New Mobility segments

2nd July 2022

For years, transportation of people had very distinct segments, these segments created industries around it and several companies specialised in these segments. You had the bicycle, scooter, motorcycle, car, and bus on the road, and helicopters and aeroplanes in the air. For the road vehicles, the power unit was the same technology which was the internal combustion engine which powered human movement across all the different sectors. For air it was mainly turbines, but again they were still based on buying fossil fuel for the generation of propulsion.

However, new distinct segments are now appearing which will either cannibalise market share from adjacent sectors, or create completely new sectors. From my opinion, there are three distinct new sectors which were not existing two decades ago.

It is obvious to say that the most mature amongst this new sector in terms of available models and market acceptance is the e-scooter market, followed by the small BEV and the least mature is the EVTOLs. These segments were almost always created by bold visionaries who started companies to cater to these. This attracted investors who are keen to be at the start of any new market revolution eying large returns. But, to realise returns you need to accelerate the phase between prototype to production.

E-Scooters:

Looking at e-scooters as its the most mature at the moment, you can see that these companies borrowed similarities from adjacent segments in terms of materials, technology, etc. They then positioned themselves in areas with the least amount of regulation so as to accelerate their route to market. Utilising existing supply chain expertise and manufacturing capabilities, products were created, sometimes with safety standards far lower than practical. It is for this reason, for example, that Transport for London (TFL) has banned to take e-scooters into their tube network as there have been incidents of these catching fire. UK Police have confiscated more than 4000 private e-scooters over last year over concerns of safety. Speak with e-Scooter companies and they insist that their vehicles should be placed in the same segment as pedal cycles. But looking at the safety aspects, is this OK?

In Britain, The Parliamentary Advisory Council for Transport Safety (PACTS) advises that there is an urgent need for some regulation to improve safety of e-scooters.(https://www.pacts.org.uk/wp-content/uploads/PACTS-e-scooter-briefing-26-May-2022-v1.pdf)


https://tfl.gov.uk/info-for/media/press-releases/2021/december/tfl-announces-safety-ban-of-e-scooters-on-transport-network

Small BEV:

From a product point of view, this is a mature area because it is mainly being championed by car companies. Most modern cars have an occupancy capability of 5 people. According to Department of Transport in UK, the majority of vehicle usage is for commuting and the average occupancy for such trips is 1.2 (https://www.gov.uk/government/statistical-data-sets/nts09-vehicle-mileage-and-occupancy). So a small 2 seater EV does make sense. Why is it then the number of small EVs (2 seaters) available are a handful? The answer is profitability. Mercedes, Stellantis and Volvo have all stated that profitability of small electric vehicles is a challenge. Mercedes CEO Ola Kallenius stated that when it comes to EVs, we will look up not down - indicating that they will focus on bigger premium vehicles. With the mass migration of people moving to urban areas, congestion on roads and scarcity of charging infrastructures, I suspect that small EVs will take a major market share in the coming decades. These vehicles would be adequate for majority of trips, have a smaller road footprint and much quicker to charge. Once the demand starts to come, I suspect new players will emerge for this new segment.

EVTOL:

This is a segment that I am yet not entirely convinced of when it comes to mass adoption. This, I believe will stay as a niche which a small proportion of people will use. True, there is a This would be well-to-do individuals who would be able to afford to travel in one. There is very little evidence to suggest that these machines will ever enter the personal market of individual buyers. Instead, this would mostly be used for inter-city travels, airport transfers etc. The challenges to overcome this segment are phenomenal. Charging them, flying them in busy cities, the noise from rotors, landing and take-off pads etc. Elon musk in a recent interview debunked EVTOLs as a segment that will never pick up. He called EVTOLs as fancy helicopters (I can agree partly). He cited concerns such as noise, safety and the downward air pressure that results on the occupants of the road. He (of course!) thinks a better way of solving congestion is to bore tunnels underground.

Mobility organisations:

As these new segments borrow aspects from adjacent segments, Some organisations spread across multiple sectors have a unique advantage in order to capitalise on these new segments. Many a times, they let the startups test the water and iron out the creases while carefully eying the advantages of entering such sectors. Consider some examples.