The new mobility industry is currently coalescing around a nexus of both traditional industries and new smart technologies, in areas touching every part of the personal mobility experience.
As the industry evolves and expands, both types of companies will have an initial role to play — but the changing nature of that role, and its prominence compared with other players, will be determined over time.
As the emphasis of consumer life shifts from products to services, cars serve as an important element of those services, but they’re no longer the center of gravity. This transformation poses challenges for carmakers in two key domains: digital technology, which we touched on in our last article in this series, and in the business models they adopt to stay competitive in this brave new world.
Mastering new business models
As of today, the automotive business is hierarchically organized and siloed, with tiered suppliers doing what they are asked by the respective next hierarchical layer. OEMs specify to Tier Ones, who specify to Tier Twos, and so on. This has worked well enough to date, considering that carmakers are doing B2B business with their distribution channels, rather than B2C business directly with consumers.
Carmakers don’t know much, if anything, about their end customers, whether individuals or fleet-wide leaseholders. Only a small number of customers are currently enrolled in state-of-the-art telematics service offerings, which they perceive as complex to enable or use and lacking clear benefits.
Now, carmakers are being faced with the need to build and execute an entire suite of B2C services with an entirely different set of business models, from the traditional one-time B2B sell to pay-as-you-go new mobility service offerings. This is a massive challenge for any carmaker, but some have already taken initial steps in this direction, including car-sharing services such as DriveNow from BMW and Sixt, Daimler’s Car2Go, GM’s Maven and Volkswagen’s MOIA.
Major automakers are projecting that by 2025, 25-50% of their business will be based on digital services (though without specifying exactly what they mean by this). And the competition extends beyond the usual suspects. The fiercest entrants will be digital natives, like Apple, Google, Amazon and Facebook, seeking to take over the experience inside the car and in the cloud as a user interface for their own services. If they’re successful, carmakers will be downgraded to hardware providers taking a massive risk on margin and brand recognition. Clearly, there is much at stake and much to lose.
Competition vs. collaboration and co-creation
As we have discussed, the transition to the people- and service-centric world of new mobility services will involve not only providing various forms of vehicle access and usage, but also linking the consumer’s existing digital services with additional services offered through connected and, ultimately, autonomous vehicles. Smoothly integrated, these services will provide a fully personalized, convenient and secure new mobility experience.
There are two ways to realize this vision.
- Competition. New mobility providers race to develop all-in-one offerings covering the entire portfolio of mobility services.
- Collaboration and co-creation. New mobility providers co-create mobility services in collaboration with established companies that already offer similar digital services to users.
The first model shows obvious drawbacks, beginning with the need to recreate so many wheels. It’s simply not reasonable to expect that a company formed in one domain will be able to extend itself rapidly into every other relevant domain and build services of a quality on par with established specialists.
Efficiency and user costs are also an issue; services created and sold by new mobility providers would be duplicative to many of the digital services already being used by the consumer. A person could end up paying separate bills for everything from connectivity to media to m-commerce services.
Collaboration and co-creation offer a more promising way forward. Each digital service provider continues to focus on its respective core competency to create the best possible services, and digital service providers work with new mobility companies to co-create the best possible new mobility experiences.
Instead of taking a winner-takes-all approach to the customer relationship, each provider can own the customer relationship within its own domain and use the full value of the data generated through the usage of its service. As a win-win for both service providers and users, collaboration on and co-creation may well be the essential concept to enable seamless, convenient, trusted and secure new mobility services.
From a technical perspective, this collaborative, co-creative model amounts to nothing more or less than linking existing digital service identities from different business domains into a single, virtual new mobility identity. By bringing established customer identities and relationships into the context of new mobility rather than starting from scratch, this approach makes it possible to deliver on its vision more quickly, efficiently and successfully.
Digital identity can help build tomorrow, today
Digital identity platforms must slot neatly into any new business paradigm for new mobility; as we pointed out in our last article, they’re actually central to its prospects for success. A car that identifies its user, adjusts to their preferences, plays their favorite music and knows where they want to go and how best to get there, won’t be science fiction — the technology is available today and will be essential to success tomorrow.
Built into a vehicle right from the design phase, digital identity enables the seamless and secure interactivity that powers new mobility services, as well as the personalization, consistency, privacy and trust that will make this new world so appealing for consumers.
For an automotive industry in transition, it’s now an exciting time to be working at the leading edge of innovation. And in our next article, we’ll explore exactly how digital identity can add present-day value and future potential to development trends in connected and autonomous cars.
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