Today, the global mobility landscape is changing rapidly on account of innovation in technology, ubiquitous connectivity, growing global population, changing consumer preferences, and environmental concerns. Thus, the coming years will be volatile and complex for the automotive industry globally. The mobility landscape would be influenced by CASE — Connected, Autonomous, Shared, and Electric — technologies which have already started taking shape.
Globally, each of the CASE technologies is bringing about a distinct change in mobility either on its own or in combination with another CASE element. Also, different CASE elements are at different stages of development.
Connected cars have the ability to connect to the outside world and enhance the user experience in more than one way. Improved traffic safety and efficiency, infotainment, convenience and cost efficiency are some of the key offerings of connected cars. Connected cars are expected to account for around 70 percent of the global automotive sales by 2023. Eventually, they will pave way to driverless vehicles.
Autonomous cars in the ideal scenario are driver-less cars. Current commercially available cars are, however, primarily, semi-autonomous (SAE Level 1/2). Going forward, self-driving cars in a real sense (SAE Level 4/5) are expected to be introduced in fleets by 2025 and for private ownership by 2030. The development of connected and autonomous vehicles will go hand in hand, and the key to the success of these rests on three pillars: technology, infrastructure, and regulations.
Shared mobility, primarily car-sharing, has been exhibiting remarkable growth in all the major markets in the recent past. As the growing population continues to escalate traffic congestion on roads, causing shortage in parking spaces, the convenience of owning a vehicle is getting diminished, and consumers are moving towards shared mobility. Smartphone and internet penetration are the enablers for such mobility options.
Electric vehicle (EV) sales in developed countries have seen rapid growth lately due to policy support and regulatory push from governments, which in turn are driven by the concerns about exacerbating poor air quality, and the dependency on fossil fuel. However, for EVs to command a pull from the consumer side, battery prices have to come down, which is only possible through advancement in battery technologies and scale.
In India, thus far, connected and shared technologies have made considerable progress compared to electric and autonomous. The connected car market ecosystem in India is expanding fast as all the major players are launching a slew of new models with connected features designed around vehicle safety, infotainment, and navigation.
In case of shared mobility, a massive 3.5 times jump in the number of rides through ride-hailing applications in the last three years indicates the rate at which shared mobility has taken off in India. Even though electric mobility has not made much progress in the country, the government is cognizant of the benefits of EVs and hence has come up with the FAME II scheme to give the overall ecosystem a push.
The Indian mobility landscape
The success of connected, autonomous, shared and electric mobility depends on overcoming several infrastructural and technological challenges. Many of these challenges are independent of the geography or market and are being exhaustively studied globally. However, to make this new mobility vision successful in India, it is essential to understand the Indian context and the challenges and needs that it brings to the fore.
The Indian mobility ecosystem is very diverse — apart from traditional public transportation, private vehicle usage, and the latest trend of ride-sharing, there are multiple informal modes of transportation, suiting local conditions. Many people use more than one mode on a trip, especially for the first- and last-mile connectivity. Hence, there is no single superior mode of travel, but all these mobility solutions together with complete the needs of an Indian passenger.
Despite having a number of mobility options, challenges like poor infrastructure, congestion, pollution and parking problems plague the current mobility landscape. Thus, to make ‘CASE’ successful in India, we need to comprehensively study the multiple parameters in mobility and identify the challenges associated with each one.
Making the case for CASE in India (I-CASE)
Addressing the current challenges in Indian mobility through innovative solutions which use CASE in one way or another will not only solve peculiar problems faced by Indian commuters but will also push the adoption of CASE.
Improving First/ Last Mile Connectivity: For example, electric rickshaws, a new phenomenon in the Indian mobility landscape, do serve the purpose of first- and last-mile connectivity but do not meet most vehicular safety norms, are not weather-proof for passengers and are quite slow too. Further, lack of dedicated lanes for e-rickshaws is leading to congestion on roads as they lead to a much higher heterogeneity in speeds. Thus, many passengers are compelled to opt for shared / individual fossil fuel-powered regular autorickshaws.
OEMs can address these challenges by making the overall design of e-rickshaws safer and at least at par with existing auto rickshaws. This will, in turn, attract many passengers towards e-rickshaws, most of whom currently use the services of autorickshaws because of safety and speed reasons.
Similarly, the introduction of aesthetically appealing, safer (crash-safe, seatbelts, alternate materials for lightweighting and safety), comfortable and weather-proof (closed cabins for passengers) three-wheelers can prove to be an effective alternative for taxi users, especially in areas with higher road congestion.
Bicycle (non-motorised)-sharing as well as motorised two-wheeler sharing has seen some momentum in the recent past, both in terms of adoption and investments in upcoming players and can serve to address the conundrum of first- and last-mile shared connectivity. While the weather (dust and humidity) and road conditions (lack of dedicated lanes) in most cities of India are not very conducive for bicycle rides as well as two-wheeler rides (especially felt so by higher income groups), a more comfortable solution which is a single- / double-seater compact vehicle e.g. global concepts like the Renault Twizy and Toyota I-ride can be emulated to solve the problem of first- and last-mile connectivity. The four-wheeler individual mobility solution will, however, have to be engineered for frugality to make it palatable for the cost-conscious Indian customer.
Hybrid transport models: Business model innovations like car-pooling make the ride-hailing option attractive due to shared costs. However, it also increases the waiting time as well as the overall commute time.
Introducing a relay model in car-pooling (wherein arterial routes are served by a group of cars and the branch routes are served by another) can potentially solve the issue of detours and higher pricing in long commute distance. Car-pooling can also be integrated with two-wheelers and three-wheeler ride-hailing to further optimise travel time and price.
Intelligent Transport Management System: To augment the benefits of a shared mobility ecosystem, connected technologies can play a vital role. For example, consider the problem of slow-moving traffic. Average traffic speed in Indian cities is around 30 percent lower than major cities in developed economies.
To solve this problem, governments have been spending colossal amounts on infrastructure — US$ 12.5 billion (Rs 89,625 crore) spent in the past five years in Mumbai, and US$ 1.3 billion (Rs 9,321 crore) to be spent in the next three years in Bangalore. However, the infrastructure alone will not suffice, and it needs to be complemented with an Intelligent Traffic Management System (ITMS).
ITMS can integrate all the vehicles in the cities and co-ordinate them more effectively as seen in Tokyo. ITMS in Tokyo which is mainly V2I (Vehicle to Infrastructure) has helped reduce traffic congestion drastically by deploying intersection collision avoidance, sag congestion mitigation and dynamic route guidance. With 5G connectivity, ITMS can be V2X which has the potential to further improve traffic congestion.
Application of telematics in connected cars in car rental business can transform the process by eliminating the need for manual intervention. Booking, pricing, unlocking, pick-up and drop-off can be automated with connected car features in rental cars. Additionally, OEM dealerships also can double-up as rental car providers, thereby creating new revenue streams. Since there are many synergies associated with connected technologies, it is important that the government and OEMs strive towards plugging the current gaps in the connected space.
With regard to the regulation around connected cars, there is no clear regulatory demarcation on type of data (personal/public), privacy and security of data. This might deter people from opting for connected cars. Also, the data exchange protocols for vehicle connectivity are not standardised, which might hamper vehicle-to-vehicle and vehicle-to-infrastructure connectivity. Moreover, there is no clear direction about which of the three connectivity architectures, namely, 5G/LTE, DSRC, or hybrid for V2X communication is to be adopted. Only when these issues are addressed will the consumer as well as the players in the value chain be free of any anxiety in switching to a connected vehicle.
Adoption of EVs through battery swapping
The Indian mobility system would do well to integrate connected, autonomous and shared with electric powertrain. Currently, EVs are not affordable for many in India and thus the adoption is still in its nascent stages. Apart from the cost, multiple issues need to be addressed to increase EV adoption through parking spaces and charging infrastructure. For example, in a city like Delhi there are only around 70,000 legal paid parking slots provided by municipal authorities while the number of cars in the city exceeds three million. The sheer absence of fixed parking space for vehicles creates major obstacles for home charging of vehicles, which is one of the major cornerstones in the EV charging ecosystem.
Also, deploying charging infrastructure in fuel stations runs the risks of economic viability of fuel stations. Deployment of sufficient charging infrastructure for 2-, 3- and 4-wheelers across the country to meet the country’s 2030 EV goal will cost between Rs 30,000–Rs 40,000 crore. Thus, there is an urgent need for innovative solutions to increase EV adoption.
For commercial vehicles engaged in e-commerce and hyperlocal deliveries, these issues can be addressed through a battery swapping model, wherein one entity owns and controls the entire system including vehicles, batteries, swapping stations and hands out subscription for each vehicle; vehicle movement is not controlled but is in a defined zone / fixed loop. Selling EVs without battery and providing a subscription plan for the batteries will keep vehicle prices in check, making them attractive compared to conventional IC engine vehicles. This solution can be adopted by fleets of e-commerce and hyperlocal deliveries as these have defined paths, scheduled stops and higher utilisation of vehicles. Also, commercial fleets will need limited infrastructure, lower battery inventory and can provide better charging management as compared to private vehicles.
As far as private ownership is concerned, given the current price differential over ICE vehicles, EVs do not seem like an attractive proposition for the value-conscious, mass-market consumer on account of which even the FAME II scheme has stopped short of incentivising personal electric cars. Hence, it makes sense to position the personal four-wheeler EV as an aspirational and lifestyle product. The recent launch of the Hyundai Kona as a premium EV reiterates the same line of thought. Once, the ownership cost of EVs comes at par with conventional IC engine vehicles, we might see EV adoption in the mass four-wheeler segment.
While it is often stated that new mobility options or CASE parameters are beginning to shift the focus from core auto industry to elsewhere, OEMs and the auto industry will still continue to play their current pivotal role and expand their presence in new areas. The automotive industry would do well to orchestrate each mobility model in the Indian context by way of design — new vehicle models, connected solutions such as V2V connected cars, solutions for charging infrastructure through a battery swapping model or in creating enabling infrastructure conditions via tech interfaces for innovative shared solutions. Players that act with due consideration of the context will achieve notable success using CASE in India.
ABOUT THE AUTHOR
Ashim Sharma is Partner & Group Head at NRI Consulting & Solutions. NRI’s Aashutosh Sinha (Senior Manager), Adnan (Senior Consultant), Udit Dhekale, Sandeep E (Deputy Senior Consultants) made significant contributions to this column.
(This article was first featured in the September 1, 2019 issue of Autocar Professional)