Navigant Research Blog

Trust in Blockchain

— October 3, 2017

Trust. You can’t touch it or smell it, but it’s a vital ingredient in every commercial transaction. It exists between companies and their staff, suppliers, and customers. The entire worldwide monetary system is based on the principle of trust. One could argue that trust, above all else, is what binds the modern world together. However, trust is not blind: mistrust will also exist between the parties of financial transactions. Consequently, it is hard to build trust, but it can turn to dust in a matter of seconds.

Part of the attraction of cryptocurrencies, like Bitcoin, is that trust is placed in its consensus mechanism and not between a transaction’s counterparties. Anonymous users exchange Bitcoin without the need to measure a counterparty’s trustworthiness. Blockchain technology creates trust across the entire Bitcoin network through its distributed ledger and consensus-based transaction verification. While Bitcoin receives a great deal of media attention, blockchain technology is coming out of Bitcoin’s shadow as a potential game changer for transactions. Many industries are investigating blockchain’s potential to remove the requirement of central market functions, speed up transaction processing, and reduce overall costs. In addition, there are other use cases outside of transaction management. However, there are many issues with the technology that must be resolved before it becomes a mainstream technology.

Ironically, Trust Could Be Blockchain’s Undoing

Few technologies as immature as blockchain receive comparable media interest. Despite any current large enterprisewide deployments, blockchain evangelists have touted it as a technology panacea. It will likely be years before blockchain applications move into the mainstream. Blockchain startups have attracted billions in investment, yet these companies are exactly that: startups. In some cases, little more than a handful of enthusiasts with a good idea and some seed capital.

And therein lies the problem: blockchain could suffer from a huge trust issue. Not in the creation of trustless networks, but trust in the technology itself. The expectation of blockchain’s potential—driven by an unrelenting hype machine—far exceeds its current ability to deliver. It will likely be 4 or 5 years before we see any large-scale blockchain deployments. In the interim, some startups will run out of capital and close, others’ products will fail to deliver on their promises. What is certain is that blockchain developers will come across many issues converting blockchain from an open source software into something that is enterprise ready, scalable, and able to provide viable alternatives to existing technologies.

Expectations Could Be Set Too High

The problem is that 4 or 5 years is a long time to wait. The hype around blockchain is such that expectations can be set unrealistically high. I expect a great deal of negative press if too many startups fail or if too many projects become encumbered by too many unforeseen technology problems. The industry will lose its trust in the entire blockchain industry. A dollar value can be attributed to companies’ trust in blockchain—it’s currently the total amount pouring into trials and proofs of concept. A breakdown in trust will mean an end to project funding and the end of the road for blockchain.

Blockchain has some unique features that could benefit many organizations in the future. But it is not a panacea. It needs time to overcome its teething problems and to demonstrate its value. The hype surrounding the technology could well be its undoing.

Companies investigating blockchain should do so with the full knowledge that it is an emerging technology. It will take time, patience, and investment to adapt blockchain for enterprise-class deployments.

 

Denver RTD Hops on the Electric Bus Line

— October 3, 2017

Commitments to electric buses (e-buses) are ramping up in the United States. Several agencies are bringing in fleets of a few dozen to over 100 e-buses over the next few years. One such agency, the Regional Transportation District (RTD) of Denver, is deploying 36 e-buses from Chinese company BYD Motors, Inc. Among the biggest drivers for the interest in e-buses is their increased efficiency. These BYD buses are expected to get 12 MPGe to 14 MPGe, significantly improving on the 3-4 miles per gallon of diesel buses. E-buses also have reduced maintenance costs. RTD says the biggest maintenance issue with these buses are the doors.

BYD Bus Details

Each vehicle costs $750,000; this includes the price of the battery chargers and a lifetime warranty for the lithium iron phosphate batteries. Lithium iron phosphate batteries were chosen for two reasons: they are designed to prevent thermal runaway and the batteries are air-cooled to maintain a narrow range of temperatures.

The buses have a maximum battery capacity of 292 kWh that requires 3-4 hours of charging time, giving them 12-14 hours of continuous use before requiring a charge. This has been demonstrated to provide 200 miles of range at 30-40 mph. However, in operation, the range is closer to 80 miles because buses make frequent stops during the 1.3-mile route.

Incorporating E-Buses into the Fleet

Three-phase alternating current (AC) fast-charging stations were installed for the fleet. The AC-to-direct current (DC) converter is onboard the bus. The lack of fast-charging standards in the United States for heavy duty vehicle e-buses is a challenge, as buses must be coupled with proprietary standards. That being the case, RTD has opted to use European standards. The construction of the charging station cost $432,000; this figure does not include the cost of the battery charging equipment.

Because the new fleet is quieter than traditional buses, they have been outfitted with noise generators (that fluctuates pitch with the vehicle’s speed) to notify pedestrians of their presence when operating along the pedestrian-oriented 16th Street Mall. The buses were ordered in 2015 and manufactured in China; final assembly will take place in Lancaster, California to meet Buy America requirements. As of August 2017, 34 of 36 buses had been delivered. RTD has indicated it hopes to incorporate e-buses in regular operations in the future.

Although the e-bus rollout has been successful to date, RTD reports that few agencies have reached out for advice about implementing their own e-bus fleets. Nevertheless, transit agencies across the United States are taking a good look at e-buses.

Other Market Drivers

While lower operations and maintenance costs are already market drivers, there are other market drivers that will become more prominent and increase the desire for e-bus adoption. Dynamic charging systems would enable buses to carry smaller batteries, decreasing costs. In addition, vehicle automation is well-suited for EVs on fixed routes, including buses. Other market drivers include increasing cities’ targets for air quality and climate change concerns and increased demand for vehicles with a reduced carbon footprint. According to Navigant Research’s recent Market Data: Electric Drive Buses report, electric powertrain buses (including all types of hybrids) are expected to grow from approximately 21% of the total bus market in 2017 to around 22% in 2027.

 

Does Yamaha’s Entry into the US E-Bike Market Signal a Turning Point?

— October 3, 2017

Electric bicycles (e-bikes) continue to be the highest selling EVs on the planet. Navigant Research estimates that a total of nearly 35 million units will be sold globally in 2017. However, the US market has struggled mightily to keep up with its successful European and Asia Pacific counterparts.

Market Percentages

In 2016, just under 1% of total bicycle sales in the United States were attributed to e-bikes—compared to 15.7% in Germany and 24.2% in the Netherlands.

E-Bike Market Share of Total Bicycle Market by Country, Select Markets: 2016-2025

(Source: Navigant Research)

Navigant Research projects that e-bike market share will remain relatively low over the 10-year forecast period (below 4%) in the United States since the country has:

  • Lower gasoline prices compared to most other world regions
  • Poor bicycling infrastructure in many major cities, which are primarily designed for cars
  • Low consumer awareness and relatively high levels of opposition from independent bicycle distributors toward e-bike technology (compared to other world regions)

Turning Point?

In what may be a turning point for the US e-bike industry, Yamaha announced it will begin selling its branded e-bikes through US dealers in 2018. The company has been refining its production of e-bikes for decades, with over 2 million sales in Japan since 1993. The major new US market entrant boasts widespread brand awareness, an expansive dealer network with hundreds of locations in the United States, and large R&D budgets unavailable to most North American e-bike vendors.

Yamaha has shown four models thus far, including the UrbanRush, YDX-TORC, CrossCore, and CrossConnect—spanning racing, mountain, and street cruiser styles.

Impact on the Market

While Yamaha is somewhat late to the manufacturer e-bike party in the United States, the company’s entry is likely to present some challenges for other manufacturers and dealers. In the short term, Yamaha will primarily capture a portion of its sales—with some consumers opting for a trusted brand with hundreds of dealers that are available to market, sell, and service their e-bikes.

However, over the long term, Yamaha’s presence should help propel consumer awareness for e-bikes in the United States more broadly—which will be positive for all vendors left in the market. Similar to Elon Musk urging major automakers to sell more competitive EVs, a bigger e-bike market will increase overall revenue opportunities. Smaller companies would be wise to differentiate their e-bike products from Yamaha’s offerings to avoid losing market share to the more powerful marketing competitor.

 

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