Navigant Research Blog

Autonomous Vehicle Pros and Cons for Government Budgets

— August 10, 2015

Autonomous vehicles continue to gather media headlines as the industry promises a highly desirable future consisting of drastically reduced vehicle accident rates, congestion, and road emissions. While these impacts and the potential effects on the insurance industry are often discussed at length, less attention has been given to how autonomous vehicles may affect government budgets—particularly law enforcement.

Speeding Tickets

As a prime example, autonomous vehicles simply do not drive faster than posted speed limits. Google’s driverless vehicles have logged more 1 million miles autonomously without receiving a single citation. According to the National Highway Traffic Safety Administration (NHTSA), the average cost of a speeding ticket in the United States is $152, and about 41 million people receive a citation each year. This amounts to a staggering $6.23 billion in potentially lost state and local government revenue each year due to autonomous vehicles. Additionally, autonomous vehicles do not run red lights or drive under the influence of any substances, eliminating two other significant sources of revenue for government services.

What About Parking?

And then there’s parking; New York City alone generated $534 million in parking ticket revenue in 2013. How autonomous vehicles may affect the business of parking revenue is much less clear than other sources of traffic violation revenue. Navigant Research expects parking to be an area remaining far more in consumers’ hands compared to highway and even city driving, at least in the near term.  Nevertheless, the on-demand nature of autonomous vehicle fleets is expected to reduce personal vehicle ownership over time, and thus the need for parking is expected to decrease, as well. If large numbers of people are using smartphone apps such as Uber to summon autonomous vehicles, parking demand and usage should decrease, which in turn is expected to lead to a significant loss in parking ticket revenue. The extent to which this may happen is unclear thus far.

Revenue Reduction Offset by Reduced Costs?

Conversely, autonomous vehicles may also reduce costs for government, somewhat negating the loss in revenue streams. The NHTSA has stated that 7% of vehicle crashes are paid for with public revenue. This annual taxpayer bill of roughly $10 billion is used for emergency services, property damage, court costs, and other expenses. Autonomous vehicles could drastically reduce or nearly eliminate the 5.6 million accidents occurring annually in the United States, saving local and state governments enormously on expenditures. Reduced demand for parking in densely populated urban areas may also free up land that could be utilized for either residential or commercial development, which could provide a new source of jobs, housing, and tax revenue.

Whether autonomous vehicles will ultimately end up saving governments money or reducing their budgets is unclear. What is clear, however, is that a future where citizens spend little or no money on traffic violations and everyone saves enormously on vehicle crashes and fatalities is a future worth pursuing.

 

Smart Cities: It’s All Relative

— July 29, 2015

Cities around the world are increasingly adopting technologies to improve the quality of life in the modern city, where traffic congestion, air pollution, and a lack of mobility are often the norm. Many smart city technologies are also being developed to deal with specific issues in energy distribution, energy and water management, transportation optimization, and public safety and security. Navigant Research defines a smart city as the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development.

Currently, the level of smart city technology integration varies greatly by region. What is considered to be one of the leading smart cities in Brazil, for example, may be far behind some of the leading cities in Denmark. To illustrate this, let’s compare Curitiba, Brazil with Copenhagen, Denmark.

Apples to Oranges

Curitiba has one of the most advanced recycling programs in Brazil, yet the city recycles just 20% of its waste.  In Copenhagen, 57% of total waste was recycled in 2009. Additionally, incineration centers are converting waste to energy by using steam from the water that is heated in the incinerator ovens. Roughly 80% of this steam energy is being used in the municipal heating system, and 20% is being fed back into the electricity grid. While Curitiba deserves significant praise for pioneering a very successful bus rapid transit (BRT) system, the city is still struggling with congestion and has just recently made initial plans for subway system infrastructure. Conversely, Copenhagen Metro began operation in 2002 (22 stations, nine of which are underground), and a driverless light metro supplements the larger S-train rapid transit system. Back in Brazil, Curitiba has the highest rate of public transport use in Brazil (45% of journeys), while in Copenhagen, it is estimated that 50% of all citizens commute by bicycle every day.

Beyond specific projects, broader climate action goals between these two cities are also quite different. Copenhagen aims to become the first carbon-neutral city in the world by 2025. The city has established targets in energy efficiency, renewable energy, and green building standards (all new buildings must be carbon neutral by 2020). Navigant Research has been unable to identify any city-level sustainability or climate action plans in Curitiba.

GDP Considerations

This comparative analysis by no means intends to detract from the tremendous achievements and progress in sustainability that Curitiba has attained. Instead, it seeks to illustrate the regional nature and context of what constitutes a leading smart city. With a gross domestic product (GDP) per capita of roughly $60,000 in Copenhagen, a much larger volume of resources is available for smart city development than in Curitiba, where GDP per capita is estimated to be $13,000.

The global smart city technology market is forecast to be worth more than $27.5 billion annually by 2023, according to Navigant Research’s Smart Cities report. Cumulative global investment in smart city technologies over the decade is expected to be $174.4 billion.

Annual Smart City Technology Revenue by Region, World Markets: 2014-2023

Smart Cities Revenue

(Source: Navigant Research)

 

Several U.S. Parking Garages Become Certified Green Garages

— July 16, 2015

The Green Parking Council’s (GPC’s) Green Garage Certification is the only global rating system that defines and recognizes sustainable practices in parking structure management, programming, design, and technology.  This certification, which was launched in June 2014, assesses nearly 50 elements of parking facility sustainability, including operations that maximize performance while minimizing waste; programs encouraging alternative modes of transportation and community involvement; and efficient and sustainable technology and structure design.

The certification was initiated partly in response to the decision by the U.S. Green Building Council in 2012 that it would no longer certify parking structures under the Leadership in Energy and Environmental Design (LEED) program. Going forward, the Green Garage Certification will be administered globally by Green Business Certification, Inc., which is the same certification body that oversees the U.S. Green Building Council’s global LEED green building rating system.

On July 1, 2015, the GPC announced the first seven parking facilities in the United States to achieve Green Garage Certification.

Garages with Green Garage Certifications: July 2015

Garages(Source: Green Parking Council)

While details haven’t been released on what each parking garage offers in particular, sustainable garages often integrate technologies and strategies such as energy-efficient lighting and ventilation systems, guidance systems that assist drivers in finding an available space more quickly, idle-reduction technologies, electric vehicle charging stations, tire inflation stations, fire suppression systems, carsharing programs, bicycle parking, and storm water management practices.

The GPC’s Green Garage Certification is an important development for the parking industry. LEED certification for buildings has gained tremendous popularity over the past few years, and the certification from the GPC could have the same result on the parking industry that LEED has had on buildings. According to the U.S. Green Building Council, over 16,000 LEED for New Construction and Major Renovation projects have been certified by the agency since 2000. These certification programs encourage businesses and government agencies to participate in energy efficiency by providing the organizations with clear goals and standards to work toward, in addition to sustainable marketing opportunities. For more information on advanced smart parking systems, see Navigant Research’s latest report, Smart Parking Systems, on the evolving market.

 

Is the Gogoro E-Scooter Priced Too High?

— July 1, 2015

Taiwan-based electric scooter (e-scooter) battery swap company Gogoro has finally unveiled pricing for the most ambitious e-scooter program in the world. Gogoro’s e-scooter, called the Smartscooter,  and access to a battery swap network will cost consumers $4,100 and about $30 per month, respectively. For the company’s first deployment in Taipei, it is offering 2 years of free maintenance, 1 year of theft insurance, and 2 years of free battery swapping. The Gogoro Smartscooter became available for pre-order in Taipei on June 27.

There are several ways to interpret the pricing announced by Gogoro. On one hand, for an exceptional looking and performing e-scooter, the price seems fair. Gogoro’s Smartscooter has a range of 60 miles and a top speed of 60 mph (going from 0 mph to 31 mph in 4.2 seconds). Advanced features, such as smartphone integration, light-emitting diode (LED) headlights and tail lights, an intelligent security system, a digital dashboard, and an overall sleek design, make this scooter far more attractive than most other electric models. On the other hand, many consumers in Asian megacities, including Taipei, are accustomed to paying $500 or less for low-end gasoline-powered scooters. A higher-end, more comparable 125cc gas scooter costs roughly $2,600, which is still considerably less than Gogoro’s Smartscooter.

Lack of Battery Ownership Remains an Issue

Gogoro CEO Horace Luke had previously stated that the company’s e-scooter would be in the $2,000 to $3,000 price range. The Smartscooter was expected to cost about the same amount as a comparable gasoline scooter since consumers of the Smartscooter won’t actually own the batteries used in the vehicles (which constitutes a large portion of the overall cost and value of the e-scooter). Removing the battery from the purchase price was meant to drastically reduce the cost of the vehicle, using more of a leasing-style mobile phone business model, where the initial purchase price of the e-scooter is reduced to encourage early adoption and subscription fees for the use of the company’s battery swapping network will eventually make up the difference over time. It is somewhat surprising that even without consumers having to pay for a battery, the e-scooter is still more expensive to buy than a gasoline equivalent.

Taiwan Subsidies a Factor

Nevertheless, Gogoro claims that when government subsidies and the cost savings of using the battery swap network instead of gas are considered, the overall cost of owning a Smartscooter will be less than its gas counterpart after 2 years. E-scooters do receive subsidies in Taiwan, with the amount ranging from TWD21,000 ($663) to TWD34,000 ($1,074) in most regions. These subsidies should help narrow the gap in price differential and encourage larger adoption of the e-scooters.

While it remains to be seen if Gogoro can win over thousands of customers to support its battery swap network, if successful, a network like Gogoro’s could become the most impactful development in electric transportation since Tesla introduced the Model S. Nearby, enormous scooter markets such as China, India, and Indonesia could see battery swap networks in their megacities sooner rather than later if Gogoro is successful in Taiwan.

For more information on electric scooters, see Navigant Research’s Electric Motorcycles and Scooters report, which forecasts global cumulative sales of electric scooters will total over 42 million units from 2015 to 2024.

 

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