Sampo’s blog: How to Kickstart the European MaaS Market

By MaaS Global • September 1, 2022

With energy prices breaking records and climate catastrophe closing in, one would think that any promising initiative to reduce hardware on the roads and the CO2 emissions that come with it, would get funded. Especially when capital, both public and private, is in abundance. The European Union has reserved over two trillion euros for rebuilding after the Covid-19 pandemic. Private investment funds, even if currently in a more cautious mode than when stock markets were hitting new records, are also loaded.

Traffic has proven to be the most challenging sector when it comes to cutting down CO2 emissions. Electric cars hold a promise but are only a part of the solution. The answer is not just to change the power source but to reduce power usage. This means moving more efficiently and flexibly than in a private car. MaaS, not owning a car and choosing the smartest way to move for each particular moment and need, holds an enormous promise to change things and eventually alter how we view mobility. But it is moving along frustratingly slowly. Why are cities, countries, and the EU refusing this opportunity?

We are in a bureaucratic gridlock of our own making. When cities want something new, they publish a request for tender, receive bids, choose a winner, and wait for things to happen. This approach usually works when you build something that has existed before, like a road or a bridge. But when creating a new reality that requires behavioral change, a tender does not bring together the public and the private interests.

Instead of running local pilots that add up to little or trying to build nationwide platforms that choke on complexity, the EU should focus on kickstarting markets. MaaS could be pushed beyond a tipping point by replacing the unambitious pilots on the supply side with serious pilots on the demand side.

One way to do this would be to hand out vouchers, lots of them. EU could, for example, pull 100 million euros out of its over 800 billion NextGenerationEU recovery plan, pick three cities and make a 50/50 deal with local authorities in each one. EU would provide 33 million to each area, and another 33 million would come from the town’s coffers. Then the money would be handed out to local folks as multimodal vouchers to get around.

The catch is the monitoring of emissions. The vouchers would only be valid for choices that reduce the carbon footprint per capita and the number of cars on the roads. Operators with an ecological modal split (what modes of transport are used and in what proportion) and falling CO2 emissions would be allowed to participate. Others would not. Another requirement for the cities would be to ensure that plenty of private choices are available. You need several relevant competing actors to kickstart a market. Subsidizing a local transport authority with vouchers would not make any sense. Coupons to use public transport may be a good social policy in some cases, but it has nothing to do with developing a market.

In this model, the consumers would choose the winners, not the municipality. They’d give their money and vouchers to those actors that offer the most convenient service or combination of services, while the authorities would see that they meet the environmental goals. As a result, a critical mass of demand for MaaS would be reached on a whim (yes, pun intended), and the city would invite new investments and innovators like crazy.

When the governments have wanted to get the wind power or electric car markets going, instead of building turbines or cars, the public sector has chosen to hand out subsidies that have quickly taken these markets to the next level. The same would be the right course of action to boost MaaS. Right now, many countries are subsidizing company cars; instead, they should support reducing them.

It is high time we took the energy and climate crises seriously also in transport.  Europe should take decisive steps to become the number one market for MaaS. If it decides not to do this, the European emissions will keep growing until one day, MaaS solutions developed in Asia, the USA, Latin America, or Africa take over. This is a pattern we’ve seen so many times in many industries, for example, in media, computers, e-commerce, and micromobility. Slow, regulation-focused, indecisive culture hands the market to others on a silver platter.

This doesn’t need to be so. Two European success stories we should learn from come to mind. Europe took decisive steps to build Airbus to change the aviation market and succeeded. Likewise, when the Nordic countries wanted to develop the telecommunications industry quickly, they took decisive steps to let the markets do the work and succeeded. The same spirit and visionary action are needed now – more than ever.