Monet Technologies, a new Mobility as a Service (MaaS) joint venture launched by Toyota Motor and SoftBank, promises to revolutionize the “driving” experience in Japan. Katayama Osamu examines the tie-up.
Why have Toyota Motor Corporation and SoftBank formed a partnership? The former is one of Japan’s leading hardware companies and the latter one of its leading software companies, so essentially the firms operate in two different worlds. But on October 4, 2018, these two companies announced cooperation in the field of “mobility services,” a business sector focused on automated driving technology, and the setting up of a new company, MONET Technologies Corporation. The company has capital of two billion yen — 50.25% from SoftBank and 49.75% from Toyota — and there are plans to increase this capital to ten billion yen.
The catalyst for this cooperation was the e-Palette Concept, a new generation EV that will leverage Toyota’s proprietary Mobility Services Platform. It was announced by Toyota at the January 2018 Consumer Electronics Show (CES) in Las Vegas and has a range of uses, including ride-sharing, delivery and retail.
These days, one shortcut to success for businesses is to build a “platform.” This is exactly how Google, Amazon, Facebook and other huge IT companies produce their profits. Toyota plans to survive by transitioning from a business that makes and sells cars to a platform company like Google or Amazon.
Hidden therefore behind the tie-up with SoftBank is Toyota’s ambition to become a platform company.
Providing Mobility Via a Range of Services
“I have decided to ‘redesign’ Toyota from a car-making company into a mobility company. A mobility company is a company that provides services related to movement for people around the world.”
So said Toyota president, Toyoda Akio, at the company’s year-end financial results press conference in May 2018. Toyoda set out his vision for building a new mobility services platform and expressed his powerful determination to personally transform Toyota.
Underpinning this attempt by one of Japan’s leading automobile manufacturers to recreate itself as a mobility company is the mobility revolution, a continuing trend that involves all kinds of transportation, including the world’s railway, bus, and taxi operators. In other words, this is the emergence of the MaaS (Mobility as a Service) market.
With MaaS, means of transport are not provided simply in the form of things, but transport itself is provided as a range of services. This system brings together a wide range of transport methods, such as trains, buses and other forms of public transport, as well as taxis, car sharing and ride sharing. Through mobile applications it offers combined, one-stop, efficient transport that includes route planning, reservations, ticket sales and payment.
MaaS was introduced to the Finnish capital of Helsinki in June 2016, to Birmingham in the UK in April 2018, and there are further plans to implement the system in large cities around the world.
MaaS has the potential to completely change the appearance of mobility systems, and this trend is sure to accelerate as time progresses. This is because the technology on which MaaS is based, ICT (Information and Communications Technology), is making advances on a daily basis.
As well as cutting-edge technology such as AI, IoT (the Internet of Things) and big data, there are wireless networks capable of sending enormous amounts of data back and forth, and plans for a 5G network to be commercialized in 2020.
The Emergence of New CASE Technologies
“The automotive industry is facing sweeping once-in-a-century changes. These changes have been caused by the advent of innovative new technologies called ‘CASE’ for short.”
This term has often been on the lips of Toyoda Akio in recent years.
CASE stands for “connected,” “autonomous,” “shared” and “electric.” As we approach an age in which everything is connected to the Internet, the concept of the car is starting to change dramatically.
With cars connected to the Net, there will be more information available. What’s more, once automated driving actually happens there will be a greater need for sharing cars than owning them. Make no mistake, this will be a massive car industry revolution that will change manufacturers’ competitors and even the rules of competition. In fact, it won’t only affect the automobile industry; this developing technology has the power to spark a restructuring of industry as a whole.
Toyoda revealed the sense of crisis he feels with the following statement: “A crucial battle has begun ― not one about winning or losing, but one about surviving or dying.”
e-Palette— A Mobility Service Platform
Until recently, it would have been hard to imagine a company based on making things like Toyota going into partnership with an IT company like SoftBank. If automobile makers gave an inch during incautious tie ups with IT companies, they might find their partners took a mile. That is to say, automobile makers were wary of cooperation with IT companies because they suspected that the latter would take the lead in the mobility revolution. Despite this, Toyota took the plunge by partnering with SoftBank. But, to what end?
In the past, the car market has developed as makers compete over numbers of new cars sold. Yet, now the focus of competition has changed. It has shifted to who can acquire the most data, then who can make use of that data and what value-added services they can develop.
And as the focus of competition changes, existing car makers cannot compete the way they once did. Frankly speaking, a company such as Toyota, which is expert at what they call tenouchi-ka (“keeping technology in our grasp”), probably had little choice but to make the jump into partnership with an IT company when faced with what Toyoda has called “a once-in-a-century revolution.”
Yet, even as it aims to become a mobility company, Toyota has been absolutely explicit that it will not pass the lead over to an IT company. The physical demonstration of this and of Toyoda’s resolution is probably the e-Palette Concept.
The e-Palette is a mobility service platform for multiple uses, such as transport, delivery and retail. It is conceived as a low-floor, box-shaped and barrier-free design that comes in three sizes: from 4 meters long to 7 meters long. Since it is intended as an autonomous EV from the first, there is no need for a driver’s seat. Its flexible and roomy interior can be fitted out for use by different service partners, such as in ride-sharing, by hotels or as a retail shop. The body is covered by an LCD panel and the display can be changed to match the car’s use.
Various uses for this e-Palette are anticipated by the mid-2020s, such as: a mobile convenience store to deliver goods to customers; a home food delivery service that cooks on the go; a mobile office allowing work to be done inside the vehicle; and a hospital shuttle service that enables examinations while the vehicle is moving. Also, in regional areas with little available transportation, it could take people to and from shopping and day care for the elderly. And it could also serve as a taxi.
Most automobile makers have been occupied with short-term goals such as, “How many years until level three or level four automated driving is achieved?” or “How many EV units will be sold by what year?” They have not been able to set out a vision of a future in which mobility employs CASE. In that sense, Toyota has clearly laid out its vision to enrich human lives as a mobility company. It was exactly this vision that impressed SoftBank, which itself has a vision to make people happy through the information revolution.
Creating a Rich Mobility Society with Car Makers in the Lead
In the e-Palette, Toyota points to a platform for the creation of a rich mobility society with automobile makers leading the way. The car is conceived as making ample use of all CASE elements (“connected,” “autonomous,” “shared,” and “electric”) and which can be used for various services. One might describe this platform concept as concrete, ambitious and epoch-making. Toyota’s hidden motive in this is to seize the lead in the mobility revolution on the strength of the distinct concept called e-Palette.
The SoftBank Group has already sought to move into the mobility industry with investments in major international automobile dispatch companies, including Grab in south-east Asia, Ola in India and DiDi in China. In 2016, it set up SB Drive, launching a general platform for autonomous buses, while it also has results from real world tests. Additionally, SoftBank has accumulated resources in AI (a technology that will be essential to the realization of automated driving) through the purchase of the UK company Arm Holdings, which has expertise in designing the data transmission semiconductors needed for automated driving.
One might say that it is a natural development for the SoftBank Group to express interest in Toyota’s e-Palette concept.
As per Toyoda’s apt comment that, “When I thought I’d give automated driving a go, I opened Uber and other company’s car doors and each time found SoftBank’s Son sitting there as a major shareholder,” the investment fund run by Son is listed among the major shareholders of automated driving and ride-sharing start-ups that Toyota has invested in. One might say that for Toyota too, which was aiming to become a dominant force in mobility services, the partnership with SoftBank was a natural development.
Toyota was enthusiastic about the partnership.
In fact, it was Toyota that was the most enthusiastic. Toyota’s Executive Vice President Tomoyama Shigeki explained as follows:
“About six months ago, following a suggestion from Toyota, a project team of young employees from both companies began research. As a result of this, they were able to share goals to aim for and concrete details of operations, eventually leading to the setting up of the present company. At some point, we’d like to broaden the team and look towards global expansion.”
Toyota monitors cars as they are used and amasses huge amounts of data. SoftBank, meanwhile, excels at technology that collects data from smartphones and sensors to analyze and use. By combining data and technology from both companies, new mobility services can be created.
“I believe that through this partnership of Toyota, a world leader in mobility, and SoftBank, with its focus on AI, more advanced mobility can be created,” said SoftBank Chairman Son Masayoshi at a joint press conference.
Right now, Toyota plans to have the e-Palette running at the 2020 Tokyo Olympics and Paralympics. Around the same time, test services will also begin in North America and other regions.
MaaS has the power to fundamentally alter economies and societies. Because of that, there is a long list of issues that need to be investigated, such as: how the companies themselves should partner; in what way local authorities should cooperate; and how necessary laws and regulations should be put in place. In that sense, there is no doubt that the creation of this massive and unusual union representing the world of industry will be of huge benefit as it overcomes these issues and seeks to establish Japanese MaaS.
When it comes to mobility services that use MaaS, it is said that Japan is trailing Europe and the United States. Could Japan catch up via a Japanese MaaS that uses the e-Palette? Toyota and SoftBank have been set a huge challenge.
KATAYAMA Osamu is an economics journalist and representative of K-Office. He has published extensively, including Sumato kakumei de seicho suru Nihon keizai (Growing the Japanese Economy with the Smart Revolution), and Naze Za Puremiamu Morutsu wa uretsuzukeru noka? (Why does The Premium Malt’s beer sell so well?). Recent publications include Samsun kuraishisu (The Samsung Crisis).