By Patrick Ayad, Global Leader Mobility and Transportation and Lance Bultena, Director of Thought Leadership Mobility and Transportation at Hogan Lovells
The Business of Mobility is an Urban Mobility Company series highlighting some of the most successful new businesses in the mobility sector. Featuring a closer look at the way in which companies stand out, CEOs, Directors and other c-level executives elaborate on what it takes to turn a great idea into a great company.
Patrick Ayad, a Partner at Hogan Lovells, is an expert in automotive distribution matters and automotive sector work, more generally. Besides being Hogan Lovells Global Leader for Mobility and Transportation, he also leads the global Strategic Operations, Agreements, and Regulation practice. His deep industry knowledge makes him a sought-after advisor for firms dealing with the transition to new mobility. Lance Bultena, Senior Counsel and Director of Thought Leadership Mobility and Transportation at Hogan Lovells, has served as counsel to the U.S. Senate Committee on Commerce, Science, and Transportation. He is on the board of the Electrification Coalition and has a long history in the electric vehicle industry. In this article Patrick and Lance frame the new mobility debate in more human terms with their concept of Living Mobility.
The challenge of ACES
The world is at an exciting tipping point in mobility, as we make the leap to autonomous, connected, electric, and shared mobility; expressed in the acronym ‘ACES’, or ‘CASE’. This vision of the future is well accepted with the biggest debate seemingly about how to define “S” in the acronym. “Shared” is the original and most common conception but some use “Smart mobility” or “System integration.” In any event, visions of the future are quite consistent, and the argument for ACES is compelling. Each aspect of these visions will require adaptation and some challenges, but also yield benefits. For example, autonomous vehicles should be much safer than human drivers, allow cheaper transportation, and create new business models while revising existing business structures. According to SAFE, an organization Lance is affiliated with, AVs will deliver US$3 – US6$ trillion of consumer and societal benefits.
The ACES future is not something just a few are merely talking about, as there has been a significant investment by many in creating that future with a similar focus by policymakers on a global basis. One can perhaps best see this dynamic in the area of electric vehicles. Concerns about global climate change have led policymakers all over the world to pull industry toward electric vehicles. Existing manufactures and new entrants have invested heavily in the development of EVs. Policy and investment are important necessary steps in the transition to electric mobility, but the next step, and the most significant, is consumer acceptance. Globally about 3 percent of vehicles sold are fully battery electric. Some jurisdictions intend to ban internal combustion engines by 2035. While that sounds like a long way off, transitioning a global industry completely in a bit more than a decade is an amazing task that will impact far more than just auto manufacturers – it will change the supply chain, require new battery advancements and production on a massive scale, and change many small businesses – for example, petrol stations and car repairs.
Such significant transformations inevitably involve government policy in many ways. When looking at the policy environment, one has to take account of all levels of government, not merely what is done at the national level. Cities are often ignored by too many when contemplating the mobility future. When one changes how people move, one changes society and the communities where they live and work. The city is “on the ground floor” of those changes.
Others take this view and focus almost exclusively on cities as the level of government responsible for the mobility revolution through the changes in zoning and the impacts on demand for real estate. But the technology is worldwide and the investments so significant that global scale is needed for appropriate returns. Cities cannot alone set standards for such complex and transformative technologies or handle significant infrastructure changes likes updating electricity grids.
Ultimately, it is important to recognize that transformations of this magnitude will have many stakeholders within the governmental sphere and all will have to play their role during this transformation.
The importance of trust
So often when discussing the mobility future, one hears much about technology and government standards, some about workers and jobs, but relatively little about consumers. We, however, see the consumers as the critical element, as they are the intended beneficiaries of these services. They will value these services and pay for them or they will fail, no matter how splendid the technology or how thorough the governmental procedures. The primacy of the consumer means the transition to a mobility future that is autonomous, connected, electric, and shared, will be founded on trust. Consumers will need to trust the technology, the companies that develop it, and those that provide related services. Consumers will need to trust the governments that regulate that technology and its application. Transparency will be key in winning over consumers. For example, if we’re to have connected mobility, consumers need to trust that their data will be used fairly. For autonomous mobility they need to trust the technology and the safety standards. Particularly in the West, and increasingly in all parts of the world, mobility has been tied to personal choice and expression; buying a car is a potent act of individualism. That means new products and services not only need to meet consumers physical needs for transportation they also need to capture their imagination. Consumer demands and tastes will determine how the new mobility revolution unfolds.
The Living Mobility solution
As the transition to ACES will not only be about how we move but also how we live, we developed the concept of ‘Living Mobility’ in an attempt to give ACES a more holistic vision and a human touch focused on the consumer. We mapped the four core elements of ACES as focused on vehicles to a set of more general concepts that in total we call Living Mobility. Autonomous – Objective, Connected – Inclusive, Electric – Sustainable, Shared – Unifying.
We use this framing because the magnitude of the mobility revolution goes so much further than changes to various types of vehicles.
AVs don’t have emotions
We paired ‘Objective’ with ‘Autonomous’ because AVs are made to be objectively safe and efficient. There is no emotion or personal preference in the way a computer drives a car, and thus autonomous driving will reduce accidents to near-zero while generating extraordinary efficiency gains for society. Mobility stakeholders should keep this in mind and ask how their decisions will objectively benefit society. If AVs are going to become everyday reality then we will need an objective approach to ethics and be prepared to make tough choices. For example, if AVs can indeed reduce accidents by 90 percent, then legislation should be pragmatic about manufacturer liability. We have to recognize that if one defines “safe” as meaning absolutely perfect in every conceivable context for all time so there is no risk in the transportation system, then that standard is a false and unattainable goal. Using it suggests a comfort with the over 1.3 million deaths each year globally from traffic accidents and a virtually countless number of other injuries that do not result in death. In some sense, being objective requires policymakers to weigh relative benefits and risks, not merely hold onto past biases.
Safe, affordable transport for all
We paired ‘Inclusive’ with ‘Connected’ to make the point that all vehicles should be included in a network and all people should be included in societal benefits like mobility. ACES will provide an opportunity to greatly improve mobility access for marginalized communities. There are various reasons why people cannot access safe, affordable transport: poverty, geography, disability, and the lack of public transport options are all challenges. The promise of ACES is that AVs can transport the aged, the young, those with visual impairments, and potentially do so at a lower cost. Significant transformations occur when better results are achieved at lower costs. The potential for public good is exciting.
Contributing to economic and social development
ESG investing is as hot a topic as one can find in the business world. Concerns about climate change have led to a focus on electric vehicles for the last few years. But ‘Sustainable’ in the mobility future extends beyond the transformative shift from internal combustion engines to EVs. Sustainability reflects the focus on reducing carbon emissions throughout the transportation system, not just on having no emissions from the “tailpipe.” We see much discussion about the supply chain for batteries, with concerns about how critical raw materials are sourced as well as the nature of the labor used and the environmental profile of the mining activities. Other common topics include how batteries are used after their useful life in the transportation sector ends and then finally how they are recycled. There is much focus “upstream” on how the electricity is produced that will fuel these vehicles (and the rest of the grid uses). Sustainability captures all of these concerns.
Breaking down silos is key
We think ‘Unifying’ better describes the mobility future than ‘Shared’ because mobility in the future will move several possible modes of transportation to better connect people, places, and cargo. Thinking in silos about one form of transportation does not truly capture the revolution taking place. The routing programs widely available on mobile phones now routinely include different transportation options with more services added regularly.
One of those mobility options is e-scooters. Before the pandemic, Patrick travelled to Paris, London, and Berlin, all in the same week. He tried out the e-scooters in each city but was somewhat confounded by the different rules and systems. His experience captures another aspect of ‘unifying’ – rules and methods will likely standardize as systems evolve. We know how universal it is to operate a car (except for different conventions about driving on the left or right) – the rules and conventions are remarkably standard on different continents. There is no reason why new mobility cannot also adopt universally accepted protocols. We’re seeing large global companies investing heavily in micromobility and MaaS – not to mention AVs and EVs. To best optimize design, maintenance practices and meet consumer expectations, standard approaches will need to develop. Those standards should foster efficiency in service provision, develop trust in consumers, and enhance safety as users of e-scooters and others sharing the roads and sidewalks will have established expectations for behavior.
When technology and investments are global in scale, the need for standards is critical. There have been some positive developments in setting industry standards for different types of new mobility. The Society of Automotive Engineers (SAE) has developed levels (0-5) of autonomous driving; and they recently published standards for micro-mobility too. SAFE (Securing America’s Future Energy), an organization Lance is affiliated with, recognizes the need for common elements of public policy on a global scale, so it launched The Commission on the Future of Mobility, which includes CEOs of global companies (including Transdev) and former European commissioners. We expect efforts like this will help refine the critical issues that need to be addressed, provide useful research and analysis, and hopefully stimulate productive conversations about policy in major markets. Another positive development is the Mobility Data Specification (MDS), a protocol that standardizes data-sharing and communication between cities and mobility operators. Industry-first initiatives like these are crucially important in building trust, enhancing collaboration and aligning business incentives to the benefit of citizens, and customers.
In all these efforts, the key is to think broadly, carefully, and from the orientation of what is best for the consumer and the public more generally. With that context more defined, we have no doubt business will find creative and efficient routes to meeting our collective needs in new and fascinating ways.
The road ahead
Almost everyone now believes a transportation revolution is taking place. Not so long ago many had their doubts. Transformation is never easy. But while the technology is changing fast, it still has a way to go – in making driver assistance systems more robust and in making batteries cheaper, faster to charge, and more durable. Business models will need to evolve and in some cases the work-force will shift. Changing government rules is also a real challenge and critical to the success of this transformation. Throughout all these changes, the focus will need to be on the consumer.
Nobody can forecast exactly how these transformations will take place, but we are very optimistic that the outcome will be a better world for all of us. Whatever the technological and political developments, we will continue to promote mobility that is Objective, Inclusive, Sustainable, and Unifying.
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