The Launch of Moia and the Burgeoning Mobility Industry
We attended TechCrunch Disrupt at the start of December and witnessed Volkswagen’s live launch of a new brand, Moia. The objective of this new brand is winning a share of the “Mobility” industry that Uber has helped usher in over the past few years.
Its opening offering is immediately familiar — an on-demand shuttle service that allows groups to call their transportation through a mobile interface. To cater for individuals, Moia has also teamed up with the existing service Gett, which VW invested 300 million dollars into earlier in 2016.
This launch was interesting beyond simply an organisation the scale of Volkswagen launching an offshoot. It reveals how Volkswagen perceives the future of the automotive industry and it’s own place within it.
A changing landscape
Automotive remained static for decades, with the ‘problem’ of getting from A to B seemingly solved forever by vehicle ownership. This remained unchallenged as the solution to personal mobility whilst the conditions for the majority of drivers remained consistent. With open roads, plentiful parking, minimal congestion and less densely concentrated populations, car ownership makes sense.
The reality in major urban areas today however is very different. Heavier usage of public transport, restricted and expensive parking, heavy congestion and densely concentrated populations mean owning a car can be a drag.
Uber and other platforms have taken this opportunity to detach the problem of mobility in urban areas by removing the pain points associated with either car ownership or traditional taxi services. According to it’s own internal stats, Uber is now operating across over 300 cities in 60 countries, and fulfills one million journeys per day for it’s user base of 8 million people. The pace of change has been incredible, and it’s not likely to end there.
The Launch of Moia as a Response to Market Changes
In a company press release about the brand launch Volkswagen’s CEO, Matthias Müller stated:
“Even though not everyone will still own a car in the future, MOIA can help make everyone a customer of our company in some way or another.”
As an opening statement, this is truly revealing of the level of perceived threat from the technology players at various stages of entering the market.
Furthering this sentiment Thomas Sedran, Head of Group Strategy at Volkswagen later says:
“As customers’ needs change, so does the automobile business model. In the world’s major urban areas, there is an ever-stronger trend away from owning a vehicle towards shared mobility as well as mobility on demand.”
There are actually two distinct threats that have been identified here:
- The move to on-demand mobility
Volkswagen has seen Uber creep up in value over the past six years until (according to many forecasters) it has even pretty much reached parity with VW. When you consider the length of operation for these two businesses (six years compared to eighty) it demonstrates the pace of change occurring.
When you consider that Uber actually owns none of the assets involved in its network beyond its interface, algorithms and software, it underlines the extent to which experience and service are where real value is now perceived.
2. A potential departure from car ownership
With car manufacturers having historically focused the brand’s ‘innovation’ efforts on the vehicles themselves and not the fundamental problem it is solving, they’ve fallen behind in solving the needs of those living in these urban areas. Even more seriously, they’ve realised that if they stand still as simply manufacturers of vehicles, they risk completely losing their relationship with many consumers entirely.
The desirability of actually owning a vehicle is declining in major urban areas where people may only need the use of a vehicle sparingly. For these individuals, the cost and time involved in purchasing, insuring and maintaining a vehicle that they actually own could seem more bother than it’s worth.
In London, the figure already stands at just 0.3 cars registered per adult, a figure which includes those living in outer London boroughs who’s access of public transportation is not as convenient as those living closer in. Similarly, 56% of households in New York city are also now carless.
Without strategic change, (in the long term) manufacturers like Volkswagen could simply become suppliers of this burgeoning mobility industry as opposed to the globally relevant brands that they are today.
It’s not difficult to imagine car transportation eventually becoming closer in structure to air travel. Consumers have a relationship with airlines and not the actual manufacturers of the aeroplanes in which they travel — similar to how Uber provides mobility to consumers without ever emphasising the brand of vehicle they will be provided with.
Autonomous Vehicles
This comparison to air travel becomes even easier to imagine, when you consider how many businesses (including Uber itself) are on the cusp of developing fully functional autonomous vehicles. With the pilot of an aircraft being invisible for most of the journey, and a lot of the in-flight navigation being handled by the autopilot.
Tesla, Google, Baidu, Apple and a host of smaller challenger brands are (alongside the traditional vehicle manufacturers) all looking to enter the autonomous vehicle market, either through producing fully functional vehicles, or through the software and components that allow vehicles to self-navigate.
Removing a driver from the equation effectively removes another ‘overhead’ in terms of the cost of delivering on-demand mobility, and makes the service an even more attractive proposition from the perspective of the user.
The Direction of Moia
At the TechCrunch conference, newly appointed Moia CEO, Ole Harms discussed how the brand will look to develop Moia, discussing the fact they would control the full circle of interface, logistics, and fleet in the long term.
This creates a subtle distinction between its own service and Uber. With this ‘full service’ offering, Moia provides an updated solution that also looks to re-marry the link between mobility and vehicle manufacturing. It was interesting that when speaking on stage, Harms would not rule out partnering with Uber or other platforms, suggesting the company has a flexible approach to establishing itself.
One of the greatest strengths of the technology competitors is their ability to build distinct units and divisions with an agility that allows them to develop disruptive solutions, without being hindered by large-scale corporate process. By launching Moia, it’s very possible that the brand will be able to act more in line with its technology-focused competitors rather than the corporate giant it’s stemmed from. It’s interesting to note for example that Moia will be based in Berlin, whereas VW is based in Wolfsburg.
Another interesting way to consider Moia is comparing it to the way in which large financial service providers have attempted to counter the threat of innovators by constructing incubators. This provides them with the ability to invest in and internalise promising startups rather than compete with them. Moia is already very publicly courting technology partners, as well as a number of other potential cooperative schemes.
Where next?
Automotive is just one example of a trend that’s occurring across sectors, where the rapid emergence of new technologies allows new solutions to be dreamt up and built before larger scale businesses can adapt. The launch of Moia is representative of one of these larger scale businesses attempting to grab it’s own share of an entire economy that’s emerged as a result of questioning the fundamental assumptions of urban mobility.
Customer expectations spread like wildfire, and what Uber has achieved by delivering mobility at the touch of a button in terms of convenience is becoming the expectation across all industries, demographic segments and channels. Whether it’s Moia, Uber or someone else, there will be further twists and turns in defining the future of mobility. Even on the near horizon, improvements in the capability of artificial intelligence, personal flight vehicles in the early stages of being designed, electric vehicles becoming the norm and even augmented reality will provide countless more opportunities for innovation in this space.
