August 19, 2016
In the six short years of its existence, Uber has revolutionized the way we think about public transportation. Just recently, as Forbes reports, the company raised an additional $3.5 billion in funding from Saudi Arabia’s sovereign fund. Uber is now valued at around $68 billion – which is almost $20 billion more than General Motors, America’s largest car manufacturer.
With Uber’s success, the mobile-on-demand industry is a true gold rush at the moment. As the line between tech and the automotive industries continues to blur, more and more startups are creating products and services that could transform the transportation sector. In addition, certain countries don’t even have Uber available, which presents a great opportunity for young entrepreneurs to create their own startups, and try to develop their own smartphone-enabled transport services.
The Rise of Ridesharing
2014 was a landmark year for the automotive industry – in 12 months, Uber expanded from 66 to 266 cities, from 29 to 53 countries and served over 140 million rides. Meanwhile, Lyft scaled to more than 60 cities and brought in more than $330 million, reaching a $1 billion valuation and cutting prices on its own Lyft Line carpooling service.
All of this attracted international companies, with GrabTaxi, EasyTaxi and Hailo flooding into African, Asian and European markets. Despite regulatory disputes, these companies are rapidly overturning the traditionally established taxi industry and expanding the market for point-to-point transportation in the process. As they continue to grow, more urban dwellers are expected to forgo the costs of owning a car.
Past efforts by industry giants like GM and Nissan to commercialize the concept and mass produce electric cars have met with limited success, while a bunch of startups, such as Coda and Fisker have raised millions of dollars only to fail in the end. Nevertheless, the recent success of Tesla has proven that there is a demand for electric cars – at least at the high end of the market. Tesla may be the first breakthrough company manufacturing electric car, but it certainly will not be the last. Last year, Faraday Future made headlines, when it announced its plans to beat Tesla and bring its electric car to the market by 2017. This trend opens up the potential for new startups specialized in inexpensive electric cars, particularly in markets that benefit from lower manufacturing costs, such as India and China.
You can find a lot of valuable data in the On-Board Diagnostic System, and smart startups are starting to take advantage of the OBD-II standard to collect this data and package it in commercial apps. Automatic offers a device that provides an SDA (Smart Drive Assistant) with tips on car maintenance; MetroMile sell a device that enables pay-per minute, and MileIQ uses a phone’s GPS to assist self-directed workers track mileage for tax purposes without any onboard device needed. Furthermore, Navdy recently pulled in a $20 million Series A to launch production with its HUD (Heads-Up Display) that synchronizes with a smartphone via Bluetooth and projects important information onto the driver’s windshield. As all this data gets mined, sorted and properly used, new opportunities for innovations that make driving safer and more efficient continue to emerge. What’s more, there is some good news for drivers, because when all of this information gets online, tasks such as obtaining car insurance, transferring ownership and getting a bonded title will become easier than ever.
Reducing Car Ownership
Cars are one of the biggest contributors to the greenhouse effect, and while encouraging people to ride bikes to work isn’t going to convince anyone to ditch car ownership, car sharing services seem to be doing just that. According to a study conducted by Innovative Mobility Research both emissions and vehicle ownership have dropped in cities and areas where car sharing programs are present. Furthermore, a study by the Boston Counseling Group predicts that car sharing will reduce car sales by 550,000 vehicles worldwide in the next five years. Therefore, it’s no wonder why so many startups are launched each year, and why so many major automakers are investing in car-sharing businesses. The deployment of autonomous vehicles will perhaps change the distinction between car sharing and ride sharing, and offer people a significant edge in the total costs of ownership.
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