Navigant Research Blog

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.


E-Bike Technology Improving Dramatically

— September 17, 2015

As recently as 1 or 2 years ago, most electric bicycle (e-bike) models had a modest electric range of between 15 and 25 miles. Although there are many contemporary e-bikes boasting 40 or more miles of range, Samsung SDI recently blew other products out of the water through the release of its new e-bike battery pack at Eurobike 2015 in Germany. The 500 watt-hour (Wh) battery pack runs 62 miles (100 km) on a single charge and is equipped with Bluetooth compatibility, allowing users to monitor battery life via a smartphone. This new range capability means that a bicycle commuter could ride their e-bike from Boulder, Colorado to neighboring Denver and back without needing to recharge the battery along the way. For those unfamiliar with the route, the Boulder-to-Denver commute takes about 40 minutes (just under 30 miles) without traffic each way by car.

Innovative emerging trends such as improved battery life have helped position the e-bike industry for increased market growth. In addition to increased battery range, combined throttle-control and pedal-assist models, electric cargo bicycles (e-cargo bikes), all-in-one retrofit kits and wheels, 3D-printed bicycles, and the increasing use of e-bikes in police patrol and various security industries have all contributed to a growing market with strong potential. According to Navigant Research, global annual sales of e-bikes are expected to grow from nearly 32 million in 2014 to over 40 million in 2023.

Autonomous E-Bikes

Also started to be tested are autonomous—or self-driving—e-bikes. At the 2015 Eurobike event where Samsung SDI announced its battery pack, startup company CoModule displayed a smartphone-controlled, three-wheel e-bike prototype. The company believes that in the near term, the e-bike could be used to help postal workers with deliveries or park cleaners with garbage collection. The long-term vision is for the vehicle to provide autonomous deliveries in urban city centers.

Although undoubtedly intriguing, autonomous e-bikes appear to be a potentially unnecessary technology that somewhat defies the purpose of a bicycle itself. If no one will be riding it, why even make it a bicycle in the first place? The general philosophy behind e-bikes is that if a rider has long distances to travel, physical limitations, or simply want a faster mobility option, then an electric-powered bicycle is a great way to get some exercise without getting exhausted or pushing physical limitations too far. While the idea of a small autonomous delivery device makes sense, making that device a bicycle with pedals (which presumably no one will use) perhaps requires some rethinking.


Autonomous Vehicle Pros and Cons for Government Budgets

— August 10, 2015

Autonomous vehicles continue to gather media headlines as the industry promises a highly desirable future consisting of drastically reduced vehicle accident rates, congestion, and road emissions. While these impacts and the potential effects on the insurance industry are often discussed at length, less attention has been given to how autonomous vehicles may affect government budgets—particularly law enforcement.

Speeding Tickets

As a prime example, autonomous vehicles simply do not drive faster than posted speed limits. Google’s driverless vehicles have logged more 1 million miles autonomously without receiving a single citation. According to the National Highway Traffic Safety Administration (NHTSA), the average cost of a speeding ticket in the United States is $152, and about 41 million people receive a citation each year. This amounts to a staggering $6.23 billion in potentially lost state and local government revenue each year due to autonomous vehicles. Additionally, autonomous vehicles do not run red lights or drive under the influence of any substances, eliminating two other significant sources of revenue for government services.

What About Parking?

And then there’s parking; New York City alone generated $534 million in parking ticket revenue in 2013. How autonomous vehicles may affect the business of parking revenue is much less clear than other sources of traffic violation revenue. Navigant Research expects parking to be an area remaining far more in consumers’ hands compared to highway and even city driving, at least in the near term.  Nevertheless, the on-demand nature of autonomous vehicle fleets is expected to reduce personal vehicle ownership over time, and thus the need for parking is expected to decrease, as well. If large numbers of people are using smartphone apps such as Uber to summon autonomous vehicles, parking demand and usage should decrease, which in turn is expected to lead to a significant loss in parking ticket revenue. The extent to which this may happen is unclear thus far.

Revenue Reduction Offset by Reduced Costs?

Conversely, autonomous vehicles may also reduce costs for government, somewhat negating the loss in revenue streams. The NHTSA has stated that 7% of vehicle crashes are paid for with public revenue. This annual taxpayer bill of roughly $10 billion is used for emergency services, property damage, court costs, and other expenses. Autonomous vehicles could drastically reduce or nearly eliminate the 5.6 million accidents occurring annually in the United States, saving local and state governments enormously on expenditures. Reduced demand for parking in densely populated urban areas may also free up land that could be utilized for either residential or commercial development, which could provide a new source of jobs, housing, and tax revenue.

Whether autonomous vehicles will ultimately end up saving governments money or reducing their budgets is unclear. What is clear, however, is that a future where citizens spend little or no money on traffic violations and everyone saves enormously on vehicle crashes and fatalities is a future worth pursuing.


Autonomous Trucks Make Progress

— August 3, 2015

Autonomous vehicle technology continues to advance steadily, with new testing facilities opening to great fanfare at the University of Michigan being a recent highlight. Around the world, plans are being put into action to test self-driving cars in many different localities, and work continues within all the major automotive manufacturers and large suppliers. The first freeway cruising and traffic jam applications are going into production in a few 2016 models, and many more are promised by 2017.

The focus from large OEMs is still on incremental improvements to existing advanced driver assistance systems, with more capable software and sensor fusion. The marketing appeal to car buyers is based on convenience and comfort with the added benefit of greater safety. Prevailing wisdom says that the personal vehicle market will continue as it has done for the past century, but there is the potential for significant change if the technology delivers and legislation is updated to allow it. This topic is discussed in the latest version of the Navigant Research Autonomous Vehicles report.

Under the Radar

What is flying a little under the radar is the work going on to launch autonomous commercial vehicles. Daimler caused a stir in May when it gave a demonstration of its Freightliner Inspiration Truck at the Hoover Dam.  In July, the company announced that it expected to be able to begin testing on public roads in Germany before the end of 2015.

Another option that is an incremental step toward autonomous driving is offered by U.S. company Peloton, which offers a platooning feature that can be added to existing vehicles. Peloton’s technology connects two trucks wirelessly and allows the following truck to close the gap safely, with speed and braking controlled by the lead vehicle while the driver remains responsible for steering. The company claims that fuel savings on a long drive are approximately 4.5% for the front vehicle and 10% for the follower.

Deciding Whether to Invest

Fuel savings are the first step toward justifying new technology for fleet managers who must decide whether to invest. The ultimate potential of autonomous vehicles is to reduce or eliminate the cost of the driver, which produces the inevitable result of lost jobs, a topic beginning to stimulate some debate in the media.

New technology almost always brings societal change, but the rate of change has increased in the computer age, and a serious commitment to retraining programs needs to be made by governments as they make changes to legislation to support the emergence of autonomous driving capability and other forms of robotics. It isn’t all bad news though. The new truck pilot jobs will need new skills on top of the conventional driving ones and should command higher pay.


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