1. Comparing the data/graph provided in Source A and B, what are your observations about the introduction of autonomous cars into the market? Explain your observations. (5 marks)2. It is said that the autonomous vehicles would change the market. With reference to your answer in Question 1, how does the introduction of autonomous cars affect the future transport market? (5 marks)

A. Case Study - Urban Mobility at a Tipping Point: How Autonomous Vehicles change the industry? Source A: Adapted from a report published by Mckinsey & Company Exhibit B Not owning a car is already convenient and cost-effective under certain circumstances. Annual cost of mobility in San Francisco Bay area, $ thousand per year 13,DOO 12,00 11,000 10,000 inance 9,000 new car 8,000 (530,000 7,000 Bast use of 6,000 mutimodal options 5,000 Buy used car 4,000 $15,000 10,000 miles 10,000 miles 5,000 miles 5,000 miles 30% time premium 0% time premium 30%% time premium 0% time premium Multimodal cost, 38 -24 % difference compared with new car Multimodal cost, 15 75 -31 ference ompared with used car "Multimodal refers to all the different methods people can use to get from point A to point B, apart from using a privately owned ear "The time premium is calculated an total annual travel time using multimodal options compared with time spent traveling in a privately owned car. A got time premium, then, means travelers are willing to spend go more time than they would driving their own ear. A o'% premium mean mium means they are not willing to spend any additional time. Source: MeKimary analysis Statement Al: "For travellers who cover the San Francisco Bay Area regional average of about $10,000 miles a year by car, switching to the best available combination of transportation, with no sacrifice of time (i.e. 0% time premium), would cost them about 38 percent more than financing a new car and 75 percent more than the cost of running a used car." Source B: Adapted from a report published by Mckinsey & Company Exhibit c With autonomous' vehicles on the road, mobility could become as cheap and convenient as individual car ownership. Annual cost of mobility in San Francisco Bay area, 6 thousand per year 14,000 12,000 10 000 Finance new car ($30,000 8,000 Best use of 8,000 multi modal options Buy used car ($15,000) 4,000 Best use of multimodal 2,000 options, including autonomous vehicles 10,000 miles 10,000 miles 5,000 miles 5,000 miles 30% time premium' 0% time premium 30% time premium 0% time premium Multimodal cost, -50 -29 -72 -61 % difference compared with new car Multimodal cost, -36 -10 -82 -46 9% difference compared with used car "We assumed that autonomous vehicles would lower the price of mobility to co nsumers by half relative to today's c-hailing rate because there is no driver to pay. Multimodal refers to all the different methods people can use to get from point A to point B. apart from using a privately owned car. The 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 their own car. A ox prem e not willing to spend any additional time. send 30' more time than they would dA. Case Study - Urban Mobility at a Tipping Point: How Autonomous Vehicles change the industry? Source A: Adapted from a report published by Mckinsey & Company Exhibit B Not owning a car is already convenient and cost-effective under certain circumstances. Annual cost of mobility in San Francisco Bay area, $ thousand per year 13,000 12,000 11,000 10,000 Finance 9,000 new car ($30,000) 8,000 7,000 Best use of 6,000 multimodal options! 5,000 Buy used car 4,000 ($15,000) 0 10,000 miles 10,000 miles 5,000 miles 5,000 miles 30% time premium 0% time premium 30% time premium 0% time premium Multimodal cost, -y 38 -49 -24 % difference compared with new car Multimodal cost, 15 75 -31 4 % difference compared with used car 1Multimodal refers to all the different methods people can use to get from point A to point B, apart from using a privately owned car. The 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 Statement A1: "For travellers who cover the San Francisco Bay Area regional average of about $10,000 miles a year by car, switching to the best available combination of transportation, with no sacrifice of time (i.e. 0% time premium), would cost them about 38 percent more than financing a new car and 75 percent more than the cost of running a used car."Source B: Adapted from a report published by Mckinsey & Company Exhibit C With autonomous' vehicles on the road, mobility could become as cheap and convenient as individual car ownership. Annual cost of mobility in San Francisco Bay area, $ thousand per year 14,000 12,000 10,000 Finance new car ($30,000) 8,000 Best use of 6,000 multimodal options Buy used car ($15,000) 4.000 Best use of multimodal 2,000 options, including autonomous vehicles 0 10,000 miles 10,000 miles 5,000 miles 5,000 miles 30% time premium 0% time premium 30% time premium 0% time premium Multimodal cost, -50 -29 -72 -61 % difference compared with new car Multimodal cost, -36 -10 -62 -46 % difference compared with used car "We 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. Multimodal refers to all the different methods people can use to get from point A to point B, apart from using a privately owned car. The 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