Surging Investments in E-Hailing Could Drive the Cost of Shared Mobility Down Significantly In the Future

can be reached at marcusamick@aol.com
can be reached at marcusamick@aol.com
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If the investments in mobility start-ups are a sign of what the future of transportation will look like, then expect to be able to hail a lot of autonomous vehicles in the years to come. According to a study by the research and consulting group, McKinsey & Company, of the $220 billion invested in mobility since 2010, most of that cash went to startups in the e-hailing sector, indicative of an even bigger shift in mobility down the road.

  • A McKinsey & Company study found that more than $220 billion has been invested in mobility startups since 2010.
  • Of all the $220 billion invested in new mobility companies, $56.2 billion of those dollars went to new companies in the e-hailing sector.
  • More mobility companies are investing in autonomous vehicle technology, which will be the cornerstone of e-hailing services in the future.

Woman Getting Into Ride-Share
Mobility companies like Uber and Lyft are ramping up their investments to stay competitive in the emerging e-hailing sector. (Photo: Uber)

Bigger play

A recent study by McKinsey & Company, highlighting the investments being made in mobility startups, reveals that e-hailing might very well be the transportation of the future.

Of the $220 billion invested in new mobility companies since 2010, roughly 25% or a whopping $56.2 billion of those coveted investment dollars have gone to startups in the e-hailing sector, as more established companies like Uber and Lyft ramp up their investments in the space as well.

Since 2014, the McKinsey and Company study shows that the annual investments in e-hailing have average about $11.4 billion a year, about $4 billion more annually than semiconductors, which has ranked as the second leading technology sector with the most startup investments since 2014. But as Matthias Kässer, a partner at McKinsey and a co-author of the investment mobility study, explains, the research only taps the surface when it come to the growth potential of e-hailing.

“Consumers are likely to further shift towards e-hailing, with the highest profitability expected around the e-hailing platforms, rather than vehicle production or operations,” says Kässer, in an email to Ride. “The investments in this space are likely to accelerate the rollout of e-hailing services across the globe, as well as the development of autonomous driving technology.

Kässer adds, “We expect that e-hailing — a key element of shared mobility — will grow as a go-to method of getting around.”

Competitive game

The McKinsey study also revealed that companies are ramping up their investments in autonomous vehicles, which Kässer tells Ride will help to significantly reduce the cost per mile of the services.

The investment and growth of e-hailing is being heavily driven by what Kässer describes as a “winner-take-all” mentality. “The e-hailing industry is largely dominated by emerging companies, so investors are focusing on building an early advantage, he says.

WHY THIS MATTERS

The McKinsey & Company investment mobility study not only highlights the growth potential of e-hailing technology; it also speaks to the number of transportation options that will be available to consumers in the years to come, as more startups look to compete with companies like Uber and Lyft. That competition should eventually lead to substantially lower cost for the services, making it feasible for more consumers to use as an everyday mode of transportation.


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can be reached at marcusamick@aol.com
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