In mid-July, in an article published on the online platform Medium, the two founders of Lyft, John Zimmer and Logan Green, revealed how their company intends to re-shape urban mobility. Just as their great rival Uber sees the future of personal transportation as multimodal, similarly Lyft is not content to remain restricted to providing a connected shared taxi service – which has proved a highly popular formula – but is aiming to become a full-scale mobility platform aggregating all the various options open to city residents, including self-service electric bicycles and scooters, plus also public transport services. In early July, Lyft acquired Motivate, the biggest bike-share provider in the United States, for $250 million. Motivate runs the Citi Bike program in New York and operates the Ford GoBike initiative in San Francisco.
Lyft thus intends to offer users the option of hiring a bicycle directly via its app. Electric scooter sharing, which recently made a storming entry into the US market, arousing high enthusiasm and sharp criticism in equal measure, is also due to be integrated into the ride-sharing app: Lyft is currently negotiating the details of a partnership with scooter service provider Spin. The Uber rival already filed a request in June with the municipal authorities of San Francisco, its home town, for a permit to operate these two types of locomotion. "We have a once-in-a-generation opportunity for the private and public sectors to work together to make our cities designed for people not cars. We see the introduction of bikes and scooters into our cities' shared transit ecosystems as one more step in Lyft's civic responsibility", stated the company's two founders in their article on the Medium site.
Betting on the multimodal approach
Lyft also wants to ensure that that this range of new urban mobility options – ride-sharing, shared bikes and self-service electric scooters – works in harmony with public transport. In its permit request filed with the San Francisco authorities, the locally-based company states that it aims to offer discounts of up to 100% on journeys that begin or end at a BART, MUNI or Caltrain station, i.e. the terminals for existing public transit services in the San Francisco area. In June Lyft also revamped the design of its app, placing more emphasis on shared rides and links with public transport lines, a strategy that the company is determined to pursue. "The Lyft app will be unique in its emphasis and ability to bridge the first and last-mile gap. Soon you will be able to get real-time transit information, plan a multi-modal trip, and use Lyft Bikes and Scooters to connect to a local transit stop or shared ride pickup location", explains the article, underlining: "Transit, bikes, small electric vehicles, and infrastructure such as safe pedestrian paths and bike lanes all play a large role in decoupling people's right to mobility from car ownership."
With this in mind, Lyft will also be investing a million dollars in a project designed to improve public transit systems in poorly-served areas, in collaboration with a number of non-profit organisations.
This move towards a multimodal approach to transport is intended to help fulfill an ambitious goal. By ensuring a range of alternative options to the private automobile, Lyft wants to see the number of vehicles on the roads reduced by a million by 2019, and hopes that 50% of all journeys made by its users will rise to 50% by that date. Currently, 35% of all rides booked through Lyft are shared so if this target is to be met, the company will need to increase the proportion of shared rides from just over a third to one in two. As an indication of the feasibility of their ambitions, the Lyft founders claim that as many as 250,000 passengers gave up their personal vehicle in 2017.
Meanwhile Uber is not planning to stand idly by while its major competitor is trying to transform the way we get around in the urban environment. The world leader in on-demand personal transport is also working both to integrate shared bikes and scooters into its app and to develop synergies with public transport providers. Accordingly, in early July, Uber made a substantial investment in Lime, which has set up a system of shared electric scooters. While the full details of the partnership are still under discussion, Uber is planning to integrate the scooter service into its ride-hailing app and to put its logo on the scooters. Back in February, the firm now helmed by Dara Khosrowshahi took a large stake in bicycle-sharing startup Jump and integrated the bike service into its app, before taking over Jump in its entirety in April. Uber has just published a report showing the pattern of use of Jump bikes since this service was included in the ride-hailing app. Uber's figures show widespread adoption of the bike service, leading to a slight drop in car journeys over shorter distances, the net result being an overall increase in the use of the Uber app.
The company claims moreover that the two services complement each other well: the bikes are especially popular during the day when traffic is at its thickest, and also for short journeys, while users tend to opt for car rides when it comes to longer journeys or night-time runs. Uber has also been making a few nods in the direction of public transport. In April it entered into a partnership with UK mobile ticketing startup Masabi to enable its users to obtain bus and underground railway tickets directly via the Uber app, and so link up an Uber ride smoothly with a public transport leg of their journey. "It's not about the vehicle, it's about bringing the consumer from point A to point B and to do so in an optimal way, by combining scooters, bikes, cars and public transportation", stresses Tien Tzuo, co-founder and CEO of Zuora, an enterprise software company that designs SaaS applications and sells access to these applications to client companies using a subscription business model.
Automobiles: from ownership to a subscription approach
This desire expressed by the two major US ride-sharing companies to build a holistic mobility ecosystem is evidence of a paradigm shift in the automobile market. In the early years of the 20th century, US industrialist Henry Ford helped to spread car ownership with his Model T car. In so doing, he helped to shape the face of the automobile industry, which has remained largely unchanged until today, with manufacturers striving to sell as many vehicles as possible to as wide a public as possible. Now however, things are changing and it is no longer so much about selling vehicles or specific rides as providing a mobility service that enables people to get around in the best and most efficient way possible. This paradigm shift is the result of a change in the expectations of a generation of consumers who are less interested in having their own vehicle than in enjoying convenient mobility services – even in a country as wedded to the automobile as the United States.
As an illustration, between 1983 and 2014, the proportion of young US Americans who hold a driving licence has fallen from 92% to 77%. "Our research has shown that many customers are looking for a hassle-free, fixed-rate experience that mirrors the many subscriptions they currently have, such as Netflix or Apple's iPhone upgrade program", Jim Nichols, Product and Technology Communications Manager at Volvo USA, told US magazine Consumer Reports. The automobile sector is therefore moving gradually towards a Subscription Economy model, where company-customer relations no longer boil down simply to a one-off purchase of goods and services but things are geared to the establishment of a long-term relationship where the customer pays sums of money on a regular basis and receives in exchange services and assistance over the longer term.
In his book Subscribed: Why the subscription model will be your company's future – and what to do about it, Tien Tzuo devotes an entire chapter to the growing prevalence of this approach in the automobile industry. In a number of respects, Uber and Lyft are mobility services operating on the subscription principle. Individual users do not pay a fixed charge, like the $9.99-per-month Spotify subscription or the annual $99 Amazon Prime fee, but every Lyft or Uber customer enters his/her personal data and payment details in the app and both platforms base their charges on customer use of the service. They record the history of each customer's journeys and use that information to offer him or her personalized services. Thanks to its partnership deal with Spotify, Uber even knows the musical tastes of its users. Moreover, both ride-share companies have recently trialled fixed subscription formulae, i.e. enabling customers to book as many rides as they wish for a few hundred dollars per month.
is Subscription synonym of freedom?
vehicles will be driven under some kind of subscription service in the Us & Europe by 2025
"These ridesharing services have ushered in a whole new set of consumer priorities: Why buy a car at all, when all you need to do to get from point A to point B is pull out your phone? Why can't I just subscribe to transportation the same way I subscribe to electricity and internet access?", asks Tien Tzuo in his book. Forbes Magazine is now predicting that over 16 million vehicles will be driven under some kind of subscription service in the United States and Europe by 2025. Faced with the new consumer needs and expectations and the determined offensive by both Uber and Lyft, the traditional automobile manufacturers have no intention of allowing themselves to be outpaced.
Anyone who fancies the idea of driving an Ioniq, the new hybrid vehicle by South Korean carmaker Hyundai, can obtain one on a subscription basis for $275 per month. "Our aim is to make it as easy to own a car as a mobile phone", says Mike O'Brien, Vice President, Product Planning at Hyundai, quoted in Tien Tzuo's book. And a number of Hyundai's competitors have the same goal. Porsche is offering a high-end subscription service that starts at $2,000 per month, providing subscribers with access to half a dozen different models with maintenance, insurance and road tax thrown in. And for $1,800 per month, you can drive a car selected from among the entire Cadillac range. Those who cannot make up their minds about which model to choose need have no worry: the offer enables them to change their vehicle up to 18 times a year! Meanwhile, Volvo enables its customers to drive its XC40 for $600 per year, including insurance, maintenance, a customer service facility open 24/7, plus a bonus service that enables them to have parcels delivered direct to the vehicle boot. The company's CEO, Martin Lundstedt, predicts that one new Volvo in five will be delivered under a subscription arrangement by 2023.
Towards a holistic approach to mobility
However, the subscription economy is not simply a matter of shifting from a one-off sale to a more regular billing arrangement, this is rather an entirely new way of thinking whereby automobile manufacturers will become mobility service providers instead of car sellers. "It's not about selling the same cars and offering your clients to pay over time or switch vehicles whenever they want to. It's about redesigning the whole transportation experience", argues Tien Tzuo. Which means that a number of carmakers are going to be hunting in Uber and Lyft territory. This is certainly the case for BMW: the German automaker has set up a special division to work on car-sharing, called ReachNow, which has just launched an on-demand mobility service in the city of Seattle, in direct competition to both Lyft and Uber. In order to distinguish itself from its rivals, the Bavarian firm is offering a more upmarket service that includes the option of asking for a particular radio station in the vehicle or planning a 'peaceful' route in advance, via the app.
General Motors also has its own car-sharing division, under the name of Maven, which has just set up a program called Peer Cars. So far trialled in several cities in the US Midwest – Chicago, Detroit and Ann Harbor – Peer Cars enables owners of General Motors vehicles to rent them out when not in use so as to make some extra money, along the lines of the tried and tested Turo and Getaround services. Volvo is also considering setting up a similar system and Daimler's car-sharing service Car2Go is already available in 25 US towns, including just recently Chicago.
CEO of Zuora
Today, the customer experience of driving is fragmented. (...) Why can't we wake you up at the right time, analyzing weather and traffic patterns? Why can't we tell you that you should get an Uber if there are no parking spots available near your office?
Meanwhile Ford has taken a stake in Chariot, whose hybrid passenger transit model – a cross between a taxi and a bus – is designed to facilitate the daily commute to and from work, and has also set up its own bicycle sharing venture, GoBike. In addition, the carmaker has also introduced an app called FordPass, which is designed to assist the user from the moment s/he wakes up in the morning right through to arrival at the workplace, handling a whole range of details linked to the driving experience. These include heating up the car in advance on cold mornings, finding and reserving a parking spot, booking a maintenance appointment at the garage, locating the nearest petrol station and making mobile payments. "Today, the customer experience of driving is fragmented. Ford wants to bring all the pieces together to provide the customer with a frictionless experience. Why can't we wake you up at the right time, analyzing weather and traffic patterns? Why can't we tell you that you should get an Uber if there are no parking spots available near your office? That's a lot of pieces, it's gonna take some time to figure all this stuff out. But the vision is exactly right", insists Tien Tzuo in his book. Some 110 years after the launch of the Ford Model T, a whole new approach to the automobile market is now taking shape, centered on the User Experience and the optimisation of transport flows.