Exploring mobility solutions in emerging markets

– New mobility services are forecast to expand dramatically through to 2030

– Transport innovation offers opportunities to leapfrog traditional modes of transit

– Asia is poised to be the centre of demand for transport-sharing services

– Micromobility solutions have significant room for growth

As the world looks to reduce carbon emissions and improve the ease and cost of urban transport, countries are exploring new forms of mobility services, ranging from ride-hailing and bike-sharing apps, to electric-vehicle (EV) charging stations and smart parking.

The global market for mobility services is set to grow from $260bn in 2020 to $660bn in 2030, according to a recent study from the Oliver Wyman Forum and the Institute of Transportation Studies (ITS) at the University of California, Berkeley, which looked at 13 services across North America, Europe and Asia.

This offers emerging markets an opportunity to leapfrog traditional transport modes more quickly and efficiently, mirroring similar developments in voice communications as countries shifted from landlines to mobile phones and cloud-based conferencing tools such as Skype or Zoom.

Regional growth trends

Europe is expected to see the strongest expansion in EVs and charging services of the three regions covered in the Oliver Wyman Forum-ITS report, driven by the EU’s proposal to cut carbon emissions from cars by 55% by 2030 and its plan to ban fossil fuel cars by 2035.

Mobility revenue on the continent is forecast to rise from $56.8bn in 2020 to $143.9bn over the decade, for a global market share of 20%.

In North America, meanwhile, smart parking payment services are expected to be the fastest-growing area, with mobility revenue to rise from $66.3bn to $175.3bn over the period, for a market share of around 25%.

However, perhaps the most interesting growth story – and an example of best practices for emerging markets – is Asia.

Asia already has a robust market for shared services that combine communication, commerce and transport in a single platform. Its mobility revenue is projected to increase from $133.9bn in 2020 to $337bn in 2030, equivalent to a global market share of around 50%. Of this growth, car rentals are expected to account for $34.3bn and ride-hailing $126.3bn.

The future of vehicles

Globally, a key opportunity for improving transport and reducing emissions in large cities is through car-sharing and ride-hailing powered by EVs and charging stations, with global EV sales forecast to triple by 2025, according to BloombergNEF’s recently published “Long-Term Electric Vehicle Outlook”.

Vehicle sharing is already commonplace in many large cities in emerging markets.

India, for example, serves as a bellwether for the uptake of ride-hailing services due to its large population, dense urban spaces, and the difficulty of registering and owning cars.

It is the leading carpooling market in Asia, especially among commuting IT workers, and is partnering with third-party players to grow the car subscription market.

Backed by Japan’s Softbank Group, Indian ride-hailing company Ola Electric currently produces electric scooters and plans to start manufacturing EVs with a range of 500 km by 2024.

Vietnam, for its part, is seeing fierce competition among its three ride-hailing platforms – Grab, Gojek and Be – with an annual growth rate in revenue of 30-35% since 2015. Ride-hailing service market revenue is expected to rise from $2.4bn in 2021 to $4bn by 2025.

Transport-sharing in other regions

Ride-hailing is also gaining ground in other regions.

Latin America is expected to post a 26% compound annual growth rate (CAGR) in car-sharing between 2021 and 2026, according to a report from MarkNtel, fuelled by urbanisation and the high cost of private vehicle ownership.

In the Middle East and Africa, for its part, the ride-hailing service market is expected to expand from $4.1bn in revenue in 2021 to $7.4bn in 2028, for a CAGR of 9%, according to Business Market Insight, with e-hailing comprising a substantial share of new growth in 2020.

Meanwhile, in Africa, the state government in Lagos launched LagRide in March as part of its multi-modal transport development blueprint. The scheme aims to phase out older commercial taxis and replace them with newer vehicles, and include an option for ride-sharing.

Micromobility opportunities

Smaller-scale solutions such as electric scooters, mopeds and bike-sharing – collectively known as micromobility – also present significant growth potential in emerging markets.

Revenue from bike-sharing in Asia is expected to grow from $6.2bn in 2020 to $14bn in 2030, according to the Oliver Wyman Forum-ITS report, while electric scooters and mopeds are projected to post $300m and $1.1bn gains over the same period.

Many commuters and city dwellers have embraced bicycles as a safer alternative to public transport since the start of the Covid-19 pandemic. In Latin America, Brazilian micromobility start-up Tembici, which accounts for 72% of bike-sharing equipment in Argentina, Brazil and Chile, reported a 34% increase in trip volume in 2020 and a 40% jump in revenue in 2021.

Meanwhile, the Lagos government, in partnership with AWA Bike, launched the first bike-sharing app in Nigeria last year. The 1000-bike pilot project is part of the Lagos Bike Share Scheme, which seeks to offer cheaper and more eco-friendly ways for people to move around the mega-city.

As the range and uptake of mobility and micromobility services continues to grow, different regions, countries and cities will have the potential to adopt and scale services to fit their individual needs, offering niche opportunities for innovation and investment.

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