CES 2016: A look at the future of mobility

Obviously, lots to see and experience related to mobility. From drones to autonomous vehicles, a walk through the Las Vegas Convention confirmed that we will see more changes in mobility before the end of this decade than we have over the last fifty years.

Some of the members of the Transportation Evolution Institute attended the Consumer Electronics Show in January. Thanks to our friends from BlackBerry who made it happen!CES-PASSES

Obviously, lots to see and experience related to mobility. From drones to autonomous vehicles, a walk through the Las Vegas Convention confirmed that we will see more changes in mobility before the end of this decade than we have over the last fifty years. Following is a photo wrap up of our experience with some commentary.

 

Expect the dashboard to be converted to an enormous screen and the front windshield to be extremely intelligent with integrated GPS and more.

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Drones, drones and more drones of every size imaginable – from the hardly perceptible to the heavy duty.

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More EV models from more manufacturers are on their way.

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Despite the hype, we were disappointed with the Faraday Future vehicle. Yes, it made an impression but more concrete, pragmatic would have been appreciated.

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The vehicle is being re-designed to accommodate more comfortable long-distance travel, meetings and comfortable workspaces. VW is also thinking that its e-Buddy will also accommodate drone deliveries.

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TEI Supports SEAMlessTM Vision

The Transportation Evolution Institute has been involved in a number of sustainable mobility-related initiatives in Canada and abroad.

The Transportation Evolution Institute has been involved in a number of sustainable mobility-related initiatives in Canada and abroad. We thought we would end the year by providing readers with a brief update of some of these activities.

As many of you are aware, the Institute supports the SEAMless™ vision of mobility developed by MARCON. As a brief summary for those who are not familiar with this model, SEAMless refers to Shared, Electric, Autonomous, Multimodal mobility. In this sustainable transportation ecosystem, mobility is accessible via technology that is becoming increasingly ubiquitous. A user is presented with mobility options (including but not limited to information about cost, time of departure, time of arrival, active and non-active modes to be used, environmental footprint and level of sharing with others) enabling him/her to reach his/her destination. Travel options take into consideration the user’s set preferences (example: increased physical activity) and physical limitations (example: options may limit active mobility).

The Institute’s activities over the last few months reflect our work in promoting the SEAMless mobility model.

Electric mobility: The Institute is a staunch supporter of electrification of transportation, wherever possible. Within Canada, the Institute collaborates with Electric Mobility Canada, the national organization promoting electrification of transportation, in all its forms. The Institute also collaborates with AVERE, the European electric mobility association.

Our environmental realities and the blatant inability of internal combustion engines to help us meet our pressing environmental commitments means that electric propulsion systems charged with electricity generated increasingly through renewables is an important solution.

For Canada, it is a no-brainer. Almost 70% of Canada’s electricity is generated through renewables and thanks to utility efforts, this percentage is increasing.  Instead of importing fossil fuels and hurting the provincial trade balances, it makes strong economic sense to use electricity produced locally to power our mobility solutions. This approach supports a domestic good and the local jobs required to deliver this good to the mode of mobility.

A 2015 report from the Union of Concerned Scientists entitled “Cleaner Cars from Cradle to Grave” says that “over their lifetime, battery electric vehicles produce far less global warming pollution than their gasoline counterparts – and they’re getting cleaner.”

Car sharing: Sharing is an important part of the SEAMless Mobility model. Research has demonstrated that a shared vehicle replaces 9 to 13 individually owned vehicles. Shared, electric mobility is increasingly being encouraged by municipalities as a way of dealing with stifling congestion and pollution issues. One need only look at the efforts and plans of cities like Helsinki, Oslo, Paris and London.

The Institute collaborates with the Car Sharing Association and supports efforts of car sharing organizations to electrify their fleets. Not only is car sharing fleet electrification important in terms of immediate environmental impact, but it has the advantage of educating car sharing users about electric vehicles. In fact, research undertaken this year in the US concluded that an individual who has used an electric vehicle in car sharing mode is 43% more likely to buy an EV if a change in his/her lifestyle requires him/her to purchase a vehicle.

Research undertaken this year by some of the Institute’s members in the area of car sharing fleet electrification and discussions with car sharing fleets in Canada and abroad lead us to believe that municipal – fleet collaborations present strong opportunities for car sharing electrification.

Mobility as a Service (MaaS):  Last month’s newsletter article described the plans of the government of Finland to implement MaaS as a way of moving to a sustainable mobility model based on usership instead of ownership of mobility. It is a model that makes significant sense from the perspective of the Finnish people as well as the Finnish government. For the latter, it is an economic development policy that also helps the country better manage its expenditures while helping to meet its emissions reductions targets. For the citizens of the country who, like motorists around the world, use their vehicles on average 4% of the time, the car is generally their second greatest expense after lodging (first for home owners who choose to invest in their lodging). If the Finnish people can be presented with an integrated mobility system composed of a variety of options for moving around, a system that is convenient and easy to use, and one that costs less than vehicle ownership, why would ownership make sense?

MaaS means sharing of mobility assets. It also means true integration of multimodality. Where possible, electrification is encouraged. Shared, electric and multimodal: three of the four pillars of the SEAMless Mobility model.

A few weeks ago, Catherine Kargas was in Finland, collaborating with the Finnish government on this important step in sustainable transportation. She moderated the MaaS Summit (involving transportation, technology, transit and government stakeholders from around the world) that took place in Helsinki and represented the Institute at the MaaS Alliance meetings. We are pleased to announce that the Institute is a member of the MaaS Alliance.

Automated technology: The Finnish Government is interested in incorporating autonomous vehicle technology into MaaS: the fourth pillar of the SEAMless model.

Given its numerous benefits, the Institute is a firm supporter of automated vehicle technology. We are pleased to have contributed to the discussions at the Ontario AV Ministerial Roundtable that took place on October 29th 2015.

Over the last three years, the Institute’s members have visited the developers of this technology in Canada, the US as well as Europe. A couple of our members recently completed a tour of numerous organizations in Europe that are involved in the development and early commercialization of the technology. We are proud to report that some of these organizations will be demonstrating their capabilities at EVS29 that will take place in Montréal, June 18-22, 2016.  Don’t miss the opportunity to see and experience tomorrow’s electric mobility.

We are working on exciting projects that we hope to report on in the coming year. In the meantime, we take this opportunity to wish you all a very Merry Christmas and a great start to 2016.

Insurance

Despite the addition of driver assistance features to vehicles intended to help avoid collisions, the growing number of in-vehicle distractions is resulting in greater opportunity for driver distraction.

One of the biggest pieces of news to hit the autonomous vehicle sector this last month was Volvo’s announcement that the company will accept full responsibility for any accidents caused by its driverless cars.  Mercedes and Google “have made similar claims as manufacturers race to create a full-functioning, legal car of the future”. The implications for the insurance industry are enormous.

Despite the addition of driver assistance features to vehicles intended to help avoid collisions, the growing number of in-vehicle distractions is resulting in greater opportunity for driver distraction.  A recently released study concludes that “aids”, such as Siri, distract drivers for up to 27 seconds after the interaction with the device is complete. Driving at 40 km/h, distraction of 27 seconds would cover a distance equivalent to 3 football fields.

The “misuse” by some Tesla drivers of Tesla’s autopilot (released in October via a software update) combined with the in-vehicle distractions should clearly spell danger for insurers.

KPMG released a report that concludes that autonomous vehicles could shrink US personal auto insurance by 60%. The impact would be underestimated if autonomous vehicles are defined as fully autonomous.

Munich Re has launched its Mobility Domain. It is part of the company’s enhanced focus on innovation and emerging risks. Driverless vehicle technology will be an important focus of the Mobility Domain’s activities.

Google is intensifying its investments and partnerships in the insurance technology space. The company has signed off on at least 6 separate partnerships and investments in insurance tech just this year. It looks like the Silicon Valley giant has its sights set on disrupting the multi-trillion dollar insurance business.

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Governments positioning to reap the economic benefits

The UK is investing hundreds of millions of £ in positioning the country in the autonomous vehicle technology sector.

The UK is investing hundreds of millions of £ in positioning the country in the autonomous vehicle technology sector. A recent study concluded that “developing the next generation of autonomous vehicles could land the UK with as many as 320,000 jobs and deliver £51bn of economic benefits”.

Japan’s National Policy Agency announced plans to draw up guidelines for public road tests of self-driving vehicles.

Driverless cars have begun being tested in the state of Virginia. They will begin testing in Australia next month.

The government of France will be modifying its legislation to permit autonomous vehicles to circulate on its roads and highways.

And of course, the Government of Ontario has announced that self-driving vehicles will be tested in the Province beginning in 2016.

Helsinki: setting the pace for the future of mobility

Helsinki appears to have found a sustainable mobility solution that will, for all intents and purposes, eliminate the need for personal vehicle ownership.

Last year, an article in Business Insider identified the 18 most innovative cities in the world. Helsinki was one these cities and was selected for its “super innovative transit system – one that will soon have a real-time marketplace for customers to choose among transport providers and piece together the fastest or cheapest way of getting where they need to go”.

Cities around the world are facing issues of congestion (costing trillions of dollars annually) and challenges related to much-needed efforts to reduce GHG emissions.  According to a recent US study, growth in congestion is “outpacing the nation’s ability to build the roads, bridges, trains and other infrastructure to handle all these people on the move”.

Helsinki_graph2Helsinki appears to have found a sustainable mobility solution that will, for all intents and purposes, eliminate the need for personal vehicle ownership by the city’s residents because it will provide them with attractive, accessible alternatives. The goal? To get there by 2020.

The solution? Mobility as a Service (MaaS). Very simply, this is a mobility distribution model where all of a user’s transportation needs are met using a single interface and managed by a mobility service provider. Access to all modes of mobility (including but not limited to bus, tramway, metro, train, taxi, car sharing, ride sharing, bike sharing) is gained through the use of a personal smart device.

According to one of the architects of Helsinki’s new mobility system, Sampo Hietanen (ITS Finland CEO), the goal is to create sustainable customer centric transportation. The vision of this innovative “Public-Private-People partnership” is that the various modes of transportation blend to the point where boundaries between them are “blurred” or disappear completely.

Clearly, this is a system that is very technology dependent, involving the interaction between user, vehicle and environment. According to Traffic Lab, the project launched by the Finnish Ministry of Transport and Communications to promote a market in intelligent transport services, in the future, mobility “will be a service provided by companies and facilitated by the authorities”.

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The resident-user pays a fee for mobility that reflects his/her usage. Some examples of the mobility packages are provided following.

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The cost of using this shared multi-modal mobility will be less expensive than that paid by the average citizen to access such services today. That’s fantastic as there is more disposable income left in users’ pockets.

The project team undertook market research with residents and future users.  One group that was particularly researched was composed of employers offering car benefits, including company cars and parking spots, and the personnel using these company cars and parking facilities. The intent of the research was to determine interest in replacing the current transportation benefits (provided or received) in exchange for mobility credits that would be provided by employers to the accounts of the individual members of the personnel.  The research revealed that a whopping 80% of respondents indicated a willingness to try such an exchange.

What is even more interesting, but not obvious on the surface, is that this is also an economic development initiative. Finland has no automotive industry to protect and lacks domestic sources of fossil energy. The country must import both vehicles and the fuel to power them. This hurts its trade balance and creates little domestic employment.

Suppliers, managers and operators of mobility services, on the other hand, will use locals to provide the services, thereby increasing employment. Further, companies interested in entering the Finnish mobility market to provide some of these services will result in additional investment into the Finnish economy.

The use of electric propulsion will reduce dependence on fossil fuels. The increased utilization of shared multimodal mobility will not only have a positive impact on reducing congestion and GHG emissions but it will lower the number of individually owned passenger vehicles that will be imported.

Congratulations to the architects of this transportation / environmental / economic vision. Congratulations to the government of Finland for having the foresight to undertake a program that exceeded their time in office and for recognizing that what’s good for the environment is also good for the economy.

Photo: Slava2009 / Shutterstock.com

Driverless vehicles are around the bend: Is this the insurance industry’s Kodak moment?

“we expect traditional motor insurance to become niche to obsolete within two decades.”

Originally published on Insurance-Canada.ca

Do you ever wonder why the executives at Kodak couldn’t see the threat of digital photography? After all, this was a huge, affluent corporation with access to abundant resources and intelligence. In fact, at its peak, the company employed 145,000 people and had revenues totalling $16 billion.

What you may not know is that a Kodak engineer, named Steve Sasson, invented the first digital camera. In an interview given to the New York Times, he characterized the corporate response to his invention as “that’s cute – but don’t tell anyone about it.”

It didn’t take long for digital photography to be discovered by others.

It’s not what you know, It’s what you do

In 1981, Kodak’s head of market intelligence, with support from the company’s CEO, undertook an exhaustive amount of research which assessed core technologies and forecast timelines for likely adoption. Their report accurately predicted the replacement of Kodak’s established film-based business by digital photography and accurately forecast that it would take about a decade for the new technology to take hold. The good news was that Kodak had time to plan, to diversify, to transition to other more lucrative businesses, to develop new products that would generate profits for the company. The problem was that it did not.

Fuji was an important competitor of Kodak in the film business. Recognizing the threat of digital photography, Fuji’s executives reacted differently. The company diversified more successfully. Film representing 60% of its business in 2000, contributes almost nothing to Fuji’s bottom line today.

The truth will set you free, but it might not make you happy

Fast forward to 2015 and to a different industry: insurance. The industry faces numerous challenges and threats and many of them are technology related. One of the most important threats concerns auto insurance.

For the last few years, I have been invited to speak at several insurance industry events, including the Insurance-Canada.ca Executive Forums (by the way, they are fantastic!), about changes in mobility of people and goods and their impact on insurance. In the last three years, industry reaction to the arrival of fully self-driving vehicle technology has evolved considerably. It has progressed from “You are nuts, this technology will never work” to “OK, it will happen, but not in my lifetime” to “It will happen, but the uptake will be very limited, as motorists will refuse to give up control of the steering wheel.”

In June of this year, KPMG released the results of a survey undertaken with insurance industry professionals to assess their preparedness for autonomous vehicles. The report states:

The conversion to autonomous vehicles may bring about the most significant change to the automobile insurance industry since its inception. As the way we drive and commute transforms, the amount, types, and purchase of automobile insurance will be impacted. The disruption to insurers may be profound, and the change could happen faster than most expect.

As many others who have evaluated the impact of this technology on insurance, KPMG forecasts “a new normal” within a decade. Despite this, the study concludes that 74% of insurance companies are not prepared for the change.

Strategy means looking beyond the windshield

The insurance industry is blessed with some strong strategists who will rise to the challenge and prepare their respective organizations for the significant changes that will certainly occur. And while no one has access to a crystal ball, insurers should be forecasting significant change in auto insurance within the next five to ten years.

At the 2015 Insurance-Canada.ca Executive Forum, Aviva Canada’s President, Sharon Ludlow, demonstrated her keen understanding of what lies ahead in motor insurance:

we expect traditional motor insurance to become niche to obsolete within two decades.”

The chart she shared with those in attendance indicated the availability of fully autonomous vehicles before 2025 but a significant uptake of the technology starting in 2025.

Hanging on to the belief that consumers will shun driverless vehicles is void of realism. Here are some facts that should be taken into consideration when evaluating potential interest in this technology:

  • The car is the single-greatest expense of most Western households (remember, unlike your car, your home is an investment that should increase in value over time).
  • Despite costing the average Canadian approximately $12-$13,000 annually to own and operate an average make/model, the vehicle remains idle 94% of the time.
  • Younger people are increasingly demonstrating an aversion to driving.
  • Our aging population, with ever increasing physical and mental limitations, is going to require to be driven.
  • Our population is becoming increasingly urbanized, preferring to avoid lengthy commutes.
  • Congestion has gotten so bad that driving is generally not pleasant. On the contrary, it’s downright frustrating.
  • People prefer to do anything but drive while they are in their vehicles. With increased connectivity, the number of distractions increases. This makes bad drivers even worse. Today, human error contributes to 93% of road collisions.
  • The uptake of new mobility options (including car sharing and ride sharing) is phenomenal. In fact, Vancouver and Calgary are the top two cities in North America in car sharing. With the recently announced expansion, Car2go’s (Division of Daimler) car sharing fleet in Vancouver is the largest one in the world.
  • Cities around the world are increasingly introducing policies to reduce the number of individually owned vehicles in their respective territories as a way to reduce the unbearable congestion and pollution. Helsinki, through its plans to introduce Mobility as a Service (MaaS) is targeting the end of personal vehicle ownership by its residents by 2020. Montreal is encouraging greater car sharing in order to minimize the number of individually owned vehicles. Jim Holland, Ford’s VP, Vehicle components and engineering, has stated that congestion will result in people not having a choice but to participate in car sharing.
  • Just about every auto manufacturer (and the supply chain) is working on the technology to automate as many of the features of the vehicle as possible.
  • Silicon Valley giants like Google and Apple have set their sights on the transportation industry and the huge profits that self-driving technology can bring to their coffers. There is an R&D spending and hiring frenzy to bring this technology to life. Why? Because this technology represents the potential to replace vehicle ownership with mobility on demand: a new business model that will generate immense revenues and profits for those who control it. This new business model means having access to a vehicle when you need one, through your smart phone, but without the headaches of driving, parking, paying for parking or other infractions, fuelling / charging the vehicle, bringing it in for maintenance, washing it, … paying insurance to use.

The changes might seem slow … Until they aren’t

Mobility on demand is expected to cost significantly less than vehicle ownership. So all the benefits, none of the headaches and all at a significantly lower cost. How many of your customers would reject that offer?

Not everyone will line up on day one but after the technology has had the opportunity to prove itself (months? a year? maybe two), the uptake curve will look like a hockey stick.

Like Kodak in 1981, the insurance industry has less than a decade to prepare for this paradigm shift that will result in approximately $20 billion of premium (in Canada alone) dwindling to a niche market in the years that follow. How will insurers prepare? How will brokerages prepare? Can all brokers start to target commercial lines business to make up for lost premium? Will this contribute to a significant consolidation in the industry? Will insurers prioritize diversification strategies?

The next few years are key to preparing the industry for the future. Complacency and beliefs that consumers will reject the mobility offers presented by the Googles and Apples of this world are clear recipes for failure.

About the Author

Catherine Kargas is Vice President at MARCON where she provides business strategy consulting advice to clients in both the private and public sectors of the economy. Catherine also serves as chair of Electric Mobility Canada, helping to promote sustainable transportation solutions. Catherine has worked closely with Insurance-Canada.ca in developing leading edge projects and programs. She speaks frequently at insurance industry events. Catherine can be reached by email at ckargas@marcon.qc.ca.

Government planning

There are jurisdictions making 10, 15, 20 year plans without taking the impact of autonomous vehicle into consideration

Every week, several pieces are written about the impact of autonomous vehicles on government revenues. One of the obvious impacts is the reduction of revenue due to the use of law-abiding driverless vehicles (no infractions for drunk driving, speeding, …). What is surprising to us is that there are jurisdictions making 10, 15, 20 year plans without taking this impact into consideration.  One of the largest road infrastructure investments in North America, the Champlain Bridge / Turcot Interchange project, has never even considered the arrival of driverless vehicles in the coming decade despite the fact that the infrastructure is being built to last over 50 years.  Wise move ?

And then, there are the jurisdictions that set the pace for others to follow. As Helsinki pursues its plans to eliminate the need for personal vehicle ownership by 2020, it considers what it will do with the parking spaces allocated to cars today. We will devote an upcoming newsletter to exploring Helsinki’s plans with one of its key architects: ITS Finland’s Chief Executive, Sampo Hietanen.

Car sharing

People are abandoning car ownership in favour of car sharing.

Some interesting statistics were announced over the last month. According to one source, every vehicle that enters the car sharing market full time replaces between 4 and 6 new car sales and delays up to 7 more.

According to BMW’s DriveNow car sharing service, 38% of clients “abandon ownership”. This is consistent with statistics provided by ZipCar: 2 in 5 corporate ZipCar members (people who join a car sharing program through an affiliation with an employer) sell or avoid buying a vehicle after joining ZipCar.

Another recent study undertaken in Germany found that “61% of customers had given up their own privately owned car since signing up for car sharing services. Rather than eroding public transport use, the study also showed that car sharing services fit seamlessly into established transport options.”

“British carmaker Mini has joined the rush to solve the problem of customers abandoning car ownership in favour of car sharing, launching a scheme that effectively offers buyers the chance to offset the purchase price by renting out their vehicles.”

As it redefines itself, Ford is not only piloting car-sharing projects in numerous cities around the world, but is also getting into electric bike sharing and car swapping. In fact, the company announced that its Peer-2-Peer car sharing pilot program for 14,000 Ford Credit customers would run in six US cities. Another 12,000 customers will be participating in an equivalent program in London, UK. Ford has also announced that it is taking its autonomous-driving research efforts to the next stage (from research to advanced engineering). In a recent speech, Jim Holland, Ford vice president-vehicle component and systems engineering, stated that as cities continue to grow “car sharing in the future may not strictly be a voluntary matter”.

Meanwhile, GM’s Opel announced that Opel CarUnity “will allow drivers to rent out their cars – say, to their Facebook friends – via a dedicated Opel app for smartphones and tablet computers”. Dan Ammann, GM’s President, discussed the situation of city dwellers who rarely use cars: “It’s the last thing you should do because you buy this asset, it depreciates fairly rapidly, you use it 3% of the time, and you pay a vast amount of money to park it for the other 97% of the time”. He added that GM was looking to deliver the freedom to travel on a “sharing model”. We’re glad that the auto manufacturers are coming to the same realization as their customers (or former customers).

Vancouver is considered to be the “car sharing capital of the world”. In fact, car2go is doubling its presence in the city to 1250 vehicles, making Vancouver home to the world’s largest car2go fleet. It would be fantastic if the City of Vancouver would invest in on-street charging infrastructure that would facilitate the integration of EVs in the city’s car sharing fleets. Given Vancouver’s “green” efforts and the renewable hydroelectric energy used to power EVs in BC, the installation of charging stations should be encouraged.

In LA, a pilot car-sharing program aims to keep thousands of citizens in “poor neighbourhoods from purchasing cars of their own by providing publicly available hybrid or electric cars instead”.

In the last month, Enterprise Holdings acquired Metavera, a Toronto-based company that provides sustainable transportation technologies to customers in more than a dozen countries. The company “offers a leading car sharing system for independent operators, as well as technology solutions for fleet management and peer-to-peer car sharing”. Note that Entreprise CarShare is available in 40 cities in Canada, the UK and the US.

In a sign that bus operators are feeling the pinch of car sharing competition, Spanish bus operators on calling on a ban of BlaBlaCar, Europe’s leading car sharing platform.

Technology

Technology News from Volkswagen, Bosch, Daimler, car2go and Verizon

Volkswagen is developing a new system of robo-parking and EV charging. The “V-Charge” system will enable the car to park itself while you go about your business. The “vehicle senses obstacles, pedestrians, other cars and everything else it will need to avoid, even without the help of GPS that can go haywire in a parking garage. If you’re operating an electric vehicle like the VW e-Golf, V-Charge also hones in on an available parking spot offering automatic induction battery charging. If need be, the car will wait in a regular spot until the charge spot opens up, then move into position and start restoring the battery.” This is fantastic news for EVs as it makes EV ownership that much easier.

Meanwhile, Bosch, Daimler and car2go are launching an autonomous car-parking pilot that should make the use of car sharing even easier and more attractive.

In an effort to minimize accidents involving pedestrians (14% of all accidents), Verizon “is testing a way for pedestrians’ phones to simply talk to drivers’ phones, which will do the location sensing and deliver the warnings themselves”.

OEMs prepare for changes in mobility

Ford reaffirmed it is working on parallel paths preparing for self-driving vehicles and sharing.

Ford reaffirmed it is working on parallel paths preparing for self-driving vehicles and sharing. Bill Ford: “There’s no question our business model will look very different in the future than it does today.” Ford added: Automakers that figure out a future with fewer auto sales and more car sharing will succeed, and those that ignore it do so at their peril.