A new Intel report suggests that the "passenger economy" market will be as high as $7 trillion. This has already created opportunities for innovators to start and grow meaningful businesses and tech giants have poured massive amounts of capital in the hopes of leading the charge. So what's all the fuss about?
Let's look at some key trends:
Urbanization: By 2050, nearly two thirds of the global population will live in cities. Due to increasing urban populations, cities will need to use more efficient modes of transportation in order to reduce congestion and travel time.
High speed mobile broadband: The Organization for Economic Cooperation and Development (OECD) reported that in June 2016 mobile broadband penetration reached an average of 95 subscriptions per 100 inhabitants in member countries. That figure increased from an average of 86 subscriptions per 100 inhabitants a year earlier. The increased adoption of mobile broadband has allowed consumers to be productive in situations that used to involve dead time. Without mobile broadband, the adoption of autonomous vehicles would only create dead time. However, thanks to high-quality mobile Internet connections, people can use the free time created by autonomous vehicles for productive purposes.
Rapid leaps in computing power: Increases in computing power over the past several years have accelerated the adoption timeline for autonomous vehicles as powerful computers are needed to process the large amounts of sensory data needed for safe autonomous vehicles.
Regulation: City governments are using tolling and road-use charging to change traffic patterns or reduce cars from city streets completely. In Europe, cities like Stockholm, London, Paris, and Hamburg have introduced policies restricting vehicle use in certain areas.
Progressive city leaders who want to transform urban transportation: Forward-thinking mayors and city leaders around the world have been setting aggressive goals for reducing or eliminating car ownership. For example, Helsinki plans to eliminate car ownership by 2025 through the adoption of an app called Whim. With Whim, the residents of Helsinki can plan and pay for any type of public and/or private transportation in the city such as train, taxi, bus, carshare, or bikeshare.
What are the benefits and drawbacks of a passenger economy?
In the near future, consumers will increase utilization rates of their vehicles. Right now, cars sit idle for about 92% of the time. With pilotless cars, private individuals will continue to own cars for some time. However, many will seek to increase utilization with mobility services and ride hailing services, or personal vehicle sharing networks. Others will become fractional owners of vehicles, with predetermined usage and availability.
B2B mobility as a service, i.e. driverless tractor trailers, will automate millions of trucking jobs. About 1.7 million people work as long-hail truckers in the U.S. This is low-paying, grinding, and unhealthy work. Nevertheless, the coming labor crisis will have unpredictable economic and societal implications. Right now, shipping a truckload from LA to NYC today costs about $4500, with 75% of that going to labor. In addition, drivers are restricted from driving more than 11 hours a day without taking a break. Driverless cars will double the output of the US transportation network at 25% of the cost.
For consumers, B2B autonomous vehicles means faster delivery times, as inventory is delivered from distribution centers on a high frequency. Smaller delivery vehicles will distribute goods to consumers' homes within minutes or hours of ordering, with unlimited hours for delivery. According to Intel's report, some of the benefits consumers will receive in the passenger economy include:
- Around 585,000 lives saved by pilotless vehicles
- Up to 250 million hours of commuting time
- Approximately $234 billion in savings from reduced traffic accidents
Opportunities for startups
With the rise of autonomous vehicles and the passenger economy, there will be plenty of opportunities for startups to help people and generate returns. Some of the questions you should answer as you look for passenger economy startup ideas are:
- How do you retrain the millions of drivers who will lose their jobs as a result of automation?
- Can you provide compelling or premium in-car entertainment experiences to passengers?
- What appointments or meetings can you bring into cars and other forms of transportation? For example, can you help create software or an experience that allows someone to have a doctor's appointment as a passenger?
- Can you create a new type of car insurance company with significantly lower premiums due to the decreased likelihood of automobile accidents in self-driving cars?
- How do you increase sales or grow revenue for existing car companies when automobile sales will likely decrease due to autonomous vehicles?
Accelerating the Passenger Economy
If you run a mobility-focused company or a startup in construction tech, real estate tech, or smart cities, there are dedicated accelerators that focus specifically on that vertical.
Dreamit has a program dedicated to helping startups that want to improve cities by bolstering the passenger economy. Dreamit UrbanTech is integrated into one of the largest real estate development projects in the country -- a $3B Tampa Bay Urban Redevelopment Initiative being led by Strategic Property Partners (a joint venture between Jeff Vinik and Bill Gates' Cascade Investments). Applications to the program are now open.
Avi Savar is CEO and Managing Partner of Dreamit, a top venture accelerator and early stage investment fund. He is the author of Content to Commerce and consults globally on trends in digital media, disruptive technologies and corporate innovation. He has been featured on Fox News, Forbes, Mashable, Business Insider, TechCrunch, VentureBeat, the New York Times and is a contributing editor for Inc.
Learn more at: www.avisavar.com