Business Models for Innovative Mobility Services in Nordic Cities



Business Models for Innovative Mobility Services in Nordic Cities

Authors

Steven Sarasini, RISE Viktoria, Ove Langeland, Transport Economics Institute

Description

The paper examines the dynamics of business model innovations in the field of mobility services in Nordic cities, with a focus on alternatives to private car ownership and decarbonisation of the transport sector.

Abstract

This paper focuses on role of car sharing as a key element of integrated urban mobility services. It examines if and how innovative business models for car sharing can reshape urban mobility and addresses the following research question:

“What are the drivers of and barriers to business model innovations in the field of low-carbon mobility services in Nordic cities?”

The decarbonisation of the road transport system is a major challenge, particularly in urban areas. Despite opportunities to ride public transport, bicycles and to walk, privately-owned cars continue to dominate mobility regimes in many cities. In addition to CO2 emissions, the use of cars creates air pollution and noise, and the need to make cities attractive and liveable is conflated with problems such as congestion and lack of space. In suburban and rural areas, these types of problems are less salient, but other issues such as accessibility are the main reason why automobiles are the primary modal choice.

The resolution of transport system problems has traditionally been perceived as a technical (engineering) challenge. Accordingly, technological innovations (hybrid and electric vehicles, biofuels, hydrogen fuel cells etc.) have been put forward as tools for delivering a more efficient and sustainable transport system. Until now, focusing on technology has failed to bring about the necessary transformations.

Mobility services such as car sharing provide a different route to a sustainable transport system. By providing an alternative to private car ownership, mobility services can improve resource efficiency and alleviate pressures on physical infrastructures (e.g. roads, parking); reduce pollution and promote accessibility. Although spurred by digital technologies and applications, mobility services rely heavily on business model innovation. The latter is the main topic of this paper.

Little has been done to examine business model innovations in the field of mobility services. Generally, business models for mobility services such as car sharing can be divided into three categories. Business-to-consumer (B2C) and business-to-business (B2B) car sharing refer to service provisions to client individuals and client organisations, respectively. By contrast, peer-to-peer (P2P) car sharing refers to services that rely on private car owners, who make their vehicles available to others for hire or rental. A fourth and emergent mode of car sharing is linked to the combination or integration of different transport modes (e.g. public transport, taxis, car clubs, bicycle pools) in a single mobility offering, commonly referred to as Mobility as a Service (MaaS). MaaS is currently emerging in several initiatives across the world (for examples, see MaaS Global (FI), Ubigo (SE), MaaS Scotland (UK), MaaS Rotterdam (NL) and MaaS Australia), and aims to provide a viable alternative to private car ownership by offering users the opportunity to purchase a monthly mobility subscription via a smartphone app.

At present, most mobility service operators such as Uber, Zipcar and Car2Go target densely populated urban areas due to the commercial opportunities available. Cities are the places in which workplaces and residential areas are most concentrated and have best accessibility to public transport. Accordingly, the possibility for integrating different mobility services (MaaS) is largest in urban areas and so is the potential for sustainable mobility services. The sustainability of mobility services also requires technological transformation, such that business models for mobility services promote the uptake of environmentally-friendly vehicle technologies. Generally, business model innovation can be seen as a complement to technological transformation. Several works have noted that new business models can unlock the economic potential of electric vehicle technology and assist in its adoption. Business model innovation has also been linked to vehicles with hydrogen fuel cells and material recirculation, akin to the principles of a circular economy. Combining these aims via business model innovations is a substantial challenge!

Overcoming barriers to business model innovation in this field will likely require actions from a multitude of public and private sector actors. In order to develop insights for governance of a transition to sustainable mobility services, this paper draws on mixed theoretical approaches and data sources. It utilises desktop studies and 20-30 interviews with mobility service operators in Norway, Sweden, Finland and Denmark. Theoretically, the study draws on two perspectives, business model innovation and transition theory, as a means to derive theoretical and practical insights regarding the governance of a transition to a more sustainable road transport system.

Publisher

Association for European Transport