Funding New Mobility - The Human Psyche

So, how can anyone make any money out of shared-mobility? It’s the burning question.

Expanding this a little, how can new and emerging mobility services improve the transportation experience for all, be affordable for the consumer and, most importantly, be financially viable and sustainable for investors and operators?

It’s a difficult one. High praise to those who figure it out.

Whichever way you look at it, the point of focus almost always comes down to money. Forget the narrative of climate change, inclusivity, safety and other politically emotive calls to action. It comes down to money. Who will risk investment and who will reap the financial reward. That’s the reality folks, but against this dispiriting backdrop something has been gnawing away at my mind for some time. And that is, the consumer’s perception of the cost of travel. The consumer being you & me. Us.

Let me indulge you with an example of the Human Psyche I think is worth exploring. We are quick to judge public transport travel as costly, yet at the same will spend a disproportionate amount of our personal income on a car. Owning a car has to be one of the most expensive things to do and we do it year after year after year. We all understand this trait and I’m sure we can all form a supporting argument, irrational or otherwise. Public transport is perceived to be expensive. Sometimes it is. How can a 4 hour flight from London to Cyprus be cheaper than a train ticket from London to Birmingham? Beats me.

Here in the United Kingdom, I think it’s safe to say that we, as a society, take public transport for granted. Its existence is expected, although our expectations of it may be tempered somewhat. And for good reason. For the most part, public transport is something to endure. It’s a means to get from here to there. It’s not always particularly convenient. Typically, you get on at a place you don’t want to start from, get off at a place you don’t want to be, travel with a bunch of people you don’t want to travel with and you pay a lot of money for the privilege. Now isn’t that a marvellous experience?

The cost would be even higher but thankfully public transport is subsidised. Honestly, it is. Some would argue it should be subsidised to the extent it becomes cheaper or as cheap as travelling by car? Because travelling by car is cheap. Isn’t it?

Well, at least public transport is pay-as-you-go. It costs nothing if you don’t use it. Unlike the car, which has a huge underlying cost. Whether you use it or not. Buying, insuring, taxing and maintaining the thing all add up to a hefty annual bill. And that’s before you’ve driven a single mile. To put it bluntly, it’s in the human psyche to dismiss the “sunk cost” when we travel by private car. To a point, the cost of fuel is ignored too. It’s almost as though car travel is perceived to be practically free. “I’ve already paid for it”, goes the mantra.

The truth is, the initial and ongoing investment of owning a car is nothing short of a massive personally paid subsidy to enable “free” car travel.

It is therefore reasonable to conclude that public and private transport is, and forever will need to be, heavily subsidised.

I’m no economist, but I wonder how the personal subsidy of owning a car compares to the personal cost of switching to another means of travel?

A few years ago, a UK employer trialled a scheme whereby as an incentive to switch from car to non-car modes, employees were paid ￡500 per month to leave their car at home. They could keep the change after all travel costs. They had takers. Imagine if you could translate that to a household. You begin each month with your “subsidised” car budget to now spend on pay-as-you-go alternative travel modes. Would the household be better off at the end of the month? Of course this model would not work for everyone, but could it work for some? Could it negate the need for that 2nd or 3rd family car?

Whatever, the point is we, as consumers of travel, tolerate, accept and are even willing, no… more than willing, to pay a large proportion of our income on personal car travel.

One can’t help but get the feeling there is enough cash in the system to sustain the cost of transport for all. It’s just a matter of how we, collectively, invest in it. It’s this that’s gnawing away at me.

For new mobility initiatives to be sustainable and viable requires a redistribution of the whole subsidy. From the personal and public purse. This means we probably have to pay more, rather than expect to pay less, to travel by the new emerging fan-dangled personalised transport choices. This thought process is quite contrary to my opening gambit that public transport is already expensive.

And for us, as consumers, we have to wake up to the fact we already over-subsidise personal transport. If only we could simply change our collective mindset and switch our abundant personal subsidy towards new mobility ... and therein lies the human psyche challenge.

Should be easy, right?

The thoughts and ramblings in this blog are entirely my own.