NEW MOBILITY CONCEPTS and FINANCING AND INSURANCE

This study looks into future trends in mobility and their implications for mobility financing and insurance. The aim is to analyse changes in (automotive) mobility and the mobility behaviour of consumers within a timeframe up to the year 2025 so as to draw conclusions for the future financing of mobility. In terms of methodology, the study is based on the analysis of secondary studies, qualitative guideline interviews with top-ranking experts from the industry and a quantitative survey of consumers in Germany drawing on a representative cross-section of the population. The study arrives at the following key results.

• Mobility in general and the automobile in particular currently face the most far-reaching changes in their history. Firstly, the driving forces behind this change are technological changes such as electromobility, connectivity/digitalisation, autonomous driving and new mobility concepts.
• Secondly, the business models established in the automotive industry are currently being called into question: the use of automotive mobility is becoming more important than automobile ownership.
• Thirdly, the negative side effects of automobile transportation (congestion, environment, climate) are becoming increasingly evident and acting as driving forces behind regulatory changes in the field of mobility, especially in cities. As a result of these factors, combined with various mobility revolutions (in terms of efficiency, time and systems) and new competitors from the digital world, the industry is facing radical, disruptive upheaval.

All in all, the technological and social trends point toward new products, services and value creation structures which will fundamentally change mobility behaviour and therefore also the financing of mobility in the course of the next 20 years.

In the current transition phase, a parallelism of different mobility patterns will initially occur on four dimensional axes: Manual driving and driverless driving, vehicle ownership and vehicle utilisation, monomodal mobility (e.g. automotive/local transport only) and intermodal mobility, combustion engine and electro-mobility. The dynamic at work within these axes is subject to considerable uncertainty and will be influenced especially by technological progress in the core areas, as well as by political control/regulation and acceptance on the part of customers.

"Manual driving" will be gradually supplemented over the coming years by "autonomous driving", defined as fully autonomous and/or the driverless driving (self-driving taxis/shuttles)). The customer benefits of autonomous driving services lie mainly in the low cost of travel per kilometre and the time saved by the user by not having to perform the act of driving. However, the market penetration of self-driving taxis and shuttles will pass through a number of phases over the course of at least the next 10 – 20 years:

• The first phase will see pilot commercial use of self-driving taxis and shuttles from 2020 in geographically limited areas or along routes to various cities in Germany and abroad, initially in good conditions (e.g. weather).
• The second phase, starting in 2025, will see more widespread use of such services in cities, on motorways and in rural areas, including end-to-end customer services.
• In the third phase, from approximately 2030 onwards, it will be possible to use autonomous vehicles for all purposes, thereby leading to a sharp increase in market shares.

The networking of vehicles and digitalisation will see a dramatic increase in importance in the coming years, leading to new products and services. The number of connected automobiles in Germany will increase to about one third in the course of the next seven years, with some 15 –20 million automobiles being networked by 2025. On the one hand, this will generate new business openings within the existing model of private vehicle ownership: New functions (autonomous driving functions, massage seat activation during long motorway journeys) and individually tailored on-demand services will be offered (e.g. parking services, fuelling, pay-as-you-drive insurance). On the other hand, additional sales potential will be generated by new models of joint automobile use such as automobile sharing (Car-as-a-Service, sharing).

Mobility services are mainly geared toward the efficient use of different means of transportation based on sharing approaches, in contrast to the existing model of vehicle ownership. The vision of "Mobility as a Service" (MaaS) comprises a continuous, highly interconnected travel and mobility chain that takes in various modes of transport, coordinated through internet-based mobility platforms – from intermodal route planning and on-demand booking through to payment and journey handling. The main MaaS include intermodal mobility platforms (e.g. Moovel), various forms of automobile sharing and in particular app-based driving services such as private taxis, ride sharing (e.g. Uber, Lyft, Moia), which will be successively supplemented with self-driving vehicles. The new digital mobility market, which is being opened further by autonomous vehicles, could already amount to between $1.5 trillion and $2.2 trillion by 2030, according to various studies.

In addition, electrification will increase in the years to come. According to CAM scenarios, registrations of new electric automobiles in Germany will initially only increase moderately up to the year 2020. An optimistic scenario sees some 25 per cent of newly registered automobiles in Germany each year as being electrically powered (conservative estimate: 9%). However, this also means that 75 per cent of newly registered automobiles will still have a combustion engine. At an early stage, however, electric vehicles may start to play a key role in the urban fleets run by mobility platforms, thereby generating further business openings in the context of interlinking with the energy sector (e.g. electric vehicles as flexible energy buffers).

Changes in mobility behaviour will have significant consequences in terms of financing and insurance at the level of both purchase and use of the connected automobile (ownership model) and at the level of the new mobility concepts (sharing model). The consumer survey indicates that there has already been a shift in mobility attitudes and behaviour among the young generation of city-dwellers. While 73 per cent of all interviewees in Germany still regard a privately owned automobile as "important", this figure drops among young city-dwellers to just 36 per cent. The same applies both to actual use and the willingness to use new mobility concepts such as automobile and ride sharing: the latter is already much higher among city-dwellers and more so among younger urban citizens. In Germany as a whole, some 15 per cent use new mobility concepts while about one third of those who have not used them to date can at least imagine doing so. By contrast, one third of the generation of 18–25-year-olds in cities are already making use of new mobility concepts, and here the willingness to opt for schemes such as free-floating automobile sharing " (e.g. Car2Go) has reached almost 50 per cent.

Flexibility, low costs, safe arrival and time savings are cited as particularly important in daily mobility by the individuals surveyed. These are the criteria that mobility services will have to live up to. Interest in future-oriented mobility concepts, such as app-based travel services, is very high. Well over half of those surveyed can imagine booking this kind of "shuttle on demand" services, and as many as 40 per cent are even open to using self-driving shuttles. Some of these figures are even considerably higher among younger respondents and inhabitants of major cities.

The prospect of a comprehensive mobility flat rate within Germany, comprising local transport, car-sharing and future self-driving taxis, would lead especially younger people and city inhabitants to dispense with private cars. Some 50 per cent of under-25-year-olds and more than 60 percent of younger city dwellers believe that they would no longer need their own private automobile under these circumstances. What is more, more than 40 per cent of younger interviewees do not want to do without other things in order to be able afford a car. This bears out the trend that many people already regard personal mobility as being more important than actually owning a car. The level of willingness to pay for a mobility flat rate remains very low to date, however. Nonetheless, nearly 40 per cent of those surveyed said they would be interested in insurance that would cover a mobility flat rate charge and ensure mobility in the event of unemployment, for example.

Experts and representatives of the major OEMs who were surveyed agree in the assessment of digitalisation as a megatrend. This will impact on mobility supply and demand. The experts surveyed believe that earning potential from existing financial services will decline in the long term. Even though the financing volume is currently increasing and is likely to continue to do so until the early 2020s, this should not obscure the fact that a decline is probable in the future. The trend toward "use rather than ownership" will accelerate in the 2020s. Financial service providers will have to develop new services in order to close the resulting gaps in revenue.

New insurance services might provide protection in conjunction with new, still unfamiliar technologies (e-mobility, autonomous driving) or mobility as a basic service (mobility flat rate). Automobile manufacturers are already starting to offer integrated insurance services aimed at providing customers with cost and convenience benefits. These might be supplemented with telematics rates and localised insurance services.

The medium-term trend from automobile ownership to the use of mobility schemes such as a mobility flat rate will require insurance companies to offer new services. The consumer survey conducted as part of this study shows that, given a realistic impression of the costs of a mobility flat rate, there is a definite increase in the willingness to insure it. Almost half of those interviewed can imagine a mobility insurance to cover work incapacity and unemployment. A quarter even regard the latter as high risks. Just under 60 per cent of those surveyed can imagine insurance covering accidents caused by themselves as forming part of a mobility flat rate.

More information/Download of study:

https://www.auto-institut.de/index_htm_files/Financing_and_Insuring_New_Mobility_Concepts_en.pdf

https://www.auto-institut.de/pm_studien.htm