Navigant Research Blog

A Scenario for Managing the Transition to Autonomous Vehicles

— November 25, 2015

Transportation is all about moving people and things from here to there safely, conveniently, and efficiently. However, as we continue to develop new automation technologies and business models, we now have a plethora of new questions to answer about how we are going to move the transportation ecosystem from here to there. At the recent Automotive Tech.AD conference in Detroit, people from many aspects of the industry came together to discuss the future of mobility. While the horizon is still mired in fog, some interesting ideas did emerge.

As development of autonomous vehicles has intensified over the past several years, the problem of how human- and computer-driven vehicles can safely coexist on the road has been among the most vexing. During the development of the Autonomous Vehicles report, Navigant Research interviewed many of the companies involved in developing this technology. Among incumbent OEMs, the most common strategy has been a gradual progression of deploying more sophisticated automation in new vehicles. This would enable customers to get accustomed to the technology while at the same time allowing OEMs, suppliers, and regulators to validate its reliability and robustness.

However, it is becoming increasingly clear that the need for a hand-off between automation and a human driver when the automation encounters a situation it cannot cope with might be unmanageable. Testing by Audi has shown that transition typically takes 3 to 7 seconds, and in some cases as much as 10 seconds. In an emergency scenario, that is far too long. Companies like Google and Ford are instead focusing on developing fully autonomous vehicles with no human control.

This brings us back to the transition from more than 1 billion vehicles on the road globally to self-driving vehicles. One potential scenario builds on trends that we’re already seeing today in large urban environments. Over the past several decades, cities such as London, Singapore, Stockholm, and Oslo have imposed congestion charges on drivers wishing to access crowded city centers. In other densely populated areas such as Manhattan, an unusually large proportion of the population don’t own cars because the cost of parking is so high. They instead rely on public transport, taxis, and ride-sharing services like Uber.

The Early Years

In the early years of deploying autonomy, the vehicles will likely have limited capability and difficulty dealing with weather and predicting the behavior of human drivers. They will also likely be reliant on highly detailed maps and communication infrastructure. Imagine a scenario where cities like London or Singapore convert traffic congestion zones into autonomous zones.

Rather than tolls, drivers may park their vehicles and take an autonomous pod to their final destination. They could subscribe to any of several services that could be operated by companies like Uber, Google, or Apple or even by incumbent automakers. Pricing for the services could be set by the operators based on factors like availability and amenities in the vehicle. Since these vehicles would be operating in an urban area, they could be restricted to lower speeds for added safety.

As people become comfortable with the technology, the autonomous zones could expand and be added to more cities. Much of the central parking could be redeveloped or replaced by charging facilities for what would likely be electric vehicles (EVs). This would also provide a built-in market for OEMs to absorb the EVs required to meet future emissions and efficiency standards.

This approach could work well for areas with high population density, while outlying and rural areas could continue to use human-driven vehicles with various levels of driver assistance for improved safety. The horizon is still foggy, but the haze is starting to lift.


Detroit Versus Silicon Valley

— November 24, 2015

October 29, Keith Naughton of Bloomberg Businessweek described how the established auto industry of Detroit is competing against the fast emerging auto industry of Silicon Valley (SV). Naughton’s article focuses on autonomous vehicle (AV) systems and examines the different R&D strategies of General Motors and Google, which essentially amounts to a comparison between gradual adoption and rapid innovation strategies to automotive technology. Naughton’s AV focus provides interesting insights, but it’s impossible to ignore the relevance of his comparisons beyond just AVs. For instance, Detroit and SV (the latter including Tesla and perhaps Apple) are each pursuing a different approach to that other disruptive force in the auto industry: electricity.

Detroit’s philosophy regarding electricity is similar to its approach to AV systems. The city has been gradually electrifying existing vehicle platforms, and this is evidenced by the fact that most of the plug-in vehicles Detroit has put on the market have been plug-in hybrids, and the fully electrified vehicles are mostly limited to markets where states have zero emissions vehicle mandates. Alternatively, the SV mantra has been the aggressive pursuit of a fully electrified alternative requiring no customer sacrifices in terms of range or convenience.

Regional Rivalry

The differing approaches have bred a regional rivalry that is demonstrated by occasional quips from industry leaders. Elon Musk often makes headlines with statements that imply Tesla may one day be bigger than GM and that Detroit needs to have a more aggressive electrification strategy. In response, Detroit calls out SV for naivete—when rumors first started to leak that Apple may be developing an electric vehicle, former GM executives Bob Lutz and Dan Akerson both publicly cautioned Apple on the struggles of entering the car business. Additionally, Lutz has continually critiqued Tesla’s business and sales model, assessing a high probability of Tesla’s ultimate downfall despite high praise of the product.

To be fair, these critiques have a strong foundation in reality. Detroit has been historically slow to adopt and produce fuel efficient or alternative fuel vehicles, creating opportunities for other global players like Toyota and Honda to grab significant chunks of the market through hybrids. Arguably, Detroit is likely to lose market share on fully electrified vehicles to other more aggressive global automakers (Nissan, BMW, BYD, and now Tesla).

Meanwhile, SV’s aggressive approach has led to challenges regarding market regulations. Tesla’s struggles with state dealership laws are well known, but Tesla has also run into trouble on software upgrades and referral programs. Additionally, though Tesla’s stock quote is impressive, its record with profits and deadlines is not. The end Lutz has assessed for Tesla has also been well played out by other California automaker startups.

Regardless of the different approaches these two regions characterize, the future U.S. auto industry is not going to exist without Detroit or SV. Detroit needs SV’s tech innovations and probably a little more SV chutzpah when it comes to investing in a new vehicle technology, and SV needs Detroit’s extensive supply chain, manufacturing expertise, and 100 plus years of market knowledge. Notably, however, SV does not need Detroit’s internal combustion engine.


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.


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