24 November 2017

Courier Talks: Are there bumpy roads ahead for the automotive industry?

Our expert panel on how cars and cities can work together to create a harmonious future.

We hosted this Courier Talks session at Look Mum No Hands in Shoreditch to debate how cities and cars will co-exist. On the panel were Matej Benuska (Taxify) and Stephen Bee (Drive Now).

Courier: Let’s start with the recent news around Taxify. It operated in London for just three days in September before its licence was revoked by TfL. Matej, what happened?

Matej Benuska: We applied for the licence in April and TfL just didn’t talk to us for the whole of July or August. So the chief executive of our company [Markus Villig] said: ‘Let’s just buy somebody who has a licence,’ and we launched the service with that company. It was actually within the law, but TfL decided to revoke the licence of the company that we bought. So that’s why we stopped.

But TfL’s point is you were trading as Taxify, but with another company’s licence. Do you expect to secure a new one?

MB: We’re waiting for TfL to respond. The application has been in since April so it’s still there.

How is TfL compared to regulators in other cities?

MB: The situation here is different to other countries. Taxi drivers have very strong unions over here, unlike in Africa or Eastern and Central Europe.

Stephen Bee: TfL for us has been supportive but passive, but that’s partly to do with our model. The relationship we really need is with the local boroughs. TfL is caught in a political matrix. It has a mayor that’s made certain promises, policy-wise, so it’s got to find funding for that. But it is not only a regulator, it actually provides most of the transport in London. And now it has this headache about these new private providers it doesn’t control. Uber has clearly had a huge impact on TfL’s thinking. Has Uber been good or bad for consumers, drivers, or even the market?

MB: Uber has changed the way we move around cities. If you need to go from point A to B, you don’t really need a London cab to do that, you don’t need a yellow cab, you don’t need a Rolls Royce. You just need anything that gets you there, and Uber over it at the push of a button. I’m a pretty big fan of Drive Now too because I think this is also the solution to the problem of congestion. Private hires are actually adding to the numbers of cars in the city right now.

Won’t Taxify be adding to that?

MB: No, we are actually just shifting suppliers from Uber to us, because of the better conditions for the drivers.

Are you just competing on price against Uber?

MB: We take smaller margins, so, yes, more money goes to the driver. We want to offer worker status – minimum wage and also holiday pay – and this brings costs up by about 20%. Happier drivers give better service and you can actually over a very similar but better product to the market.

But given Uber is not profitable, and you’re planning to undercut them, that raises questions on your unit economics?

MB: London is actually a city where Uber is earning lots of money. It has markets where it needs to fight, like India and Southeast Asia, where it is burning money. That is why it is not profitable.

More broadly, fewer young people are buying vehicles or even getting their driving licence. Does the car have a long-term future in the city?

SB: There’s definitely declining ownership. But that’s also partly to do with population change and the actual amount of cars you can have in a city. London has not expanded its parking supply, but it has expanded by a million people.

Is shared transport actually the inevitable future?

SB: It’s no longer about having that thing you own on the street and it’s always there. It’s having a service that’s better than that, and also not needing to use it all the time, and basically using other forms of transport alongside of it.

MB: Exactly. I believe cars will be shared or rented. There will be companies that own the cars and manufacturers. You’ll just choose the type of the car you want, the type of service, and you will not own a car.

Can you really see that happening outside of dense areas like London?

MB: It will just take time. The countryside is the hardest one to solve, but we are living in a world of technology and innovation, so it’s just about someone coming up with a great idea to solve this.

SB: I’m going to say it: autonomous. I grew up in Gloucestershire and it would have been fantastic to have a car to pick me up and take me to town instead of having to drive my Yaris. Buses could also become ‘on demand’.

How far are we from driverless cars?

SB: Within 10 years we’ll have something on the roads commercially. It’ll be the biggest change to the car industry since Ford. There is a huge amount of investment going on. The manufacturers want to create products on top of driverless cars, too. Because ultimately with driverless cars, when they get really good, there won’t be much difference between them.

Surely, if I’m not driving or owning, what’s the inherent value of a BMW over a Vauxhall?

SB: The selling point of BMW will be that it’s always premium. Instead of a premium product, it’ll be a premium service.

MB: Imagine cars like airlines. Practically, you need to go from A to B. You either pick Emirates because it’s luxurious. The car equivalent could be Mercedes. If you want to go cheap, you might use a Toyota Prius. So think of car manufacturers like airlines of the future.

In the German city Frieberg, 74% of the traffic is people in cars looking for parking. That’s immediately eradicated with driverless cars. What are the other consequences?

SB: In terms of accessibility, it’ll be a really, really good thing. At the moment it’s still fairly expensive to use Taxify, Uber or Drive Now, but in the future it could offer cheap travel for people that currently can’t access public transport networks. People will be able to be picked up at their front door. You won’t have to have traffic signals because cars will know where people are in the future. But you’ll also potentially have increased demand, because the cost of using cars will be lower. But first, we’ll be moving over to electric cars…

SB: Any of the motor shows you go to this year, it’s all about electric vehicles. It takes seven years to design a car and go through all the process – that’s a long time. It’s not something they can change overnight.

That timeline is fascinating. It takes seven years to make a car, but Oxford’s City Council proposes to ban all but electric vehicles from parts of the city by 2020.

SB: There is unprecedented investment in electric vehicles and battery-powered technology. While it is a difficult time, car manufacturers are adapting to the regulations. They have always worked under a regulatory environment.

We’ve already seen diesel sales decline. We may have reached – or be close in some markets in Europe – to ‘peak car’, where you have the maximum amount of people owning cars.

Will there be changes to road pricing as a result?

SB: Road pricing will be important. We’ve given road space away for free, and actually what should happen is it should be priced so only a certain amount of people use the finite road space we have.

At the moment we have the congestion charge, which was fantastic 10 years ago. The price of parking for electric vehicles should be much less than for petrol or diesel alternatives, to improve air quality. You also need to put the infrastructure in place so people can charge them.

In this tech-driven world regulators often get a reputation of being obstructive. Is that fair?

MB: I come from Eastern Europe, where we have a completely different history. You guys still have laws from the 17th century. In Estonia, you can get your European citizenship online, you can submit your taxes in three minutes from your iPad.

The British bureaucracy is killing us – we aren’t used to this. But when you are in London, do as Londoners do. You guys probably like it like this.

SB: Regulation always follows what happens in an industry, so you could say actually London has been pretty open. Uber has been operating for ve years, it’s a hugely successful product in London and TfL let them come in. But according to the rulebook, TfL was within its rights to revoke Uber’s licence.

TfL is in a really tough situation. I am going to defend it a little bit, it has got a lot of hard work to do.

In this automated, self-driving future, whose responsibility will it be to make sure vehicles are safe and ethical?

SB: I don’t have an answer to that. It’s definitely a conversation we have to have. But there will be much lower deaths with autonomous vehicles in the long-term.

MB: The most important thing is that engineers build a car that’s safe enough it will never have to make the decision between killing a driver or killing a pedestrian.

The panel

Stephen bee, Drive Now.
Drive Now is an on-demand car-sharing scheme run by BMW and car rental firm Sixt. Bee runs the company’s policy and strategy in the UK.

Matej Benuska, Taxify.
Having previously worked for Uber, Benuska now leads ride-hailing competitor Taxify’s expansion into UK, French and Slovakian markets.

Open mic

‘If BMW wants to have autonomous cars that are quick and safe, is TfL or the Government going to start providing the traffic signs or the [infrastructure] that helps with that? Or will the car companies have to work together?’

Joost Van Heesben, Media IQ Digital

‘Autonomous, electric cars combined with ride-sharing is the best thing that could happen. It’d be much more efficient than public transport the way it is now and could be tailored around demand.’

Felix Rossknecht, Newton Bell

‘London has a goal of being carbon-free by 2050. Schemes like Drive Now and Zip Car add more cars to the road – it’s not a fleet that’s already moving, like with Blablacar. What will London do in that context? In 33 years the city will be carbon-neutral – so are the car fleets going to be entirely electric?’

Pauline Marcou, Advizzo

‘We’ll have many years of transitioning from petrol to fully-automated. But I also think we need to commute less because otherwise, it will be impossible to live with too many people [in cities].’

Karen Rozenbaum, Royal College of Art

First appeared in Issue 20 Dec/Jan

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