Navigant Research Blog

Carsharing Consolidation and Diversification

— October 7, 2015

When carsharing began in the 1980s and 1990s, it was seen as a sustainable alternative to the dependence on private cars in developed economies like Europe and North America. The concept was viewed—much like carpooling—as appealing to a small niche of environmentally conscious drivers. The market was also pioneered by people committed to the sustainability cause. The carsharing services that sprung up in European and North American cities tended to be local businesses with strong ties to the community. In the 2000s, the market took a leap forward after the launch of Zipcar in the United States. After it rapidly became the biggest carshare company (in terms of membership), Zipcar furthered its reach by merging or acquiring other services—most notably through merging with the other big player in the U.S. market, Flexcar, in 2007.

Today, the carsharing industry is now a major global business, albeit one that is still more popular in North America and Europe. Navigant Research estimates that there will be around 4.7 million carsharing service members worldwide by the end of 2015 and that global membership will grow to almost 24 million by 2024. The market landscape looks quite different than it did in its early days, with more large players like Zipcar accounting for significant shares of global membership. Zipcar is estimated to have around 900,000 members, while Daimler’s car2go service reports having 1 million members. Socar, a service in South Korea, has stated a gain of 600,000 members since opening in 2012, and a Tokyo-based service called Times Car PLUS reports around 430,000 members. Large auto companies have increased their interest in the carsharing market in part because of these numbers. Zipcar was acquired by Avis in 2013; automakers Daimler and BMW are now running carshare programs; Time Car PLUS is run by a large parking lot company; and French conglomerate Bollore launched a successful Parisian carshare service, Autolib’, and has since opened services in London and Indianapolis. Another successful South Korean carshare company, CityCar, is operated by a subsidiary of LG.

Is Bigger Going to Be Better?

Consolidation has been a trend for carsharing recently; Zipcar acquired several smaller companies in Europe and the United States, and rental car company Enterprise acquired the United Kingdom’s largest independent carsharing company, City Car Club. But this market still has plenty of small, local players and will continue to support such services. Small players are more likely to remain in the round-trip carshare service model, however, as the recent trend has been toward more one-way services like car2go and Autolib’. A one-way service requires a larger fleet of vehicles deployed upfront, and thus is more likely to attract larger companies that can afford this investment. Navigant Research also expects to see more large companies acquiring smaller competitors as a means to expand market share. But the market is not likely to move to just a handful of large companies, as small, localized carshare services are banding together to strengthen market position. Although large carshare companies will represent a significant chunk of membership numbers, the market over the next decade will continue to support both large and small operations.


John Krafcik Takes the Steering Wheel of Google Car Project

— September 29, 2015

Someday, Google’s vision of cars without steering wheels, accelerators, or brake pedals may come to fruition. For the foreseeable future, however, intelligent people will still be necessary to guide the process of actually developing and building those machines. Incidentally, Google has just hired one of the smartest in the business, John Krafcik. The former Ford, Hyundai, and TrueCar executive is now the CEO of Google’s self-driving vehicle program.

As the former head of product planning and later CEO of Hyundai Motor America, Krafcik demonstrated his ability to run an operation that develops, manufactures, and markets vehicles to a mainstream audience. Prior to his decade with Hyundai, Krafcik spent 14 years at Ford, where he is reputed to have coined the term “lean manufacturing” in an article he wrote while working on his MBA at MIT.

Navigant Research’s Autonomous Vehicles report projects that by 2025, approximately 45 million light duty vehicles with at least Level 2 semi-autonomous capability will be sold globally every year. Level 2 is defined as a system that can automatically control at least two primary functions—such as steering and speed. Widespread adoption of Level 4 systems that can handle all primary driving functions without human intervention are unlikely before the 2030s.

Google and the Automotive World

For Google, Krafcik brings a reality check to the company’s automotive ambitions. Unlike Google’s primary businesses, the automotive industry is one of the most heavily regulated in the world, and the product can put lives at risk. Representatives from several manufacturers have acknowledged that they have been approached by Google about partnering on autonomous vehicles. However, Google’s approach so far has been to have manufacturers supply a vehicle platform while Google provides a black box of software that the manufacturers have neither control nor influence over. Given the many unresolved legal and ethical questions around autonomous vehicles, this approach has been rejected so far.

Krafcik knows how the auto industry functions and why it so often appears to be extremely conservative in rolling out state-of-the-art technology. He has a keen understanding of how to mass manufacture vehicles in high volumes and what mainstream consumers want in a vehicle. At the same time, he is an acknowledged risk taker in taking his companies into new market segments. Under his leadership at Hyundai, the brand steadily expanded from a second-tier purveyor of value, building credibility with consumers and critics so that it can now sell luxury cars like the Genesis without being laughed at.

Krafcik’s Credentials

This writer has known Krafcik for 8 years and he is clearly an engineer and manager that appreciates a challenge. Prior to being promoted to CEO at Hyundai’s American branch, the office had a rotating door of occupants who struggled with the home office’s demands. Krafcik managed to occupy the post for an unusually long 5 years and is likely the best candidate that Google could have hired.

Chris Urmson will continue leading the technical development side while Krafcik opens possibilities as this project evolves into a real business. Krafcik is well-respected in the industry, and if Google decides to pursue OEM partnerships, he is far more likely to be successful in brokering deals than those that have a distinctly Silicon Valley mindset. On the other hand, if Google opts to get into the manufacturing of cars, Krafcik knows that side of the business equally well—whether Google wants either its own factories or a contract builder like Magna Steyr to handle the work. Whichever path Google takes, the future looks interesting. And that is said without even knowing if Apple will get involved.


High-Strength Steel or Aluminum for Vehicle Body Parts: That Is the Question

— August 10, 2015

In a presentation to the 2015 CAR Management Briefing Seminars, Eric Petersen, the vice president of research and innovation at AK Steel, outlined his plans to produce the next generation of high-strength steel. He was confident that new innovations from steel suppliers will prevent the loss of more market share to aluminum. As Petersen demonstrates, Ford’s decision to convert its F-150 to all-aluminum has prompted steel suppliers to get creative.

However, there are a lot of things to consider when choosing a material for manufacture of vehicle components. Current vehicle bodies and closures are made primarily of sheet metal, although carbon and glass fiber-reinforced plastic are also used. Original equipment manufacturer (OEM) designers and engineers have to consider both the requirements of the finished vehicle and the ability to manufacture it efficiently.

Modern production lines depend on assembly techniques that can be automated, and fixing parts together must use a process that can be done by robots both for speed and repetition. Depending on the material, this may involve spot welding, seam welding, rivets, bolts, glue, etc. If production facilities are already equipped with a certain capability, changing to a material that needs a different joining process might require a major investment, which may only be practical when the existing equipment is reaching the end of its useful life.

Part manufacture is another consideration. Many body parts have complex shapes. If they are stamped and need a deep draw, then there may be a limit on how thin the material can be. Steel that is developed to have high strength has a higher yield stress than ordinary mild steel, which is a benefit in the finished article to absorb loads, but makes it harder to form during manufacture. Other lightweight materials such as magnesium have poor formability for body panels but can be cast for uses such as the instrument panel beam in the 2015 Ford Mustang. Some materials are treated after shaping to make them harder, but that also adds cost. Different materials also require different post-manufacture treatments to prevent corrosion.

Once a part is manufactured and assembled, it has to meet various performance specifications. A vehicle body structure has to be stiff in torsion and bending, cope with fatigue loading at load points, handle rollover and side impact loads, and absorb crash energy while keeping occupants safe. In addition to meeting these structural goals, overall vehicle fuel efficiency targets mean that keeping the weight low is now critical. And, as always, there is the ever-present need to keep costs as low as possible.

No Silver Bullet

Just as with powertrains, there is no silver bullet material that is ideal for every application. Material suppliers should recognize the big-picture approach of the automotive manufacturers, which involves reducing the number of platforms to increase volume of many parts and to streamline manufacturing processes. OEMs are increasingly using multi-disciplinary optimization for part design, which considers a wide range of factors including manufacturability, assembly, structural performance, weight, functionality, and overall cost.

Future vehicles are more likely to be made from a variety of materials than to stick with one or shift entirely to another. Material suppliers should consider how to make parts with their products that not only perform better than the competition at lower cost, but also integrate easily into existing platforms.


After a Century, the Era of the Cadillac V8 Is Over

— April 16, 2015

Twenty years ago, the thought of building a flagship Cadillac sedan without a V8 engine under the hood would have been virtually unthinkable. Nonetheless, in the coming months, the all-new Cadillac CT6 will hit the road to take on the likes of the Mercedes-Benz S-Class and BMW 7 Series with only 4- and 6-cylinder engine options to start with plus diesel and plug-in hybrid electric capability in the future. General Motors (GM) has created what it hopes will be a viable competitor to the segment leaders by harnessing a combination of advanced powertrain technologies and lightweighting to achieve both its performance goals and increasingly stringent fuel efficiency and emissions targets.

Cadillac introduced the first mass-produced V8 engine 101 years ago and, until as recently as 2010, every top of the line Cadillac had a minimum of 8 cylinders under the hood. After first being teased in a television ad run during the 2015 Academy Awards broadcast, the CT6 is debuting at the 2015 New York Auto Show and goes on sale later this year.

Bigger, Better, Not Heavier

In order to help meet the often conflicting goals of performance, driving dynamics, and energy efficiency, Cadillac is incorporating all of the major technologies discussed in Navigant Research’s Automotive Fuel Efficiency Technologies report. Despite its significantly larger size compared to the existing CTS sedan, the CT6 is estimated to weigh about the same 3,600 lbs thanks to extensive use of aluminum in its structure.

A combination of stampings, castings, and extrusions accounts for 64% of the mass of the structure and contributes to an overall reduction of 198 lbs compared to a comparable steel version. GM developed new techniques for laser and spot welding of aluminum in addition to the rivets, screws, and adhesives used extensively by Ford in its new F-150 pickup trucks.

Still High Performance

Starting from a lighter platform enables the engineers to utilize smaller, more efficient engines without sacrificing the performance that customers in this segment expect. At launch, the CT6 will be available with GM’s existing 2.0-liter turbocharged 4-cylinder, an all-new 3.6-liter normally aspirated V6, or a twin-turbocharged 3.0-liter V6 producing 400 horsepower and 400 lbs-ft. of torque. All of the engines feature direct injection and variable valve timing. The V6s will be GM’s first overhead-camshaft engines to feature cylinder deactivation with the ability to disable valve actuation and fuel flow on 2 cylinders under light load conditions.

Each power plant is paired with one of GM’s new 8-speed automatic transmissions and has auto stop-start functionality to shut down the engine when the vehicle comes to a stop to prevent wasting fuel while idling. Cadillac won’t reveal fuel economy numbers for the CT6 until later this year, but the new 3.6-liter V6 is expected to increase fuel economy of the midsize CTS by 9% compared to the 2015 model.

V8 86ed

In addition to these advanced gasoline engines, Cadillac plans to add both diesel and plug-in hybrid electric powertrains to its lineup over the next several years. What about the classic V8 configuration? Those are now limited to a pair of niche but still highly profitable segments, the ultra-high-performance CTS-V sedan and the full-size Escalade SUV. The rest of the lineup will rely on fours, sixes, and electrification from now on. It seems that a century after it began, the era of the mainstream Cadillac V8 engine has drawn to a close.

Update: Shortly after this blog was posted, Cadillac president Johan de Nysschen contacted me to confirm that the brand does in fact have a new high-performance V8 engine in development. While V8s will no longer be the volume powertrain, they will remain part of the future Cadillac lineup.


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