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Page 1

Urban mobility at a
tipping point

Shannon Bouton
Stefan M. Knupfer
Ivan Mihov
Steven Swartz

In collaboration with McKinsey’s Advanced Industries Practice

McKinsey Center for Business and Environment September 2015

Page 2

Urban mobility at a tipping point

Approaching the tipping point 4

Privately owned vehicles 4

Walking and bicycling 6

Public transit 8

San Francisco and the economics of travel 9

New mobility services 12

Policies and regulations 14

Start-ups that are reimagining personal mobility 15

Land use and urban design 16

Consumer preferences and behaviors 17

What kinds of cities will lead the mobility revolution? 18

Established megacities 19

Rising megacities 19

Mature, advanced cities 20

Car-dominated, mature cities 20

Keeping pace 21

The road ahead 21

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Exhibit C

CDP 2015
Urban mobility tipping point
Exhibit (C) 3 of 3 (sidebar)

1We assumed that autonomous vehicles would lower the price of mobility to consumers by half relative to today's e-hailing
rate because there is no driver to pay.

2Multimodal refers to all the different methods people can use to get from point A to point B, apart from using a privately
owned car.

3The time premium is calculated as total annual travel time using multimodal options compared with time spent traveling in a
privately owned car. A 30% time premium, then, means travelers are willing to spend 30% more time than they would driving
their own car. A 0% premium means they are not willing to spend any additional time.

Source: McKinsey analysis









Finance new car

Best use of
multimodal options2

Buy used car ($15,000)

Best use of multimodal
options, including
autonomous vehicles

10,000 miles
30% time premium3

10,000 miles
0% time premium

5,000 miles
30% time premium

5,000 miles
0% time premium

–50 –29 –72 –61

Annual cost of mobility in San Francisco Bay area,
$ thousand per year

Multimodal cost,
% difference
with new car

–36 –10 –62 –46Multimodal cost,
% difference
compared with
used car

With autonomous1 vehicles on the road, mobility could become as
cheap and convenient as individual car ownership.

the widespread use of the driverless car is not
imminent. In aviation, for example, many planes
could theoretically be operated without a pilot.
The universal preference, however, has been to

require pilots, so that human judgment is available.
For similar reasons, and also because of legal
issues related to liability, this might be the case with
autonomous cars.

Page 12


New mobility services
A wide range of mobility services offers new kinds of

transportation alternatives (Exhibit 2), and money

is pouring into the sector (Exhibit 3). In 2014, global

venture-capital investments into mobility services

amounted to more than $5 billion, up from less

than $10 million in 2009. Besides Uber, China’s

Didi Dache, which has more than 100 million users

in 300 cities, raised more than $800 million and

Ola, India’s biggest online cab service, has raised

$677 million so far.

These new mobility services and product concepts

could profoundly change both public and private

transit (see sidebar “San Francisco and the

economics of travel”). Of course, not all of these

start-ups will survive, but the technology, business

models, and user experiences will likely improve.

We are confident of this because consumers have

proved remarkably receptive to using many of the

new mobility models. For example:

E-hailing: Uber is already operating in more than
300 cities and 58 countries, and in some of them, it

is already larger than the traditional taxi industry.

In China alone, an estimated 170 million people use

some form of e-hailing services.15

Car sharing: These services are growing 35 percent
a year in the United States, reaching 1.6 million

members in 2014. In Germany, car-sharing

membership has grown 50 percent a year since

2010, reaching 1 million people in 2014.

Shared e-hailing: Lyft’s CEO, Logan Green, recently
announced that the company’s shared e-hailing

service, Lyft Line, already accounts for most of its

San Francisco business.16 Both Uber and Lyft plan

to roll out shared services to new cities in 2015.

On-demand private shuttles: Using smaller, more
flexible shuttles is not a new idea; New York City’s

“dollar vans” and the minibuses common in the

developing world have been around for decades.

But the new crop of connected, on-demand shuttle

services is finding a loyal customer base and an

operating model that is allowing the services to

expand to new routes and new cities.

Private buses: Some private employers, such
as Google, Apple, and Genentech, are building

transportation networks for their employees. This

is happening in the developing world too. Tata

Consultancy Services has more than 225 buses to

help its employees cope with the notorious traffic

jams in Chennai.17

Software companies are also getting involved

in improving transport. Apps like Moovit allow

consumers to plan their journeys by stringing

several trips together in the most efficient way.

Waze reroutes travelers away from heavy traffic.

Urban Engines uses real-time consumer travel data

to help public-transit agencies visualize, analyze,

and improve public-transit network performance.

Firms like TransLoc and RideCell are helping

agencies to optimize and automate their operations

by developing technology platforms to help them

integrate flexible, on-demand services that can

supplement their traditional high-occupancy,

fixed-route fleets.

Page 22


required for fully autonomous driving—meaning

drivers don’t need to touch the wheel—are both

lower than many people believe and declining

rapidly. Innovation in connectivity, autonomy,

lightweight materials, EVs, and AVs will continue

to accelerate, and the attitudes of citizens and cities

around the world are evolving. Put it all together,

and we can’t help but be excited about the bright

future ahead for urban mobility.

1 Shannon Bouton et al., How to make a city great, McKinsey &
Company, September 2013,

2 Joyce Dargay, Dermot Gately, and Martin Sommer, “Vehicle
ownership and income growth, worldwide: 1960–2030,”
Energy Journal, Volume 28, Number 4, 2007, pp. 143–70.

3 “7 million premature deaths annually linked to air pollution,”
World Health Organization, March 25, 2014,

4 “Waze forms municipal partnership with Rio de Janeiro’s
Centro de Operações,” Waze video release,

5 “Autonomous driving: The future of the automobile,” Daimler,

6 Mike Murphy, “Google could start shuttling people around in
its self-driving cars this year,” Quartz, March 4, 2015,

7 “Uber, Carnegie Mellon announce strategic partnership and
creation of advanced technologies center in Pittsburgh,”
Carnegie Mellon, February 2, 2015,

8 “TransMilenio in Bogotá: Case-study of PPP in BRT,” Global
Mass Transit, August 1, 2011,

9 Gordon’s View, “The growing squeeze on autos in China,” blog
entry by Gordon Orr, January 20, 2015,

10 Yonah Freemark, “Openings and construction starts
planned for 2014,” The Transport Politic, January 5, 2014,

11 Joseph Rose, “Has the Portland area’s growing light-rail
system been worth the investment? (poll),” Oregonian, May 6,

12 Adam Greenfield, “Helsinki’s ambitious plan to make car
ownership pointless in 10 years,” Guardian, July 10, 2014,

13 Cody Kraatz, “VTA opens Innovation Center to incubate and
test new ideas,” Valley Transportation Authority, February 20,

14 “S15015 On demand and subscription solution,” Valley
Transportation Authority, February 9, 2015,

15 Scott Cendrowski, “China has a new taxi app monopolist,”
Fortune, February 16, 2015,

16 Daniel Terdiman, “Lyft CEO says Lyft Line now accounts for
majority of rides in San Francisco,” VentureBeat, March 16,

17 “A planet of suburbs,” Economist, March 1, 2014,

18 Natalie Neff, “Mercedes-Benz’s S-Class redefines luxury,”
Autoweek, September 12, 2013,; China Real
Time, “Rush hour: Limits fuel huge car sales surge in Tianjin,”
blog entry by Rose Yu, December 17, 2013,

19 Michael Sivak, Has motorization in the U.S. peaked?,
University of Michigan Transportation Institute, January 2014,

20 Emma Hutchings, “China is planning to build a car-free city,”
October 29, 2012, PSFK Labs,; “Great city master
plan Chengdu,” Adrian Smith+Gordon Gill Architecture, 2012,

21 Bouton et al., How to make a city great.

22 Kraftfahrt-Bundesamt,; World Market Monitor, IHS,

The authors wish to thank Stefan Heck, Hans-Werner
Kaas, Detlev Mohr, Vadim Pokotilo, Yakov Sergienko,
Martin Stuchtey, and Jonathan Woetzel for their
contributions to this article.

Shannon Bouton is the global manager of the

McKinsey Center for Business and Environment and

is based in McKinsey’s Detroit office. Stefan Knupfer

is a director in the Stamford office, Ivan Mihov is an

alumnus of the Johannesburg and San Francisco

offices, and Steven Swartz is a principal in the

Southern California office.

Page 23

September 2015
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