Navigant Research Blog

Helsinki’s Plan to Make Private Cars Obsolete

Lisa Jerram — August 12, 2014

Helsinki, Finland, has proposed a strikingly ambitious mobility on demand system that presents the logical extension of current innovations in passenger travel.  The city plans to create a subscriber service that would let users choose from, and pay for, a range of transportation options through their smartphones.  The options will include conventional public transit, carsharing, bikesharing, ferries, and an on-demand minibus service that the city’s transit authority launched in 2013.

The major innovation that makes this work will be an integrated payment system.  This part of the scheme may prove the most complicated to implement, but it is the final piece of the puzzle that makes this scheme truly transformative.  No longer forced to choose between the on-demand capability of private car ownership versus the eco-friendliness of shared transit, Helsinki residents will be able to easily get where they want to go, when they want to get there, without needing a car.

I’ve been using the phrase mobility as a service for this phenomenon, but it looks like the mobile phone companies may have claimed that moniker already.  Whatever the name, the concept is the transportation version of other businesses that are moving from selling a product to selling the service or utility the consumer wants from that product.  Planned obsolescence no longer makes good business sense, and consumers can benefit from constant improvements in technology.  This is most common in information technology (in cloud computing and storage, for instance), but it’s also happening in the energy sector – especially for clean technologies like solar, where leasing programs offer a way to overcome the upfront price premium barrier.

Share, Don’t Buy

Globally, carsharing membership has grown around 28% since 2010, with Europe as the leader in this sector.  Navigant Research’s report, Carsharing Programs, forecasts that global carsharing members will surpass 12 million in 2020.  The rise of on-demand ride services, such as Uber, Lyft, and Sidecar, are also transforming the way city dwellers use taxi services.  Taking on the highly regulated taxi business, these companies face considerable opposition, but at this point, it will be hard to put the genie back into the bottle. Bikesharing and even scooter share services are also spreading.  Today’s young urban dwellers expect to be able to use an array of transportation options to suit an array of needs, at the touch of an app.

Helsinki’s program has the potential to tie into other transportation innovations, such as the rise of electric vehicles (EVs) – more carsharing programs are deploying EVs as a selling point for their service – and autonomous vehicle technology.  Wireless charging would also support schemes like Helsinki’s by ensuring that shared EVs are recharging when parked, rather than relying on the driver to remember to plug in.

Faced with dwindling demand in mature markets like North America and Western Europe, automakers are exploring a range of new services to offset lower demand and to gain a competitive edge.  Farsighted companies will look to begin selling mobility as well as vehicles, changing transportation as much as the IT and energy sectors have changed.

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