Navigant Research Blog

A Humble Pickup Bed May Point to the Future of Mobility as a Service

— March 13, 2018

The US auto market is no longer the largest in the world, having been surpassed by China. However, it does lead the world in one thing: pickup trucks—no one loves a large pickup truck the way Americans do. While many may consider the pickup truck a crude, agricultural implement, over the past two decades it has become anything but. The debut of the redesigned 2019 GMC Sierra brings with it a fascinating new bit of tech that may well play a key role in the future of mobility as a service applications.

The humble pickup bed would seem like one of the last places you would look for cutting edge technology, after all, it’s just a box, right? At January 2018’s Detroit Auto Show, Chevrolet introduced the new 2019 Silverado pickup with a reconfigured bed that gave it a 20% cargo volume advantage over its competitors. In March, General Motors’ (GM’s) premium truck brand, GMC, launched its version of the Sierra with an optional carbon fiber cargo box.

Breaking the Mold

Carbon fiber has been used in many high performance vehicles for its combination of high strength and low weight, but its cost and manufacturing challenges have largely kept it out of mainstream vehicles. The highest volume applications to date for carbon fiber have been on the BMW i3 and i8 plug-in EVs. However, while BMW and its carbon supplier SGL have made advances in bringing down cost and improving reparability, they continue to use the same fundamental process that has always been used for making parts. That process lies down a woven carbon fiber matte in a mold infused with plastic resin and is then cured in a large autoclave to produce rigid thermoset components. This process has a cycle time of 45 minutes or more.

GMC and supplier Continental Structural Plastics are breaking the mold by using a sheet molding compound (SMC) process that replaces the glass fibers that have long been used with carbon fibers. Rather than a large woven matte that requires long, costly strands of fiber, SMC infuses the plastic resin with millions of short strands that are about 1-inch long. An SMC carbon fiber panel can be also be produced in about 1 minute and requires no autoclave curing. GMC showed a video of a carbon fiber pickup box being subjected to the sort of abuse a work truck goes through and it survived with no issue.

Thinking Outside of the Box—Environmental Impacts from SMCs

While it is great that GMC has a pickup box that saves 62 pounds over the steel equivalent and should be more durable, there are perhaps more important long-term implications of this new material technology. For instance, SMC could be incorporated into GM’s aggressive commitment to both zero emissions and automated vehicles. Automated vehicles are expected to be primarily utilized in mobility as a service (MaaS) applications, where vehicles will have much higher utilization and potentially shorter service life. Rather than scrapping MaaS vehicles every 3-4 years and expending energy to build replacements, a new vehicle architecture that utilizes carbon SMC structures with replaceable and upgradable components could prove to be far more efficient.

Navigant Research’s Mobility as a Service report projects 7.8 million automated MaaS vehicles could be deployed in 2026. If these vehicles can utilize a lower cost from a durable carbon fiber SMC structure, they could potentially remain in service for 2-3 decades with regular updates to propulsion, battery, sensing, and computing systems. When the SMCs eventually have outlived their usefulness, they can be ground up and remanufactured into something new.

Today’s trucks are test beds for new technology and the profits from their sales fund the development of tomorrow’s advanced vehicles.

 

Urban Automated Vehicle Deployment Needs Coordination

— March 8, 2018

There’s little doubt that ride-hailing as a means of urban transportation is on the rise, and that trend is expected to continue unless something dramatic changes. Urban congestion is also on the increase globally. While there is a clear correlation, causation is still open to some debate—although studies seem to indicate that ride-hailing is at least partly to blame.

As of early 2018, there are probably no more than 1,000 highly automated vehicles (HAVs) being tested on the public in cities around the world. Those tests are going to start turning into commercial applications for ride-hailing possibly as soon as later this year, and before these vehicles proliferate, we need to have the conversation about how to integrate these vehicles without exacerbating the congestion problem.

What Will Entrepreneurs Do?

Left to their own devices, we already know how entrepreneurs, especially those backed by mountains of Silicon Valley cash, are likely to deal with this. They will rush as many vehicles as possible into the marketplace (primarily, in densely populated cities) in order to establish a dominant position early. This has happened in many areas of the technology sector, and it certainly has been the strategy of Uber and Lyft.

Is Ride-Hailing the Future?

Navigant Research’s Mobility as a Service report projects that, by 2026, ride-hailing services will be providing more than 160 billion rides annually and with nearly 1 trillion vehicle miles traveled.

From a consumer perspective so far, ride-hailing has been a huge boon, providing convenient access to rides at reasonable prices (except during rush hour and inclement weather). While I don’t use ride-hailing at home, I haven’t rented a car during a trip in many years and I rarely take traditional cabs. The convenience factor often makes it a great alternative to traditional transit.

Ride-hailing companies claim that for each of the vehicles deployed on their platforms, they replace multiple individually owned vehicles, which should reduce congestion. However, often these vehicles are without passengers as drivers wait for a ride request. To provide short wait times for customers, the companies entice more drivers with higher fares via surge pricing. While this makes sense economically, it also puts more cars on the road at times of high demand, increasing congestion. Also, the platforms have no control over where drivers choose to deploy themselves.

What Is the Potential for HAVs?

HAVs provide an opportunity to address the problem of urban congestion, but only if they are deployed in a coordinated fashion that is probably anathema to those of a more libertarian bent in the tech industry. Nonetheless, cities are going to need to step up and play an active role in shaping deployment plans for HAVs, and companies involved in the sector are going to need to cooperate.

Any regulatory frameworks need to allow for enough flexibility for multiple companies to compete with services and retain the potential to be profitable. At the same time, service providers need to be prepared to share enough data to enable the optimization of the mobility ecosystem so that excess vehicles are kept to a minimum while still meeting the needs of residents.

However, not every resident is going to be able to afford to take an HAV for every trip. A multimodal ecosystem with a range of vehicle types and operational models from point-to-point to fixed-route mass transit will persist. To the degree possible, trips should be optimized with the use of whatever mode makes the most sense. The HAVs should also be optimized to keep empty trips to a minimum, which will benefit everyone by reducing congestion and maximizing profitability.

 

Sharing Companies Shouldn’t Get Free Rides

— February 6, 2018

One of the big themes of recent years has been the emergence of the so-called “sharing” economy. Unless we were raised by hardcore Ayn Rand acolytes, chances are that as children we were taught that sharing is good, and I certainly subscribe to that philosophy. However, the kind of sharing I learned was about splitting cookies or letting other kids play with my toys. It wasn’t about business, it was for free in an altruistic manner. What we increasingly experience today is a freelance gig economy that has little to do with that kind of sharing, and has everything to do with commerce.

The Capitalism of Sharing

Why is this relevant? Many of the shared economy startups claim to be enablers of sharing when in fact they are independent business enablers. Not that there’s anything wrong with that, but we need to recognize these companies and their products for what they are and treat them accordingly from a policy standpoint.

Instagram is, or at least was before it was taken over by “paid influencers,” a place for users to share photos with friends. Uber and Lyft are platforms that enable freelance taxi drivers to give rides to strangers for pay. AirBnB is a platform to let people rent rooms, apartments, or houses to strangers for pay. Turo is a platform that lets individuals try to become Hertz by making their cars available to rent.

Dictionary definitions of sharing don’t rule out commerce since we buy fractions of companies and other products and call them shares. But the messaging from these companies always seems to focus on sharing in the altruistic context. This framing of the message is often used as part of the argument for circumventing regulations that govern the traditional form of the industries these new businesses are trying to compete with.

Safety in Sharing?

While there are undoubtedly plenty of rules in the taxi, hospitality, and rental businesses that are outdated and in many cases simply protectionist for incumbents, there are others that provide a public good. Background checks for taxi and livery drivers aren’t a terrible idea when it comes to public safety. Ensuring that homes being rented out to travelers meet building safety codes is ultimately a good thing. Managing where people pick up rental cars or hail rides at airports or in cities is crucial to safe and efficient operation for everyone. Yet some upstarts seem to think they get a free ride from regulations by playing the sharing card.

In late January 2018, Turo was in a dispute with the City of San Francisco about permitting at the San Francisco International Airport. The rules are meant to help pay for upkeep of the airport and manage traffic congestion. Turo claims it is not a rental company on the basis of it not owning or renting the physical assets, similar to the arguments made by Uber, Airbnb, and others. While the operational details differ from incumbent to incumbent, the end result to the customer is effectively the same as with those established players. They make reservations and payments using the startups portal, pick up their rental, and drive.

Compliance with reasonable business rules will be increasingly important as we transition to automated mobility services. Navigant Research’s report, Market Data: Automated Driving Vehicles, anticipates nearly 5 million such vehicles being deployed by 2025. If cities cannot manage where they go, congestion is likely to get worse rather than improve. We need to find a cooperative balance between overregulation and being completely laissez faire if we are to solve our transportation problems.

 

Detroit Auto Show Stars Fund Future Promised at CES

— January 18, 2018

For many of us that keep tabs on the automotive industry for a living, the first 2 weeks of January are among the most grueling of the year. The North American International Auto Show in Detroit has kicked off the year for several decades. And in the past 10 years, International CES in Las Vegas has become an increasingly important addition to our schedule as the two events run back to back. The announcements at 2018’s shows illustrated some of the crucial interconnections between the growth of technology and the transportation business.

For automakers, CES has largely been a place where they talk about future technologies and try to shift the media’s perception of them from being old-fashioned metal benders to forward-thinking visionaries. They rarely show actual new products, instead focusing on automated and connected concept vehicles. The Detroit show, like most other auto shows, targets consumers that are buying vehicles in the coming year.

For an industry that is facing the biggest transformation in more than 100 years, this is a crucial time. While many recent auto shows have highlighted new plug-in and hybrid vehicles, there were almost none in Detroit this year. Instead, the biggest announcements came from the Detroit-area manufacturers, and they were all pickup trucks—mostly full-size. Fiat Chrysler unveiled the redesigned 2019 Ram 1500. Chevrolet brought out a new from the ground up Silverado, and Ford launched a diesel version of the F-150 and a midsize Ranger pickup.

Profit in Pickups

Pickups are a segment that is likely to be among the last to gain highly automated driving capabilities, as discussed in Navigant Research’s Market Data: Automated Driving Vehicles forecast and its Leaderboard reports. However, those automation technologies were a major topic of conversation in Las Vegas, particularly in the context of whether manufacturers will build new business models around these costly, complicated, support-intensive vehicles.

That’s why pickups are so important to Detroit. They are the profit engines that keep this industry humming along while indirectly funding R&D efforts that will create the next big things. Part of why Ford is bringing the Ranger back to North America is that the average selling price of an F-150 is now more than $58,000. Pickups and large SUVs generate far more profit per vehicle than any small car and they sell in far larger volumes than any other segment in the American market. Ford is projected to make a full-year 2017 profit of more than $9 billion, largely thanks to sales of nearly 900,000 F-series trucks. Even the third place Fiat Chrysler sold more than 500,000 Ram pickups in 2017.

All three manufacturers are adopting fuel efficiency technologies such as 48 V mild-hybrids, dynamic cylinder deactivation, diesel and active aerodynamics in order to meet fuel economy requirements, as discussed in Navigant Research’s Automotive Fuel Efficiency Strategies report. However, until they all figure out how to make sustainable profits in the new age of mobility, we can rest assured that they will continue pressing ahead with enhancing the customer appeal of these trucks in order to keep the cash flowing to develop the promises made at CES.

 

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