Navigant Research Blog

Ford Shifts Production Plans to Support Electrification Push

— January 3, 2017

In December 2015, Ford announced plans to invest $4.5 billion to introduce 13 new electrified vehicle models by 2020. The company provided no additional details at the time, but a big piece of that plan just became clear as CEO Mark Fields made a major investment announcement at the Flat Rock Assembly Plant near Detroit on January 3.

Ford has been criticized in the media for a seemingly lackadaisical approach to introducing plug-in electric vehicles (PEVs) over the past several years; however, this criticism is only partially valid. Unlike its more PEV-aggressive competitors Nissan and GM, Ford has avoided building dedicated PEV platforms to date—but that will soon change. The Focus Electric BEV has been called out for being merely a compliance car to meet California zero emissions vehicle mandates. Ford has been focused on pushing the plug-in hybrid variants of the Fusion and C-Max, which have been among the best-selling PEVs over the past 2 years.

Changes to an American Classic

According to Fields, Ford’s powertrain lineup will look very different by 2020. The best-selling vehicle in America for nearly four decades, the F-150 pickup, will be available with a new hybrid system that is expected to retain the towing and payload capabilities that customers in this segment expect. A rear-wheel drive hybrid system will be available for the truck and will also be applied to Ford’s most iconic car, the Mustang, when it gets its next update in 2020.

With the overall market shift away from cars toward utility vehicles, it has been a struggle for automakers to sell PEVs in volume. With that in mind, several of the new electrified vehicles will be SUVs, including the next-generation Explorer, which is built in Chicago. The police interceptor variant of the Explorer outsells the Taurus sedan by more than two to one, and the new generation will be Ford’s first hybrid with a turbocharged EcoBoost engine.

Big Plans for Flat Rock, Michigan

In addition to the Explorer hybrid, Ford will build a new, smaller SUV with a fully electric powertrain that offers a range of at least 300 miles. The electric SUV will be built at the Flat Rock, Michigan plant alongside the Lincoln Continental, Mustang, and a previously announced fully automated vehicle for ride-hailing that will debut in 2021. In order to support these new vehicles, Ford is investing $700 million to expand the plant, as well as adding 700 more jobs.

At the same time, Ford is canceling plans for a $1.6 billion small car plant in Mexico. During the 2016 presidential campaign, then candidate Donald Trump made a major issue of the plan to shift Focus production to Mexico from Michigan. The next Focus will instead be built at the existing Hermosillo, Mexico plant alongside the Fusion sedan. The small car market isn’t growing right now, limiting the need for companies such as Ford to expand the manufacturing of these vehicles. With sales of the Fusion slowing as well, there is plenty of capacity at Hermosillo to support both cars, plus the Lincoln MKZ.

Navigant Research’s recent Market Data: Electric Vehicle Market Forecast report projects that more than 6.8 million PEVs will be sold annually across the globe by 2025. Ford’s new electrification plan shows that the company is focused on applying the technology to vehicles where it believes it can do so profitably.

 

Autonomous Ride-Hailing May Hail the New Era of the Minivan

— December 22, 2016

CarsharingIt’s been more than 3 decades since Hal Sperlich and Lee Iacocca redefined the family hauler with the introduction of the minivan. Over the subsequent 20 years, the minivan segment grew to become one of the largest in the US market before being overtaken by SUVs and beginning a long and steady decline. However, as we move into the era of autonomous mobility services, we may also see a resurgence of what had been derided as the “soccer mom-mobile.”

While the minivan market isn’t as big as it once was in total sales volume, as these vehicles have gained useful amenities, they have become quite profitable. Starting in 2016, the companies that have stuck by this body style have begun introducing redesigned vans, including the 2017 Chrysler Pacifica and the 2018 Honda Odyssey that will debut at January’s North American International Auto Show in Detroit.

Vans On Demand

When Google decided it was time to expand its development fleet of self-driving cars, it struck a deal with Fiat Chrysler Automobiles (FCA) to purchase 100 Pacifica plug-in hybrid EVs (PHEVs) and equip them with its autonomous sensing and control systems. With the self-driving car project now spun out of the X research lab as a separate company called Waymo, it has also announced an agreement with Honda to discuss collaboration on development and possibly commercialization of autonomous technologies. In Navigant Research’s 2015 Autonomous Vehicle OEM Leaderboard Report, Honda was ranked eighth among 18 companies evaluated, so working with Waymo could provide a boost relative to the market leaders.

Since auto industry veteran John Krafcik came on board as CEO of what is now Waymo in October 2015, the program has apparently shifted its focus from developing complete cars to working with existing carmakers to supply its systems as well as potentially building mobility service platforms. As the shape of future mobility services continues to evolve, these platforms are likely to include a broad range of vehicle types to support different needs. One- or two-person pods may be adequate to provide first/last mile transportation in dense urban areas, while something more akin to a minivan can support families or larger groups traveling on a variety of routes that don’t have sufficient density to make mass transit viable.

Ford-owned San Francisco-based startup Chariot is already providing hybrid on-demand services in San Francisco and Austin, Texas with human-driven vans. As autonomous vans become available, they could be deployed in the same way. For these types of transportation services, the easier ingress/egress of a van would be much more practical than climbing up into an SUV.

Growing Trend

Volkswagen will also be joining in on the autonomous van trend at January’s Detroit show. The embattled German automaker will be unveiling a new battery electric micro-bus concept based on the same new modular electric platform that underpins the I.D. concept shown at this year’s Frankfurt Motor Show. FCA will be participating in the 2017 International CES in Las Vegas for the first time and will reportedly show a battery electric version of the Pacifica.

FCA’s program with Waymo only extended as far integrating autonomous hardware into the minivan and does not include system development. However, as one of the companies in the back half of the pack in the Leaderboard rankings, FCA would also be a good candidate to adopt a production autonomous package from Waymo or one of the larger Tier 1 suppliers such as Delphi or Continental. We’ll probably be seeing a lot more self-driving minivans in the coming decade.

 

Autonomous Vehicles as Both a Sustaining and Disruptive Innovation

— December 9, 2016

Electric Vehicle 2While listening to a recent episode of the Exponent podcast, co-hosts Ben Thompson and James Allworth had a vibrant discussion on one of their regular topics: sustaining versus disruptive innovation. The topic was in the context of whether Apple should acquire Netflix, but as the hosts’ conversations often do, it got me thinking about the auto industry. With self-driving vehicles, transportation is on the precipice of a dramatic change that many argue will be exceptionally disruptive. I’d like to take a slightly contrarian view by arguing that autonomous technology will be sustaining to parts of the auto industry and disruptive in ways that many in the tech industry may be missing.

Sustaining vs. Disruptive

Disruption is an often-abused word in the world of technology, but as defined by Harvard University’s Clayton Christensen, it boils down to innovations that create new markets and value networks and eventually displace existing market leaders. Sustaining innovations evolve existing markets and improve value.

An example of the latter is the way that manufacturing automation improved productivity and quality in the way cars are built over the past several decades. However, as in any complex analysis, these things are never simply binary. While new manufacturing technology was sustaining for automakers, it was extremely disruptive to the people that worked in their factories. Similarly, any argument that autonomous vehicles will be purely disruptive of the auto industry is a vast oversimplification. If automakers had followed the path of Nokia in the mobile phone business and ignored the threat posed by Apple when it introduced the iPhone in 2007, incumbent automakers would be facing extinction in the face of autonomy.

Instead, I would argue autonomy will instead be sustaining for many (although probably not all) automakers. Someone will need to build these vehicles regardless of whether they are piloted by computers or humans, and the companies that already have design, engineering, and manufacturing expertise are well-positioned to do so.

Just as other real-world examples are rarely black and white, there will be disruption from the autonomous vehicle. Most obviously it will affect those that make a living from driving, whether by taxi, bus, or truck—society will have to address this employment displacement in the next decade.

Retail Side

Perhaps the less anticipated and more impactful disruption is faced by the retail side of the auto industry. There are nearly 17,000 franchised car dealers in the United States currently selling about 17.5 million vehicles a year with more than 1 million employees. If transportation shifts as expected over the next several decades (i.e., from an individual ownership model to on-demand autonomous mobility services), the business of these retailers will evaporate. It won’t be overnight, but it will almost inevitably happen.

However, someone still needs to own these vehicles, right? Sure, but unlike the Silicon Valley investors that pumped Uber’s valuation to more than $60 billion, I doubt it will be standalone ride-hailing companies. I’m increasingly of the opinion that mobility services will be provided by the manufacturers themselves, leveraging their existing expertise in building, logistics, and financing along with strategic investments in the software platforms needed to connect people with rides.

Disruption by its nature takes people by surprise. The self-driving car will be both sustaining and disruptive, and probably not in the obvious ways.

 

With Self-Driving Cars, We’re All Cartographers

— December 5, 2016

Connected VehiclesMapmaking used to be the domain of a select group of cartographers that would gather, review, and plot out data onto sheets of paper. The chances that you actually knew a cartographer in the past were probably pretty slim—but not anymore. Today and in the future, virtually everyone is or will be a contributor to the increasingly detailed maps that represent the world we live in.

As our vehicles become increasingly automated, they need ever more detailed maps, and not just the maps we get from Google or Apple on our smartphones. The self-driving car will need much more information. The basics of street names, directions, and building numbers are just the beginning determining a basic route from where a car is to where its user has asked it to go. This data set already exists in every vehicle with a navigation system and a GPS receiver.

Limits of GPS

However, if you’ve ever tried to navigate around urban canyons in places like Manhattan or Chicago, you’ve no doubt experienced the limitations of GPS as the signals orbiting more than 12,000 miles above the Earth’s surface bounce between skyscrapers. Looking at the navigation display and realizing that the car thinks it is several city blocks away from your actual location is not exactly confidence-inspiring.

Even when it works correctly, GPS is only accurate to several feet, not nearly precise enough to safely locate where a car is on the road. Then there’s the problem of navigating around on streets when you can’t actually see the road, such as when it snows. If you can’t rely on GPS for precise positioning and you can’t see lane markers, you need other data to calculate location.

Crowdsourced Maps

That’s where the future of crowdsourced mapping comes in. If you use smartphone-based navigation apps like Waze, Here, TomTom, or Google or Apple maps, you are already contributing to augmenting the map data that is also collected by fleets of sensor-equipped vehicles that drive the world’s roads.

In the near future, the cameras and other sensors that power lane keeping systems and other driver assist features will be feeding information to datacenters where it is aggregated with information from other drivers. In addition to real-time traffic and road conditions, they will be looking for landmarks like bridges, signs, buildings and more, and anything that isn’t already in the high-definition map will be uploaded.

Mobileye is the leading maker of image processing and recognition systems used by automakers for driver assist. In January 2016, the company announced a new product called Road Experience Management that processes images captured by car cameras and sorts out new information. This data is then transmitted and collected in order to update maps. Earlier this year, Ford invested in a startup called Civil Maps that is developing a similar system using cameras and any other sensors on the vehicle that can provide relevant data.

Even when the vehicle sensors can’t see the road, if they can see landmarks, they can triangulate and calculate position to within a few inches. Last winter, Ford demonstrated the ability to do precisely this with its autonomous prototype using a high-definition map generated using LIDAR. The future ability of autonomous vehicles to successfully operate in varied conditions will depend in large part on the contributions that we all make toward improving the quality of maps.

 

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