Access over ownership
- towards a sustainable future
Technology has changed the way we consume. For consumption that has a high environmental impact, such as driving, new behavior patterns can bring huge environmental benefits.
The last decade's technological developments have changed our behavior in many areas, not least when it comes to consumption.
Society's digitalization has paved the way for subscription and sharing services that simplify life in many ways and create new opportunities to transition towards a more circular economy.
"Digitalization has allowed us to consume in a whole new way. I would say that digitalization is one of the cornerstones of making the circular economy work," says Elin Bergman, COO of Cradlenet. This network helps companies and organizations transition to a circular economy with support from sources including the Research Institute of Sweden, RISE.
"We have been taught that we have to own things to live a happy life. But increasingly sophisticated sharing services make the transition easier because you don't have to own what you use. When you talk to the younger generation, the difference in attitude is huge," she says.
Research on the positive environmental impacts of sharing services separates the sharing economy between individuals, such as carpools, and the access economy where commercial actors provide the service. The former category has effects that counteract or even cancel out the positive environmental impact because it increases rather than decreased consumption. An example is a private individual who buys a cheap car, which is often older and environmentally inferior, to carpool with many friends. On the other hand, the access economy leads to more sustainable consumption and more efficient use of resources.
Digital media services such as Spotify and Netflix have shaped a consumption model where we have become accustomed to accessing digital content without owning it. The next step is to transfer the behavior to physical goods, such as the car-sharing service M - Volvo Car Mobility. Buying access to an object instead of buying the object itself is not only cheaper for the consumer. It reduces the use of manufacturing resources, reduces the amount of waste, and increases recycling opportunities. For the market, the access economy is a potential cash cow: What items are consumers willing to pay to access that are too expensive or cumbersome to own?
In public discourse, the problematic aspects of ownership are increasingly highlighted alongside the positive ones. Ownership isn't only associated with wealth and status; it's also associated with costs, heavy responsibility, and, perhaps above all, excessive consumption. We know that we can't continue consuming in the same way if global warming isn't to get out of hand. Despite this, we are finding it extremely difficult to switch to more sustainable consumption patterns. Nowhere is this phenomenon more noticeable than with our relationship to cars.
Buying a new car is not a lucrative financial investment. Apart from the purchase cost, which starts from a few hundred Euros a month upwards, a typical family car costs around € 500 per month in fuel, taxes, insurance, and maintenance. To this, add the steep depreciation of new cars and the cost of parking. Even the latter can be considerable since our cars sit idle for about 95% of the time on average. So what are we paying for exactly? Most car buyer surveys give similar answers: For comfort and dependability, for freedom and driving pleasure, and not least for the feeling. But does ownership make a difference to that?
A global study of the car market published in February by management consultancy Arthur B Little suggests that something has happened in recent years.
Compared to a previous study from 2018, the forecast for new car sales until 2030 has been adjusted downwards to an increase of two percent. This was a slight increase compared to sales when the report was written, but a worse performance than forecasted in 2018. The new report also gives a much more complex picture of attitudes toward cars.
The changes are, of course, caused mainly by the COVID-19 pandemic, the effects of which reinforce some existing trends and weaken others. Overall, almost half of the respondents worldwide think that it has become more important to have a car today than before the pandemic because of the fear of getting infected in, e.g., mass transit. At the same time, uncertainties about the pandemic's impact on the economy are reducing the demand for new cars. Of all the survey respondents who had planned to buy a new car in 2020, 32% have postponed the decision, 14% have opted for smaller and cheaper cars, and 5% have canceled their plans to buy a new car altogether.
The authors of the report are reluctant to make any firm predictions about the pandemic's long-term impact on car use, but raise some interesting questions: Will the increase in people working from home become permanent and reduce the need to commute to work? Perhaps. Will we be willing to give up the convenience and flexibility that comes with owning a car? Perhaps. If so, will this lead to more people choosing access to a car over ownership? Again, the report authors' answer is perhaps, especially considering many respondents are concerned about the negative environmental aspects of owning a car.
"The COVID-19 pandemic has made people value access to a car more than they did before," says Steinar Danielsen, Sustainability Lead at M - Volvo Car Mobility, Volvo Car's wholly-owned but independent car-sharing service currently growing across Sweden.
"The use of various services offering micro-mobility is increasing, but personal space has become a more important aspect with the pandemic. In parallel, many people don't want to own a car because of the environmental impact. Cost is also a factor, cars are expensive, and we often don't use them that much. But when we do use them, they are crucial," he says.
So, how justified are the concerns about the environmental impact of cars? M - Volvo Car Mobility asked Cap Gemini Invent to study the M's service's effect on Stockholm's environment throughout the first year. The results were surprising.
When Cap Gemini Invent asked active M - Volvo Car Mobility customers, they found that 26% of the customers had sold their cars in favor of using M.
51% of customers also said they had decided not to buy a car of their own. Customers also have changed their behavior when using M, choosing to walk, cycle or use public transit for shorter trips instead of taking the car. Overall, the study shows that every car from M replaces eight privately owned vehicles. This number will likely go up as the service develops. M - Volvo Car Mobility has contributed to 4,515 fewer cars in Stockholm in just the first year of operation.
The report also shows that choosing other transport modes for certain trips has reduced carbon dioxide emissions from exhaust fumes of up to 8,200 metric tons. Plus a reduction in fuel consumption of 3.2 million liters in one year in Stockholm alone.
"The main reason there is climate change in the first place is that we have been increasing our consumption for a hundred years," says Steinar Danielsen.
"We have been taught that it's good to consume. But since the middle of the last century, our need to own things privately has become problematic. Look at the apartment buildings built a few years back; they had laundry rooms in the basement. Now everyone has their washing machine in their apartment. It takes more space, and it increases consumption, but it's more convenient, and unfortunately, convenience eats sustainability for breakfast. For us, this means focusing on delivering a service that works as well or better than owning your car.
Emissions are not the only problems caused by car use. The amount of space that cars take up in our cities is a huge problem for society."
Urbanization is a strong global trend, and it's growing. For more than a decade, more than half the world's population has been living in cities. Even in sparsely populated Sweden, around 88% of people live in cities. But cities aren't just built for people. Some argue that they weren't built for people at all in the first place; they were built for cars.
In October 2020, the report Framtiden för parkering och Nya bostäder [The Future of Parking and New Housing], commissioned by organizations including the Swedish Society for Nature Conservation (SSNC) and a real estate industry association Fastighetsägarna, was published. The report suggests that there are about 50 square meters of parking space for every Swede. According to Statistics Sweden (SCB), the average living space per person is 48 square meters. In other words, we have given more space to cars than to ourselves. This adaptation to cars also effectively hinders the development potential of cities. According to the report, the requirement for parking spots in residential developments increases construction costs by around 15%, hampering the new developments that growing cities need.
A Nudge in the Right Direction
The design of sharing services plays a significant role in the impact they have on their surroundings. Airbnb has transformed the travel and hotel industry, giving travelers a much wider choice of accommodation.
But in cities that are popular tourist destinations, the service has meant that more and more real estate owners have moved from selling or renting apartments on long-term contracts to operating short-term rentals. For some city dwellers, this has led to growing difficulties in finding housing, which affects recruitment opportunities for businesses, tax revenues, and so on. The fleets of electric scooters established in many major cities make it easier for users to quickly move around the urban environment. Simultaneously, many of them end up cluttering our streets or, even worse, our canals or are left to rust in wooded areas. How does this affect the environmental benefits of reduced car traffic?
In the case of M - Volvo Car Mobility, the service has been designed to make life easier for the user and positively impact the environment at the same time. Instead of having a system similar to many other car sharing services where the car is picked up and dropped off anywhere within a specified area, M - Volvo Car Mobility is based around a system of fixed stations. Users do not book a specific car. Instead, an AI-powered system matches each reservation with an available car half an hour before pick-up. This allows M to be much more efficient, providing a higher level of dependability to their customers. The service is designed for medium to long-distance travel. The minimum reservation time is one hour, which has resulted in many users choosing alternatives such as mass transit or cycling for shorter journeys. In other words, every user plays their part in society's sustainable transformation, whether they are aware of it or not.
"It's important to discuss cause and effect. A service might work great for the customer but have a bad effect on the urban landscape. Uber and Lyft generate 70% more emissions than the trips they replace because the gig economy encourages drivers to keep driving in circles while waiting for customers. In Manhattan, which already suffered from gridlocked traffic, the empty cars driving around have caused the average speed of all car transport to drop even further," says Steinar Danielsen.
"Sure, companies that develop sharing services can have very rapid growth. But if people aren't aware of the negative effects, there will be penalties in the long run, such as regulations. Cars have been a high priority as cities have developed. We now understand that this has created problems. At M - Volvo Car Mobility, we recognize that we can't turn a blind eye to the problems and must be part of the solution."
The Consumers of the Future
Tell me what you buy, and I'll tell you who you are. Consumption has become a way for us to construct a narrative about ourselves.
The basic rule of thumb has been that high status associated with a product somehow rubs off on the person buying it. This is true for designer clothes, as well as for trips to exotic destinations and exclusive cars. But just as you can build your personal brand around owning the latest luxury car, you can do the same thing by using the latest digital service.
No consumer group masters this better than the generation whose consumption will build our future prosperity, the notoriously unpredictable Millennial generation, shaped by the recession of the 2000s and raised with unquestioned access to the internet's possibilities. Why accumulate expensive things, take up space and require care when all the experiences you want are available at the touch of a phone? For many young urbanites, non-ownership has become a lifestyle choice. Others, who long to be free of things, try to find strategies to determine what is still worth owning. To borrow a current phrase from interior design guru Marie Kondo: Does it spark joy?
"Young people don't want to own things to the same extent as older people do, partly because they don't see the point of it, but also because, unfortunately, many can't afford the investment. Lots of customers turn to us to access the possibilities of car ownership while avoiding the responsibility that comes with it," says Steinar Danielsen.
"We usually talk about fluid expectations. Younger consumers' expectations are not about comparing us to other car dealers; they're about comparing us to other digital services. Being as good or even better than owning a car isn't enough. We have to be as good as Spotify or Netflix."
From the market's perspective, the access economy offers huge opportunities in the long run. Not just because investments continue to yield returns over time, and the positive environmental impact of use produces various kinds of positive side-effects. An important aspect is also the question of how companies use finite resources. A circular business model is the Holy Grail for many businesses.
"For our owners Volvo Cars, we are an important puzzle piece on the road to a circular economy. We see a great opportunity to reduce our environmental impact by recycling the car's parts at the end of its life cycle. How? By not selling cars but continuing to own them and recycling the resources. It might be that in the future, it's more profitable for manufacturers to lease out their products than it is to sell them."
According to Steinar Danielsen, cars are the horses of today. A hundred years ago, the streets were populated by pedestrians, cyclists, and horses pulling carts and carrying riders. But ask a resident of Kungsholmen in Stockholm or Linnéstaden in Gothenburg today if they would like to ride a horse through town and see what happens. The same thing will eventually happen with cars. They won't disappear, but not everyone will own a car, and we won't use them in the same way.
"Another aspect linked to the future is what you are designing for. Look at what has happened in the older parts of cities. Housing associations have seen the huge value of loft spaces, so they are being converted at the expense of storage that is no longer needed. In newly developed areas such as Hammarby Sjöstad in Stockholm, the City of Stockholm wanted fewer on-street parking spots, forcing property developers to build parking garages under residential buildings instead. But they'll soon be more or less empty."
There's a lot to suggest that we're heading toward a future where we don't need to own things to be rich in experiences. Digital-based services can be designed so that users actively contribute to a societal transformation that can make a difference in slowing climate change without thinking about it.
So, what should we do with all the empty parking garages in cities? Turn them into padel courts, of course, what else?