How will intelligent transport transform future cities?

The development of intelligent transport is often divided into three phases of innovation: electric cars, self-driving cars and car-sharing. The first phase of innovation has already begun with almost all major car manufacturers bringing their own electric cars to the market. There will be a significant increase in the number of electric cars in service as purchase prices go down, making electric cars more affordable for average consumers while the cars’ properties, such as operating ranges, improve and charging times shorten. In the future, electric cars will replace conventional internal combustion engine vehicles – the only question is when.

In the near future, the need for car transport will not decline by any measures. Helsinki Region Transport (HSL) predicts that car density in Helsinki will increase by a third by 2035. The number of parking spaces in town planning must be proportional to the number of vehicles in service in such a manner that the supply of spaces is double in comparison to the demand. The centre of Helsinki has now approximately 13,000 parking spaces (on-street parking, parking areas and parking facilities) and the whole car fleet of Helsinki needs over 5.5 km² of parking space. Development globally has already gone slightly further.

Even if the number of cars would remain at the current level, people’s need for mobility is increasing. One solution to the problem is increasing the utilisation rate of the cars in service. The current estimate is that privately-owned cars are unused over 95% of the time. If the utilisation rate of a vehicle is only around 5%, theoretically, the car could be used by up to 20 people without a reduction in the owner’s usage. This is obviously only a theoretical estimate because people’s need for transport does not spread evenly, but even a small increase in the utilisation rate would reduce the total amount of traffic.

The change is about more than just practicality and transformation of public transport. A needs assessment based on just the utilisation rate does not give a reliable picture of the need or endowment effects. Even if the car is still seen as a part of wealth status, it is increasingly becoming a commodity.  It is used to satisfy a need – getting to work, a supermarket, hobbies or holidays. The smaller the utilisation rate of a car is and the more occasional the usage, the further from home the vehicle can be stored.

One future approach is to renounce private car ownership and transform cars into a part of public transport services. It is projected that in the long run transport will experience a transformation into a comprehensive service (Mobility as a Service). A self-driving car could pick you up from your doorstep and carry you to your destination like a taxi, albeit at a significantly cheaper cost. As the safety and reliability of self-driving cars improves, the supply of transport services utilising the technology will increase. Similarly to communication services, transport is intended to become a service package. Vehicles can be designed so that the manufacturing costs are lower (for example, two-seated cars) because the driver functions can be removed. However, so far the technology is not on a practical level nor safe to use.

Instead of self-driving cars, the next step will be sharing and renting cars. However, these “carpool services” are somewhat challenging. For instance, the utilisation rate of Finnish summer cottages is even lower than that of cars and their upkeep is often very expensive, but still, only a few cottage owners are willing to rent out their summer house to outsiders. So why would they do that with their car? On the other hand, the phenomenon of property sharing is exercised with Airbnb, a service where people rent out their homes for short-term accommodation. In the United States, car rentals of private users have already gained more popularity thanks to Turo and other service providers.[1] The Massachusetts Institute of Technology (2017) estimates that two million people in Los Angeles alone will renounce car ownership in the next 15 years. The change does not arise just from technological development but also because consumer habits are changing.

It is worth keeping in mind that the biggest single factor to promote the success of new technologies is money, and only after that comes practicality. If you could travel by a self-driving car, why would you take a train? And how much more should the car cost in order for you to choose the less practical option? Also growing concern over climate change encourages government action to promote cleaner transport. The new report of the Intergovernmental Panel on Climate Change (IPCC)[2] encourages governments to take more active steps to reduce CO2 emissions. New intelligent transport solutions play a key role in these efforts.

Change in intelligent transport would also have an influence on cities’ economies as public parking is a significant source of income to them. In Helsinki, parking payments bring the city approximately 11 million euros a year, that is, around 3,143 euros for each parking space. When residential and business parking is included, the income exceeds 15 million euros a year. Also individual housing associations can gain significant profits by renting out their parking spaces, especially in city centres.

Growth of intelligent transport will lead to reduction of parking spaces and therefore also changes in both town and building planning. In town planning, parking spaces can be replaced with green areas or wider walkways but the reuse of residential building garages can turn out to be more problematic.

[1] https://turo.com/

[2] IPCC: Global Warming of 1.5 °C (2018). http://www.ipcc.ch/report/sr15/

Jari Tuomala
Partner

Mikko Kaunisvaara
Associate Trainee

Author
Jari Tuomala
Partner
HPP Attorneys

Mr. Tuomala specialises in property and environmental law. His areas of expertise include, in particular, property reorganisations and development projects, construction, environmental liabilities and permit procedures. He is in charge of the firm’s property group and is also part of the environmental group. Jari assists property investors, developers and property users from different sectors. He also assists companies and industrial operators with regard to administrative and civil proceedings related to environmental liability and permit issues.

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