Business Insider 2021: How driving data predicts the future
Speakers:
- Gary Hallgren, President, Arity
- Mark Coffey, EVP and General Manager at GasBuddy
Key insights from Arity’s data:
- People are returning to driving more since the height of the pandemic, but they’re also driving differently. This will have a significant effect on many industries, including insurance and rideshare.
- In spite of fewer miles being driven last year, fatalities increased. The movement of people to suburbs and to rural areas may account for driving faster, but there were more fatalities in 2020 than any time since 2007.
We used to drive most during morning rush hour, but that’s changed to around midday during the week. This will have an effect on companies designing apps and advertisers, who will need to rethink when and how they can capture their audiences.
Transcript
Host:
I am speaking with Gary Hallgren, the President of Arity and Mark Coffey, the Executive Vice President of GasBuddy, about how driving has changed since the beginning of the pandemic – and which of those changes will stick. Gary’s going to start by sharing some of the key insights from Arity’s new reports about this year’s top driving and travel trends. Take it away, Gary.
Gary Hallgren, Arity:
Great, thanks Mark, and thanks everyone for joining us today. Arity collects data. We’ve collected over almost 600 billion miles of driving data, and in doing that, we develop some really unique insights about how people move. So I want to spend just five minutes today before we open up the panel to talk a bit about what we’ve seen. We had a report that came out about a year ago and then another one this spring, and we decided to release one now because we’re seeing some pretty interesting, interesting trends and I think that’ll become apparent as we go forward. But we collect this data to enable advertising, to enable insurance pricing, to enable a lot of different things, but it allows us with a unique view of how people move. One question we always get is where does the data come from? So it’s anonymized, aggregated dataset that we get from our publisher partners.
So we work with companies like GasBuddy, we’ll talk to Mark in just a little bit, but others as well to gather this data and really get a sense of how people are moving, where they’re going when and kind how. So there’s three insights that I want to cover today. The first one is kind of how much that they are driving. The way this slide works is if you look down the Y axis, there’s a hundred there. 100 is the average driving for 2019. You can see people tend to drive a little bit less in the wintertime and a little bit more in the summertime, but that’s an average. So based everything from 2019 average is the way to think about the slide. When you look at that, the blue line that drops from 2020, it was just simply amazing. Well, maybe not too surprising because everyone did shelter in place for the most part throughout the country, but it dropped like 50% of driving miles and it just changed dramatically and then it started to come up towards the latter part of the year, but still never got to really normal until the beginning of this year [2021].
Then the beginning of this year hit, and while there was a little dip in February, it took off like crazy and now we’re running about 10% above what 2019 was like. So if you get the sense that people are driving more and driving differently, you’re right. Why does this matter? It matters because industries are really driven on this. The insurance industry, the amount of time you’re spending miles on the road really matters. The automotive ecosystem really matters when I think about autonomous vehicles and the future of new cars and EVs, as our last panel was talking about, the idea of duration of trips and how much they’re driving is really going to matter. So right now we’re going through the peak of driving, which you normally see in summertime. And I guess the question’s going to be as we go into fall and move forward, what’s that going to be, and really what’s it going to be regionally?
This is a national view of it, but it really changes as we go into the different areas. So if we move into more like how people drive as opposed to how much they drive, we decided to take a look of one activity, which is speeding and high mild speeding. We did this over 80 miles an hour. We also have a view of over a hundred miles an hour, which shows some incredible spikes as well. But what you can see again normalized to what things were like this number of miles driven that have these over 80 events inside them. 2019 pretty predictable. 2020 happened when people hit the road. Again, there wasn’t as much traffic on the road as how we surmised it. So people went fast – and people went really fast. What’s happened in 2021 as we got out of January and February started to move back towards the middle part of the year, it’s still well above again could be due because the density is there.
There’s also definitely been a movement of people more to the suburbs and to rural areas where it’s probably easier to drive a little bit faster, but it definitely was strikingly different. Why this one matters and it’s not in the good news category. Why this one matters is there was more fatalities last year than any time since 2007 that it was a bad year for fatalities and really when you start going faster, people were able to maybe move about without some of that traffic density, but when they did get into collisions, they were much more severe and we really need as a kind of a society to take a look at that as we look at 2021 and we see it trending above 2019 but still trending higher. Let’s just hope as we move through the latter half of this year that stays in check and that the fatalities come back down because it was just disheartening to see that much fewer miles driven, but yet the fatalities were up.
The other interesting insight that I wanted to share with you is around when people drive. So when you think about that and you break it down into the different groups, we have a view that shows the different periods of time of when people are driving. It’s a little bit of an eye chart. If you come to our website, you can see a little microsite and you can kind of dig into this a little bit. The interesting one that I want to highlight is the teal bar, which is the morning rush hour. And if you look through 2019, generally speaking, that’s where a lot of your miles are driven, and that’s almost always the most dominant one except in the summertime when people let out and take their time driving when there’s more sunshine and kids are out of school. But outside of that, the morning commute was really the thing and it was an area where people were always on the road and there was a lot of consistency for companies to understand that.
We went into the pandemic, you can see the big drop again. And then when it came back, what came back the strongest was the weekday midday. So again, most people working from home, or not most, but a good number of people working from home during last year. So they were able to get out during the weekday and their driving actually increased quite a bit during that weekday period. One thing you also saw was the evening driving was significantly less going through the pandemic. A lot of things weren’t open and now that’s peaked. What we don’t know right now because it’s September and if you look at the 2019 comparable over to the side in the summertime, people generally do do that. So what we’ll have to look for and see as we go through the rest of the years, how does that change? So the takeaway from this is we need to think differently about it.
If you’re designing apps, you need to be thinking differently about when people are going to be using your apps. If you’re advertising and trying to catch people in the car, maybe you should be looking at different times of day in order to do that. Same with rideshare, car share, demand duration of kind of how the roads are utilized. All that’s going to be dependent upon how this settles out over time. Anyway, as a brief preview of the report, hope that you take away a little something from that, then I’ll turn it back to Mark.
Host:
Thanks, Gary. Now what do you think is the single most important statistic from this report? What should be our big takeaway?
Gary Hallgren, Arity:
I think the big takeaway is just how much that the mileage is up and the migration of people inside of it. When you look at this and see mileage up overall, if you start to delve into the details, you actually can see that the urban areas, there’s a lot less drivers in there, even though those drivers are driving more, but people are moving to the suburbs and people are moving to the rural areas and that’s really evident inside of the data. So between that element and then the idea of just we need to be safer, we need to concentrate on our driving and then I guess think about the times that people are using them. But I think the biggest one is this overall migration and it’s just changed how people use their vehicles and go about their day.
Host:
Mark, how about you? What do you think is the most important number in area’s report?
Mark Coffey:
Well, everything that Gary just said is very consistent with what we’re seeing with GasBuddy and certainly I would suggest that the most important takeaway is that certainly when people are driving where they’re driving certainly and unfortunately the speed at which people who are driving has changed, but I think the frequency of driving the amount of miles that American drivers are driving hasn’t changed and we see that as well in fuel consumption. We’re going through a period right now where there are literally more cars on the road pumping more gas at any other time in recorded history. So we’re in a very sort of schizophrenic moment between where we want to go from a mobility question versus where we are. So I think it’s again, America is the great car culture and Americans are very much still heavily reliant on their vehicles.
Host:
Now, which pandemic driving and travel trends do you think will actually stick in the long run?
Mark Coffey:
I think it’s basically the shift in when the driving’s happening, about 80% of all driving in the U.S. is under 30 miles. So I definitely will see that the influence of a very large percentage of Americans now who have either permanent work home flexibility or meaningful flexibility on being able to work from remote locations I think is going to continue to have a big change on the shift of where vehicles are starting and ending a trip. I also think as well, because of what will be an increase potentially in short haul trips that does pertain to the continued acceleration into EV vehicles, we’ve seen a doubling of EV vehicle sales is still just two and a half percent of the total cars on the road. But I do think that a lot of, I think the pandemic sort of made the future not what it used to be, and I think out of what was a very difficult event, there are some silver linings and those silver linings are more flexibility and autonomy for workers and I think that does have a direct impact as well on driving habits and behavior.
Host:
And Gary, what do you think which driving and travel trends will stick around?
Gary Hallgren, Arity:
Yeah, I think that’s exactly kind of what Mark was saying this morning commute and the amount of time that we used to spend the hour going each way to and from work. And the more people that you talk to, at least anecdotally the way that they view that morning commute and the amount of time that they feel that was wasted in the car, I think that’s changing a lot. Similar with some of the plane travel we’re seeing, there’s a lot less of plane travel. I think that’s starting to come back probably Delta has a lot to do with that right at the moment, but the idea of even a meeting like this that we all would’ve got on the planes and spend time to get to San Francisco for the event and now we’re able to do that without that. So I think the way that people think about their time and value their time and then finding these optimized ways to get their work done or to get their errands run, and if they can do that and really kind of better optimize the roads and better optimize their time, it’s probably good for everybody.
I think people will gravitate to what works for them.
Host:
And Gary, what are the trends we’ve been seeing last year and this year mean for car companies? Should they be rethinking the way they design or sell their vehicles?
Gary Hallgren, Arity:
It’s certainly been in a very interesting year with all the chip shortages and things that have affected all of that affected pricing for cars and otherwise, where I think some of the trends could affect them is better understanding how the vehicles are being used. Mark just gave an example of the average number of trips, our data, I think it’s like 3.2 trips per vehicle and you start to see those duration of those trips. I think about people that lived in the suburbs, worked in the city, took the train to and from during the day, they never drove their cars. Now those cars are getting driven to the market and running errands. So I think from the car manufacturers’ perspective, how people will use the vehicle vehicles, how much of it will be on these trips into work versus the shorter trips in the neighborhood. And that probably bodes well for just thinking about the future mobility and when to use EVs and when you want to, I guess ramp up for the cross-country trip, which at least in the current form will be with gas-powered vehicles and moving about the country.
Host:
Mark, how do you think car companies should be responding to their customers new habits?
Mark Coffey:
It’s a very good question, Mark. And I think that when you actually look at the vast majority of the cars on the road today, there are 280 million cars on the road today. And like I said earlier, only two and a half percent are electric. I do think now what the pandemic has done that America has been profoundly very much a sort of commuting car culture. And I think workers have traditionally needed to try to manage their personal life around their work lives. So Gary mentioned you’ve got that one to two hour commute in the morning, one to two hour commute in the evening, not a lot of flexibility in the traditional office environment. And again, one of the positive effects of what was the negative of the pandemic is the reverse of that because of the flexibility with remote offices. And I guess we have teleportation now, not in the way that I imagined, but we get to teleport ourselves with this event without having to be in a physical location.
And I think now that new level of autonomy that Americans get where their personal lives will come first and they’re now going to be able to manage their personal lives first and they’ll have more flexibility with the work life again, will influence the acceleration away from gas vehicles into the EV range. Anxiety was always the early anxiety there. I see some significant comparisons as well between the e-commerce business that’s quite matured versus the EV business. The e-commerce business today is still only about 15% of all retail sales, yet Amazon is about 50% of that 15%. EV sales are only about two and a half percent of the cars on the road, yet Tesla represents 66% market share. So I do think that you’re going to see more American consumers become more comfortable with at least having one of their two vehicles become EVs. And you can see the automotive manufacturers now they’re chasing Tesla. Tesla has a breathtaking headstart, but you’re definitely going to see all of the OEMs lean in further faster against their EV strategy.
Gary Hallgren, Arity:
And it’s really kind of an important part to the data that kind of plays into that. If it used to be that I had to have that second car because my spouse and I need to both drive to work and we both have a 30-mile commute, whatever that might be, but if you’re home and you really want to take short trips and everything is kind of around the neighborhood, I’m guessing the car companies can really start to optimize it once they start to understand that people in these geographies or in this life circumstance are really going to be optimized with a vehicle that works for them in that way. So I think it’s a chance to create maybe some micro segments of how people will use vehicles and it’ll be different, but it’ll be better for all of us.
Host:
Now how should retailers be thinking about this? Should they be reconsidering where they locate their stores or how much they invest in e-commerce versus brick and mortar?
Gary Hallgren, Arity:
In our marketing business, we see a ton of opportunity inside of that. The idea of understanding where and how people are going and when they’re going, I think it changes dramatically as far as the Starbucks off the ramp in a certain area as opposed to being in the area around the town center that’ll make it more convenient. As Mark said, there’s a ton of e-commerce and I think the Amazon guy comes to our house and she delivers our packages every day, but there’s a little bit of what it feels like to be at the market and at these locations. But I think understanding then how these movements are happening and then being able to advertise accordingly to them to bring them into your store. Also, maybe just the time of day and the factor of knowing that people are going to be out more midday. We’ve seen a lot of stores in our neighborhood that are taking less evening hours than what they used to run before simply because people are able to do errands during the day. So I think the retailers are going to have some great opportunities to create great experiences for consumers that work around how people now want to want live and work.
Host:
And Mark, what adjustments do you think retailers should make, if any?
Mark Coffey:
I mentioned e-commerce earlier. I mean 85% of all consumption still happens in the real world. E-commerce business is about 15%, so we haven’t quite completely become virtual creatures yet. And look, when I look at the fuel and convenience business, which gas body plays a very big part in, it’s a trillion dollar addressable market, but the Achilles heel of that business is that there’s little to no margin on the fuel. It’s huge business. You can imagine there are about 40 million Americans spend a billion dollars a day in gassing up, but the margin for the fuel and convenience industry is in the convenience store. The challenge there is dwell time. It takes about three minutes to fill a tank of gas, whereas charging has a very, very significant and long 12 times. So you are seeing a pretty significant re-imagining of what that trillion dollar convenience experience looks like and then taking into account that you’re going to have people coming potentially less frequently, but when they do come to charge or to gas up, and by the way for the record at gas body, despite our name in the long term, whether people are charging up or gassing up, we’re excited at the transition from fueling to EV because of the profoundly positive effect it’s going to have in the fuel and commerce fuel and convenience business due to the significantly longer dwell time for EV charging.
Host:
And Mark, what are the main lessons ride hailing, scooter and other kinds of mobility companies should be taken from the way their customers travel habits have changed?
Mark Coffey:
Certainly I’ve been part of the mobility conversation for a decade or more, and in the early days you mentioned scooters. There were grand ambitions by the way, about mobility and I think earlier there was some expectation or hope rather that we could shift Americans out of their personal vehicles into other mobility options. We have not seen that play out. Certainly we anticipate as well that America is the great car culture and will remain the same. The positive change will come from the switch from gas vehicles to electric vehicles. There was a discussion earlier, I’m always fascinated with the phrase of smart cities, certainly in an area where we’re kind of looking at some dilapidated structure. So I do think that it’s the classic thing that when the pain of change becomes less than the pain of staying the same, that’s when you get actual change to happen. And I do think there’s a little bit of a force function has to happen. So I think grander and better incentives on EVs and then more exciting electrical vehicles coming from the more traditional OEMs start chasing Tesla. So all very exciting. I don’t see the number cars on the road becoming less, but we do see a pretty significant acceleration away from internal combustion engines into EV and I’m not sure the scooter’s going to make it into the future mobility.
Host:
Gary, what do you think should be the key takeaways for ride hailing and other mobility companies?
Gary Hallgren, Arity:
Yeah, there’s a couple of things. When I think about it, the safety of the drivers is really key. When you think of the amount of money that all the platforms spend to operate their business, when people get into trouble, when cars get into accidents, they’re either out of service or heaven forbid, people get hurt, it really matters. So I think there’s opportunities when you look at who are the speeders, who are the good tiered drivers versus the others. We have, like, say the 30 million database today, we think we’ll be able to do that on a hundred million shortly to understand who the gig drivers are and who the safe gig drivers are. And I think that’ll help with the companies as they try to recruit and attract the business As far as the when and the where. I think that’s also going to be interesting too.
We’re definitely seeing a trend of less drivers in the city. What I don’t know if that means is there’s going to be less ride hailing needs in the city. It could be, but certainly I think it’s going to mean there’s more ride haing needs in the suburbs and maybe even drifting a little bit more to the rural areas or at least the less dense suburban areas. So I think it’s going to be a bit of a change for them as they think about where to deploy their fleets and maybe some different ways of how to attract the right drivers into the right areas to support the customer demand.
Host:
And Gary, which pandemic driving or travel trends look more like short-term COVID-related anomalies? Are there any insights that auto or retail or mobility companies from the past couple of years shouldn’t be placing too much weight on?
Gary Hallgren, Arity:
I do hope that the speeding element of that that comes down when you see those huge spikes that we saw last year, I think that was due to being a lot less density on the road and people were finally out of their houses and driving and it was just tragic to see what happened with that. It certainly is causing more accidents and the cars are getting more advanced so when they do have collisions, they’re more expensive to repair. So I think that that’s a trend that’s going to continue, but I hope some of that severe aspect of it is going to change. I think the other thing is that that people want to be out and they want to move around. So to think that those shelter in place that people are going to get very comfortable and just being in their houses. I think people love people, they want to be around other people and movement is going to happen again, just differently.
Host:
Mark, what do you think? Are there any trends in areas reports that you think won’t stick in the long run?
Mark Coffey:
I definitely think, and I hope as well that we will see a return to long haul trips versus short haul trips, obviously during the pandemic. And we’re seeing the lasting effects that the distance of which the average person is traveling, whether it’s in a vehicle or whether they’re getting on a plane, we’ve seen a pretty substantial expansion of I guess what would be formally call the staycation. That is one of the things that I hope changes, but there is a little bit worry about how long it’s going to take and if we ever in fact return to the same levels we’ve previously seen before the pandemic.
Host:
I want to go now to a question or two from the audience. The first one is, do you think there are big technological differences between Teslas and other electric vehicles?
Gary Hallgren, Arity:
I’ll say it this way. The reason that I like what Tesla has done is they just set the bar so high and they push companies to go faster. And now you’re starting to see the slate of other vehicles coming into the market and starting to apply pressure there, which I think is good. I used to work for a car company years ago and it’s hard to build something like that in an element of speed and I think Tesla has pushed the bar on that and probably made the migration to this better for everybody. But who will win in the long run? I guess I’ll sit back and watch like everyone else.
Mark Coffey:
It’s a very good question. The last revolution in the car industry was over a hundred years ago when Henry Ford started the production line. And if you look at where cars were over a hundred years ago versus where they’re today, it has been very, very slow iteration on the vehicle. So I think the credit that Tesla gets is that they made the future happen faster and it did take the boldness of Elon Musk to sort dream the impossible and then make it happen. And there were times where it seemed like he might not pull it off, but he didn’t just build a great EV vehicle, but he also built his own infrastructure to serve his own vehicles, which I think is breathtaking. As I mentioned earlier, with a 66% market share in the us but Gary’s point as well, it’s heating up. Volkswagen just actually passed Tesla in Europe to become leading market share.
I’m pretty sure that’s accurate. In many cases, companies are forced the next thing rather than getting there themselves. And I think the wonderful thing that Tesla is doing, they do build a fantastic car and a great technology, but they are forcing the other OEMs to follow. And like Gary said, it’s going to be impossible to predict how this plays out, but when you look at the breathtaking headstart that Tesla has with close to 70% market share, it’s going to be a fast and hard follow with the OEMs, but it’s still all to play for not too early, still not too late.
Host:
Now even another question from the audience for Gary. Gary, what can you share from Arity’s product roadmap? What’s the next big idea?
Gary Hallgren, Arity:
What’s coming forward is the idea of, we started with telematics, which is more understanding how insurance should be priced. We’ve migrated that into doing advertising and marketing, have an audience now that you can target best drivers out of a hundred million Americans. And really what’s coming up now is a product called Arity IQ, which is going to allow you to price insurance at new business. We think there’s a lot of opportunities not only to disrupt the insurance industry, but there’s also a ton that is happening for the rideshare industry and other parts of the automotive ecosystems. We’re excited to keep gathering our data, supporting great companies like GasBuddy and our other publisher partners and looking forward to a great future.
Host:
I want to talk now about a new feature in the GasBuddy app that will give users advice on how to become safer and more efficient drivers. Mark, can you start by telling us what GasBuddy is and what that advice would look like?
Mark Coffey:
For anybody who doesn’t know, GasBuddy is one of the top five most used travel apps in North America where the primary source for empowering drivers by showing them where the best price gas is based on their current location. And like I said, when you have 40 million Americans spending about a billion dollars a day on gas with the typical American family spending about $3,000 a year in gas, other than the violent depreciation of a vehicle, gas is the single biggest cost of ownership expense, and that’s where GasBuddy comes in. We help drivers save very significant amounts of money on gas. So the business has been around for 20 years. We have been evolving and iterating very, very quickly. We have been very focused on personalization and also app fatigue, allowing the average American consumer today doesn’t, 50% of American consumers don’t download any new apps.
So through partnerships like we have with our new drives features, it’s all about personalization. It’s not an app for people anymore, it’s an app for the individual person. So through the great technology that we have within the gas body app from Arity, we’re able to give real world driving feedback to the actual drivers. One of the unique and personalized expAritynces, which is there’s the kind of odd but funny analogy of the psychology of driving and that everybody thinks they’re a good driver. Anybody going faster than me is crazy and anybody going slower than me as an idiot. But the reality is is that we can’t all be good drivers. So with the technology that we have with Arity, we’re generating significant savings and also making people significantly safer by giving them real world feedback on their actual driving through the app.
Host:
Well, that’s all the time we have for this conversation. Thank you very much Gary and Mark for sharing a glimpse of the future of driving.