Global revenue generated by ride-hailing services is expected to reach nearly $1.2 trillion in 2026, according to a new report from Navigant Research.

The report examines the global market for mobility as a service solution, including car sharing, ride-hailing, micro transit, automated mobility and peer-to-peer (P2P) rental services.

As more people move from rural areas to cities, an influx of personally owned vehicles is contributing to issues such as congestion, air quality and traffic accidents. Mobility as a service solution can provide more flexibility than mass transit while also enabling the replacement of individually owned vehicles.

“During the next decade, ride-hailing provided by human drivers will lead services in the mobility as a service field, enabled by platform providers like Uber, Lyft, Didi and Ola,” said Sam Abuelsamid, senior research analyst with Navigant Research. “The convenience of summoning a vehicle through an app and paying electronically makes this service appealing and gives it a distinct advantage over carsharing.”

However, while revenue from global ride-hailing services will be enormous, transportation network companies (TNCs) must drive a lot of cost out of their platforms to reach sustainable profitability, something none have done so far. According to the report, as automated driving supplants human drivers, existing TNCs will find themselves challenged by services provided directly by the companies that manufacture vehicles. There is still significant room for growth before the mobility as a service market is saturated, but low switching costs for riders are expected to make it a challenging business.