India isn’t the best market for autonomous vehicles: WEF’s John Moavenzadeh
Mobility Industries chief John Moavenzadeh on car makers facing the risk of becoming a supplier to technology firms, future of self-driving cars and online taxi firms
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New Delhi: John Moavenzadeh, head of Mobility Industries and member of the executive committee of the World Economic Forum, had some Indian suppliers gasping for breath after he presented to them the changing mobility scenario around the world.
The presentation spoke of Dubai’s target of 25% of all transportation in the city-state being powered by autonomous vehicles by 2030; a WEF survey of 5,500 consumers that suggested that most people are ready to accept self-driving vehicles; and expected ban on private vehicles in some cities over the next 15 years.
In an interview, Moavenzadeh spoke about classic automakers facing the risk of becoming a supplier to tech firms and the future of autonomous driving and ride-hailing firms. Edited excerpts:
Do you think autonomous vehicles will take off in India?
I don’t think India is the best market for the autonomous vehicles. The state of the infrastructure, very complicated traffic patterns, the economics of (hiring) a driver in Delhi who earns $250 a month. What I personally find really exciting about India is the skills and talent around software and certain technology and that to me seems like a great opportunity.
India is not the ideal experimental market for autonomous driving but it is an experimental market for some of the other mobility solutions.
For example, Ford’s pilot on smart mobility in Bengaluru...
Ford is experimenting with a lot of things in smart mobility. It has a portfolio of projects, like the one in Bengaluru. I think it is essentially doing this to learn quickly about what the potential is by unlocking new sources of adding value.
Other vehicle manufacturers are doing similar and rapid experimenting. There are so many partnerships where real money is flowing between Volkswagen and Getz; GM and Lyft. It has really been remarkable in terms of what we have seen what we call innovative partnerships. We could not even have fathomed these things even two years ago.
What’s the future of traditional auto makers and the technology companies?
There are two ways to answer that question. You still need the skills that you find in Stuttgart, Detroit and in Toyota City, in terms of classic automotive capitals, to build cars. Cars are not easy to build. Having said that, you also need a new set of skills to build the solutions around mobility platforms. The big risk for classic vehicle manufacturers is: do we become suppliers to the mobility service companies who form a very powerful platform? There is a family connection with Google. It has dominated the search space. Uber dominates the e-hailing market. What does that mean and how much value can be extracted from that? So, I think vehicle manufacturers are forced to understand the risks, opportunities. I think they need to very actively plan in this space.
Can you tell us about the underlying risks in the relationship between car makers and technology companies?
It is a very interesting relationship. It is an opportunity as well a threat in terms of what we are seeing in developments around the mobility solutions. Here, in India, Ola and Uber in the short-term are actually generating sales for the auto manufacturers because they have provided financing programmes for the drivers to purchase their vehicles. That’s great for the vehicle manufacturers but that short-term gain coming at the cost of medium and long-term sales opportunities following that classic old model of needing to sell more cars. But you are not going to sell more cars if you have a fleet which is more heavily utilised and that’s what Ola and Uber do. You take a car, it is used 50% of the time (in the Ola and Uber model) whereas (in the) personal mobility model, a car is sitting idle for 95% of the time.
In the long-term, they (technology companies) will take cars off the road. That’s the big challenge. I do think that in the saturated markets such as the US, Germany and Japan, we will see stable and declining vehicle sales within the next 20 years.
So, essentially a car will become a commodity.
This is the big question. So, how much do younger consumers value the feel of leather inside the car? How much do they value the passion and beauty that we felt for a beautiful automobile that versus the convenience and cost of where you want to go quickly? For me that’s the big question.
But ride-hailing companies are losing money.
I think they are seeking a land-grab sort of a play where you first get people on the platform and then once they are hooked, you can raise prices but right now, the platform is ridiculously cheap even by Indian standards. Right now, Ola is about Rs6/km (in India) and that is remarkable. So, if they triple that, it is still very affordable and appealing.
How is the electric vehicle scenario changing?
Personally, we are on the cusp of a significant take-off in electric vehicles, similar to what we have seen of solar panels. The economics of it have been driving it, costs have been plummetting. I have heard that is happening with battery technology as well. There are always three prohibiters to the electric vehicles: range anxiety, cost, and availability of charging infrastructure. Now we have reached this stage where it is entirely possible to bring out electric vehicles which have a range of...in US, the magic number seems to be around 200 miles even though very few people need 200 miles. Costs have started to come down and infrastructure is coming up slowly in Europe and the US.