Navigant Research Blog

Audi Motorsport Marks the End of an Era as It Shifts to Formula E

— October 26, 2016

Car driving fastOver more than 3 decades, few companies have demonstrated more consistently how to “Win on Sunday, Sell on Monday” than Audi. Since at least the 1980s, Audi has used its involvement in motorsports to demonstrate the efficacy of its latest technologies. In the process, the Volkswagen (VW)-owned premium brand has risen from a niche player to being considered on par with its chief competitors at Mercedes-Benz and BMW. However, as a direct result of the VW diesel emissions scandal, the Audi racing program is making its biggest pivot in nearly 20 years.

The modern era of Audi motorsports began in the early-1980s with the introduction of Audi’s Quattro all-wheel drive system. Drivers such as Michel Mouton, Walter Rohrl, and many others demonstrated that, from that time on, all-wheel drive would be essential in order to win in the World Rally Championship. But since most drivers don’t spend their days driving through forests at high speed, Quattro was then proven on tarmac in series like Trans Am.

Since 1999, Audi has been developing its latest powertrain technologies in endurance racing, including 13 overall victories in 18 years at the 24 Hours of Le Mans. The various evolutions of the R8 that competed from 1999 to 2005 demonstrated the efficiency of gasoline turbocharged direct injected (GTDI) engines that Audi brands in its production models as TSI. While most casual observers consider racing to be all about speed, efficiency can be just as important—especially in 24-hour endurance races like Le Mans. The more time a car spends in the pits getting refueled, the less time it is racking up miles on the circuit. Increasing the number of laps between stops from 10 to 11 and eventually to 14 or 15 laps makes a huge difference in the ability to win.

Performance and Efficiency

As a premium brand, Audi customers are often as interested in performance as they are in efficiency. In 2006, the company set out to prove that you don’t have to sacrifice one for the other. The new R10 and its successors, the R15 and R18, have been powered with a series of TDI turbodiesel engines that quickly came to dominate everywhere they ran—including the first ever victory by a diesel at Le Mans. Thanks to the particulate filters used on the R10, it was both smoke free and quieter than most gasoline racing engines.

In 2012, Audi launched the final series of its endurance racer with the R18 e-tron that paired a smaller TDI V6 with an electro-mechanical flywheel hybrid drive system. Like its predecessors that became the first Le Mans winners with GTDI and diesel engines, the R18 was the first hybrid to win Le Mans.

Following the September 2015 revelation that the VW Group (including the VW, Audi, and Porsche brands) had been cheating on diesel exhaust emissions on millions of vehicles around the world, the promotion of diesel was no longer viable. In the past year, the VW Group has made a major commitment to electrification, announcing that it will introduce 30 new plug-in models in the next 10 years. It is unlikely that any VW-owned brand will ever sell another diesel-powered light duty vehicle in the United States.

Following the final two races of the 2016 World Endurance Championship, the Audi effort will end entirely. It is now all about electrification, so from 2017 onward, Audi will focus instead on the battery-powered Formula E championship with a full, factory-backed effort launching in 2018. As the technology improves, electric racing will expand; by the 2020s, it’s likely that we will see full EVs at Le Mans and possibly the return of Audi.


The Apple Car Was Always a Long Shot

— October 18, 2016

Connected VehiclesIn February 2015, when word of Project Titan filtered down from Cupertino, California, Apple fans and the tech media instantly whipped themselves into a frenzy that has barely subsided since. However, if a new Bloomberg report is accurate, the never-announced Apple car is now all but dead.

For anyone that gave the premise of Apple building a car serious thought, including yours truly, the concept was always a long shot at best. There is a fundamental disconnect between the way Apple has operated for most of the past 2 decades and the auto industry. With a few rare exceptions like Porsche, automakers have long scraped by on notoriously thin, single-digit margins. Ever since Tim Cook joined Apple in 1998, the company has grown into the most profitable enterprise in the history of the world, with margins that regularly exceed 35%.

Along the way, Apple has created a string of hit products that built on its core competencies of computers and user experience. Building cars would have required several new sets of skills that were completely foreign to Apple. (That’s not to say that a company with $200 billion in the bank and an extremely capable leadership team couldn’t have developed or acquired the necessary skills.)

However, if there is one thing that many (although apparently not all) in Silicon Valley have learned from watching Tesla over the past dozen years, it is that building a car is orders of magnitude more difficult than building a messaging app or a smartphone. The complexities of the supply chain are vast, and the regulatory requirements are labyrinthine.

Automotive Transformation

However, Apple is coming at the automotive space at a time when we are on the verge of the biggest inflection since the Model T. As described in Navigant Research’s Transportation Outlook: 2025-2050 report, the autonomous car may be about to take over from the human driver, and we may be shifting from individual car ownership to on-demand mobility services.

To a degree, this would actually be a very good time for Apple to jump in. Apple is a company that likes to control the user experience, and offering an on-demand mobility service where it doesn’t have to sell individual vehicles might actually be a great fit. On the other hand, that same desire to provide a reliable, consistent experience may be working against the company, as we are on the bleeding edge of autonomous vehicles. Apple prefers to let others go first and then learn from their lessons. It didn’t build the first MP3 player, smartphone, or tablet, but instead waited to build devices that worked better. If Apple wants to enter the mobility business, it might be better off waiting a few years until more of the technical and legal hurdles have been overcome.

The Bloomberg report indicates that the company is pivoting toward providing a software platform for other automakers. This seems unlikely to be a successful strategy. The aforementioned desire for control clashes with automakers’ preference to provide a distinct user experience to customers, so if Apple offered an infotainment system beyond CarPlay, it is unlikely to be adopted. If the company were to offer an autonomous driving platform, it would be something that’s not consumer-facing and unlikely to appeal to Apple. The bigger automakers are all developing autonomous systems in-house, and the smaller brands are likely to go with the more experienced Tier One suppliers like Delphi or Continental that can offer a turnkey solution.

Only a fool would completely discount Apple in the transportation space or anything else it wanted to try—but holding your breath while waiting for the company’s automotive offering might prove just as foolish.


Could On-Demand Mobility Finally Pave the Way for Vehicle-to-Grid Integration?

— September 27, 2016

EV RefuelingA decade ago, when discussion of modern plug-in electric vehicles (PEVs) was just getting ramped up again, one of the big potential selling points was the concept of vehicle-to-grid (V2G) integration. For a variety of reasons, it never quite caught on. However, as automakers, suppliers, and a variety of service providers have made a flurry of announcements about deploying autonomous vehicles into ride-hailing services in recent weeks, the time may also have arrived for V2G.

The idea behind V2G was to enable two-way communications and power delivery between PEVs and charging outlets. In addition to electricity flowing into the vehicles’ batteries to enable mobility, PEVs could also provide power back to the grid when needed to cover peak demand loads. A number of automakers have worked with utilities over the years to test out the concept, including Ford. When the automaker built a fleet of 20 prototype Escape plug-in hybrids for field testing in 2008, the cars were loaned out mostly to utilities to evaluate V2G.

Benefits of V2G

For customers, potential benefits of participating in a V2G system include possible rebates for contributing power back to the grid or discounts on charging during off-peak times. Utilities using V2G would have access to a buffer of power during load spikes that would reduce the need to build out extra generating capacity.

Unfortunately, sales of PEVs have turned out to be far lower than many projected a decade ago, with fewer than 120,000 sold in 2015. At the same time, there are more than 3,300 electric utilities in the United States, all with different (and incompatible) systems. With relatively few PEV owners, many with low-range battery EVs, there wasn’t a huge demand for V2G from consumers concerned about being left with insufficient range when they needed their vehicles.

Enter the era of autonomous on-demand mobility (AMOD). Navigant Research’s Transportation Outlook: 2025-2050 report projects that as the world becomes increasingly urbanized and crowded in the next 3 decades, there will be a push toward AMOD to solve the combined problems of air quality, safety, and urban congestion. Most if not all of the autonomous vehicles used to provide these services are also expected to be electric.

New Business Models

Large fleets of more standardized EVs should ease some of the technical issues involved with V2G and could provide the critical mass of fleet size needed to make the investment worthwhile for both utilities and fleet operators. By taking individual owners out of the equation, the fleet management system could cycle some percentage of these autonomous vehicles through V2G-enabled charging stations during the peak hours of electricity demand to provide the needed buffer.

In a world of dramatically reduced retail vehicle sales and the possibility of automakers running these mobility services, such a scheme could also be beneficial to today’s auto dealers. Those dealers could turn their focus to providing maintenance services for fleets, and while vehicles are onsite, they could participate in the V2G system. If utilities were to share part of the savings from not having to expand generation capacity with these mobility and service providers, it would contribute to a new revenue model. As the transportation ecosystem transforms in the coming decades, everyone in the supply chain will need to look at innovative approaches to building a sustainable business.


Using Urban Utility Poles To Geo-Locate Vehicles

— September 16, 2016

CarsharingAs engineers around the world work to make the self-driving car a practical reality, one of the biggest challenges still faced is how to precisely locate where those vehicles are in space at any moment in time. This is especially important in scenarios where the sensors can’t actually see the road—for example, when it is snowing. One potential approach to the problem would be to turn traffic signals, street lamps, and utility poles into beacons that could be used to more precisely triangulate position.

As outlined in Navigant Research’s Transportation Outlook: 2025-2050 report from 2Q 2016, a primary application of autonomous vehicles is likely to be providing autonomous mobility on-demand services in urban environments. As more of the world’s population moves into cities in the coming decades, those urban centers are likely to grow both out and up toward the sky. However, while skyscrapers allow more people to live in the same land mass, they also create problems for the satellite-based location systems such as the American GPS, Russian GLONASS, and European GALILEO.

As the low-power signals that are broadcast from satellite constellations bounce off buildings in urban canyons, errors are generated. Current generation systems only have about 5 meters of precision, which is fine for general navigation purposes, but inadequate for an autonomous vehicle that needs to make decisions about where it should be on a given road to make an upcoming turn.

Localized Systems

This is where a new localized position system could be beneficial. Go down the street in any developed city in the world and you will find poles sticking out of the ground every few hundred feet at most. These poles are owned and maintained by utilities, municipal lighting departments, telecommunications providers, and others that connect and power the modern world. Equipping these poles with wireless beacons could enable them to be used for much more precise geolocation than is currently possible.

In 2013, Apple introduced support for its iBeacon technology into the iPhone and iPad. Small beacons using Bluetooth low energy can be used to provide location indoors or out, enabling retailers to track where customers are lingering in stores and food vendors to deliver orders in crowded stadiums. Similar technology could be harnessed on the road to locate vehicles.

In early 2016, Ford conducted the first test of its autonomous Fusion prototypes on snow-covered roads at a Michigan test facility. The car was able to navigate by triangulating landmarks that had previously been mapped out using LIDAR. While this approach worked well enough when the test car was the only vehicle on the track, it could be problematic in a city where the same landmarks could be blocked from the LIDAR’s view by other vehicles or objects. An approach using location beacons would achieve a similar effect in combination with high definition maps while eliminating the line-of-sight problem.


Equipping urban utility poles with beacons could provide the owners of these poles with the first step toward full vehicle-to-infrastructure communications and potentially a mechanism to deploy a variety of other revenue generating services. For example, vehicles equipped with cameras for either driver assist or autonomous systems could be used to gather data about available parking spaces. That could then be fed into a reservation system allowing drivers to find and pay for parking before arriving at the location. The data providers could then get a share of the revenue generated from that service.

The first deployments of these beacons could be done in the next few years as vehicle-to-external communications rolls out in new vehicles followed by 5G wireless systems in the early 2020s.


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