HOW COVID-19 WILL SHAPE URBAN MOBILITY - By Julien Bert, Daniel Schellong, Markus Hagenmaier, David Hornstein, Augustin K. Wegscheider, and Thomas ...

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HOW COVID-19 WILL SHAPE
URBAN MOBILITY
By Julien Bert, Daniel Schellong, Markus Hagenmaier, David Hornstein, Augustin K.
Wegscheider, and Thomas Palme

                 Just a few months ago, cities all over
                  the world were in the midst of a mobili-
                                                                 remains, urban mobility faces two challeng-
                                                                 es: consumer behavior and attitudes have
                 ty renaissance. New forms of shared and         shifted, and disposable income has shrunk.
                 connected mobility were taking root,            Social distancing practices, along with fear
                 augmenting overburdened public-transit          of the close physical contact that’s often in-
                 systems and offering convenient, eco-           evitable in urban transportation, raise the
                 friendly alternatives for commuting and         question: Is this the beginning of the end
                 urban travel. Then came COVID-19. When          of the new urban mobility ecosystem—or
                 lockdowns halted normal everyday life,          just a temporary bump in the road? The
                 commuting and leisure trips for many            fact is, the need for new modes of mobility
                 millions of people came to an abrupt halt.      hasn’t changed and neither has their social
                 Urban transportation usage plummeted to         or environmental value. Moreover, a vi-
                 its lowest level in decades.                    brant mobility ecosystem is vital to cities’
                                                                 economic recovery. So what must mobility
                 Meanwhile, the pandemic forced compa-           providers, municipal leaders, governments,
                 nies to adapt fast, and now many people         and investors do to restore public confi-
                 are recognizing that there is actually anoth-   dence and get the new mobility back on
                 er way to live and work. Google and Spoti-      track?
                 fy recently announced that employees can
                 work from home until the end of this year;      To answer that question, BCG conducted a
                 Twitter, Square, and Facebook will allow        survey of 5,000 residents of major cities in
                 most of their employees to telecommute          the US, China, and Western Europe
                 permanently.                                    (France, Germany, Italy, Spain, and the
                                                                 UK). (See the sidebar “About Our Survey.”)
                 But how deep and how long-lasting will          Our goal was to understand people’s trav-
                 such changes be? As business activity re-       el-related concerns and priorities by asking
                 sumes but the threat from the coronavirus       them a series of questions about their actu-
ABOUT OUR SURVEY
                      At the end of April, BCG surveyed 5,000                                   2 million, and their median age is 42.
                      urban residents: 1,000 in the US, China,                                  The survey pool was divided almost
                      and Germany, and another 500 each in                                      evenly by gender, and the largest share
                      France, Italy, Spain, and the UK. (See the                                of respondents (43%) were in the
                      exhibit below.) By then, China was no                                     middle-income bracket (brackets were
                      longer in lockdown, but Europe and the                                    adjusted according to each country’s
                      US were. More than half the respondents                                   level of prosperity).
                      live in cities with populations exceeding

                        Survey Demographics

                           City size                                                               Age

                                                                                                                                  Up to 30
                                                             More than 500,000                       28.1%       25.6%
                                             30.4%                                                                                31 to 50
                                                             but fewer than 1 million
                                                                                                                                  51 and older
                            54.0%                            More than 1 million
                                                             but fewer than 2 million
                                                                                                                             18                  42   69
                                                             More than 2 million
                                            15.6%
                                                                                                             46.3%           Min             Mean     Max

                           Household income                                                        Gender

                              20%               43%                    29%         7%
                                                                                                                                  Male
                                                                                                   49.7%             50.3%
                                                                                                                                  Female
                             Lower income    Middle income     Upper income         No answer

                          Source: BCG survey (5,000 urban residents in China, the EU, and the US).

                   al and anticipated behavior in the course                                    Some e-scooter and car-sharing services
                   of three specific periods: during lockdown;                                  suspended service temporarily, while others
                   over the short term, as lockdowns are lifted                                 maintained operations, implementing sani-
                   but the threat of contracting COVID-19 re-                                   tizing and other hygienic measures. Some
                   mains (as does the possibility of subse-                                     reduced their rentable fleet to cut costs.
                   quent lockdowns); and in the medium
                   term, some 12 to 18 months from now, as                                      Not surprisingly, the use of privately owned
                   treatments and a vaccine presumably be-                                      bikes and e-scooters rose in all three of the
                   come available.                                                              regions we surveyed, and bike sharing in-
                                                                                                creased in the US and China, aided by reg-
                                                                                                ular disinfection and price reductions.
                   Lockdown Travel                                                              Apart from providing a way to avoid con-
                   During the lockdowns, the use of nearly ev-                                  tact with others, bikes offered a healthy
                   ery mode of transportation fell precipitous-                                 and convenient alternative and the oppor-
                   ly. (See Exhibit 1.) Cities kept public transit                              tunity to be outdoors, where the risk of in-
                   running to provide low-cost transportation                                   fection is minimal. Some cities, in fact, fa-
                   for essential workers; they were forced to                                   cilitated bike use by closing streets to
                   act quickly and change their business mod-                                   motorized vehicles and creating pop-up
                   el to meet the requirements of a rapidly                                     bike lanes.
                   changing environment, with frequent sani-
                   tizing of subway and rail cars and buses,                                    Private-car travel, which supplanted public
                   contactless payment, and other measures.                                     transit and ride hailing (among other less-

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                           2
Exhibit 1 | Use of Most Transport Modes Declined During Lockdowns

   TRANSPORT MODE                        US     EU    CHINA         SHORT-TERM MEASURES
                                                                    • Reduced frequency
   Public transit
                                                                    • Disinfection of seats, poles, and other high-touch surfaces
   (metro, bus, tram)
                                                                    • Compulsory masks for staff (and, in some places, passengers)
                                                                    • Limit number of passengers in shared rides
   Ride hailing (pooled)
                                                                    • Protective sheet between driver and passengers
   (on demand, multiple passengers)
                                                                    • Temporary suspension of service                                 +60% or more
                                                                    • Free masks, hand sanitizer, and cleaning supplies for drivers
   Taxi and ride hailing
                                                                    • Frequent disinfection (e.g., every 4 hours)
   (on demand, single passenger)
                                                                    • Protective sheet between driver and passenger
                                                                                                                                      +21% to +59%
                                                                    • Increased cleaning and sanitizing
   Car sharing
                                                                    • Temporary reduction of fleet or suspension of service
   (free floating or station-based)
                                                                    • Price reductions and package prices
                                                                    • Regular disinfection of handlebars and seats                       ± 20%
   Bike sharing
                                                                    • Price reductions
   (free floating or station-based)
                                                                    • Temporary suspension of service

   Scooter sharing                                                  • Temporary suspension of service
                                                       N/A                                                                            –21% to –59%
   (only available in US and EU)                                    • Regular disinfection of handlebars

   Own bike/e-scooter, walking                                      • Pop-up bike lanes
   (including subscriptions)                                        • Closure of entire roads to cars                                 –60% or more

   Private car
                                                                    • Suspension of road tolls (including for bridges and tunnels)
   (one’s own or company owned)

   Sources: Press search; expert interviews; BCG analysis.
   Note: Lockdowns include mandatory and nonmandatory quarantines, business closures, and bans on events or gatherings. Arrows indicate a
   change in usage based on observations in cities per region.

                                used modes), declined, as reflected in the                   ly, the travel modes perceived as riskiest
                                reduction in the overall number of trips. In                 were those offering little physical distance
                                the US, vehicle miles traveled fell national-                from fellow passengers and those requiring
                                ly at least 65%, and in some states (in early                contact with high-touch surfaces.
                                April), by as much as 80%, according to
                                StreetLight Data. Interestingly, some re-                    The least risky travel modes? Cars and oth-
                                gions reported significant increases in the                  er types of solo travel. On average, Chinese
                                proportion of speeding tickets compared                      respondents perceived the risks associated
                                with the same period last year, as drivers                   with all modes to be lower than did their
                                took advantage of emptier roads.                             European and US counterparts. US respon-
                                                                                             dents were the most wary of mass transit
                                                                                             and shared modes. That could be a func-
                                Travel Practices During                                      tion of timing, however, as the pandemic hit
                                Lockdown and in the Short                                    the US later, and the country is emerging
                                Term Post-Lockdown                                           from lockdown later and in a nonuniform
                                Now that lockdowns around the world are                      way. It could also be a reflection of less reli-
                                being lifted or eased, and as urban travel                   ance on public transit in many US cities.
                                begins to rebound, what criteria will drive
                                city dwellers’ transportation choices?                       How do consumers expect to behave in the
                                                                                             short term, post-lockdown? Between 40%
                                Social Distancing and Cleanliness. Physical                  and 60% of respondents in all three regions
                                distance and cleanliness were by far the                     said they will be using public transit less or
                                two most important criteria during lock-                     much less frequently, in favor of walking,
                                down for almost half the respondents to                      biking, or driving their own car. (See Exhib-
                                our survey, and this will likely continue.                   it 2.) Other shared-mobility modes, such as
                                Cost came next (and over time, as more                       ride hailing and car sharing, will also be
                                people resume their daily commute and                        used less often, but they won’t experience
                                regular routines, cost could resume its                      declines as sharp as public transit’s, accord-
                                place as their top priority). Not surprising-                ing to our survey.

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                    3
Exhibit 2 | Change in Urban-Mobility Use Immediately Post-Lockdown

                                                                 Percentage of respondents
                              0                20                     40                    60                     80                100                Mean
                        US                                                                                                                      –0.6
   Public transit       EU                                                                                                                      –0.7
                      China                                                                                                                    –0.8

                        US                                                                                                                       –0.4
   Ride hailing         EU                                                                                                                         –0.2
   (pooled)           China                                                                                                                     –0.6

   Taxi and             US                                                                                                                          –0.5
   ride hailing         EU                                                                                                                           –0.3
                      China                                                                                                                         –0.5

                        US                                                                                                                            –0.2
   Car sharing          EU                                                                                                                            –0.2
                      China                                                                                                                         –0.5
   Micromobility        US                                                                                                                            –0.2
   sharing (bikes,      EU                                                                                                                            –0.1
   e-scooters)        China                                                                                                                         –0.4

   Own bike/
                        US                                                                                                                                   0.1
                        EU                                                                                                                                    0.2
   scooter, walking   China                                                                                                                                  0.1
                        US                                                                                                                                   0.2
   Private car          EU                                                                                                                                   0.2
                      China                                                                                                                                     0.5

                        Much less frequently        Less frequently        Same as before        More frequently        Much more frequently   –2      –1    +1       +2

   Source: BCG survey (5,000 urban residents in China, the EU, and the US).

                              Of the three main populations surveyed,                                        portion in Europe (63% of respondents)
                              the Chinese showed a stronger tendency on                                      and in the US (78%) said they would only
                              both counts. In the short term, they are re-                                   travel alone in their own car. Respondents
                              lying less on public transit. Our survey, con-                                 noted that they were not inclined to buy a
                              ducted after China’s lockdown was lifted,                                      transit pass, a reflection of their uncertain-
                              suggests that public-transit usage had been                                    ty about the total number of trips they
                              declining for some time; many Chinese had                                      would take in a given month and the mode
                              been voluntarily staying home for months,                                      of transportation they would choose.
                              including many who weren’t in quarantine
                              or lockdown. Chinese respondents also said                                     Avoidance may be a harder tactic to keep
                              they were more likely to walk, bike, and                                       up over time. It’s telling that even those
                              drive their own cars, rather than use public                                   who continued to use public transit during
                              transit. This is entirely logical, considering                                 the peak of the outbreak modified their be-
                              that these are the lowest-risk modes of                                        havior in some way. So while travel pat-
                              transportation in places under lockdown                                        terns during lockdown were highly disrupt-
                                                                                                             ed, it remains to be seen how persistent
                              Avoidance Strategies. With commuting                                           avoidance will be once people are again on
                              halted for the vast majority during lock-                                      the move—and what that will mean for fu-
                              down, people could be more flexible about                                      ture demand.
                              when to travel, and many made adjust-
                              ments to minimize contact. Overall, around                                     Car Appeal. More than 60% of Chinese
                              one-third of respondents said they were                                        respondents said they were more likely to
                              traveling at different times of the day to                                     buy a car post-lockdown than they were
                              avoid crowds during lockdown, and nearly                                       before the crisis. (See Exhibit 3.) Their
                              one-quarter said they would only board                                         interest was high across all income brack-
                              public transit if there were ample empty                                       ets. About 80% of upper-income respon-
                              seats. Chinese respondents practiced these                                     dents and around 60% of middle-income
                              habits considerably more than Europeans                                        respondents said they were more likely to
                              or Americans. At the same time, a sizeable                                     buy a car now than they were before.

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                                          4
Interest was high even in the lower-income                               to spend less are some who also expect to
                               group, with 44% saying they were more                                    rely more on a private car, two expecta-
                               likely to buy a car post-lockdown.                                       tions that seem contradictory. This suggests
                                                                                                        that these respondents might be underesti-
                               In contrast, a significantly smaller percent-                            mating the cost of owning a car, perhaps
                               age of respondents in the US and the EU                                  because the most obvious variable cost
                               expressed an interest in buying a car                                    associated with car use—fuel—is now
                               post-lockdown. Why? Several factors are                                  much lower with the global oil supply glut.
                               potentially at work. Car ownership in Chi-
                               na is still relatively low compared with oth-                            Interest in Bikes. In the US, bike sales are
                               er regions; for many, a car is an aspiration-                            booming: sales of bikes, related equipment,
                               al purchase. Private cars are also attractive                            and repair services almost doubled in
                               because they’re a safe form of transporta-                               March compared with the same period in
                               tion. Just before the lockdown took effect                               2019. British Cycling, an advocacy group,
                               in Hubei province, only people with their                                estimates that COVID-19 might prompt
                               own car were able to leave town. And                                     some 14 million Britons to choose a bike
                               during lockdown, when access to public                                   over a car, according to the World Econom-
                               transportation was restricted, only those                                ic Forum’s COVID Action Platform. Bikes
                               with a car could travel freely around the                                offer an alternative to public transit and an
                               city. Finally, with international travel all                             opportunity to exercise and be outdoors.
                               but impossible for much of the rest of 2020,
                               it’s probable that more Chinese, like peo-                               Loyalty. Those who used a given mode of
                               ple everywhere, will want to travel domes-                               transportation more than ten times a week
                               tically by car.                                                          pre-COVID are likely to stick with that
                                                                                                        choice. In the short term, between 67% and
                               Spending. In the near term (as shown in                                  76% of heavy users of shared mobility plan
                               Exhibit 3), the tendency among most                                      to continue using (or to increase their use
                               respondents appears to be to spend less,                                 of ) those modes—which include solo or
                               suggesting that they expect to travel less                               pooled ride hailing, taxis, car sharing, and
                               often. Among the respondents who expect                                  bike and e-scooter sharing. (See Exhibit 4.)

 Exhibit 3 | Anticipated Spending on Mobility Post-Lockdown

                                                             Change in likelihood after lifting of restrictions

                               0        20    40            60         80         100                                 0     20         40        60     80   100
                         US                                                                           Upper income
    Buy a car
                         EU                                                                   US      Middle income
                       China                                                                          Lower income

                         US                                                                           Upper income
    Buy a bike                                                                                EU      Middle income
                         EU
    or scooter                                                                                        Lower income
                       China

                                                                                                      Upper income
                         US
    Buy a metro pass                                                                          China Middle income
    (monthly/annual)     EU                                                                           Lower income
                       China

                         US
    Try new-mobility
                         EU
    services
                       China

                           Much less likely   Less likely        Same as before         More likely      Much more likely        No answer/don’t know

   Source: BCG survey (5,000 urban residents in China, the EU, and the US).

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                                  5
Exhibit 4 | User Loyalty Varies by Mode and Depends on Frequency of Use

                    100

                                                                                                                                                        86 87               84 82
                    80                                                                                                              76                                 76
                                                                                                         69                                       71
                                                          67                         66
  Loyal users (%)

                    60                                                                                                         55
                                    50                                 49 51                                          49
                                                                                                    48
                                                     44                                       44
                               39               38
                    40    36

                     20

                     0
                          Public transit        Ride hailing         Taxi/ride hailing         Car sharing           Micromobility             Own bike/scooter,       Private car
                                                 (pooled)                                                               sharing                    walking
                                                                                                                   (bikes, e-scooters)

                                                 Casual users: less than once/week        Frequent users: 1 to 10 times/week             Heavy users: >10 times/week

    Source: BCG survey (5,000 urban residents in China, the EU, and the US).
    Note: Loyal users are defined as those who will use a given transport mode to the same or a greater extent after lockdown restrictions are
    lifted.

                                           Not surprisingly, casual users (those who                                   services can promise cleanliness and mini-
                                           used a given mode less than once a week,                                    mal risk of infection (and if they weather
                                           on average) are the least loyal. Respon-                                    the financial shocks they’ve experienced),
                                           dents registered the least loyalty to public                                individual ride hailing could rebound in
                                           transit, regardless of previous frequency of                                most regions. It’s worth noting that bike
                                           use. Those who walked or who drove their                                    sharing in China, the country first hit by
                                           own car, bike, or scooter pre-COVID are                                     COVID-19, rose 150% immediately post-
                                           likewise highly likely to stick with those                                  lockdown. And shared modes, whether
                                           options.                                                                    bikes, e-scooters, or even cars, offer users
                                                                                                                       the benefits of private, dedicated use with-
                                           It’s important to bear in mind, however,                                    out a large investment.
                                           that the choice of mobility mode is always
                                           determined by the value proposition, in-
                                           cluding price. So once commuters return to                                  The Medium-Term Outlook
                                           their normal routines, economics and con-                                   What will urban consumer sentiment look
                                           venience may well overrule other consider-                                  like over the next 12 to 18 months (mid-
                                           ations. Still, the pandemic has heightened                                  2021 through year-end 2021), when more
                                           people’s sensitivity to physical distance                                   targeted treatments or even a vaccine for
                                           and cleanliness. This will probably fade                                    COVID-19 becomes available? Respondents
                                           over time, but in the short term, public                                    to our survey indicated that over time, as
                                           transit and pooled mobility will suffer. For                                the crisis fades, their safety concerns won’t
                                           example, in mid-May, when Germany                                           be nearly as acute, and their use of shared
                                           emerged from lockdown, public transit use                                   mobility and public transit will increase.
                                           bounced back to only 50% or 60% of its
                                           normal level, according to data from Ap-                                    We see two potential medium-term scenar-
                                           ple’s Mobility Trends Reports.                                              ios:

                                           Who wins in the short term? Most likely in-                                 ••      The increased use of private mobility
                                           dividual mobility modes, such as cars,                                              may have some staying power. This is
                                           bikes, and e-scooters. Car sharing will re-                                         especially likely if the perceived risk of
                                           main popular in Europe, and if ride-hailing                                         public transit and shared mobility

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                                                    6
remains high. If respondents’ current                       sanitizing and other safety measures to re-
                                        sentiments persist, we could well see a                     duce risk and instill confidence. There are
                                        resurgence of private car use (not just                     only so many options for urban passengers,
                                        as a reliable means of transportation in                    and fear does fade, supplanted by practical
                                        town, but also as a way to get out of the                   reality. (Recall the widespread vows to nev-
                                        city during lockdowns and on weekends                       er fly again in the wake of 9/11.) Moreover,
                                        and holidays).                                              consumers opt for value—the best combi-
                                                                                                    nation of features and cost—and many, es-
                              ••        On the other hand, public transit and                       pecially commuters, rely on public transit
                                        shared mobility could make a come-                          because of its affordability. If they haven’t
                                        back. We believe this to be the more                        already, these people would benefit from
                                        likely scenario, providing stakeholders                     shared mobility for the same reason.
                                        put in place the right measures and
                                        incentives to discourage the use of                         This second scenario is also more desirable,
                                        private cars in urban centers. As Exhibit                   for city residents as well as for city officials,
                                        5 shows, the short-term reluctance to                       because it means less pollution and less
                                        use public transit (50% of respondents)                     traffic congestion. Assuming cities respond
                                        will decline by about half. Indeed, in                      effectively to restore faith in public transit
                                        the US and Europe, the survey suggests                      and support eco-friendly mobility modes,
                                        that use of micromobility (mainly bikes                     the only pandemic-related trend that en-
                                        and e-scooters) will return to precrisis                    dures may be the rise of flexible ownership
                                        levels. Again, these results were ob-                       models, in everything from cars to e-scoot-
                                        tained during lockdown, a period when                       ers.
                                        respondents were generally unsure and
                                        unsettled about the potential dangers
                                        of using public transit.                                    Getting the New Urban Mobility
                                                                                                    Back on Track
                              The second scenario depends to a great ex-                            What can mobility providers, policymakers,
                              tent on providers’ ability to continue with                           and investors do to restore beleaguered

 Exhibit 5 | Change in Urban-Mobility Use Over Time

                                                                    Percentage of respondents
                                    0             20                  40               60                 80                100           Mean

   Public transit
                       Short term                                                                                                  –0.7
                     Medium term                                                                                                      –0.3

   Ride hailing        Short term                                                                                                      –0.4
   (pooled)          Medium term                                                                                                        –0.2

   Taxi and            Short term                                                                                                      –0.4
   ride hailing      Medium term                                                                                                        –0.2

                       Short term                                                                                                      –0.3
   Car sharing
                     Medium term                                                                                                        –0.1

   Micromobility       Short term                                                                                                       –0.2
   sharing (bikes,
                     Medium term                                                                                                         –0.1
   e-scooters)

   Own bike/          Short term                                                                                                                0.2
   scooter, walking Medium term                                                                                                                 0.2

   Private car
                       Short term                                                                                                               0.2
                     Medium term                                                                                                                0.2

                           Much less frequently   Less frequently     Same as before    More frequently   Much more frequently    –2     –1     +1    +2

   Source: BCG survey (5,000 urban residents in China, the EU, and the US).
   Note: Short-term = immediately after lockdown restrictions are lifted; medium-term = the next 12 to 18 months, when COVID-19 treatments
   and/or vaccines are expected to be available.

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                                                          7
public-transit systems and new-mobility           brought municipal leaders to a crossroads.
                   modes to health—and revive the urban              Restoring ridership to precrisis levels may
                   mobility agenda?                                  be necessary to restoring the financial
                                                                     health of public-transit systems, but riders
                   Mobility Providers. For providers, ensuring       will only let a full bus go by so many times
                   the health of staff and passengers is the top     before they choose an alternate mode.
                   priority. Many of the practices that compa-       Economic factors must be balanced against
                   nies introduced during the pandemic, such         concerns about the risks of overcrowding.
                   as the use of protective plexiglass panels        That means, for example, tailoring service
                   and motorized sanitizing stations for             frequency to actual demand patterns,
                   drivers, could become standard.                   instead of relying on traditional tactics like
                                                                     weekend schedules. Transit authorities
                   Meanwhile, the wave of layoffs is one more        need to ensure that riders have an incen-
                   indication that consolidation is likely—and       tive to buy monthly passes, or the econom-
                   an important development in a market              ic hit could be significant and trigger
                   where price competition to gain share was         undesirable effects throughout the mobility
                   pummeling revenues even before the crisis         ecosystem.
                   hit. (Uber’s sale of its bike-share business,
                   Jump, to the scooter company Lime dem-            Like the sharing companies, public-transit
                   onstrated how tough the micromobility             systems will need to invest significantly in
                   market has become.)                               regaining the public’s trust over the longer
                                                                     term. Maintaining or implementing sanitiz-
                   Mobility providers will need to focus on          ing practices is a clear imperative, given
                   streamlining operations and optimizing            the sheer volume of passengers served.
                   costs to curb cash burn. This includes re-        New tools, such as the disinfection robot
                   ducing fixed costs; cutting nonessential          that Hong Kong has successfully trialed in
                   processes; trimming offerings, fleet size, or     train cars, may help with that effort. Cities
                   city portfolios; and renegotiating with sup-      also need to find ways to accommodate a
                   pliers. It may even require pausing services      higher volume of passengers more safely,
                   temporarily.                                      by running buses, subways, and trams more
                                                                     frequently, for example, and trying out new
                   On the revenue side, providers will need to       hybrid models, such as pooled minibuses,
                   zero in on the most profitable cities and fo-     which transport far fewer riders but offer
                   cus on stabilizing income efforts—by cater-       more elbow room.
                   ing to alternative customers, such as essen-
                   tial workers, for example, or offering cargo      Extending short-term support to local
                   or food delivery. Revenues of the food de-        new-mobility service providers could help
                   livery service Uber Eats exceeded those of        cities meet normal demand without com-
                   Uber’s passenger transport service in the         promising consumers’ safety. For example,
                   US for the first time in the first quarter of     they could pause or waive operating licens-
                   2020. Providers should also consider alter-       es or parking fees, offer providers credit, or
                   native pricing schemes, such as monthly           even invest in their services.
                   passes and volume discounts, to attract cus-
                   tomers.                                           As federal, state, and municipal govern-
                                                                     ments focus on gearing up their economies,
                   Finally, new-mobility services should make        they may be tempted to encourage spend-
                   a greater effort to partner with cities to of-    ing on automobiles, especially given the re-
                   fer cooperative arrangements such as mul-         newed attraction of private ownership.
                   timodal access. In this way, they would           (China and France have already announced
                   help integrate public transit with other mo-      that they will be offering car-buying incen-
                   bility options and, in particular, offer first-   tives.) But given the need (and, in some
                   and last-mile micromobility solutions.            cases, the legal obligation) to reduce urban
                                                                     congestion and control emissions, munici-
                   Cities and Policymakers. COVID-19 has             pal leaders must be proactive about stav-

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                     8
ing off an increase in private cars. Two         Current investors in mobility services will
                   proven tactics are congestion pricing (dis-      now turn to working with their portfolio
                   counting tolls during off-peak hours) and        firms to reduce the burn as much as possi-
                   increasing downtown parking fees.                ble in order to rebound postcrisis. But they
                                                                    will need to stay calm and hold the line.
                   Another strategy, which has won many             We expect that the new mobility will recov-
                   more advocates during the pandemic, is to        er and that, on average, the industry will
                   promote biking and walking. The UK re-           provide positive profit pools in the not too
                   cently announced a £2 billion package to         distant future. In the long term, new forms
                   put cycling and walking “at the heart of”        of mobility must prevail if urban centers
                   Britain’s post-COVID transportation plan—        are to remain vibrant and sustainable.
                   intended, in part, to protect the public-
                   transport network. In May, Milan began re-
                   allocating 35 kilometers of streets for bicy-
                   cle and pedestrian use only, adding tempo-
                   rary bike lanes, widening pavements, and
                                                                    R    eliable, accessible, and affordable
                                                                         transportation that minimizes environ-
                                                                    mental impacts is still a critical need. Resi-
                   designating certain streets as “pedestrian       dents and policymakers everywhere under-
                   and cyclist priority.” Paris, too, is develop-   stand that a sound public-transit system,
                   ing a plan to discourage cars from regain-       biking infrastructure, and new and shared
                   ing dominance on its streets.                    forms of mobility are vital to the economic
                                                                    lifeblood of their cities. The fundamental
                   No matter what, in the effort to restart         value proposition underlying the new mo-
                   their economies, governments should not          bility has not changed. Business models
                   neglect support for public transit and           may need to be modified, but user eco-
                   new-mobility modes, whether in the form          nomics, environmental health, and general
                   of subsidies for sanitization programs or        societal interests only reinforce the value of
                   funding for designated bike and scooter          a diverse urban mobility ecosystem. Restor-
                   lanes or parking spaces for car sharing.         ing cities’ economic health post-COVID-19
                                                                    depends on it.
                   Investors. Overall, big sums of money
                   remain in the market and in investment
                   funds. Investors are watching closely to
                   identify the relative winners in mobility
                   postcrisis. Given the amount of funding
                   that so many mobility startups need,
                   consolidation is inevitable. So are “down
                   rounds” (in which valuations are lower
                   than in the previous funding round).

Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                    9
About the Authors
                   Julien Bert is a managing director and partner in the Munich office of Boston Consulting Group. He
                   works with automotive and mobility clients and leads BCG’s Center for Mobility Innovation. You may con-
                   tact him by email at bert.julien@bcg.com.

                   Daniel Schellong is a principal in the firm’s Berlin office and a leader of its work in automotive and mo-
                   bility, with a focus on digital business models and new forms of mobility. You may contact him by email at
                   schellong.daniel@bcg.com.

                   Markus Hagenmaier is an associate director in BCG’s Vienna office. He is an expert on the future of
                   mobility and leads the global operations of the Center for Mobility Innovation. You may contact him by
                   email at hagenmaier.markus@bcg.com.

                   David Hornstein is a consultant in the firm’s Berlin office who focuses on digital business and mobility.
                   You may contact him by email at hornstein.david@bcg.com.

                   Augustin K. Wegscheider is a partner in BCG’s Chicago office and the leader of the Center for Mobility
                   Innovation in North America. You may contact him by email at wegscheider.augustin@bcg.com.

                   Thomas Palme is a managing director and partner in the firm’s Beijing office and the leader of the Cen-
                   ter for Mobility Innovation in China. You may contact him by email at palme.thomas@bcg.com.

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                   © Boston Consulting Group 2020. All rights reserved. 6/20

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Boston Consulting Group | How COVID-19 Will Shape Urban Mobility                                                               10
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