YouSaid · the spoken record

Henning Kagermann

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28
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2017-12-06
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2017-12-06
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  1. “Yes. There's maybe more of a biocation between the mobility as the service, right? I need to go from A to B. And in that sense, these pay-as-you-go business models are going to be more convenient and more economic ways of addressing that need. But on the other side, today co-ownership is deeply uneconomic and it's not rational. Otherwise, you wouldn't buy cars today and utilize them at 5%. And it's difficult to see, particularly in the context of the conversation about urban and rural, what we had, why this would change in the long run. So I think the car ownership will remain. It will remain a deeply personal experience and therefore branding, design, consumer experiences will become more differentiating factors than pure power what it was in the past.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  2. “As a city, you want to attract capital. And in order to attract capital, you need to provide an infrastructure which allows a city to move and a city which isn't polluted. These are the preconditions for the adoption or the welcoming of the services we are discussing. So when you go around the world, you see that the town planners are clearly deprioritizing the car in town. And when we really want to have a glimpse in the future, we go to Singapore. In Singapore, you have heavily regulated car ownership. Road uses is very expensive. You are encouraged to use the public transport. The ownership costs are five to six times that of the global average. And we've seen the impact on car ownership. That is an extreme example. And it's going to be in a partnership with these mobility service providers and city planners to gradually find ways of allowing this service to penetrate and then ultimately allow the cities to evolve into better places. And in this process, we talk to”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  3. “That is correct, then arguably, if you think about the robotaxi, it's almost like a business service offering. In our model, the robotaxi is two and a half times more expensive than the average car. So yes, you could argue in that context, given the utilization, you might get adoption earlier.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  4. “Buying a hybrid was three years. That's when you saw the inflection in the previous demand. So we use that concept when we look back and what needs to happen in terms of battery costs to have the similar experience, obviously making some assumptions. And we concluded that you need $100 per kilowatt hour from currently it's around double the rate in order to see a consumer-led adoption because the consumer ends up with a product which is comparable in experience in terms of usage, but also in terms of costs.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  5. “So when we think about the EV adoption curve, on the one side it's kind of a push adoption, which is regularly driven, because EVs are zero emissions. So by having them in my portfolio, I reduce my CO2 footprint, and that's what I have to achieve. When we really talk about the wider adoption of penetration, we are talking about the pull. So when is the consumer asking for the EV? And for that, I think the industry is using the model that the EV needs to be comparable in experience to the internal combustion engine today. So in terms of range, 500 kilometers or miles, and in terms of cost, because as a society, we are not unlikely going to spend substantially more for mobility. So these are sort of the limiting factors. And then very quickly, you end up at the battery cost, which today is still punitive. So when we go back to try and figure out what is the inflection point for adoption, my colleague Koto Yozava in Japan, he's gone back to the previous experience. And when the payback for the consumer...”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  6. “You write in that report that current battery ranges are sufficient for at least 90% of current vehicle usage, but cost is obviously still limiting. These cars tend to be pretty expensive. What has to happen for adoption of EVs to really take off?”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  7. “Well, a lot of the discussion we have with investors, for instance, autonomous and electrification is kind of the same for many people the way this is happening. But our utilities colleagues in London have recently published a report where they try to quantify what is required to make us go electric. They're talking about 6 trillion of CapEx required in charging networks and power infrastructure, 2.6 trillion of charging infrastructure, and of which 1.7 trillion would be in smart grids to kind of manage the peak loading on the grid.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  8. “Yes, the best adoption scenario is a welfare city, densely populated with random traffic pattern. That is the best context to make these right hailing business models, I think, economic. So what we did in the report, we looked at the top 300 cities globally and analyzed what we call the pull factors, which is the wealth and how inefficient this car is today, so how low is utilization, and the push factors, which is pollution, congestion, and are there any viable alternatives out there in terms of public transport? And then we've found in a little matrix, there's two broad groups of cities, large Asian cities. We found they're ready for this disruption. Like Tokyo, Shanghai, Hong Kong, they're all in a screening very well. But there is plenty of the European cities and some of the American cities, which are what we call willing adopters, the pull factors are very strong, but you haven't gotten the traffic or the pollution aspects yet. It's not country by country, it's more like city, but”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  9. “But that's why when we think about it, it comes back to disaggregator concept. And you could see how a consortium could work with the local public transport office to kind of use this flexibility of what we're discussing to complement the public transport system and offering in ultimately the objective for any city planner is to keep a city moving.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  10. “Therefore, there's another element which makes the costs go up. So, in our view, it's not a substitution for public transport, but it's another segment in between the, let's say, private car ownership, the taxi, and the public transport.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  11. “When this is often discussed, people would argue intuitively yes, because they start out, oh, you're telling me it's $1.50 is the per mile cost. Half of this goes to the driver. The driver is not going to be there, and therefore cost should come down. But as an offsetting part of that, which is the driver's functionality of what he brings to the party needs to be industrialized. And when we do the math so that $1.50 might drop to $1.20, but it's not going to go to zero. Also, as this service is going to grow, you might find that some of the cities or cities in general are starting to think about how we're going to tax that.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  12. “It's the predominant one because it's the closest where we can relate to the right hailing opportunity. The question is who is going to win there? And I think the company which is better able to match supply with demand is going to be the one which is going to crap the opportunity more. And then there will be variants of that concept of providing us with mobility solutions when we need different ones. For instance, you would like a convertible for a weekend. I'm sure there is a business model emerging, but the bulk is going to be about satisfying our daily trip demand at a more economic cost.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  13. “From a traditional manufacturer's point of view, it really is worthwhile exploring if you are making a car, if you're playing in the Robotaxi market, whether you are become part of where you extend your value chain like you've done today in terms of financial services and use Delazeer balance sheet and your knowledge base to provide some of the funding and ultimately also team up with others or become part of a consortium to kind of provide the fleet in the broader context. When we think about this, we've came to the view that actually to be successful, you want to be regionally dominant rather than globally irrelevant. And then on top of it, obviously,”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  14. “The interesting point is in the moment causes are vertical. Causes sold to an individual. When we think about this, we often talk about that the sales process is going to have to become horizontal. What I mean by that is, you probably see that cities are going to drive this process. So you're going to go and compete maybe for a license in a particular city to provide this particular service. And that is a different skill set required. It's way out of the competencies of the car company today.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  15. “The patterns and so they can preload the system and therefore when you look for the mobility solution they will be able to give you a better time to fulfillment and possibly a lower cost because they're running at a higher utilization which is ultimately the economic differentiator for these services. And underneath we have these fleet operators. There is nobody who has the full skill set yet. And so there will be partnerships evolving and we see some of them.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  16. “And so underneath, we believe it's going to be a level of optimizers. And these are the right healing companies today. And then what's the competitive advantage of these optimizers? In our mind, is the data they have, the knowledge where we are, when.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  17. “So that's a big question mark. And what we are arguing is that this fragmented part of the value chain today, which sits with the drivers, needs to be institutionalized in order to enable this service to be happening. And so that aspect is an opportunity, let's call it fleet management, which obviously is adjacent to the traditional carmakers when you think about their financing operations, but it's also adjacent to rental car companies. They know how to maintain and turn around these fleets. When you think about the value chain, In the report we talk about just to conceptualize this, the aggregator. The aggregator for us is an app which is maybe in conjunction with a city, which usually I want to go from A to B and the app tells you you can walk, you can ride a bike. This right healing company costs you X, the taxi costs you Y, and ultimately you're making your choices in terms of time and cost.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  18. “When you think about it, the right hailing company today, you have this right-hand driver, and the driver fulfills two principal functions. One, he drives you around or she drives you around, and B, the person provides the capital, so it funds the service, and ultimately provides a clean car, a safe car, maintains the asset which provides the service. So the next pivotal event is going to be when we move to autonomous. The computer will be able to drive us around.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  19. “Yes, they're starting, right? Over the last two years, we've seen progress being made. It's like a jigsaw puzzle which is going to be put together, how economic attractive this is going to be further down the line, we will see. But in the report, we are arguing that the autonomous car, which ultimately is the backbone for the robotaxi, is going to be an expensive car to produce enabling the business opportunity we're discussing. So why conceptually with a car company sell this car? And what we explored in this report is saying if you weren't to sell this car and if you made this car part of the service offering, and rather than selling it, you would sell the service on a three-year basis. In our maths, it's five to six times more profitable. So $14,000 versus on average $2,000 per car.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  20. “They have made some investments in those right hailing operations, I would say rather maybe defensively, to understand what is changing, what is involved. On the other side, they are also trying to play around or made some investments in different business models in terms of trying to figure out what is the skill set we need to add in order to succeed in this right hailing world. Because we are talking about a service and car companies in the moment are selling a product.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  21. “We first observed is kind of a land crop mentality of these new companies. These are tech companies on the one side. On the other side, it's a brick and mortar business. There's a guy in the car which provides the service. And to make it economic for these people to do that, even if they might not get the load or the utilization, you've got to subsidize it. So they raised capital. They're using the capital to drive that. And you can see, and we've observed obviously in some geographic areas where two competitors clashed with each other, that the competitive deeper pockets were ultimately able to be the dominant player in the market. So we arguing that in terms of the right hailing opportunity, you probably see a sort of regional championship that the global market gets divided and a particular geographic area, a company's dominant versus in others. The manufacturers obviously dealing with many changes in the moment.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  22. “First of all, the biggest problem for taxes is the lack of utilization. Because if you stand in a rank, if you wait at an airport for this next fare, if you drive around the city for the next customer, an inefficient use of time. And so the ride-hailing companies are trying to minimize this inefficient use of time by also dynamically matching demand and supply. What's going in favor of the taxi companies is that they are largely regulated businesses. And so when you look in the world where right hailing has maybe slower penetrated, so in Tokyo, for instance, or in continental European countries, it's often because regulation, taxi regulation has prevented that faster adoption. And what you might see is, particularly in those areas, that the taxi business is sort of looking towards the elements of the right hailing business model to kind of adapt, as you put it. But it's a very gradual process.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  23. “Will remain probably the predominant form of transportation. And then even if we assume that the penetration of car ownership in cities will decline and in our models we assume from about 30% to 23%, which is basically from one third to one-fourth of any inhabitant of a city is gonna owning a car. The growth in urban population will compensate that. And then there's two drivers here. So you have the underlying growth of car population in cities will continue to go up. And those cars which are utilized in robotaxis, we believe are going to be depreciated and replaced much faster.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  24. “Contrary to what one would intuitively assume, we don't believe that it's going to be a watershed event for the car industry. It's not necessarily spelling disaster. First of all, consuming mobility is an urban phenomenon. So it's geographically limited in our mind. Why we're saying this? Because right healing is just using this as the example for the pace you go mobility industry. There's different variants of that. But what's central and common to all of them is they're built on maximizing utilization of the asset. And so therefore you need a dense population. And ideally you also need random traffic patterns. Those two conditions make the best backdrop for an attractive economic outcome. So in our mind, mobility as a service is largely an urban consumer offering. Private co-ownership will remain the cheapest way of transportation going forward. Today we estimate that the paramile cost of a privately owned car is a fifth.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  25. “That's obviously a bit of a stab into the future. So we have a model behind it, but if we just zero in on the key drivers here, first of all, we assume in maybe conveniently that the mobility pattern we're observing today is not going to change going forward, and that is, on average, we're using 2.2 trips a day per capita. And that is to go to work, to go to school, or drive kids to school for leisure, to shopping, etc. So that's not going to change. There's population growth. Today there's 7.5 billion of us on this planet, it's predicted to grow to 8.5 billion, and more of us are going to live in urban centers, and we inherently believe this mobility as a service is going to be an urban phenomenon at first. And so urban population grows from 54% to 60%. So put these two things together, we'll have to accommodate 25% more trips. And then finally, there's going to be a mixed shift. As we get to know this services,”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  26. “So today there's roughly 6 billion ride hailing trips a year made around the world. You estimate the number of ride hailing trips could grow to 83 billion annually by 2030. What's going to drive that growth?”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  27. “I would focus on four drivers. First, car ownership, as we know it today, is inherently inefficient and costly. The typical car on average is utilized 5% per year. Second, the experience to take your car into a city, it has become quite punitive in terms of finding a parking and then the cost of parking. And then thirdly is technology. We have now smartphones, GPS, maps, and all of these are building blocks for the system, for a pay-as-you-go ride-hailing provider. So now we know where we are, where we want to go, but also where the taxis are, so that the right hailers are to get us where we want to go. So it's a much more dynamic and efficient matching of demand and supply. And then finally, access to capital. The world's three largest retailers you mentioned raised more than 36 billion to build out that infrastructure and have been valued in excess of high-level.”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT

  28. “Your report identifies a new product category, which you call mobility, simply mobility, ride-sharing companies like DD, Uber, Lyft have essentially unbundled car use and car ownership and allowed folks the ability, in your words, to pay as they go, like we do with other products. How did that opportunity come about?”

    2017-12-06 · Goldman Sachs Exchanges · The "Pay-As-You-Go" Car and the Future of Mobility · IDENTIFIED FROM THE TRANSCRIPT