Product Innovation Trends

Is Car as a Service Model the Future of Transportation

How the XaaS business model can be extended into car sharing

Ania Osinska-Bulloff | November 29, 2016

the future of car sharingTim Navarrette gave up his car 11 years ago. At a recent Mobility Unplugged event hosted at Jama Software, Tim shared that when he was a teenager, getting a driver’s license meant freedom from adults, and driving a car was an extension of his social life. But when he moved to Portland, driving a car was frustrating. Tim couldn’t see the city and he decided he wanted to sell his car. He couldn’t shed the guilt until the first car sharing came to town. This is when he realized, he’d been spending $500-700 a month on car insurance and other fees, an amount he would never be able to spend monthly on any car sharing service. Today, he picks the service that’s most convenient for the type of errand he needs to run. He uses what he describes as a “transportation portfolio”.

Anything as a Service

What if we could take the “transportation portfolio” a step further. The past decade has seen a revolution in consumer electronics and technology. Mobile phones, for one, have been transformed — once little more than devices for making calls, they’re now miniature portable computers. Meanwhile, tech companies like Uber and Airbnb are leading the boom in the “sharing economy,” making travel easier for millions of people in the process.

Alongside this constant innovation and digitalization, we’ve seen the rise of the XaaS (anything as a service) business model, in which software products or access to hardware is provided over the internet for a fee. This service model is appealing to companies and consumers who prefer paying a subscription fee and not having to worry about hardware upkeep over investing money upfront in a solution that slowly degrades over time.

To a certain extent, we’re already seeing the expansion of the service model into consumer electronics, as people choose to lease their smartphones with the option to upgrade every year. But, what if it extended into transportation as well? What would it look like if we had “cars as a service”?

Smart, Efficient and Flexible

The exciting possibilities offered by the cars as a service model are nearly endless. Instead of buying a particular vehicle and leaving it in a garage for most of the year, consumers could use any vehicle they want when they want to. They might have a sports car delivered to their home for a trip to the beach, an SUV for a mountain excursion, a convertible for a cross-country road trip, or a pickup truck for making deliveries.

These days, our smartphones are connected to the Internet of Things (IoT), a massive network of devices, from kitchen appliances to thermostats, that share information with each other. Likewise, we’ll have “smart cars” that remember things about users as they switch vehicles — from frequent routes and favorite destinations to preferences for radio stations, seat height and air conditioning. Users would pay a monthly fee to use the service, with different plans available for different usage levels and the ability for car manufacturers or owners to optimize usage and dollars earned.
The growth in the cars-as-a-service model is also coming at a time when ride-sharing apps and self-driving cars are picking up steam. Rather than needing to own a car, or even a driver’s license, people will have affordable, efficient and timely transportation options that get them where they need to go.

Future Fast

It’s almost a certainty that cars as a service is coming soon. What remains to be seen is how manufacturers will build the cars of the future and how cities will plan their roadways and transportation networks around them. Better and faster product definition, change management and functional safety verification will certainly be crucial in this process. What are your thoughts on the future of car sharing?