Mobility 2.0 - the urban mobility revolution

Gildo Seisdedos. Professor. IE Business School

29 February 2016

The digital revolution is coming to the rescue of cities worldwide that are threatened by serious pollution and growth problems. 

Madrid holds the No. 4 position in Europe in terms of air pollution, topped only by Lisbon, Luxembourg and Rome. On a global level, this sad ranking is headed by Asian mega-cities, with China, India and Pakistan heading the list.

In addition to such somber facts, it is forecast that by 2030, 60% of the world’s population will live in cities, and more than two billion citizens will join the ranks of the middle class. These two trends combined are responsible for the fact that global car sales have doubled, moving from 70 million a year in 2010 to 152 million in 2015 (over half are for use in urban areas). The current global fleet of humanity’s cars (1.2 billion vehicles) could double by 2030.

In the face of this apocalyptic scenario, experts exhibit a paradoxical level of optimism. The digital revolution will come to the rescue and, coupled with technology, this particular urban problem will disappear because, as in many other sectors, apps, smartphones, big data, internet of things, electric engines, etc., will offer a window of opportunity for cities to enjoy efficient and healthy forms of mobility, which respect the environment.

Just how is this miracle going to be possible? A report I prepared jointly with my colleague Enrique Dans, entitled” Upgrading Urban Mobility” and presented recently at IE Business School, cites the key factors. First, technology is making for increasingly green systems of transport with the advance of vehicles powered by clean energies, and with less (or zero) contaminating emissions. Second, growing access of citizens to smartphones has given rise to a new category of transport services that challenge the dichotomy between public transport and private vehicles: emerging mobility models.  

These new mobility services are provided through technological advances that permit supply and demand in the transport sector to work cross-functionally in a far more efficient and creative manner. These mobility service firms make up a kind of third alternative sector, with a new generation of innovative transport services that offer a winning combination of mobility resources, but not necessarily delivered directly. This category could include companies dedicated to car-sharing and ride-sharing.

In the case of car-sharing, people reach an agreement using a mobility services company, whereby the vehicle of one can be used by the other. It is about individuals granting others permission to use their car, with the company serving as an interface for supply and demand, as well as offering additional services (insurance, preparation of contract, etc.) in exchange for a commission on the transaction. The number of services like this is growing by some 35% a year in the US. In Germany, there were around a million people affiliated with programs like these in 2014.  

But without doubt, the ride-sharing category is the most dynamic and complex, and the area where the most innovative and controversial new services are being developed. The company matches up supply and demand for different routes in which the provider might be a professional (taxi or truck driver) and the other an individual with whom the shared use of the vehicle is exchanged.

Companies like Cabify, Uber, Car2Go or Respiro are just a small simple of a new plethora that is opening up and making us face the challenge of intense coordination between the public sector and private sector. The same must happen in this field as in other fields, namely, we have to stop looking at this trend with mistrust, and start to collaborate with just one aim in mind – that of providing citizens with a level of mobility that permits them to mover around swiftly, safely, and in a sustainable manner. 

New technologies and sales models, coupled with innovative public policies and original business models, will play a key role in making the current system more efficient, not so much through incremental improvements but rather through innovation in the global conception of the system. Madrid has an excellent opportunity to leverage everything this challenge represents and to spearhead this revolution. Will we manage to do it this time?

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