Navigant Research Blog

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.


Automated Driving at 2018 CES Is All About Business Models

— January 11, 2018

Ten years to the day after my very first ride in the automated Chevrolet Tahoe that won the 2007 DARPA Urban Challenge, I was in Las Vegas yet again for the 2018 International CES. In the very same parking lot where I took my first driverless ride, I climbed into the backseat of a BMW 5 series sedan sporting the logos of Aptiv and Lyft for an automated round trip from the Las Vegas Convention Center to Caesar’s Palace. As has been the case for most of the past decade, automated driving is the main automotive topic at CES, but now it’s more about the business models than the core technology.

For the second year in a row, General Motors (GM), the company that started the automated driving land rush at CES, is not here even in an official capacity. Supplier Aptive and several of the automakers that did return to Vegas have turned their attention to how they are going to transform their business models in the coming years as we make the shift away from buying and driving our own vehicles. Aptiv is just one of several companies—along with Waymo, Ford, GM, and Jaguar Land Rover—that have partnerships with Lyft to deploy automated vehicles.

The Hunt for New Revenue Streams

However, ride-hailing isn’t going to be the only application for automated vehicles in the coming decade. Automakers are keenly aware of the reality that shared, automated mobility will likely mean that there will be far fewer vehicles in the coming decades. With reduced revenues from sales, they are looking to services to generate new revenue streams. Given that, automakers need to maximize the utilization of these vehicles because the number of people in need of rides is hardly consistent during the course of the day.

While many surveys have asked consumers if they want to buy automated vehicles in recent years, it’s really the wrong question. For the most part, consumers will be unlikely to have the opportunity to purchase these vehicles. Instead, they will be owned and operated by manufacturers and other providers and made available on-demand.

Platforms Evolve, Targeting New Applications

The architecture of the vehicle will change from the traditional cars and SUVs we know today to something more flexible that can accommodate everything from passengers to pizzas to packages. Toyota unveiled a concept at CES 2018 called the e-Palette specifically targeted at these multimodal applications. It will be built in three sizes to accommodate different use cases.

Along with the vehicle, Toyota announced the e-Palette alliance to leverage the company’s Mobility Services Platform. Initial partners include Amazon, Didi, Pizza Hut, Mazda, and Uber to work on developing the vehicle, applications, and verification activities.

Ford CEO Jim Hackett also announced several business model initiatives to accompany the bespoke automated vehicle the company is launching in 2021. With its partner Autonomic, Ford is developing a transportation operating system cloud platform that will be available to cities to provide a range of non-competitive services like payments, authentication, and coordination.

On top of that, Ford’s transportation as a service platform will handle the logistics and deployment optimization for partners that want to utilize Ford’s vehicles. A pilot of the system will be launched this year in a city yet to be named along with Dominos, Lyft, and Postmates.

The business of mobility is changing, and the industry is trying out a range of solutions in the hopes of making both itself and the cities it operates in sustainable.


In an Age of Digital Disruption, Cities and Utilities Must Work Closer

— December 19, 2017

Energy transformation will force the industry to reassess existing value propositions and identify new revenue streams. Until recently, this value lay in single technologies—such as smart meters or solar PV. However, the industry is recognizing value in the convergence of technologies that have historically been treated separately. These technologies might not currently sit within a utilities’ existing area of influence. The potential convergence of EVs, automated driving, smart transportation networks, charging infrastructure, metering, and billing could create huge opportunities for utilities. The industry should keep an eye on disruption in other industries, particularly transportation and smart cities.

Utilities Must Identify Where Value Will Be Created

Kodak is an often cited example of how companies can fail in periods of industry disruption. Kodak developed the first digital camera and owned many patents related to digital photography. Yet, it failed to recognize where the future of digital photography value lay. It believed that digital photos would still be printed on Kodak paper and did not consider a future where users would share digital images online.

There are many lessons that utilities can learn from Kodak, primarily that nothing within business models can be taken for granted. No part of the value chain is immune from the risk of future irrelevance. Every company must consider where the future value will lie in the energy transition. For many, this will focus on helping customers reduce their power consumption, instead of supplying more power. ENGIE UK and the Netherland’s Eneco have both stated their intentions to shift to this service-based approach. The industry has also recognized the growth opportunity in supplying power to EVs and the associated vehicle-to-grid services.

There Is Significantly More Value for Utilities beyond EV Recharging Infrastructure

However, I would posit that utilities have not yet recognized the potential value that lies beyond EV charging infrastructure, supply, and grid services. The automotive industry is undergoing a period of disruption arguably greater than what utilities are experiencing. As city leaders are increasingly concerned about pollution and congestion, cities such as Paris, Athens, Madrid, and Mexico City have announced bans on the most polluting diesel vehicles by 2025. The UK, France, and China have announced bans on the sale of all light duty internal combustion engine vehicles in the next 20 years.

While EVs will play a large part in the shift away from petrol and diesel and offer an opportunity to utilities, there is significant value to be gained by the most ambitious utility. Decarbonization is just one part of automotive disruption, and we are starting to see a shift in trends of car ownership. Increasing numbers of urban residents are turning their backs on car ownership. Singapore has legislated that there will be no net increase in car ownership after 2020. Auto manufacturers are investing millions in automated vehicles, which could hugely disrupt ownership models and, consequently, the taxi and car hire industries.

Utilities Must Work Closer with City Leaders

City leaders—keen to improve air quality and reduce traffic congestion—could be the primary driving force behind a shift to shared ownership and automated models. However, they will need partners to deliver the sophistication of smart transportation services. Utilities have an opportunity to provide the recharging infrastructure for EVs, so it is not inconceivable that they can manage additional infrastructure, such as the metering and billing of automated vehicle use, predictive maintenance of vehicle fleets, fleet asset management services, and more.

Over the past decade, I have witnessed (at least some) utilities’ reluctance to cooperate with smart city programs. However, the concomitant digitization and disruption of electricity and transport create a strong argument for cities and utilities to work closer for their mutual benefit and the benefit of citizens. Navigant Research recently published a list of recommendations for utilities to work closer with city leaders.


Cities Looking to Automated Vehicles to Solve Congestion and Emissions Challenges

— November 21, 2017

Around the world, major cities have been setting targets to combat the negative effects of local transport on public health, local pollution, noise levels, and greenhouse gas (GHG) emissions. Cities are looking increasingly at the potential of automated vehicles (AVs) to help solve these problems through improved traffic flow, the near elimination of collisions, increased productivity, and reduced pollution and GHG emissions.

 Moving toward Full Automation

The concept of automated or self-driving cars has shifted from the realm of science fiction into reality, as showcased by some of the latest developments in cities around the world:

 Key Challenges Remain

Partial automation is becoming commonplace in all road vehicle classes. Full driving automation is starting to be piloted in numerous cities globally with regular commercial deployments expected in the next 2 to 3 years. Before AVs can become ubiquitous in city streets, new infrastructure investments, communication network upgrades, the need for fleets to operate in varied conditions, and concerns about cybersecurity need to be addressed. Cities also need to develop frameworks to integrate and coordinate AV mobility services with existing transit services to optimize the use of road infrastructure and avoid increased congestion. Although the AV was not at fault for the accident, the recent Las Vegas automated shuttle collision shows why vehicle-to-vehicle communications will also be crucial to the success of AVs.

If AVs are managed properly, highly integrated with public transport, and coordinated as part of a multimodal transportation ecosystem, the shift to self-driving vehicles could lead to reduced traffic congestion in cities, lowered demand for parking spaces, and highly beneficial energy and environmental effects. For more information on the potential effects of AVs in cities, see Navigant Research’s recent white paper on Redefining Mobility Services in Cities.


Blog Articles

Most Recent

By Date


Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author

{"userID":"","pageName":"Automated Vehicles","path":"\/tag\/automated-vehicles","date":"3\/18\/2018"}