GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

GENERATION SUSTAINABILITY INSIGHTS SERIES1

TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
DECEMBER 2016

KEY INSIGHTS
> The incumbent system of personal mobility, based principally on private ownership of internal
combustion engine vehicles, is collapsing under the weight of the rapidly accumulating negative
externalities inherent in the system.

> As this elaborate system falters, numerous innovations are giving rise to a more sustainable
system—one capable of addressing many of those negative externalities while delivering
considerably more value to consumers.

> Although still in its nascent stage, the new system is rapidly solidifying around the provision of on-
demand services across various modes of autonomous, connected, electric and shared transport.

> In order to successfully navigate the transition from the incumbent to new system, companies
across the value chain must evolve their businesses or face displacement by new and existing
competitors.

> For investors, this presents a compelling opportunity to deploy capital for the long-term, amidst
an environment of generally low growth. However, it also signals a period of heightened risk, as
investments with exposure to the decline of the incumbent system come under pressure.

> Overall, we believe it is critical to zoom-out in order to view personal mobility outside of the
bounds of any single challenge, innovation or sector. We believe this broader, more holistic lens
is what enables investors to identify and adapt to changes others have yet to see.

1 Founded in 2004, Generation is a boutique investment manager with four investment strategies: Global Equity, Asia Equity, Growth Equity and Global Credit.
Generation seeks to deliver superior investment results by consistently taking a long-term view and fully integrating sustainability research within a rigorous
framework of traditional financial analysis. Pictures: First picture – highway at night in Shanghai (www.shutterstock.com/pic-156116006/stock-photo-shanghai-
elevated-road-junction-and-interchange-overpass-at-night.html); second picture – depiction of fleet of electric cars
(http://www.harcresearch.org/feature/HARC_Increasing_use_of_electric_cars_bicycles)

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 1

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

The Sustainability Insights
Series draws on Generation’s
deep base of proprietary
research to provide readers a
holistic view of developments
occurring across key areas of
the economy.
In the case of mobility,
Generation’s proprietary
research dates back to the
firm’s inception and includes
the following Roadmaps and
Solutions Summits:
2004
Automobiles
2008
Fuel economy & emissions
2009
I. INTRODUCTION
The incumbent system of personal mobility, based principally on private ownership
of internal combustion engine vehicles, is no longer sustainable in major urban
areas. Although this system facilitated decades of economic growth throughout the
20th century, it also resulted in the mass accumulation of negative externalities 1
related to public health, the climate and social inclusion. Today, the escalation of
these indirect costs is driving the system towards breaking point.
However, as it falters, a more sustainable form of personal mobility is emerging. By
harnessing innovations in technology, business models and policy, the new system,
more suited to the realities of the 21st century, has the potential to avoid many of
the negative externalities of the past while delivering considerably more value to
consumers going forward. It centres on the use of on-demand services across
various modes of autonomous, connected, electric and shared transport.
In this paper, we examine the transition from the incumbent to the new system
through the broad lens of sustainability.2 Our aim is to provide investors with a
holistic framework through which they may assess complex changes as they unfold.
We begin with a description of the starting point, the incumbent system, and then
examine how negative externalities are constraining growth. From there we explore
the innovations in technology, business models and policy we see giving rise to
more sustainable forms of mobility. We then share our vision for a new system.

2010
Sensors
II. THE INCUMBENT SYSTEM OF PERSONAL MOBILITY
Since the mid-20th century, consumers in urban areas have largely relied on
privately-owned internal combustion engine vehicles (specifically cars and
2011
Market for electric vehicles motorbikes3) to meet the majority of their personal mobility needs, with services
Transport & logistics
such as public transit and hired cars playing a supplementary role (‘The incumbent
system’; see Diagram 1).4 While systems vary by urban area, due to differences in
2012
Machine-to-machine income levels, density and quality of public transit, most share these common
characteristics.

2013
The auto industry forms the backbone of this system, with each segment playing a
Automobiles key role in the provision of personal mobility products and services. The first
Sharing economy – automotive
Fuel cells segment includes ‘Tier-1 suppliers’ responsible for providing finished hardware and
2014
software components to car and motorcycle manufacturers, as well as lower tier
Autonomous car suppliers of other component parts and raw materials. Whereas lower tier suppliers
Connected car
Sustainable Urbanisation* compete primarily on the basis of price, Tier-1 suppliers differentiate themselves
2015
on the function and reliability of their products. The next segment includes
Fleet telematics manufacturers, responsible for proprietary engine design and vehicle assembly.
Future of mobility*
Their core value proposition comes from manufacturing complex products with
2016
near zero error rates. They also compete heavily on the basis of brand value to retail
Bus & rail go digital consumers. Manufacturers typically have close relationships with retail sales
P2P car sharing
Solar and storage providers in the next segment of the value chain. This group includes the product
Cyber security
Automobiles dealerships responsible for developing a network of consumers at the point of sale.
Lastly, a host of end service providers serve consumers throughout the lifetime of
*Accompanied by Solutions Summits vehicle ownership, such as petrol stations (i.e. energy suppliers), consumer finance
and insurance companies and other maintenance and service providers. Other
types of vehicles, including buses and trains, originate from similar value chains,
albeit with different technological specifications and end customer profiles.

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 2

 GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

Diagram 1 5
Incumbent system of personal
mobility
> Centred on the use of privately-
owned internal combustion
engine vehicles with services
playing a supplementary role
> Evolved from adoption of (i)
internal combustion engine
technology, (ii) private ownership
and mass production business
models and (iii) policies designed
to maximise capacity for private
vehicles
> Supported by hardware-driven
value chain

Although the incumbent system has served consumers for close to a century, today
it is giving way to new forms of personal mobility. To understand why, we first
examine how negative externalities are constraining further growth of this system
and then explore the innovations giving rise to a more compelling alternative.

III. ACCUMULATED NEGATIVE EXTERNALITIES ARE

Diagram 2 (a)
‘In 50 years, every street in
London will be buried under nine
feet of manure’ (The Times, 1894)
With 300,000 horses in London
and 100,000 in New York, each
producing 15-35 pounds of manure
a day, officials from both cities
came together in 1889 to debate
the ‘Great Horse Manure Crisis’ at
the world’s first international
urban planning conference.
CONSTRAINING THE INCUMBENT SYSTEM
Negative externalities refer to tangible and intangible costs borne by third parties.
They are the often unintended impacts of doing business. While tolerable at low
levels, negative externalities can drive systems to breaking point once they cross
unsustainable thresholds.
This was the case in the early 1900s during the last transition in personal mobility.
After decades of economic growth and urbanisation following the Industrial
Revolution, major cities, such as London and New York, had become crowded with
people and horse-drawn vehicles.6 Piles of manure lined the streets, blocking the
flow of traffic and spreading both disease and stench. As congestion increased, so
did the number of road accidents, to the point of causing a greater number of
human fatalities per capita than they do today. City officials spent their time
continually removing not only manure, but also dead and injured horses from city
limits.7 Moreover, with the radius of personal mobility limited, urban workers had
little choice but to live in this unpleasant environment, fully absorbing the cost of
negative externalities.8
Today we see similar dynamics at play. Although the negative externalities
associated with the incumbent system have not changed, the magnitude of their
impact has. At current levels, these unintended consequences are severely
impairing public health, the climate balance and social inclusion. To understand
why, we explore three major developments occurring over the past 50 years.

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 3

 GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
Diagram 3 (b)
‘Scooter waterfall’ on a bridge
into Taipei City
Congestion cripples major cities at
peak commuting hours.
Diagram 4 (c)
Air pollution in Delhi, India
In November 2016, Air Quality
Index values in Delhi, India neared
1,000, twice the 500 level deemed
‘hazardous’. As citizens protested,
officials closed schools, halted
construction and warned they
would restrict vehicles on streets.
Diagram 5 (d)
Atmosphere as seen from
international space station
The atmosphere is not an endless
expanse, but rather a thin shell
protecting our planet.
© GENERATION INVESTMENT MANAGEMENT LLP 2016
DEVELOPMENT 1: GROWING CONGESTION CONTRIBUTING TO URBAN AIR AND
NOISE POLLUTION AS WELL AS TRAFFIC ACCIDENTS
From 1965 to 2015, the urban population increased four-fold to four billion people
and the stock of passenger cars and motorbikes grew six-fold to approximately 900
million units each.9 The expansion of urban infrastructure, however, has not kept
up with this rapid pace of growth. As a consequence, congestion has now reached
severe levels in cities around the world. Congestion not only slows the speed of
commerce, but also takes a direct toll on public health. First, it increases urban air
pollution, ‘the modern-day manure’, as the more time vehicles spend in traffic, the
more particulate matter they emit. Air Quality Index values are now in frequent
breach of the 0-100 level deemed as moderately safe.10 This causes millions of
premature deaths each year, along with a higher incidence of respiratory illness. 11
In addition, congestion contributes to stress levels, as it wastes time and raises
noise levels.12 Furthermore, a growing number of vehicles in circulation also
increases the likelihood of traffic accidents, responsible for killing 1.3 million people
annually.13 Lastly, in many cities, congestion drives up the cost of housing in central
areas due to the increasing desire on the part of those who can afford it to avoid an
increased commute time. This pushes lower income earners, who cannot afford
higher housing costs, farther outside of cities, causing them to disproportionately
bear the time-burden of congestion.
DEVELOPMENT 2: RISING GREENHOUSE GAS EMISSIONS DISRUPTING THE
CLIMATE
Over the past 50 years, the atmospheric concentration of carbon rose by 80 parts
per million (ppm), 10-20% of which is attributable to the use of oil-derived fuels for
passenger vehicles.14 With the atmospheric concentration now ‘permanently’
above 400 ppm,15 average global temperatures have risen more than 1.0°C above
pre-Industrial levels.16 As a result of higher average, and also maximum
temperatures, extreme weather events (e.g. more powerful cyclonic storms,
heavier downpours and blizzards, larger floods and longer, deeper droughts) are
occurring with greater frequency. Ice caps and glaciers are rapidly melting, which
accelerates sea-level rise (a threat to the survival of island nations and coastal cities
and towns), while also reducing the supply of fresh water.17 Should the
concentration rise above 450 ppm, the level climate scientists associate with a
+2.0°C average increase, not only could we see a non-linear intensification of these
impacts, but we also run the risk of unleashing positive feedback loops capable of
driving average temperatures well above +3.0°C.18 When temperatures reached
these levels during the Pliocene,19 there were no continental glaciers in the
northern hemisphere and sea levels were 10-25 metres higher.20 In light of these
risks, the total cost of using oil and other fossil fuels to meet our energy needs is
rapidly outweighing its benefits.
DEVELOPMENT 3: WIDENING GAP IN QUALITY OF ACCESS TO PERSONAL MOBILITY
During the same 1965-2015 time period, global income per-capita rose 17 times
from USD 589 to 10,004,21 enabling millions of consumers to become car or
motorbike owners for the first time. While motor vehicle ownership increased
around the world, developing countries with average per-capita income of USD
3,000-10,000 experienced the fastest rate of growth (on average, more than twice
as fast as developed countries).22 For example, in emerging economies in Asia,
Page 4
GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
Diagram 6 (e)
Family on motorbike
As developing countries have built
out the extensive infrastructure
required to support private
vehicles, public transit has often
suffered as a result.
Diagram 7 (f)
Moving assembly line production
The combination of moving
assembly line product and the
‘living wage’ opened the door to
an age of private ownership of
mass produced vehicles.
© GENERATION INVESTMENT MANAGEMENT LLP 2016
motor vehicle ownership rose by 7-10% per annum versus the OECD country
average of 3%.23
Cars and motorbikes, however, require extensive infrastructure in the form of
highways, streets, traffic management systems and parking structures. A sharp rise
in the number of vehicles therefore presented government officials with the
challenging task of building out required infrastructure while still supporting public
transit options for non-vehicle owners. In many cases, competition for mobility-
related budgetary resources resulted in a negative feedback loop, whereby reduced
spending on public transit caused the quality of the experience to decline, thus
driving even greater numbers of users to switch to private vehicles. This in turn led
to additional spending cuts and ultimately further reductions in quality. 24 At the
same time, this vicious circle also increased congestion, because motor vehicles
move far fewer people per hour than public transit (see diagram). The result was a
system of personal mobility with significant disparities in quality of access—with
lower income earners limited to lower quality public transit and walking, medium
income earners bearing the financial burden of vehicle ownership and high income
earners unable to escape high levels of congestion despite benefitting from a
broader range of options.25
With relatively high rates of growth in per-capita income expected to continue in
Asia and other parts of the developing world,26 we see the incumbent system as
reaching a limit to its ability to effectively serve a broad range of consumers. In the
words of the former mayor of Bogotá, Enrique Peñalosa, ‘an advanced city is not
one where even the poor use cars, but rather one where even the rich use public
transport.’27
Today, policymakers, business leaders, entrepreneurs and consumers are much
more aware of the consequences of all three areas of accumulating negative
externalities, and as such are driving a shift towards a more sustainable system.
IV. INNOVATION IS ENABLING THE ADOPTION OF A MORE
SUSTAINABLE SYSTEM
With the incumbent system facing meaningful challenges, innovators are
introducing more sustainable forms of personal mobility, capable of avoiding many
of the negative consequences of the previous system, while delivering more value
to consumers.
This also occurred during the last profound transition in personal mobility. In
comparison to old 19th century system, the now incumbent system was: (i) free of
horse-related negative externalities and (ii) offered consumers the freedom to
move at higher speeds whenever and wherever they pleased. Its path to mass
adoption began with technological innovations, most notably the introduction of
electrical ignitions to internal combustion engine vehicles in 1911.28 It progressed
in 1913 with the advent of a new business model based on moving assembly line
production and consumption-stimulating ‘living wages’ (‘Fordism’), which opened
the door to private ownership of mass-produced vehicles.29 Finally, it took off in
earnest in the 1930s with the introduction of a series of supportive policies,
including incentives for national champions in the auto industry, earmarked funds
for road and highway infrastructure projects and rules and regulations assigning the
right of way to cars and motorbikes.30 The auto industry became a robust source of
Page 5
 GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

growth in an otherwise depressed post-war economy.31 While the U.S. was the first
to adopt this system, other countries soon followed.
Today, enterprising individuals are again harnessing the power of innovations in
technology, business models and policy to drive adoption of more sustainable forms
of personal mobility. We explore each of these areas in turn before bringing them
together in the form of a new system.

TECHNOLOGY INNOVATIONS
0
Three types of technological innovations are revolutionising the personal mobility
1 landscape: autonomy, connectivity and electrification.

2 > Autonomy

3 Autonomy refers to the use of software to perform tasks previously performed by

4 decades of simultaneous and mutually-reinforcing advancements in computer
5 autonomy allows software programmes embedded in vehicles to take over
Diagram 8 (g)
Five levels of autonomy
No feet, no hands, no eyes, no
mind, no driver
Diagram 9 (h)
The local government of
Pittsburgh partnered with Uber to
serve as its test site for
autonomous vehicles
Other local governments in the
U.S. are similarly vying to become
early adopters of autonomous
vehicles. Michigan recently
surpassed Florida to become the
state with the most comprehensive
and permissive rules and
regulations for autonomous
vehicles.
humans. Increasingly sophisticated forms of autonomy are now possible following
hardware, computer software and data storage. When applied to personal mobility,
responsibilities from drivers. It is often described across five levels, beginning with
Level 1 of ‘no feet’ assistance in accelerating and/or braking and progressing to
Level 5 of ‘no driver’ fully autonomous vehicles. Many premium vehicles already
come with Level 1-2 features and Tesla’s Model S arguably has some Level 3
functionality.32 Several manufacturers are now working towards Level 4-5 with
launch dates ranging from 2018 to 2025.33 The exact timing will depend on how
quickly these players can complete the remaining software and data requirements
needed for algorithms34 and mapping programmes.35 Another critical factor is the
speed at which policymakers can draft and approve regulatory guidance.36 Initially,
the use of autonomous vehicles is likely to be limited to fleet owners operating
within select ‘geo-fenced’ smart cities. Densely populated, easily mapped,
developed urban areas with mild climates make the best candidates.37 Over time,
further advancements in regulation and mapping software will be needed to
broaden adoption across geographic areas and into the hands of retail consumers.
Autonomy is a powerful tool for advancing personal mobility. Most significantly, it
promises to greatly reduce driver-related accidents (i.e. 94% of total). In recognition
of this potential, policymakers in Europe, the U.S., Japan and Korea have already
made five-star safety ratings contingent on the installation of automatic emergency
braking based on intelligent sensors (set to go into effect in 2018). Among other
knock-on effects, this development will eventually have a significant impact on the
auto insurance business.38
In addition to improved safety, autonomy is likely to improve the efficiency of
travel, thus serving to reduce emissions and particulate matter while improving the
consumer experience. Furthermore, autonomous vehicles can help to broaden
personal mobility options for non-drivers, including the young, elderly and disabled.
Finally, autonomy promises to free drivers from time spent operating machinery,
initially by assisting them and eventually by removing their responsibilities
altogether. Although many people enjoy driving on open roads, few enjoy doing so
within congested urban areas.

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 6

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
Diagram 10 (i)
Electronic Road Pricing board
displays dynamically set
congestion charges in Singapore
By 2020, all vehicles in Singapore
will be required to transmit data
to the local transport authority
through the use of mandatory
sensory devices. This flow of real-
time data will allow officials to
charge dynamic congestion prices
based on a vehicle’s average
speed and geo-positioning, as part
of the greater Electronic Road
Pricing scheme.
Diagram 11 (j)
Tesla Model 3
Policymakers initially did not
incentivise incumbent auto
manufacturers to develop electric
cars, leaving open the possibility
for new entrants such as Tesla to
take market share.
© GENERATION INVESTMENT MANAGEMENT LLP 2016
> Connectivity
Connectivity refers to the connection of people and objects to one another and to
stores of information. In the context of personal mobility, connectivity has the
power to transform vehicles from largely mechanical, disconnected entities into
connected nodes within extensive webs of users, vehicles and infrastructure. In its
basic form of ‘tethered connectivity’ (i.e. connection via smart phones or electronic
devices), consumers are able to access services such as real-time navigation. In its
more advanced form of ‘embedded connectivity’, vehicles are able to transmit
sensor-generated data to the Cloud,39 potentially facilitating real-time vehicle-to-
vehicle (V2V) and vehicle-to-infrastructure (V2I) communication.40
Connected vehicles may help alleviate negative externalities tied to congestion by
improving traffic flow and safety features. With real-time data, transport
authorities can dynamically charge congestion prices and manage traffic signals. 41
In addition, manufacturers have the ability to push software updates to vehicles in
real-time, addressing malfunctions when, or even before, they occur.
Manufacturers have also been able to add more advanced safety features into
vehicles, such as automatic emergency calls, which reduce response times to
accidents. In terms of value to consumers, improved safety is particularly important,
typically falling within buyers’ top three criteria.42 Reduced travel and servicing time
due to more efficient navigation and automatic updates, in addition to a growing
number of options for in-vehicle infotainment, are also attractive benefits.
Today, connectivity is advancing rapidly as part of the broader shift towards
autonomy, taking it from a ‘nice-to-have’ to a ‘must-have’ in vehicles.
> Electrification
Electrification applied to personal mobility refers to the incorporation of electric
drivetrains and batteries into vehicles. This type of energy system can either
function alongside internal combustion engines (i.e. plug-in hybrid vehicles ‘PHEV’)
or independently (i.e. battery electric vehicles ‘BEV’). In internal combustion engine
vehicles, the 200-part engine is the primary driver of both price and performance,
while in electric vehicles the battery holds the key to both, as it accounts for 35-50%
of the total cost and determines the range of the vehicle.43 Another key point of
differentiation is the lack of a tailpipe, as BEVs do not produce emissions when
driven.
In recent years, developments in both batteries and vehicle emissions standards
have increased the attractiveness of electric vehicles relative to internal combustion
engine vehicles. In terms of batteries, from 2008 to 2015, the average price fell by
a factor of four, while energy density increased by a factor of five (see diagram
below). Over the same period, regulators in major auto markets tightened fleet
emissions standards for cars by an average of 20% (see policy innovation section),
placing upwards pressure on cost.44
Today, electric vehicle penetration rates are still relatively low, with the estimated
1.3 million electric cars45, 200 million electric motorbikes46 and 173,000 electric
buses in circulation equating to less than 1% of total vehicles in most markets. 47
However, these numbers do not reflect the significant investments made to-date
by governments, battery manufacturers and vehicle manufacturers, which are
accelerating adoption and pushing the market towards critical tipping points. For
example, by 2017 electric cars will be available at a retail price under USD 30,000
Page 7
GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

post-subsidy with a minimum range of 200 miles—two factors considered critical to

mass-market adoption.48 With industry leaders planning to expand capacity to over
100 gigawatt hours by 2021 (see Diagram 13), we expect to see continued
improvements in price driving even greater consumer demand and adoption.49
Diagram 12 50
Evolution of battery cost and density for plug-in hybrid (PHEV) and battery electric vehicles (BEV)

1200 500 2022 GM battery cost target (BEV)

1000
Battery cost
(USD/KWh)

400

density (Wh/L)
Battery energy
2022 Battery cost target (PHEV)
800
300 2020 Tesla battery cost target (BEV)
600
200 Battery cost (PHEV)
400
200 100 Energy density (PHEV)
0 0 2022 Energy density target (PHEV)
2008200920102011201220132014201520202022

Adoption at mass-market levels has the potential to significantly reduce negative

Diagram 13 (k)
Yutong electric bus
China is leading the way in terms of
electrification of public buses; the
country is responsible for over 50%
of both supply and demand
globally. Leading Chinese
manufacturer Yutong Bus recently
entered an agreement with RATP in
France to supply electric buses
across the country.
More active
users
Better Higher
experience utilisation
More active
vehicles
Diagram 14 (l)
Example of network effects within
ride-hailing model
More active users drive utilisation
rates higher, which in turn attracts
more drivers on the basis of
improved profitability; this reduces
active users’ wait times and cost.
© GENERATION INVESTMENT MANAGEMENT LLP 2016
externalities associated with the incumbent system. In contrast to internal
combustion engine vehicles, electric vehicles do not emit carbon or particulate
matter and produce little noise. The ability to locate the smaller sized engine in the
back of the vehicle as opposed to the front (e.g. Tesla Model 3) also increases safety.
These features promise to improve health and wellbeing issues. Furthermore,
electric vehicles offer a compelling solution to reducing total ‘wells-to-wheels’
carbon emissions. For one, they are more energy efficient than internal combustion
engine vehicles—where only 1% of fuel consumed is used to move passengers and
13% to move the physical car, with the rest, 86%, lost to the engine, transmission
and idling time.51 When combined with renewable power charging stations, they
have the potential to reduce emissions from the vehicles themselves to almost zero.
Turning to the consumer, price typically ranks as the number one buying criterion
when selecting a vehicle.52 In this respect, electric vehicles are becoming
increasingly attractive relative to internal combustion engine vehicles and in terms
of their payback period.53 As for overall experience, electric drivetrains offer faster
acceleration and a quieter ride. They can also save time: consumers who drive fewer
than 300 miles per day can leave their vehicles to charge overnight; maintenance
and servicing demands are less frequent; and premium parking is increasingly
available. These benefits are becoming even more attractive as ‘range anxiety’
declines in line with improved batteries and growing numbers of charge points.54
BUSINESS MODEL INNOVATIONS
Just as Fordism unlocked the power of internal combustion engine vehicles, today
sharing models in the form of multimodal, mobility-as-a-service (‘MaaS’) platforms,
are laying the foundation for the spread of autonomous, connected and electric
vehicles. Multimodal refers to different vehicle types, such as motorbikes, cars,
buses, rail, boats and bikes. MaaS platforms refer to digital interfaces through which
consumers can order and pay for on-demand, seamless, hyper-local, customised
journeys.55
Multimodal MaaS platforms rely on the power of network effects (see diagram).
Although we have yet to see the development of a fully-fledged platform, we have
seen companies in critical verticals consolidating user bases and broadening their
N
Page 8
e
t
 GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
Diagram 15 (m)
Scooter sharing in San Francisco
Scoot is one example of an electric
scooter sharing company. It
operates over 400 vehicles across
75 locations in San Francisco.
Diagram 16 (n)
Didi’s ride-hailing app
In the time it took Uber to
complete one billion ride-hailing
tips, Didi completed two billion.
Diagram 17 (o)
GoogleMaps journey planner now
displays Uber as alternative
© GENERATION INVESTMENT MANAGEMENT LLP 2016
service offerings. Below we explore these developments and examine how
multimodal MaaS platforms have the potential to provide consumers and society at
large with a compelling value proposition.
> Building block 1: vehicle sharing platforms
Today there are several different types of vehicle sharing models in operation,
including business-to-consumer (B2C), business-to-business (B2B), peer-to-peer
(P2P) and ride-hailing platforms.
Under B2C sharing models, consumers rent vehicles for short periods of time
through digital platforms. This model began in the car segment in the early 2000s
when new entrants, such as ZipCar, disrupted the rental market through the use of
digital service platforms as opposed to physical rental offices.56 Both incumbent
rental car companies, such as Avis and Enterprise, and automotive companies, such
as BMW and Daimler, have a strong presence in B2C car sharing after acquiring
many of the original start-ups. This segment has now grown globally from 350,000
members in 2008 to two million today.57
It has also spread across different types of vehicles. For example, bicycle-sharing
programmes are now in place in over 600 cities worldwide. Operating companies
typically run these schemes in conjunction with local governments aligned in
providing alternatives to motorised transport over short distances. 58 Electric
scooter and motorcycle sharing is also taking off, with growing networks in cities
such as Barcelona and San Francisco.59 We have also seen developments around
bus sharing, such as with Didi’s 2015 launch of leased bus fleets intended to
complement public transit options on popular routes.60
In the B2B market, companies manage fleets of cars for corporates or communities,
with the promise of increasing utilisation and ease of use in comparison to
traditional leasing programmes.61 Services range from infrastructure management
to financing to cleaning. In 2015, RCI Mobility launched its B2B business, Glide
Mobility, after acquiring Nissan CarSharing.62 In the same year, Didi unveiled its
Enterprise Solutions business segment.63
The P2P model, ‘the Airbnb of vehicles’, aims to leverage underutilised assets by
connecting private vehicle owners with renters. With cars parked an average of 96%
of their useful lives, the economic rationale behind the model is strong.64 However,
we have yet to see any one platform reach scale, despite attempts from numerous
players such as iCarsClub, Drivy and Turo. This could change as companies find ways
to boost user density.65
Finally, ride-hailing offers vehicle sharing with the added service of a driver.
Although it initially began in the hired car segment, it has now expanded into other
modes, such as rickshaws and minibuses. 66 Uber was arguably the first company to
enter this market, with a platform offering on-demand car journeys, transparent
wait times, seamless mobile payments and quality control via its two-way ratings
system.67 Although Uber was able to complete over one billion trips in the span of
five years, today the company faces stiff competition. 68 Notably, in 2016 Uber sold
its stake in China to Didi, its local rival.69 Didi completed two billion trips in less than
four years by embedding its ride-hailing platform within China’s leading messaging
service, Tencent’s WeChat platform.70
Page 9
GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
CHANGES IN LOCAL POLICY
In London, the transport
authority is dissuading the use
of private vehicles by
increasing fees in Congestion
Charge and Low Emissions
Zones, while at the same time
incentivising alternatives, such
as through the development of
Cycle Superhighways, BRT
lanes for low and zero
emission buses and
pedestrianised areas.
Similarly, in support of
multimodal transport,
policymakers in Bogotá have
prioritised investments in
public transit, cycling
infrastructure and
pedestrianised areas.
TransMilenio BRT now moves
2.5m people per day. The city
has also put in place its own
service platform, Sistema
Integrado de Transporte.
In Johannesburg officials
challenged citizens to live in a
city free of cars by closing
down major roads in its
business district as part of the
month long EcoMobility World
Festival in 2015. This followed
several years of putting in
place transport alternatives,
including BRT in 2009, light rail
in 2012 and bike lanes
connecting the city with
townships in 2013.
Finally, in Vancouver,
transport authorities reached
their goal of 50% of all trips in
the city to be taken by walking,
biking or public transit in 2016,
four years ahead of target,
thanks to the use of public
incentives.
Diagram 18 (p)
Transmileno BRT in Bogotá
© GENERATION INVESTMENT MANAGEMENT LLP 2016
> Building block 2: Journey planning platforms
Journey planning platforms are in development for both public transit and private
vehicle users. In relation to public transit, the first generation of platforms have
focused on integrating public transit data into mapping platforms. Examples include
GoogleMaps, Citymapper and Moovit. They help consumers overcome the
complexities of using public transport by combining different modes, transparently
displaying prices and providing real-time information on wait times. 71 Many now
also provide information on vehicle sharing options. For example, GoogleMaps
displays Uber journey times and fares alongside public transit options (see
diagram). As a further step, many aim to integrate payment systems akin to the
‘Zurich Card’, which enables consumers to seamlessly pay for travel on all types of
public transport and gain entry into local attractions.72 Aside from public transit
focused apps, journey planning platforms also exist for private vehicles. For
example, through the community-based app Waze, drivers share real-time traffic
and road information in exchange for navigation assistance.73 In 2016 Waze
partnered with INTRIX, the world’s leading supplier of quality traffic data, to add
parking assistance to its services.74
> Fully integrated multimodal, MaaS platforms
Over time, vehicle sharing and journey planning platforms have the potential to
converge into multimodal models, integrating all modes (public and private) into
one interface along with payment systems. This form could achieve powerful
optimisation and individual customisation at the system level. Although multimodal
MaaS platforms are not yet a reality, this could change quickly along with further
advancements in autonomous, connected and electric vehicles and greater
collaboration amongst different stakeholders (e.g. data sharing).
Multimodal MaaS platforms have the potential to play an important role in the
development of a more sustainable system of personal mobility. Shifting consumers
away from owning mobility assets and towards accessing mobility services could
serve to reduce the number of vehicles in circulation over the long-term, as less
would be required to move the same amount of people.75 However, over the short-
term, we recognise the potential for the number of vehicles to actually increase as
use of the incumbent system overlaps with the new system.
Multimodal MaaS platforms also have the potential to be more inclusive: for one,
greater optimisation and customisation could enable a broader range of more
affordable options.76 In addition, these platforms could help to bring down the total
cost of personal mobility. While the incumbent business model of siloed ownership
and services makes it necessary to maintain excess capacity in order to meet all use
cases, under a dynamically managed model, idle assets would become productive,
eliminating the need for providers and users to share the cost burden associated
with them. Aside from these advantages, consumers would no longer have to
choose between A, B or C (e.g. daily commute by bus, motorbike or car), but rather
could choose a blended solution across A, B, C, D, E, F, etc. each time they move.77
POLICY INNOVATIONS
From the 1930s onward, policy innovations helped to entrench what has now
become the incumbent system of personal mobility. Today, policy innovations at
both the local and national level are again speeding up the transition to the new
system emerging today.
Page 10
GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS
Diagram 19 (q)
Visual depiction of existing right
of way assigned to private
vehicles in urban areas
Illustration of historical
prioritisation of private vehicle
owners over pedestrians.
Diagram 20 79
Shifting consumers away from
cars can help to alleviate
negative externalities
Compared to alternative forms of
transport, cars are less efficient in
terms of space, emissions and
capacity; they are also
responsible for a higher number
of fatalities.
© GENERATION INVESTMENT MANAGEMENT LLP 2016
> Local policies aimed at reducing use of private vehicles
At the local level, policymakers are using numerous tools to restrict the use of
private internal combustion engine vehicles in urban areas. Measures include
increasingly prohibitive congestion charges, restricted access areas, bans at certain
times, speed reductions and parking charges. At the same time, local officials are
also incentivising consumers to take public transit, cycle or walk by increasing the
availability and attractiveness of these alternatives (see side bar on previous page
for examples).78
The introduction or extension of light rail has been one option adopted by several
cities, such as Los Angeles and Melbourne, given it has higher passenger capacity
relative to other modes of public transit, lower operating costs versus the metro
and limited air and noise pollution compared to combustion vehicles. However, due
to high capital costs, inflexible infrastructure and traffic interruption, it is not always
a viable option, particularly in lower income countries. For this reason, many cities
have instead (or additionally) opted for Bus Rapid Transit (BRT). BRT consists of
dedicated, centrally positioned bus lanes with prioritised traffic signals. It achieves
speeds similar to metros, but with a fraction of the capital expenditures and time
required to build. In China, for example, BRT is in place in over 20 cities. Aside from
these options, local officials are also increasing the number of dedicated bicycle
lanes and car-free developments, which incentivise both cycling and walking.
The basic shift from the use of private vehicles to these alternative modes has the
potential to significantly reduce negative externalities associated with the
incumbent system, while at the same time improving communities (see table).
> Global decarbonisation agenda driving national policies
Globally, policymakers are effectively restricting the use of oil-based fuels for
transport in line with the decarbonisation agenda outlined in the 2015 Paris
Agreement (the first universal, legally-binding global deal on climate).80 This plan
necessitates the implementation of aggressive measures over the next 5-10 years.
One such measure is the use of increasingly strict vehicle emissions standards.
Policymakers in leading auto markets have already put plans in place to
meaningfully ratchet up requirements, with step-ups planned for 2020 and 2025. 81
Compliance with these standards requires manufacturers to electrify at least part
of their fleets.82 Aside from ‘sticks’, national policymakers are offering ‘carrots’ in
the form of incentives for first time buyers of electric vehicles. For example, in the
U.S. the government provides a USD 7,500 tax credit to first time buyers, in
additional to incentives offered at the state level, such as sales tax exemptions and
carpool lane access.83
Page 11
GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

Diagram 21 84
The need for speed
We have a 5-10 year window to
implement the aggressive
decarbonisation measures
required to limit the average rise
in global temperatures to +2.0°C;
this includes greatly reducing the
world’s dependence on oil-based
fuels for transport.

Taken together, local and national policies are shifting the focus of personal mobility
away from maximising system-wide capacity for privately-owned internal
combustion engine vehicles towards optimising system-wide emissions, efficiency
and resilience.

V. A MORE SUSTAINABLE SYSTEM

Under the new system, we expect consumers to increasingly meet their needs for
personal mobility through the use of on-demand services across various modes of
autonomous, connected, electric and shared transport. We anticipate many
consumer segments, such as young urban dwellers, will choose note to own a
vehicle, while others will own them to fill supplementary needs (e.g. long journeys).
As a whole, the new system has the potential to address the negative externalities
associated with the incumbent system, while improving the value proposition to
consumers by: (i) improving system-wide efficiency; (ii) nearly eliminating driver-
related accidents; (iii) greatly reducing both urban air pollution and carbon
emissions; (iv) enhancing social inclusion by offering a broader range of options
across price points; and (v) increasing consumer satisfaction through individual
customisation. Although the system introduces a new set of unintended negative
consequences, such as safety risk from cyber-attacks and job losses from advances
in autonomy, these challenges have yet to cross critical, systemic thresholds.
A mix of old and emerging mobility service providers is likely to be responsible for
driving this system forward. Across the value chain, we expect to see the rise of
parts suppliers focused on providing increasingly sophisticated software
components; manufacturers with expertise in designing and manufacturing
autonomous, connected, electric vehicles for shared-use; retail sales providers
capable of uniquely satisfying consumers’ needs through data-driven mobility
service plans and lastly, end service providers serving the retail segment, as
opposed to individual consumers, with offerings ranging from renewable charging
stations to fleet-based insurance products.

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 12

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

Diagram 22 85
A new system of personal
mobility
> Centred on the use of on-
demand services across various
modes of autonomous,
connected and electric transport,
with product ownership meeting
supplementary needs
> Driven by a shift towards (i)
autonomous, connected and
electric vehicle technology, (ii)
multimodal mobility-as-a-service
business models and (iii)
redistribution of right of way to
optimise for system-wide
emissions, efficiency and
resilience
> Supported by a software-driven
value chain

VI. CONCLUDING REMARKS

The shift to the new system of personal mobility represents the transformation of
a complex global system. For investors, this presents a compelling opportunity to
deploy capital for the long-term, amidst an environment of generally low growth.
However, it also signals a period of heightened risk, as investments with exposure
to the decline of the incumbent system come under pressure. In our view, it is
therefore critical to zoom-out in order to view personal mobility outside of the
bounds of any single challenge, innovation or sector. We believe this broader, more
holistic lens is what enables investors to identify and adapt to changes others have
yet to see. It is the difference between a 19th century carriage driver and a horse
with blinders.

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 13

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

1 Tangible and intangible costs borne by third parties

2 For more information on how investors may apply a ‘sustainability lens’ in practice, please refer to Generation Foundation, Allocating capital for
long-term returns, May 2015; Available from: www.genfound.org/media/pdf-genfound-wp2015-final.pdf
3
Cars are more common in developed markets and motorbikes in developing markets on the basis of affordability; this is particularly the case in in
China, India, Indonesia, Vietnam, Thailand, Japan, Taiwan, Brazil, Malaysia and Pakistan; Pew Research Center, Car, bike or motorcycle? Depends on
where you live, April 2015 (Available from: http://www.pewresearch.org/fact-tank/2015/04/16/car-bike-or-motorcycle-depends-on-where-you-
live); Institute for Transportation and Development Policy, Managing Two and Three Wheeler Traffic, January 2009 (Available from:
http://cleanairasia.org/wp-content/uploads/portal/files/presentations/pres98.pdf)
4 Bloomberg New Energy and Finance and McKinsey & Company, An integrated perspective on the future of mobility, October 2016 (Available from:

https://www.bbhub.io/bnef/sites/4/2016/10/BNEF_McKinsey_The-Future-of-Mobility_11-10-16.pdf)
5 Generation IM

6 The 19th century system of personal mobility centred on the shared use of horse-drawn vehicles, such as hired carriages, omnibuses and trolley

cars.
7
Morris, Eric, From Horse Power to Horsepower, Spring 2007 (Available from: http://www.uctc.net/access/30/Access%2030%20-%2002%20-
%20Horse%20Power.pdf)
8 Idem

9 Estimated growth in global passenger car stock from Ciment, James, Encyclopaedia of Global Population and Demographics, 1999 (Available from:

https://books.google.co.uk/books?id=58emAgAAQBAJ&pg=PT83&lpg=PT83&dq=Global+production+of+motor+vehicles+1965&source=bl&ots=VL8
C4QX7nH&sig=aEhzFE9C0jbhPV9HPRlSLgp9DhY&hl=en&sa=X&ved=0ahUKEwiNsIukj5bOAhWCF8AKHcqoCR4Q6AEINzAF#v=onepage&q=Global%20
production%20of%20motor%20vehicles%201965&f=false) and International Organization of Motor Vehicle Manufacturers, Motorization rate
2014, 2014 (Available from: http://www.oica.net/category/vehicles-in-use); Estimated growth in atmospheric concentration of carbon from U.S.
Department of Commerce National Oceanic and Atmospheric Administration, CO2 expressed as a mole fraction in dry air, micromol/mol,
abbreviated as ppm, 2015 (Available from: ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt); Estimated growth in global
motorbike stock based on 223 electric motorbikes in China representing half of the country’s total stock and the country representing half of the
world’ total stock with data available from the International Energy Agency, Global EV Outlook 2016, 2016 (Available from:
https://www.iea.org/publications/freepublications/publication/Global_EV_Outlook_2016.pdf)
10 World Air Quality Index, Air Pollution in World: Real-time Air Quality Index Visual Map, 2016 (Available from:

http://aqicn.org/map/world/#@g/14.2521/135.8727/2z)
11 United Nations Environment Programme, Urban Air Pollution, 2016 (Available from: www.unep.org/urban_environment/Issues/urban_air.asp);

World Health Organisation, 7 million premature deaths annually linked to air pollution, March 2014 (Available from: who.int)
12
Montgomery, Charles, Happy city: transforming our lives through urban design, February 2015
13
World Health Organisation, Road traffic deaths, 2015 (Available from: www.who.int/gho/road_safety/mortality/en/)
14
World Energy Council, Global transport scenarios 2050, 2011 (Available from: www.worldenergy.org/wp-
content/uploads/2012/09/wec_transport_scenarios_2050.pdf); Paris Process on Mobility and Climate, Draft Proposal for a Global Macro-Road
Map
for De-carbonization of the Transport Sector, 2016 (Available from: www.ppmc-transport.org/macro-road-map)
15 Scientific American, Earth’s CO2 passes the 400 ppm threshold—maybe permanently, September 2016 (Available from:

https://www.scientificamerican.com/article/earth-s-co2-passes-the-400-ppm-threshold-maybe-permanently/)
16 TED, Al Gore: the case for optimism on climate change, February 2016 (Available from:

https://www.ted.com/talks/al_gore_the_case_for_optimism_on_climate_change?language=en)
17 Idem

18 e.g. the melting of the Arctic ice-cap and many of the world’s glaciers will itself speed the rate of warming, as there will be less ice to reflect heat

and more ocean surface to absorb it; at high levels of heat stress, the carbon cycle of plants and soil can reverse to the point of releasing as
opposed to absorbing more carbon, which would severely exacerbate the rise in total emissions; Geological Society of London, Climate change:
evidence from the geological record, November 2010 (Available from:
www.geolsoc.org.uk/~/media/shared/documents/policy/Climate%20Change%20Statement%20final%20%20%20new%20format.pdf?la=en)
19
The Pliocene refers to an epoch of the Tertiary Period, occurring from 10 to 2 million years ago
20
Geological Society of London, Climate change: evidence from the geological record, November 2010 (Available from:
www.geolsoc.org.uk/~/media/shared/documents/policy/Climate%20Change%20Statement%20final%20%20%20new%20format.pdf?la=en)
21 The World Bank, GDP (Current USD), 2016 (Available from: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD)

22 Dargay, Joyce, Dermot Gatley and Martin Sommer, Vehicle Ownership and Income Growth Worldwide: 1960-2030, January 2007 (Available from:

https://www.econ.nyu.edu/dept/courses/gately/DGS_Vehicle%20Ownership_2007.pdf)
23 Idem

24 Clausen, Eileen and Daniel Sperling, The developing world’s motorisation challenge: soaring personal vehicle use is producing great benefits but

also potentially enormous costs, 2002 (Available from: http://www.uctc.net/research/papers/688.pdf); Dadush, Uri and Shimelse Ali, In search of
the global middle class: a new index, July 2012 (Available from: http://carnegieendowment.org/files/middle_class-edited.pdf
25 Idem

26
United Nations, 2014 revision of world urbanisation prospects, 2014 (Available from: https://esa.un.org/unpd/wup/); Deloitte, Navigating the
African automotive sector: Ethiopia, Kenya and Nigeria, 2015 (Available from:

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 14

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

https://www2.deloitte.com/content/dam/Deloitte/za/Documents/manufacturing/ZA_Deloitte-Africa-automotive-insights-Ethiopia-Kenya-Nigeria-
Apr16.pdf)
27 TED, Enrique Peñalosa: Why buses represent democracy in action, September 2013 (Available from:

https://www.ted.com/talks/enrique_penalosa_why_buses_represent_democracy_in_action?language=en)
28 Giancarlo Genta, Lorenzo Morello, Francesco Cavallino, Luigi Filtri, The Motor Car: Past, Present and Future, (Available from:

https://books.google.co.uk/books?id=KxTHBAAAQBAJ&pg=PA115&lpg=PA115&dq=kettering+starter+internal+combustion+engine&source=bl&ots
=WI--fCu7ID&sig=tBuOcfT_vuN7HYg_Eilp9QysJdA&hl=en&sa=X&ved=0ahUKEwi21dLxnqDPAhVkI8AKHdl-
CVgQ6AEISTAI#v=onepage&q=kettering%20starter%20internal%20combustion%20engine&f=false)
29
Ford, Heritage: the evolution of mass production, 2016 (Available from: www.ford.co.uk/experience-ford/Heritage/EvolutionOfMassProduction)
30 Norton, Peter, Fighting Traffic: The Dawn of the Motor Age in the American City, 2002

31 Idem

32
e.g. Volvo, Tesla, BMW, Ford, Google, Baidu, Uber, NuTonomy
33 Driverless Future, Driverless car market watch, 2016 (Available from: http://www.driverless-future.com/?page_id=384)

34 Level 1-2 automation depends on classical computer algorithms (e.g. if-then statements), whereas Level 3+ applies machine learning and pattern

recognition technology from artificial intelligence; these algorithms require extensive databases in order to function; so far Google has collected
data from the 2 million test miles its autonomous vehicle prototypes have completed; Hars, Alexander, Top misconceptions of autonomous cars
and self-driving vehicles, September 2016, (Available from: http://www.driverless-future.com/?page_id=384); Google, Google self-driving car
project: where we have been, 2016 (Available from: https://www.google.com/selfdrivingcar/where/)
35
e.g. HERE (a company recently acquired by Daimler, Volkswagen and BMW) is developing a product with three detailed layers, which will
compete with other leading solutions, such as Mobileye’s Road Experience Management technology; Mobileye, BMW Group, Intel and Mobileye
Team Up to Bring Fully Autonomous Driving to Streets by 2021, July 2016 (Available from: http://ir.mobileye.com/investor-relations/press-
releases/press-release-details/2016/BMW-Group-Intel-and-Mobileye-Team-Up-to-Bring-Fully-Autonomous-Driving-to-Streets-by-
2021/default.aspx)
36 For example, the National Highway Traffic Safety Administration in the U.S. recently teamed up with the the interest group ‘Self-Driving Coalition

for Safer Streets’, comprised of industry leaders such as Google, Ford, Volvo, Uber and Lyft, to draft guidance to legalise the use of autonomous
vehicles without human controls; Reuters, Google, Ford, Uber launch coalition to further self-driving cars, April 2016 (Available from:
http://www.reuters.com/article/us-autos-selfdriving-idUSKCN0XN1F1)
37
Driverless Future, Cities around the world jump on the self-driving car bandwagon, May 2016, (Available from: http://www.driverless-
future.com/?p=925); Catapult Transport Systems, Driverless pods, 2016 (https://ts.catapult.org.uk/current-projects/self-driving-pods); CNET, Self-
driving cars to hit UK roads in Volvo trial, April 2016 (Available from: http://www.cnet.com/roadshow/news/self-driving-cars-to-hit-uk-roads-for-
the-first-time-in-volvo-trial/); Venturer, A new and exciting autonomous vehicle project, 2016 (Available from: http://www.venturer-cars.com)
38
HERE, Swiss Re, The future of motor insurance: how car connectivity and ADAS are impacting the market, 2016
(http://media.swissre.com/documents/HERE_Swiss+Re_white+paper_final.pdf); Morgan Stanley, North America insight: shared mobility disrupting
auto insurance one mile at a time, December 2015
39 We note the growth of ‘edge computing’ as a complementary solution to cloud computing for processing and storage.

40 HERE, Swiss Re, The future of motor insurance: how car connectivity and ADAS are impacting the market, 2016

(http://media.swissre.com/documents/HERE_Swiss+Re_white+paper_final.pdf)
41 Singapore Land Transport Authority, Electronic Road Pricing Scheme, 2016 (Available from: https://www.lta.gov.sg/content/ltaweb/en/roads-

and-motoring/managing-traffic-and-congestion/electronic-road-pricing-erp.html)
42 National Research Council, Shopping for safety: providing consumer automotive safety information, 1996 (Available from:

https://www.nap.edu/read/9698/chapter/6#85)
43 National Research Council, Cost, effectiveness and deployment of fuel economy technology for light-duty vehicles, 2015 (Available from:

https://www.nap.edu/read/21744/chapter/6#139); Hensley, Russell, Stefan Knupfer, and Dickon Pinner, Electrifying cars: How three industries will
evolve, June 2009 (Available from: http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/electrifying-cars-how-three-
industries-will-evolve)
44 Japan Automobile Manufacturers, JAMA; Department of Energy, DOE; Goldman Sachs Global Investment Research

45 International Energy Agency, Global EV Outlook 2016: beyond one million electric cars, 2016 (Available from:

https://www.iea.org/publications/freepublications/publication/Global_EV_Outlook_2016.pdf)
46 International Energy Agency, Global EV Outlook 2016: beyond one million electric cars, 2016 (Available from:

https://www.iea.org/publications/freepublications/publication/Global_EV_Outlook_2016.pdf)
47 World Energy Council, World energy perspective: E-mobility, 2016 (Available from: https://www.worldenergy.org/wp-

content/uploads/2016/06/E-Mobility-Closing-the-emissions-gap_full-report_FINAL_2016.06.20.pdf)
48 Tesla Model 3 and GM Chevy Bolt

49 Harrington, Rebecca, One dramatic chart shows why electric cars are about to become mainstream, March 2016 (Available from:

http://www.techinsider.io/electric-vehicle-battery-cost-decreases-2016-3)
50 2020 estimates from Tesla data; 2022 estimates from General Motors data

51 McKinsey Global Institute, Resource Revolution: meeting the world’s energy, materials, food and water needs, November 2011

52 Deloitte, Driving through the consumer’s mind: steps in the buying process, December 2014 (Available from:

https://www2.deloitte.com/content/dam/Deloitte/in/Documents/manufacturing/in-mfg-dtcm-steps-in-the-buying-process-noexp.pdf)
53 International Energy Agency, Global EV Outlook 2016: beyond one million electric cars, 2016 (Available from:

https://www.iea.org/publications/freepublications/publication/Global_EV_Outlook_2016.pdf); Harrington, Rebecca, One dramatic chart shows

why electric cars are about to become mainstream, March 2016 (Available from: http://www.techinsider.io/electric-vehicle-battery-cost-decreases-
2016-3)

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 15

GENERATION SUSTAINABILITY INSIGHTS SERIES: TRANSITION IN PERSONAL MOBILITY IN URBAN AREAS

54 McCurry, Justin, Japan now has more electric car charge points than petrol stations, May 2016 (Available from:
https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)
55 Bachman, Justin, Hertz Car-Sharing Would Be Perfect, if Not for Those Meddling Customers, October 2013 (Available from:

http://www.bloomberg.com/news/articles/2013-10-29/hertzs-24-7-car-sharing-plagued-by-those-meddling-customers)
56 These mechanisms allow them to remotely manage decentralised fleets of vehicles, as opposed to maintaining costly rental offices in premium

locations, which in turn supports a compelling offering to consumers of on-demand, hyper-local access to vehicles at competitive prices; Bachman,
Justin, Hertz Car-Sharing Would Be Perfect, if Not for Those Meddling Customers, October 2013 (Available from:
http://www.bloomberg.com/news/articles/2013-10-29/hertzs-24-7-car-sharing-plagued-by-those-meddling-customers)
57
Roland Berger, “Sharing the Future: China”, June 2014
58 Morris, David, Take my bike, please: Cycle-sharing companies reshape U.S. cities, August 2015 (Available from:

http://fortune.com/2015/08/11/bike-sharing-startups)
59 Cooltra website (https://www.cooltra.com/en); Scoot website (https://scoot.co/faq/)

60 Crouch, Erik, Didi Kuaidi wants to make ‘tech buses’ a common commuter option in China, October 2015 (Available from:

https://www.techinasia.com/didi-kuaidi-bus-beijing-shenzhen)
61
Glide, What is B2B or corporate car sharing?, 2016 (Available from: http://glidemobility.com/en/what-is-b2b-or-corporate-car-sharing); Glide, 5
Reasons Corporate Car Sharing is good for business, 2016 (Available from: http://glidemobility.com/en/5-reasons-corporate-car-sharing-good-
business)
62 RCI Bank and Services, RCI Banque launches rci mobility to develop car-sharing services, 2015 (Available from:

https://www.rcibs.com/en/news/rci-banque-launches-rci-mobility-develop-car-sharing-services)
63 Didi, Investor Day presentation, 2016

64 McKinsey Global Institute, Resource Revolution: meeting the world’s energy, materials, food and water needs, November 2011

65 Roland Berger, ‘Sharing the Future: China’, June 2014.

66
e.g. Jugnoo Pool in India; Goopta, Biswarup, Jugnoo launches auto-rickshaw ride pooling service, June 2016 (Available from:
http://economictimes.indiatimes.com/small-biz/startups/jugnoo-launches-auto-rickshaw-ride-pooling-service/articleshow/52591856.cms)
67 Growth Hackers, Uber: what’s fuelling the growth engine, 2016 (https://growthhackers.com/growth-studies/uber); Mangalindan, JP, The trials of

Uber, February 2012 (Available from: http://fortune.com/2012/02/02/the-trials-of-uber/)

68 Other competitors include Ola in India, GrabTaxi in Southeast Asia, Lyft in North America

69
Didi, Investor Day presentation, 2016
70
Horwitz, Josh, In just 9 days, WeChat brings in over 100,000 taxi rides for Chinese passengers looking for a lift, January 2014 (Available from:
https://www.techinasia.com/wechat-didi-dache-100000-taxi-rides-chinese-passengers)
71 Department for Transport, Feasibility study for mobility-as-a-service concept in London, May 2015 (Available from:

https://www.bartlett.ucl.ac.uk/energy/docs/fs-maas-compress-final); Hietanen, S. Mobility as a Service’ – the new transport model? ITS &
Transport Management Supplement, 2014 (Available from: http://www.itsineurope.com/its10/media/press_clippings/ITS%20Supp_et214.pdf)
72 City of Zurich, ZurichCARD, November 2016. (Available from: https://www.stadt-

zuerich.ch/vbz/en/index/tickets/tickets_prices/zuerich_card.html)
73
Waze website (Available from: www.waze.com)
74 Inrix, INRIX Selected by Waze to Supply Global Parking Data, September 2016. (Available from: http://inrix.com/press/waze-parking/)

75 McKinsey & Co, Urban mobility at a tipping point, September 2015 (Available from: http://www.mckinsey.com/business-functions/sustainability-

and-resource-productivity/our-insights/urban-mobility-at-a-tipping-point)
76 For example, ride-hailing platforms are already bringing hired car services into previously underserved areas. In New York City, Uber’s fastest

growing pickup zones are in areas with below average incomes outside of the yellow cab prime zone; New York Post, How Uber is reducing
inequality, September 2015 (Available from: http://nypost.com/2015/09/03/how-uber-is-reducing-inequality/)
77
Department for Transport, Feasibility study for mobility-as-a-service concept in London, May 2015 (Available from:
https://www.bartlett.ucl.ac.uk/energy/docs/fs-maas-compress-final); Hietanen, S. Mobility as a Service’ – the new transport model? ITS &
Transport Management Supplement, 2014 (Available from: http://www.itsineurope.com/its10/media/press_clippings/ITS%20Supp_et214.pdf)
78 Vox, In Vancouver, 50% of trips are by foot, bike, or transit. This video shows how they did it. December 2016 (Available from:

www.vox.com/science-and-health/2016/12/9/13897078/walkable-vancouver-video)
79 Asian Development Bank, Changing course in public transport: an illustrated guide, October 2011 (Available from:

https://www.adb.org/publications/changing-course-urban-transport-illustrated-guide)
80 European Commission, Paris Agreement, 2016 (Available from:

http://ec.europa.eu/clima/policies/international/negotiations/paris/index_en.htm)
81 Generation Foundation, ‘Stranded Carbon Assets: Why and how carbon risk should be incorporated in investment analysis, 30 October 2013.

Available from: https://www.genfound.org/media/pdf-generation-foundation-stranded-carbon-assets-v1.pdf

82 Financial Times, Brussels starts work on stricter CO2 targets for vehicles, July 2016 (Available from: https://www.ft.com/content/e8a0f880-4e80-

11e6-88c5-db83e98a590a)
83
Plug In America, Current Policy Priorities, November 2016. (Available from: www.pluginamerica.org/policy)
84
Generation IM; National Oceanic and Atmospheric Administration (Available from:
ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_mm_mlo.txt); United Nations, United Nations Framework on Climate Change (Available from:
http://unfccc.int/paris_agreement/items/9444.php)
85 Generation IM

© GENERATION INVESTMENT MANAGEMENT LLP 2016 Page 16