Positioning for competing in the new mobility ecosystem

Big moves in the mapping industry and Apple on the move.

Understanding the importance of maps to autonomous vehicle mobility, Uber acquired Bing Maps technology.

Audi, BMW and Daimler purchased Nokia’s mapping division, Here, for $3.1 billion US. This was a strategic acquisition as the auto manufacturers compete with Google and other tech giants for the mapping technology key to the commercialization of driverless vehicles. The auto manufacturers’ plan is to pool real-time data (example: information on icy roads). They insist Here will be run as an open platform to the benefit of all Here‘s customers.

Other reasons why the purchase of Here was important to the German automakers:

  • The auto OEMs can receive the licensing fees from major companies such as Amazon, Bing, Yahoo, Flickr, SAP, and Oracle that already rely on the Here mapping platform.
  • The deal will allow automakers to take control of user location data and monetize it through local advertising.
  • Mapping is essential to vehicle automation and it makes a whole lot of sense that automotive companies will want to have control of that information.
  • Shutting out Google and other mapping giants.

Delphi announced acquisitions (including automated-driving technology producer Ottomatika and Quanergy Systems, a company that develops light detection and ranging scanners enabling cars to locate objects and generate digital maps) enabling the company to better compete in the autonomous vehicle space.

TomTom and Bosch will be collaborating on the development of highly accurate maps for autonomous vehicles.

Recognizing the value of data and that future mobility will be controlled by data, car manufacturers are limiting the data they share with technology partners like Apple and Google.

In the last few weeks, we have witnessed more signs that Apple might be getting into the auto business. The tech giant has hired two individuals: Doug Betts (formerly Chrysler’s quality chief & SVP) and Paul Furgale (Swiss autonomous vehicle and robotics expert). Apple also hired a senior engineer Jamie Carlson from Tesla Motors, as part of Apple‘s effort to build a team of experts in automated driving. At least six others with experience developing self-driving technology and systems have joined Apple, according to their LinkedIn profiles.

Further potential evidence: Apple boosted its R&D budget by $1.5 billion. In addition, Apple representative visit to a BMW factory have fuelled rumours of a possible partnership between the two companies. Further, The Guardian claims to have accessed documents indicating that Apple engineers from the company’s “secretive Special Project group met with officials from GoMentum Station, a 2,100-acre former naval base near San Francisco that is being turned into a high-security testing ground for autonomous vehicles”. While no confirmation has been provided by Apple, the signs are indicating that the company is in fact working on the development of an electric, self-driving vehicle.

Microsoft has reportedly agreed to invest in Uber as part of a funding round that values the ride-hailing company at about $US51 billion.

Delphi Automotive bought Ottomatika, a Carnegie Mellon University spin-off that supplied software used to pilot the self-driving Audi across the US earlier this year.

The world’s largest automotive company by revenue is redefining its strategy regarding manufacturing and distribution of automobiles. Toyota believes the future of mobility for urbanites lies in covering distances between transit and destination (home / work). It therefore wants to rebrand itself as a public transport provider, not merely a vehicle manufacturer.

Hoping to grab a piece of the driverless car investment pie, Australia is gearing for autonomous vehicle trials. We learned that Audi could be preparing to test autonomous cars in this country. Meanwhile, in the UK, the government has released rules to get self-driving vehicles onto public roads.

In the US, a variety of stakeholders from numerous industries (including auto manufacturing, insurance and telecommunications) have come together to develop a “fake” city in Michigan for the testing of connected and driverless vehicle technology. Michigan is only one of the states looking to attract automakers and tech companies to undertake testing of driverless vehicles. Virginia, Florida, Nevada, Texas and California are but some of the states all vying for a piece of the R&D pie.

In the last month, it was revealed that Google set up Google Auto in 2011. The company is a licensed auto manufacturer. The company’s self-driving vehicle technology is being tested in Texas. Google sees several benefits to doing this, including testing in a new environment with new challenges, being exposed to viewpoints beyond those of Silicon Valley and a relaxed regulatory environment with no reporting requirements.

The CEO of SNCF, the French railway company that runs the high-speed TGV has stated that he wants the company to offer door-to-door mobility services: “We can’t just provide trains; we have to consider those last few miles people want to travel as well. So we want to offer bikes, electric cars, car sharing, carpooling, light rail systems.”

Also from France, Ségolène Royal, the Minister for Ecology, confirmed driverless vehicles would soon be tested on France’s roads and highways.

Photo: Here

Auto OEMs and their foray into mobility services

Increasingly, auto manufacturers, cognizant of the fact that demographics, increasing urbanization and its effects as well as increased mobility options represent a threat to their business model, are vertically integrating forward into the mobility space.

Increasingly, auto manufacturers, cognizant of the fact that demographics, increasing urbanization and its effects as well as increased mobility options represent a threat to their business model, are vertically integrating forward into the mobility space. Ford’s 29 mobility projects launched earlier this year are a perfect example. One of these projects is Ford’s Dynamic Social Shuttle allowing users to order shuttle rides.

9a321170-da32-11e4-ab90-516a7d968d09_Ford-Dynamic-Social-Shuttle
Ford

 

Another Ford project that is getting publicity in recent weeks is its Go!Drive UK car sharing project where EVs and ICE vehicles are being provided to users.

Audi launched its on demand car sharing service in the US. This is a program offering daily rentals of Audi vehicles. The company has indicated that it will soon be launching its Audi at home program (available in select premium condo complexes).

Silicon Valley vs auto OEM autonomous visions

As we have stated time and again, the vision of autonomy of most auto manufacturers is not the same as that adopted by Silicon Valley’s stakeholders.

As we have stated time and again, the vision of autonomy of most auto manufacturers is not the same as that adopted by Silicon Valley’s stakeholders. Google, Uber and others are working on achieving NHTSA Level 4 autonomy while the auto OEMs are generally happy to have semi-autonomous features on vehicles ensuring the current business model is not threatened (As a side note: more studies undertaken in the field conclude that self-driving vehicles could drastically reduce vehicle ownership while others are suggesting that self-driving taxibots could replace 9 out of 10 cars).

Over the last few weeks, we saw increasing evidence of the two visions. Hyundai, for example, will invest US$1.8 Billion in driverless technologies by 2018 and will introduce its semi-autonomous Equus this year. The vehicle will allow owners “to take their hands off the steering wheel and feet off the brakes as they’re traveling down the highway, and let their car do the driving”.  The company plans for fully self-driving vehicles in 2030.

Carlos Ghosn’s (Nissan Renault) perspectives have been discussed in previous newsletters: fully autonomous drive is at least a decade away. The company has re-emphasized its commitment to be ready with what have been described as NHTSA Level 3 autonomous vehicles by 2020.

Highly automated vehicle models abound

Volvo and Subaru are just some of the auto manufacturers that are promising the delivery of cars that avoid crashes.

Volvo and Subaru are just some of the auto manufacturers that are promising the delivery of cars that avoid crashes.

Consequently, even before fully self-driving vehicles are navigating our roads and highways, we will be benefitting from technology intended to compensate for driver error. This will have a tremendous implication on numerous industries, including insurance, car repair, …

The 2015 NHTSA Report on Vehicle Crashes estimates that 94% of car accidents are due to driver related issues.

Car sharing and its impact on auto sales

ARK Investment Management estimates that “a rise in car sharing to 5% of all journeys could almost halve US auto sales”.

ARK Investment Management estimates that “a rise in car sharing to 5% of all journeys could almost halve US auto sales”. Given the rapid expansion of car sharing programs around the world, it is understandable that auto manufacturers are interested in expanding into car sharing and other mobility services.

Which auto OEM will partner with Google?

Google has begun discussions with most of the top auto manufacturers

Last year, Google’s Chris Urmson indicated that the Silicon Valley giant was seeking auto industry partners “to bring its vision of a self-driving car to market within the next five years”. And now, we read that Google has begun discussions with most of the top auto manufacturers (including GM, Ford, Toyota, Daimler and Volkswagen) for such an “alliance”. In fact, just a few days ago, GM’s Chief Technology Officer was quoted as saying “we’d certainly be open to having a discussion with them”. Such a “partnership” would have numerous benefits for both Google and the auto OEM but control over the technology is just one of the big issues that will need to be ironed out. Another is the vision of autonomy. While Google’s objective is to deliver a fully driverless (Level 4 autonomy) vehicle to consumers, many of the auto manufacturers (for obvious and self-serving reasons) would prefer to keep the driver in the loop (Level 3 autonomy). If a deal is struck, it could certainly help in meeting the 2020 driverless vehicle commercialization objective that many players have been referring to.

Speaking at the Detroit auto show, Chris Urmson stated that he does not believe that NHTSA will stand in Google’s way and that the company’s outlook for fielding a fully driverless car on public roads is probably 5 years – but that’s the forecast for sunny California. When can we expect to see these vehicles in Canada and other nordic climates?

From auto manufacturing to mobility services

The 2015 Consumer Electronics Show was once again attended by over one hundred thousand people looking to discover the next great thing.

The 2015 Consumer Electronics Show was once again attended by over one hundred thousand people looking to discover the next great thing. Over the last few years, the show has attracted some of the most innovative prototypes and concepts created by the auto industry.

At this year’s show, Daimler’s CEO, Dieter Zetsche, delivered a keynote, during which the Mercedes F015 electric driverless concept car was introduced.  It can only be described as one thing: luxury in motion.

 

Mark Fields, Ford’s CEO, gave a morning keynote at CES during which he introduced Ford Smart Mobility and the 25 mobility experiments that the company will be undertaking in cities around the world.

According to Fields, four megatrends are shaping the way Ford sees the future:

  • increasing urbanization
  • rapid growth of the middle class
  • issues of air quality and related health risks from congestion
  • changing consumer attitudes and priorities.

Combine these megatrends with three enablers (connectivity [in two years, 80% of world’s population will have a smartphone], software and sensor technology and big, smart data) and Ford sees a major opportunity for innovation and a “higher purpose”, as Fields explains.

1420573263343.jpg

The 25 described experiments fall into three categories:

  • creating a better customer experience
  • developing more flexible user-ship models for customers
  • connecting with every customer in a socially collaborative and rewarding way. 

Many of the experiments to be undertaken relate to vehicle sharing and many involve electric vehicles. Fields also mentioned “user-ship” experience, multimodality and the company’s priority “in making the first Ford autonomous vehicle accessible to the masses” although Fields does expect the first driverless vehicles to be available in five years.

He spoke about shared and electric as well about autonomous and multimodal. Fields also talked about making mobility information accessible to consumers through their smart phones.  Doesn’t this remind you of the SEAMlessTM Mobility model that has been promoted by the Transportation Evolution Institute?

The megatrends identified by Ford are clear to everyone in the mobility space.  The combination of population growth, urbanization, an aging population, millenials’ relative disinterest in vehicle ownership / driving and finally, the congestion and pollution issues faced by most cities would make any auto manufacturer and transportation planner realize that a more sustainable transportation system is required.

Strained government finances in most countries means that limited resources can be invested toward new road infrastructure. As Fields stated, “the existing infrastructure for motor vehicles simply cannot sustain the sheer number of vehicles expected to be on the road in the coming years”.

Given a low vehicle utilization rate (average of 4%) means that vehicles can be shared. The growth of an increasingly urbanized population means they HAVE to be shared.

Despite Fields’ continued emphasis on a “higher purpose”, we are all aware that auto manufacturers are in business to deliver a strong return to shareholders.  It is fantastic to see that at least some of these auto OEMs are recognizing that a strong ROI will not necessarily only come from auto manufacturing but from an expansion into other areas of mobility.

In the future, surviving auto manufacturers will need to adjust to the new mobility ecosystem and become mobility service providers. Such mobility services may include operation of car sharing programs, ride sharing services and mobility insurance.

Will today’s auto manufacturers, seeking to generate revenue from activities other than vehicle manufacturing, look to expand their operations into areas that are currently the domain of transit properties? How will governments react in such situations?