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The Rise of Transport as a Service (TaaS)

The huge costs and inefficiencies associated with our current transport model are self-evident. The majority of vehicles sit idle, and when moving only a small proportion of the energy released from burning a fossil fuel is to actually move the vehicle (most energy is devoted to overcoming the inertia of the vehicle itself). To this we can add the social and economic costs of accidents and congestion. As one of the world’s most urbanized and motorized nations these inefficiencies are particularly pronounced in Australia.

I had the privilege in May this year of chairing day one of the Future Vehicles World Conference which looked at the future of passenger and freight movement in Australia. The key take out from the conference was the rise of Transport as a Service (TaaS) and how this could overcome the inefficiencies we experience with today’s transport infrastructure.

Transport as a Service sits at the intersection of four macro trends: autonomous vehicles; electrified vehicles; connectivity; and the sharing economy. It involves a shift away from ownership of the mode of transport towards mobility solutions that are consumed as a service.google-car-taas-sml.jpg

Over the course of two days, speakers from a broad range of private and public organisations, including Tesla, Bosch, GoGet, The Electric Vehicles Council, NRMA, Austroads, the National Transport Commission (and of course ACA Research!), presented their vision of Australia’s transport future. Interestingly, a quick show of hands on day one indicated around a third of the audience had already experienced a ride in an autonomous vehicle.

There is little doubt that rapid progress has been made since the International Driverless Cars Conference was held in Adelaide in November 2015. The question is whether the infrastructure is keeping pace with the rate at which automotive technology is progressing. We heard about why Bosch sold their internal combustion engine in order to focus on electric powered vehicles, Tesla’s ambitious plans for mass-production and the forthcoming launch of the Model 3, GoGet’s plans for expanding the car sharing economy and the success of the RAC Intellibus trial in Perth. But we also heard from the NTC about the breadth of regulation alteration required and the potential barriers ahead, and the work that needs to be completed at the ACMA for the new automotive radiofrequency spectrum required for vehicle connectivity.

Also check out: Are We Reaching Peak Automotive In Australia - A Review of 2016 Vehicle Sales 

The electrification of vehicles in Australia was also questioned, given the current policy environment. More recently, I had the pleasure of attending a roundtable discussion with Carlos Ghon, global chair of the Nissan-Renault alliance. Carlos autonomous vehicle technology transforming the way we experience and see our cars. They will become a kind of mobile space where we can work, rest, relax, watch movies, and video conference you are being driven. However, he was less optimistic about the immediate prospects for electrification in this part of the world: “In Australia I don’t think there is anything to say that demand for electric cars is going to take off.”

A recently published paper from RethinkX, an independent think tank, predicts that within 10 years of the regulatory approval of driverless vehicles:

  • 95 percent of U.S. passenger miles traveled will be served by on-demand Autonomous Electric Vehicles (A-EVs) owned by companies providing Transport as a Service (TaaS).
  • A-EVs engaged in TaaS will make up 60 percent of U.S vehicle stock.
  • As fewer cars travel more miles, the number of passenger vehicles on American roads will drop from 247 million in 2020 to 44 million in 2030.

Now that’s a bold prediction that has major implications for all of the major industries involved in the automotive supply chain, include OEMs, the aftermarket and the oil industry.

From an Australian perspective, this may be good news given our reliance on oil imports and the lack of liquid fuel security .

While the regulators play catch up, there will be an ongoing debate about when the tipping point for Transport as a Service will happen. In the meantime businesses will continue to experiment with the new mobility services such as ride and car sharing and attempt to figure out how to integrate these into their existing corporate transport policies and plans. 

Topics: Automotive Research