Addressing the Urban Mobility Challenge

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Addressing the Urban Mobility Challenge

Today, half of the people in the world live in cities. Fifteen years from now, that proportion will rise to 60 percent. At the same time, another 2 billion people in developing economies such as China will move up into the middle class, and most of them will live in cities and aspire to own cars.

As a result, the number of vehicles sold around the world annually is projected to rise from roughly 70 million in 2010 to 125 million by 2025, and more than 50 percent of those cars will be owned by city dwellers. By 2030, according to Energy Journal, the number of cars on the road will grow from 1.2 billion to 2.4 billion.1

While this is great news for the automotive industry, it represents a crisis for the world’s cities that are already overwhelmed by the current traffic. There aren’t enough lanes on roads to handle the current amount of vehicles and there aren’t enough spaces to park the cars that are owned today. The time wasted in traffic, the lost productivity, and the cost of fuel already amounts to between 2 and 4 percent of GDP.

If this trend continues, the result will be massive gridlock, even slower economic growth, and higher healthcare costs. According to World Health Organization statistics, 7 million deaths are caused each year by air pollution, largely as a result of smog from urban traffic.2

What’s the solution?

As recently highlighted by Shannon Bouton, Stefan M. Knupfer, Ivan Mihov, and Steven Swartz of McKinsey & Company, several emerging technologies and business models are likely to solve the problem.3

Consider how privately owned vehicles are evolving. Thanks to in-vehicle connectivity via smartphone apps or onboard systems, drivers can access navigation tools that offer directions to avoid heavy traffic. As the technologies evolve, cars will communicate with each other and with their surroundings to prevent crashes and determine which routes would provide the quickest travel times.

At the same time, battery-powered electric vehicles are slowly building market share. A study by market research firm IHS estimates that annual sales of electric and hybrid vehicles will jump from 2.3 million in 2014 to 11.5 million by 2022. Sales are likely to be highest in cities, where the infrastructure of charging stations will be built first. This will result in less smog than if the entire urban fleet was powered by fuel combustion engines...

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