Automobiles are becoming vehicles in a different sense. The cars of the future, besides ferrying people from A to B, will also act as conduits for value added services, opening up new opportunities for the mobility sector.
Speaking at the Fortune Global Tech Forum in Guangzhou, Bill Peng, a partner at PwC’s consulting subsidiary Strategy&, highlighted three ways advances in technology will impact the auto industry. Firstly, products will be more creative. Secondly, car ownership will decline. And lastly, the auto industry supply chain will be transformed as automakers vie to provide more longterm customer services.
Peng’s second point is a particular threat to carmakers in China. In August a report from Strategy& revealed that 79% of Chinese car owners would give up their vehicles if on-demand, autonomous vehicles, also known as “robotaxis”, became available. For comparison, in Europe that percentage is 47% and for the U.S. Peng thinks the proportion is only around 30%.
Zeng Qinghong, the chairman of Guangzhou Auto Group (GAC) says his company is already responding to that challenge. Last year GAC expanded its business focus to include the realm of mobility as a service, or MaaS – a market which Peng predicts will be worth $200 billion globally by 2020. At last year’s Guangzhou auto show, GAC unveiled its iSPACE concept car, offering a glimpse of what pivoting towards MaaS might look like for the automaker.
The iSPACE was developed in partnership with Tencent, the Chinese tech giant most famous for its instant messaging service, WeChat. The autonomous electric vehicle runs on Tencent’s “AI in Car” operating system, which enables it to recognize users as they enter the vehicle, and customize the driving experience to suit their tastes – selecting music, tv shows, and even preferred routes.
Tencent, which announced major restructuring in October to focus on business services, might seem like an odd partner for an auto company but Zhong Xiangping, Tencent’s head of Intelligent Mobility Services, says the pairing plays well with what the company calls the “attention economy”.
In short, the attention economy means the longer Tencent can retain a consumer’s attention, the more money it stands to make. In the future, passengers of autonomous vehicles will provide a potentially lucrative and certainly captive audience.
Zeng summarizes, “The space within a car is limited, however within this limited space you can have unlimited life.” Or in other words when it comes to monetizing MaaS, it’s the journey not the destination.