Transportation-as-a-service: The end of private car ownership

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  Quantumrun Foresight
• December 16, 2021

Insight summary

The concept of car ownership is undergoing a dramatic shift due to urbanization, busy roads, and environmental concerns, with Transportation-as-a-Service (TaaS) emerging as a popular alternative. TaaS platforms, which are already being integrated into various business models, offer 24/7 vehicle access and could potentially replace private car ownership, saving individuals money and time spent on driving. However, this transition also brings challenges, including the need for new legal frameworks, potential job losses in traditional sectors, and significant privacy and security concerns due to the collection and storage of personal data.

Transportation-as-a-Service context  

Buying and owning a car was regarded as the definitive symbol of adulthood as far back as the 1950s. This mindset, however, is rapidly becoming outdated as a result of rising urbanization, increasingly busy roads, and elevated global carbon dioxide emissions. While the average individual only drives around 4 percent of the time, a TaaS vehicle is ten times more useful per day. 

In addition, urban consumers are shifting away from automobile ownership because of the increasing acceptance of ridesharing services such as Uber Technologies and Lyft. The gradual widespread introduction of legal self-driving cars by 2030s, courtesy of companies like Tesla and Alphabet’s Waymo, will further erode consumer perceptions towards car ownership. 

In private industry, a wide range of businesses have already integrated TaaS into their business models. GrubHub, Amazon Prime Delivery, and Postmates already deliver products to households across the country using their own TaaS platforms. Consumers can also lease their automobiles through Turo or WaiveCar. Getaround and aGo are two of many car rental companies that enable consumers to access a vehicle whenever necessary. 

Disruptive impact 

The world may only be a generation away from something unimaginable only a few years ago: The end of private car ownership. Vehicles integrated into TaaS platforms will likely be accessible 24 hours a day across urban and rural communities. TaaS platforms might function similarly to public transit today, but it may probably integrate commercial transportation companies within the business model. 

Transit consumers may then use gateways, like apps, to reserve and pay for rides whenever they need a ride. Such services may save people hundreds to thousands of dollars each year by helping people avoid car ownership. Similarly, transit consumers may use TaaS to gain more free time by reducing the amount spent driving, presumably by allowing them to work or relax as a passenger instead of an active driver. 

TaaS services will significantly influence a range of businesses, ranging from needing fewer parking garages to potentially reducing automobile sales. That might potentially force companies to adapt to the decline in clientele and restructure their business model to adapt to the modern world of TaaS. Meanwhile, governments may need to adjust or create new legal frameworks to ensure that this transition will lead to less carbon emissions instead of TaaS businesses flooding the roads with their fleets.

Implications of Transportation-as-a-Service

Wider implications of TaaS becoming commonplace may include:

• Reducing per-capita transport costs by discouraging people from spending money on vehicle ownership, freeing up funds for personal use.
• National productivity rates will increase as workers can have the option of working during commutes. 
• Automotive dealerships and other vehicle service businesses downsizing and refocusing their operations to serve large corporations and wealthy individuals instead of the traditional public. A similar impact on car insurance companies.
• Easing access to and significantly improving mobility for senior citizens, as well as physically or mentally disabled persons. 
• New business opportunities and jobs in vehicle maintenance, fleet management, and data analysis. However, there may be job losses in traditional sectors, such as car manufacturing and taxi services.
• Significant privacy and security concerns, as large amounts of personal data are collected and stored, requiring the need for data protection laws and regulations.

Questions to consider

• Do you believe TaaS is a suitable replacement for personal car ownership?
• Could the popularity of TaaS entirely disrupt the automotive sector’s business model towards corporate clients instead of everyday consumers?