BMW and Daimler Dump Mobility Projects

Yet another Silicon Valley illusion has gone pop with BMW and Daimler announcing they are dumping their mobility services in the US, Canada and the UK.

The German automakers have made the decision citing lack of infrastructure and the unexpectedly high costs of electrification of their model ranges. It comes as a bit of a shock following the pair teaming up in mobility solutions in February, combining Car2go and DriveNow, with the pledge to expand the service to 90 cities by the end of 2019 and investing $1.1Bn into the required infrastructure. Instead, from February 29, 2020, their service will now operate in only 18 European cities. A company statement read: “We, along with our shareholders, believe these markets show the clearest potential for profitable growth and mobility innovation.”

This drastic scale-back of ambitions comes after several automakers admitted earlier this year that full autonomous technology is a lot further over the horizon than the digital players had been promising. Some believe true mass market adoption of Level 5 technology is unlikely to happen before 2050.

In truth, this latest dose of realism will come as little surprise to many observers of the automakers and their ambitions to future-proof themselves by moving away from hardware manufacturers into being service providers. The biggest problem they face is similar to the one they see in the adoption of BEVs.

Current population trends suggest 70% of the world’s population will be living in cities and, consequently, less likely to want to own vehicles. However, with more congestion comes less room and so car-sharing and ride-sharing services have no space to park, to charge batteries and even for pick-ups and drop-off in many instances.

By the same token, the dwindling number of rural population will have very much less demand for sharing services or vehicles that have limited battery range. Even if these people can be persuaded into EVs with longer ranges, such as FCEVs, with the demand starting from a low point and, ultimately likely to get lower still, there is little incentive for companies to want to satisfy this demand long term.

Increasingly, the solution lies in automakers getting more heavily involved in the transport solutions that make most sense both to the environment and the city regulators – public transportation. It will require a big spoonful of humility for the mobility solution teams and, doubtless, see even more industry consolidation such as this week’s announced merger between PSA and FCA.

— Paul Myles is a seasoned automotive journalist based in London. Follow him on Twitter @Paulmyles_


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