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Trends in the Mobility Industry Point Toward Eco-Friendly, Self-Sufficient Transportation

Like driving down a dark road with broken headlights, it’s been hard to navigate the mobility industry in 2020.

The coronavirus has transformed how — and how much — we move. Public transit networks around the world are running at a fraction of capacity as people stay home or choose more individual modes of transit, with car ownership enjoying a resurgence in some urban areas. Yet the pandemic shows no sign of slowing the rise of eco-friendly transportation. 

Governments have remained steadfast in their commitment to greener mobility. The European Union, for example, is investing more than $2 billion for transportation projects like reinforcing cross-border railway links and deploying more charging stations. Cities have reacted quickly to make their streets more hospitable to pedestrians and cyclists. And while car sales have rebounded strongly in many areas, more and more of them are electric vehicles.

The urgency for action against climate change is bound to intensify ahead of the UN’s COP26 conference in Glasgow in November. That suggests that demand for greener and safer transit options will accelerate in the new year.

Cars Are the Winner of 2020

Travelers have shunned public modes of transit and turned to personal means of mobility during the pandemic. Roughly a quarter of people said that they would be less willing to commute via bus or subway after lockdown orders end, according to an eight-nation Oliver Wyman Forum survey in June.

Conversely, cars saw the biggest upswing in traveler sentiment. Forty-six percent of respondents said that they would be more willing to commute via automobile after lockdown orders were lifted. Auto sales staged a recovery in the second half of the year after the pandemic shut factories around the world in the spring. Even more striking was the shift toward electric vehicles, which could pay sustainability dividends if it’s sustained. EV sales surged across Europe in 2020, particularly in Norway and Germany, and more markets across the world are primed for similar growth. As the price of batteries falls and more charging infrastructure and models become available, we expect the U.S. to experience rising EV adoption through 2021.

Cyclists and Walkers Are Here to Stay

From the U.S. to Europe, cycling became a popular choice last year for travelers as they escaped the close-quarters of public transit. About a quarter of bicyclists said they would be more willing to commute by two wheels when they return to the office. Pedestrians were no different: 41% of walkers said they would be more willing to keep doing so when they return to the office.

We expect these micromobility gains to continue through 2021, particularly with many cities reshaping their infrastructure. Cities such as Berlin, Bogota and New York have redesigned their roads to make way for more pedestrians and cyclists in response to COVID-19. Others, like Montreal, San Francisco and Vienna, are banning through-traffic and lowering speed limits to create “slow streets” for pedestrians and cyclists.

These municipal moves are only one part of a larger trend we see in 2021 toward greener mobility.

Climate Change Will Drive Mobility Regulation

Many governments are maintaining their commitments to climate change regulation despite the financial fallout from the pandemic, and their boldness will power the growth of eco-friendly forms of transit in 2021 and beyond.

The European Union has reaffirmed strict car emission standards, while Japan and California made moves to phase out gasoline cars. More governments are offering cash and other creative incentives, such as easier parking or charging, to convince consumers to purchase an EV.

Mobility is no exception to the acceleration of digitization in our daily lives, and providers are embracing these digital solutions to respond to the new market realities.

As shown by our Urban Mobility Readiness Index, not every city has a holistic vision for future mobility. Still, we expect more governments to adopt regulations or legislation that promote climate-friendly modes of transportation. That should hasten the arrival of mobility’s new chapter: one that’s clean, resilient and increasingly digital.

Virtual Technologies Will Outlast COVID

Mobility is no exception to the acceleration of digitization in our daily lives. With technologies like telehealth, online grocery deliveries or video conferencing, many adapted quickly to lockdown measures. That may become a lifestyle change instead of a temporary adjustment.

More than half of those who tried video conferencing, online grocery, telehealth or e-learning technologies will use them more after COVID-19. The staying power of these technologies has less to do with safety in avoiding contagion than one may think: Saving time and getting just as much done compared to working in-person were the primary reasons survey respondents said they would continue using virtual technologies.

Mobility players are anticipating a lasting change in behavior. Gioia Ghezzi, president of Milan’s mass transit operator, told an Oliver Wyman Forum roundtable that she and her team believe that passenger capacity in the new normal will be only 80% of the old normal. With people moving about less to work, shop and receive medical care, the implications for mobility are as loud and clear as a train horn.

Businesses Adapt and Partner to Succeed

Mobility providers are embracing digital solutions to respond to the new market realities. “I expect a tremendous acceleration of digital,” said Ghezzi, who mentioned things like paperless ticketing and information apps for train and bus journeys. Caroline Parot, chief executive of Europcar Mobility Group, told the Forum roundtable that her group was promoting contactless car rentals reserved online on short notice — days or hours rather than a few weeks.

These shifts in business models don’t come easily or cheaply. Many will require collaboration among the public and private sectors to get the job done. Cities don’t have the capital to transform their mobility networks, making strategic partnerships more important than ever in the new year. We expect the competition between cities for these collaborations to heat up as mobility players seek the most innovative and forward-looking governments.

Fostering innovation, equity and collaboration is at the heart of Michigan’s new autonomous vehicle corridor between Detroit, the state’s business hub, and Ann Arbor, home of the University of Michigan. It wouldn’t have been possible for the state to build the corridor without the partnership of tech, mobility and academic organizations — none of which are in it for the economic returns.

“It’s not just about tech for tech’s sake,” said Trevor Pawl, Michigan’s first chief mobility officer. “The idea here is to look at the existing transportation systems that get people around and create equity or inequity, and use this new technology to make them better.“

As the world seeks to build back better, we foresee more of these bold partnerships that will be the driving force of change in the mobility industry. Collaboration “will become a must because all of us have so many things to do,” said Parot. “We won’t be able to reinvent everything alone.” 

Andreas Nienhaus

Partner, Automotive & Mobility at Oliver Wyman

Andreas Nienhaus has spent the past 10 years focusing on strategy development for automotive OEMs and Mobility Service Providers. He’s a Partner in Oliver Wyman’s Automotive & Manufacturing practice, based in the Frankfurt Office. Neinhaus is involved in designing new strategic business models for emerging mobility solutions and services.

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