Ms. Herlt, what’s behind “Transport-as-a-Service” – and why do you think those who see ‘TaaS’ as key to delivering a sustainable future for the transportation industry are right?
Our industry is experiencing a fundamental shift towards zero-emission vehicles (ZEVs), including commercial vehicles. This change is not only focused on drivetrains, and encompasses the entire business model itself, which is evolving beyond a pure focus on hardware towards a customer-centered service model – TaaS is one such example. This subscription-based business model offers customers a comprehensive service. The frontend, i.e. the part that customers ‘see’, includes new ownership models, coupled with a complete package for insurance, maintenance and charging infrastructure. All of this is paid for via a fixed monthly instalment. The prerequisite for this is a backend on the part of the mobility provider that is characterized by a customer-centric organizational structure and a solution profit center. This also means that many more assets than before end up on the provider’s books.
Now TaaS is not necessarily an innovation discovered in the past few months...
That is correct. This type of business model has already been driven forward by new companies in the mobility world in recent years. What is new is that established truck companies are now also offering these services. This movement is creating new ecosystems in the industry – from truck manufacturers to financiers and insurers. Exciting co-operations are also emerging in vehicle maintenance. The combination of maintenance contracts and the data collected in the fleets can bind customers more closely to the maintenance network of truck manufacturers and providers. This creates attractive revenue opportunities in the maintenance and repair market.
These new offers play a particularly important role in the rollout of ZEVs across the board – because they can address the biggest hurdles that have existed to date. Zero-emission trucks are two-to-three times more expensive than a diesel lorry. Companies must also invest in charging infrastructure. The technology and residual value risk should also not be forgotten. TaaS reduces these hurdles, as it reduces the necessary investment and therefore enables flexibility. This opens new value creation potential for manufacturers – they can compensate for possible gaps due to the discontinuation of the diesel engine, cheaper e-engines and generally lower value creation depths in e-mobility. However, I don’t expect manufacturers to enter the logistics sector on a large scale themselves – it’s a very intense and competitive environment. However, innovative providers are trying to fill this gap and position themselves between manufacturers and logistics providers.
The most important point is that customers are very open to TaaS. Around 70% of operators of small or medium-sized fleets are interested – primarily to reduce the risk of switching to ZEVs. In Europe, 30% to 40% would be prepared to pay 5% to 10% more. For manufacturers, this means that competition is getting tougher, but on the other hand, new partnership models and many opportunities to reach additional customer groups are tempting.
Electrification, digitalization and autonomous driving are megatrends in the transportation industry. How, specifically, are they changing individual transport companies?
All three trends will have a huge impact on transportation companies in the long-term. In the short- and medium-term, the necessary electrification will have a particularly strong impact, as it will increase the acquisition costs of each vehicle. Transportation companies will either have to reserve the capital for this or resort to TaaS. On the other hand, digitalization in the short-term and autonomous driving in the long-term will help to save costs in the logistics system. According to our analyses, these new technologies will lead to a consolidation of the market, as high investments will be necessary – transport companies will only be successful if they align their business models with the aforementioned trends. In addition, these technological leaps always create opportunities for new, technology-based companies.
What advantages does the TaaS concept offer compared to the traditional purchase or leasing of commercial vehicles, especially in terms of cost efficiency and flexibility?
There are several advantages. Firstly, TaaS enables greater cost efficiency through more accurate pricing – transportation companies only pay for what they use. This is a particular advantage for smaller fleets switching to zero-emission trucks without having to shoulder an investment risk. Secondly, there is flexibility – companies can adapt more quickly to a changing market environment. Thirdly, there is an increase in predictability, as the residual value risk remains off the transport company's balance sheet. In addition, there is less complexity, better customer orientation and optimization of fleet uptime thanks to more data.
The switch to e-mobility is a complex process, especially when it comes to financing. What role do the higher acquisition costs, but also the higher residual value, second use and second life of expensive batteries play?
The factors mentioned above, in particular the significantly higher purchase price, will significantly increase the importance of financing products and their penetration rates. Traditional financing products such as loans or financing will continue to be used, but most of the growth will come from full-service offerings or more flexible financing products such as operating leases or subscription models. These models can simply cushion the risks better from the customer’s perspective. Customers can also focus better on changes to their own core competences if they use more flexible products.
What influence can (and should) the financial services provider exert to preserve the value of the vehicle for as long as possible and therefore maximize its uptime and operational efficiency?
The basic aim is always to maintain the vehicle’s condition as long as possible or to maximize mileage. In addition, the financial services provider can use ‘pay-how-you-use’ models to reward a value-preserving driving style – this is already feasible with the data available in a truck today. With these models, battery-friendly use and charging behavior, adherence to maintenance intervals and an anticipatory driving style are rewarded with lower premiums. The more transparent the assessment criteria are, the better this works. The attractiveness of such an offer is increased if the vehicle ‘trains’ the driver with its feedback, i.e. it gives them direct suggestions for improving driving and charging behavior.
What role do renewable energies and environmentally friendly technologies play in the context of TaaS?
TaaS helps to overcome the hurdle of high acquisition costs and will accelerate the ramp-up of zero-emission trucks. TaaS can also be combined with a ‘green’ charging infrastructure by only charging with electricity from renewable sources. TaaS can also directly incorporate solutions for a more sustainable fleet operation. For example, higher fleet utilization alone has a sustainability effect. Training courses about sustainable driving can also be offered.
What long-term strategic considerations should companies make to position themselves in a constantly evolving market for TaaS and secure competitive advantages?
We’re talking about a significant growth market that offers many opportunities. I can only emphasize this: It’s important to drive technological change forward with determination – this includes e-mobility, digitalization and autonomous driving – and to consistently initiate the necessary changes in the business model and the underlying processes. A good first step can be targeted pilot projects to enable learning on a small scale and the building up of experience. This reorganization is a marathon, not a sprint.