The App that Replaces Your Car
MaaS (Mobility as a Service) programs are gaining popularity in Europe, but have mostly failed to launch in the US. SmartGO CEO Peter Katz looks at the reasons why – and explains how such programs could succeed on this side of the Atlantic.
In January 2016, Fortune Magazine announced that “Xerox Built the Ultimate Transportation App for Los Angeles.” It was an exciting moment. Corporate America had seemingly crafted a solution that would address one of the biggest downsides of getting around without a car: the lack of precision in routing and scheduling of one’s journey.
Xerox’s app was touted as multi-modal. Initially it included ZipCar, bus, subway, taxi, biking and walking. It also included both of LA’s ride-hail options, Uber and Lyft. The app promised features beyond basic navigation and trip planning: It could calculate the cost of one’s journey, the calories that the user would expend and the amount of atmospheric carbon that would be generated. Xerox stated that it was working with partners “to integrate booking and payments into the app so users can coordinate their entire trip with a single click of a button.”
Development of the app, and a sister version for Denver, reportedly cost Xerox $10 million in R&D funds. The company provided it as a gift to both cities with the expectation that the cost of updates, performed by Xerox, would be covered by each municipal government.
Concept meets reality
Alas, Xerox’s high-flying plans soon hit the ground with a thud. Uber left the app within weeks, reportedly miffed because the app enabled customers to compare their prices to Lyft. And the booking and payment functions that Xerox promised never materialized.
In the end the LA app only attained 30,000 active users. Such a tiny group, of course, is just a fraction of the millions living in the region. The Xerox executive who cited the figure said that the company had been unwilling to spend the additional $1 million he felt was needed to market the app. Not long after it was released, the Xerox division that had created the app was spun off into a new entity called Conduent. LA and Denver never budgeted the funds to upgrade their apps. For this reason, and because of internal management changes, Conduent stopped supporting the app soon thereafter.
Today, the term “MaaS” is widely used to describe the sort of app that Xerox set out to create. The concept behind the acronym, now a catch-all term for a range of integrated transportation planning and fare-purchase solutions, was first described in a visionary 2014 thesis by Aalto University student Sonja Heikkila.
Although Heikkila’s description of a future MaaS program, was, and still is, highly compelling, the reality of MaaS implementation lags far behind. This said, the MaaS brand has developed a life of its own, and the quest to achieve a working version with most of the promised features described in Heikkila’s thesis, has become something of a holy grail for a range of public and private entities across the globe.
Government led MaaS programs do exist in several European cities and are partially operational in a few places here in North America. But since such programs are publicly funded, they have not sought to develop their commercial potential.
SmartGO sees great opportunity in tapping the commercial potential of MaaS programs and believes that a purpose-built app integrating both commercial and public-serving functions could be a powerful catalyst for improving the sustainability and fairness of our transportation systems. Importantly such an app — we at SmartGO call it “The App That Replaces Your Car,” or TATRYC for short — could operate at little or no cost to users once it was operating with expected commercial revenue streams coming in.
So what’s holding MaaS back here in the US?
For the most part, the technology needed to operate TATRYC exists. What’s been missing is an institutional framework to integrate and align the goals of stakeholders: local government, transit agencies, regional planning entities, private-sector mobility providers and most important, “transportation consumers.”
SmartGO has spent years focused on the challenge of creating and implementing TATRYC. We’ve concluded that three key characteristics are essential to the viability of such a program:
To the greatest extent possible, TATRYC should integrate all safe and reliable transportation modes, both public and private, and be able to “ticket” journeys incorporating such modes at the touch of a button.
TATRYC should be self-sustaining. The costs of operating such a system are not crushing, but they are not insignificant either. Unlike their European counterparts, governments in the U.S. will likely be less willing to fund TATRYC at levels needed to perform successfully for transportation consumers once the excitement of an initial pilot fades.
Finally, TATRYC should be trusted. Transportation consumers should not feel that they’re being “upsold” to more expensive travel options — a private car or limo — when what they really want is a less costly choice such as a shared van, or even a scooter or bike. Thus, having the ability to state one’s preferences up front is key, as is transparency at every stage of a mobility transaction. TATRYC will also gain trust from the clear identification of who’s behind the app. SmartGO believes that a respected third-party that’s not government, nor an active public- or private-sector transportation provider, should be the name that’s on the app.
To address these requirements, SmartGO has developed a revenue model that’s tied to insurance, a private-sector business activity intrinsically linked to transportation. We all know about the uniform state requirement for liability insurance when operating a motor vehicle. What’s less familiar, because it exists only in patchwork form, is the insurance that might protect us in the event of a collision when riding a shared bike, scooter or any of a range of “new mobility” modes that have emerged in the past decade. By capturing the revenue generated by such “all-modes coverage” to cover the costs of developing and maintaining TATRYC, one could easily envision a revenue model that achieves these objectives:
It will make MaaS economically sustainable in the U.S. without direct government subsidy.
If the auto insurance that’s offered is pay-per-mile (PPM), app users will be driving about 8% less than they would with conventional auto insurance. (That’s the estimate for mileage reduction with PPM, per multiple studies).
The app, and its PPM insurance feature, will enable the creation of an easy, affordable and regularly updated regional database of travel behavior. Because transportation is the largest generator of atmospheric carbon, the resulting database becomes an important tool for regions to monitor progress in relation to climate repair goals.
Getting Americans out of their cars to experience and hopefully adopt less-polluting transportation options is challenging in the best of times. With memories of Covid still fresh in our minds, it’s going to be even more difficult in the years ahead. But having a viable MaaS app, even if it doesn’t fully replace one’s car, could go a long way toward the goal of reduced auto dependence, particularly in places that are conducive to walking, cycling and the use of public transit.