The relationship between tech and government has been, to put it mildly, complicated.
Part of it is cultural: tech likes to move fast without regard to consequences while government tends to fixate on consequences (real or imagined) at the expense of speed and urgency. The former is proactive and occasionally reckless, the latter is frequently indifferent and then intensely reactive.
The dynamic is particularly evident in the on demand transportation business. Companies like Uber, Lyft, and Lime have frequently clashed with regulators over issues like traffic, safety, economic and environmental impact.
But tech is not seeing the big picture. Instead of viewing government as obstacles, they should be looking at government as customers with very deep pockets. China alone last year spent $323 billion on infrastructure (2.64 percent of GDP) compared to $87 billion (0.45 percent of GDP) in the United States.
“Infrastructure quality surely impacts consumer experience,” according to SharePost’s 2018 Global Rideshare Report. “Bad roads and highways mean delays and thus a lower chance people use rideshare firms again. Higher investment will help rideshare firms by reducing both maintenance and time costs to drivers and users.”
For the myriad of private firms that focus on Internet of Things, autonomous vehicles, energy, and mobile software, there is a lot of potential revenue in government contracts to transform cities into centers of smart, seamless mobility.
In fact, McKinsey & Co. even quantified that opportunity. By 2030, new modes of urban transit could create additional revenues equivalent to 40 percent of what companies operating in this space already generate today, according to a recent report by the consulting firm. For a major city like London, that means an extra $10 billion a year.
Two major factors are driving the quest for seamless urban mobility: climate change and urbanization. We’re well aware of the need to reduce carbon emissions, given the rise of severe droughts, wildfires, super strong hurricanes, rising ocean levels, and flooding.
What gets less attention is a profound shift of population to cities. The United Nations estimates that 68 percent of the world’s population will reside in cities by 2050, compared to 55 percent last year. Moreover, the UN thinks over 40 “mega cities” (populations of 10 million each or more) will emerge over the next decade.
In Asia, ridesharing and car usage in general are only getting started.
“By far, the Asia-Pacific region has the largest gap between people and cars; less than half of residents own a car and thus may need to use ridesharing services,” according to the SharesPost report. “With the largest metro areas in the world, Asia-Pacific should offer the fastest growing market for ridesharing firms.”
“Rideshare applications work best in high density areas with lots of potential drivers and riders,” the report said. “This is a classic network effect. The Asia-Pacific region is home to the most metro areas with a population over 10 million people. Such a large base of users and drivers should drive future adoption.”
In China, the short-term car rental market grew at a CAGR of 27 percent from 2013 to 2018, reaching roughly $2.6 billion. Altogether, SharesPost estimates the top 3 populated countries to generate combined car rental revenue of $50 billion annually by 2020, assuming strong growth over the next two years in China and India.
Those trends will no doubt pressure cities’ services and infrastructure.
“As the world continues to urbanize, sustainable development depends increasingly on the successful management of urban growth,” according to the UN report. “Many countries will face challenges in meeting the needs of their growing urban populations, including for housing, transportation, energy systems and other infrastructure, as well as for employment and basic services such as education and health care.”
That’s where seamless mobility comes in. A major problem in urban transportation is the lack of coordination between the private and public sectors over supply and demand. For example, people can now use their mobile devices to call for Uber or Lyft but ridehailing does relatively nothing to alleviate congested highways during rush hours.
Here’s how McKinsey envisions the ideal scenario for seamless mobility: commuters take autonomous, electric-powered trains, shuttles, and buses into city cores. For the so called “last mile” of their journey, they can transfer to e-scooters and bicycles, conveniently located near major transit centers. For people who still prefer cars, they can order self-driving robo taxis which travel down dedicated lanes on roads and highways, aided “smart” traffic lights to efficiently direct vehicles.
This one scenario offers promising opportunities for both hardware and software firms: sensors for traffic management and predictive road maintenance, dedicated AV lanes equipped with vehicle-to-infrastructure communication systems, facilities where we can efficiently store and quickly recharge shared fleets of autonomous vehicles.
This will require significant government dollars to upgrade existing infrastructure in cities and build new systems to accommodate the latest technologies.
“Cities around the world are under pressure to improve mobility,” the McKinsey report said. “ If they do little or nothing, the trends related to urbanization, population, and e-commerce are likely to make congestion and pollution worse.”
In the United States, support for such investments seem to cross ideological boundaries. President Trump, for example, has floated a plan to spend $1 trillion on the nation’s infrastructure. And Rep. Alexandria Ocasio-Cortez (D-N.Y.) has spoken of a “Green Deal,” a massive government spending program to create jobs and to permanently wean the U.S. economy off carbon emissions.
“Seamless mobility offers a different, potentially better path,” the McKinsey report said. “To get there will require significant financial investments, imaginative policies, and substantive collaboration with the private sector.”
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