARING

For car sharing, utilization is the major driver of profitability …

Revenure-cost relation dependent on country/region of operation

Revenue1/cost per vehicle, per day vs. utilization

EUR ▪ In this example calculation,
~ 12 - 13% utilization per day,
Revenue per
day leading to break-even of vehicle
Cost per depending on price charged
45 day per min and cost structure
40 35 EUR ▪ Certain level of fixed costs per
35 vehicle, even at zero utilization
13% (e.g., insurance, allocated HQ
30 costs) – variable vehicle cost
25 increasing with utilization
20 ▪ Scale effects on fixed costs
15 through larger fleet size on a
constant fixed costs basis,
10 leading to lower utilization
5 needed for break-even

0 ▪ Increasing fleet size as a

0 1 2 3 4 5 6 7 8 9 10 1 12 13 14 15 trade-off between decreasing
1 utilization and increasing
Utilization
vehicle coverage throughout
Percent2
city area

SOURCE: 49
CAR SHARING

On a city level, break-even can be expected within ~4yrs EXEMPLARY FOR

FREE-FLOATING MODEL

after launch – initial negative EBIT margins due to low fleet utilization

Location EBIT margin (before central cost (HQ) allocation)

EBIT margin Mean Variance Factors influencing time until break-even

Percent
▪ Number of players and incumbent fleet size in
20 city
▪ City density/population clustering
▪ Regulations (e.g., limitations on number of cars or
additional charges for car travel)
0
▪ Availability and convenience of other mobility
services
Key insights
-20
▪ Current large car sharing business models only
profitable in larger cities due to
– Minimum number of cars needed per city to
-40 ensure sufficient coverage and convenient
3 - 4 years until customer experience
-60
break-even – Need for sufficiently high utilization rates
-100
Location EBIT margin > 10% – Scale effects on overhead costs
-200 before central cost allocation ▪ For smaller cities, new economically viable car
sharing solutions still to be developed –
-260
0 1 2 3 4 5 potential business opportunity
Years after launch

SOURCE: Expert interviews; McKinsey 50

CAR SHARING
Assessment of a city’s structure and demand patterns is critical
in order to anticipate likelihood of car sharing rollout success
Typical questions
▪ What distinct driving patterns as well
as underlying use cases and customer
needs exist?
▪ What external city factors support or
limit potential city performance?
▪ Where do the most important segments
live and how strongly are they
represented in each target city?
▪ How highly concentrated is potential
customer value?
▪ Are there major bottlenecks that could
hinder successful rollout?
SOURCE: Mobility of the future; McKinsey
ILLUSTRATIVE
Key insights
▪ Need to analyze on a post code or street
level – cannot take the city average
▪ Prediction of car sharing success based on 3
factors
– Segment mix – is the expected customer mix
assumed to be favorable or unfavorable?
– Segment value – is the customer value per
segment assumed to be above or below
average?
– Volume – is there more or less car sharing
business volume available
(e.g., per inhabitant) than average?
▪ Influence of those factors can be combined
into a “city score” by post code
51
CAR SHARING

Analysis typically starts with socio-demographic data on post code or even

street level and is complemented with city-specific traffic data

Analyze and prioritize socio-demographic factors… … and adjust for traffic type of city

Age Concen-tra ▪ One city center, activity

▪ Male inhabitants in age class 0 - 9, 10 - 19, ted activity
structure 20 - 24, 25 - 29, … mostly centered around it
▪ Female inhabitants in age class 0 - 9, 10 ▪ Traffic going from and to city
-19, 20 - 24, 25 - 29, … center
District/ ▪ Inhabitant density, average household size,
household
average family size, number of
structure
single/multi-family households with/without
children
▪ Pedestrian frequency, number of companies,
Income number of retailers
▪ Household income by class
structure
▪ Purchasing power per inhabitant Wide-sprea ▪ Hot spots around the
▪ Social class – upper, upper-middle, lower d/
different city/business
middle, lower class distri-bute
centers and in well-situated
Education/ d activity
▪ School enrollment/educational attainment neighborhoods
employ-m
ent ▪ Class of worker and occupation type ▪ Concentration around main
▪ Industry by class (e.g., manufacturing, retail, hubs of local transportation
public administration) (car sharing used to reach
Com-muti ▪ Car density/existing vehicle availability local transportation hubs)
ng
▪ Incoming commuters, outgoing commuters ▪ Traffic going across city, but
▪ Travel time to work (e.g., < 10 min, 10 - 14 also to hotspots
min, 15 - 20 min, 21 - 30 min)

SOURCE: Mobility of the future; McKinsey

52
CAR SHARING

Car sharing has several secondary economic benefits for automotive OEMs

Sales/Marketing ▪ Sale of additional units in order to secure core business

▪ Creation of used car pool that can be controlled by OEM
▪ Marketing new vehicles/special features/technology (e.g., EVs) –
especially BMW seems to heavily use DriveNow for marketing purposes
▪ Improvement of image for OEM brand (e.g., EVs for "green" OEM)
▪ Lowering of average CO2 emissions value across all cars sold by
increasing share of CO2 friendly car sharing vehicles
▪ Up-selling/cross-selling of OEM’s products/services to car sharing
customers
Customer insights ▪ Receive key personal data at registration especially from young people
and people who are probably not an OEM customer so far
▪ Gain overview of car usage patterns regarding driving time, distance,
frequency, destinations
▪ Market gathered data to other players (e.g., traffic monitoring services,
offline retailers)
Testing of new ▪ Testing of new vehicles/features/technologies in actual daily routine
vehicles/features ▪ Eradicate "teething problems" much easier with more direct feedback
from accessible car information

SOURCE: McKinsey
53
E-HAILING

Profitability of e-hailing business depends on platform adoption with

economic feasibility for local operators being a prerequisite for scaling
… Incurred cost along value … Observed minimum level of integration
chain, % of total

E-hailing Implications for

value Operations Platform (customer e-hailing players
chain Vehicle
~ (vehicle related) ~ facing and analytics)
~
1 7 2
▪ Emerging
e-hailing leaders
0 0 0
cover only
Company
platform part of
examples
+ Private drivers value chain,
making the
▪ Supply of vehicles ▪ Operation of fleet ▪ M&S, brand building realization of
to e-hailing operators (e.g., fuel, clean, and cross-regional
Descri-pti insure fleet vehicles) ▪ Development
… and scale
on operation of e-hailing econo-mies
▪ Driver salary platform (typically primary driver for
software solution) profitability

▪ However,
profitability for
▪ Mostly fix cost related to fleet size and ▪ Large portion of cost local operators
variable cost depending on mileage (e.g., incurred by central M&S needs to be
Cost
driver salary) and platform ops. ensured to
structure
(scal-able across regions facilitate platform
▪ Limited potential for cross-regional synergies and with potential for adoption
cross-regional synergies)

SOURCE: McKinsey
54
E-HAILING

Driver salary as largest cost driver along e-hailing value chain

Potential levers for

Cost, % of total Insights cost reduction

▪ ~10% of total cost for vehicle ▪ Development of

Vehicle Vehicle cost/depreciation depreciation/financing de-dicated, more
cost efficient
vehicles
Insurance, maintenance ▪ Driver salary as largest cost ▪ Improve driver
fees & other ops. driver, accounting for ~50% of utilization (i.e.,
total cost minimize backhaul)
to allow for reduced
Fuel ▪ Cost mostly variable with driver salary per mile
Opera-tion regard to mileage at constant hourly
s
salaries
(vehicle Driver
related) salary

Subtotal
operation
s

Customer facing services1

▪ ~20% of total cost for ▪ -
customer facing/
platform services, including
Platform M&S, brand building, G&A,
(customer Total
IT, Legal and customer
facing and service as major cost drivers
analytics)

1 M&S, Brand building, G&A, IT, Lega, Customer service, Call center
SOURCE: McKinsey 55