“The world is moving from car ownership to car usership”
A BBC News article provides a great insight into the revolution in the making that the car industry is about to go through. KPMG sums it up in their annual survey of the auomotive industry: “The world is moving from car ownership to car usership.” Arguably it will take longer than headline-grabbing statements suggest, not least because a large section of the consumer base still feels a strong emotional connection to the car they own or that they wish to own, but it is undeniably underway.
In an earlier post, I highlighted that we should not expect eletric cars to substitute motor cars like for like. Disruptive innovations typically involve a shift on more than one dimension. A simple three-dimensional innovation model comprises:
- Product innovation – coming up with the next technical upgrade as automakers – amongst other – have to do permanently,
- Customer innovation – reaching out to new customer segments as Nintendo did by developing video games for girls on the Nintendo DS,
- Business model innovation – changing the way value is created and shared as Apple did with iTunes.
At the risk of over-simplifying, an innovation that plays along one dimension only is likely to be incremental, while an innovation that plays along at least two dimensions is much more likely to be disruptive. Apple’s recent successes have been built by squaring the circle with the magic Apple Pi number that enables them to play on all three dimensions at the same time.
As a new product technology electric cars will inevitably face consumer resistance. They are much more likely to take off (figuratively!) if they come in association with a business model shift from ownership to usership that dramatically reduces the technology risk as perceived by the consumer. But once the shift from ownership to usership has been made in this context, it will gather momentum: consumers will wonder why they should sink such an amount of capital in a fast-depreciating asset while they can enjoy the same benefit for a pay-as-you go fee. Once the usership business model takes hold, there will be no going back.