Navigant Research Blog

Perception vs. Reality: CES and the North American International Auto Show

— January 19, 2017

Connected VehiclesIf there is any one lesson that we should all take away from 2016, it’s the confirmation that perception does not necessarily equal reality. What people perceive to be the truth is often the most important part of their decision-making, a concept now shown in the auto industry’s seemingly increasing participation in the International CES and apparently declining interest in Detroit’s North American International Auto Show (NAIAS).

There has been a lot of consternation in Michigan recently about the impact that CES has had on the Detroit show over the past decade. The two events tend to run back-to-back over the first 2 weeks of January. I was on hand in 2008 when then-General Motors CEO Rick Wagoner was the first major auto executive to keynote at CES after demonstrating the autonomous Chevrolet Tahoe, which won the DARPA urban challenge the prior year. While more automakers and suppliers than ever took part in CES this year, GM actually took a pass for the first time since Wagoner’s speech.

While the Detroit Auto Dealers Association, which organizes the NAIAS, is concerned that manufacturers are increasingly favoring CES, the issues of the auto show are largely unrelated to what’s happening in Vegas. Auto shows are consumer events designed to showcase all of the latest products available for sale, and media previews show what is arriving in the coming months.

With rare exceptions (like 2016, when Chevrolet unveiled the production version of the Bolt EV), new production vehicles are almost never shown at CES. The electronics show is a business-to-business event that isn’t open to the public; instead, the industry flocks to Las Vegas to talk up technology.

NAIAS Is About Reality; CES Is About Perception

For many years, the financial market’s perception of the auto industry has been that of old-school manufacturers of commodity widgets. The view of Silicon Valley and technology companies is that of innovators on the bleeding edge that are poised for explosive growth. Thus, you have investors pouring billions of dollars into startups every year; most of those companies getting all of that investment fail without ever producing anything noteworthy while burning through cash.

Meanwhile, the modern car is one of the most complicated and technologically sophisticated devices ever created and is produced by the latest cutting-edge processes. The industry that produces them employs tens of millions of people globally directly and indirectly, generating trillions of dollars in revenue and tens of billions in profit. Yet the industry gets little respect and low market values.

The presence of the auto industry at CES is designed to reach a group of media that cover companies like Apple, Google, Microsoft, Amazon, and Facebook alongside countless startups, the same media that investors follow. The goal is to change the perception of the auto business from one that looks like it came from the dawn of the industrial revolution to one that innovates on a daily basis.

That’s not a message you can get across by showing off the refreshed Ford F-150, even though it may be packed with far more technology than anything from Silicon Valley. That’s a message you communicate by demonstrating automated cars in Las Vegas traffic jams; partnership announcements with chip designers like Nvidia won’t reach its intended audience in auto shows in Detroit, Frankfurt, or Geneva. These shows have issues to address, but the fault doesn’t lie in Las Vegas. It’s all about perception.

 

Autonomous Vehicles as Both a Sustaining and Disruptive Innovation

— December 9, 2016

Electric Vehicle 2While listening to a recent episode of the Exponent podcast, co-hosts Ben Thompson and James Allworth had a vibrant discussion on one of their regular topics: sustaining versus disruptive innovation. The topic was in the context of whether Apple should acquire Netflix, but as the hosts’ conversations often do, it got me thinking about the auto industry. With self-driving vehicles, transportation is on the precipice of a dramatic change that many argue will be exceptionally disruptive. I’d like to take a slightly contrarian view by arguing that autonomous technology will be sustaining to parts of the auto industry and disruptive in ways that many in the tech industry may be missing.

Sustaining vs. Disruptive

Disruption is an often abused word in the world of technology, but as defined by Harvard University’s Clayton Christensen, it boils down to innovations that create new markets and value networks and eventually displace existing market leaders. Sustaining innovations evolve existing markets and improve value.

An example of the latter is the way that manufacturing automation improved productivity and quality in the way cars are built over the past several decades. However, as in any complex analysis, these things are never simply binary. While new manufacturing technology was sustaining for automakers, it was extremely disruptive to the people that worked in their factories. Similarly, any argument that autonomous vehicles will be purely disruptive of the auto industry is a vast oversimplification. If automakers had followed the path of Nokia in the mobile phone business and ignored the threat posed by Apple when it introduced the iPhone in 2007, incumbent automakers would be facing extinction in the face of autonomy.

Instead, I would argue autonomy will instead be sustaining for many (although probably not all) automakers. Someone will need to build these vehicles regardless of whether they are piloted by computers or humans, and the companies that already have design, engineering, and manufacturing expertise are well-positioned to do so.

Just as other real-world examples are rarely black and white, there will be disruption from the autonomous vehicle. Most obviously it will affect those that make a living from driving, whether by taxi, bus, or truck—society will have to address this employment displacement in the next decade.

Retail Side

Perhaps the less anticipated and more impactful disruption is faced by the retail side of the auto industry. There are nearly 17,000 franchised car dealers in the United States currently selling about 17.5 million vehicles a year with more than 1 million employees. If transportation shifts as expected over the next several decades (i.e., from an individual ownership model to on-demand autonomous mobility services), the business of these retailers will evaporate. It won’t be overnight, but it will almost inevitably happen.

However, someone still needs to own these vehicles, right? Sure, but unlike the Silicon Valley investors that pumped Uber’s valuation to more than $60 billion, I doubt it will be standalone ride-hailing companies. I’m increasingly of the opinion that mobility services will be provided by the manufacturers themselves, leveraging their existing expertise in building, logistics, and financing along with strategic investments in the software platforms needed to connect people with rides.

Disruption by its nature takes people by surprise. The self-driving car will be both sustaining and disruptive, and probably not in the obvious ways.

 

With Self-Driving Cars, We’re All Cartographers

— December 5, 2016

Connected VehiclesMapmaking used to be the domain of a select group of cartographers that would gather, review, and plot out data onto sheets of paper. The chances that you actually knew a cartographer in the past were probably pretty slim—but not anymore. Today and in the future, virtually everyone is or will be a contributor to the increasingly detailed maps that represent the world we live in.

As our vehicles become increasingly automated, they need ever more detailed maps, and not just the maps we get from Google or Apple on our smartphones. The self-driving car will need much more information. The basics of street names, directions, and building numbers are just the beginning determining a basic route from where a car is to where its user has asked it to go. This data set already exists in every vehicle with a navigation system and a GPS receiver.

Limits of GPS

However, if you’ve ever tried to navigate around urban canyons in places like Manhattan or Chicago, you’ve no doubt experienced the limitations of GPS as the signals orbiting more than 12,000 miles above the Earth’s surface bounce between skyscrapers. Looking at the navigation display and realizing that the car thinks it is several city blocks away from your actual location is not exactly confidence-inspiring.

Even when it works correctly, GPS is only accurate to several feet, not nearly precise enough to safely locate where a car is on the road. Then there’s the problem of navigating around on streets when you can’t actually see the road, such as when it snows. If you can’t rely on GPS for precise positioning and you can’t see lane markers, you need other data to calculate location.

Crowdsourced Maps

That’s where the future of crowdsourced mapping comes in. If you use smartphone-based navigation apps like Waze, Here, TomTom, or Google or Apple maps, you are already contributing to augmenting the map data that is also collected by fleets of sensor-equipped vehicles that drive the world’s roads.

In the near future, the cameras and other sensors that power lane keeping systems and other driver assist features will be feeding information to datacenters where it is aggregated with information from other drivers. In addition to real-time traffic and road conditions, they will be looking for landmarks like bridges, signs, buildings and more, and anything that isn’t already in the high-definition map will be uploaded.

Mobileye is the leading maker of image processing and recognition systems used by automakers for driver assist. In January 2016, the company announced a new product called Road Experience Management that processes images captured by car cameras and sorts out new information. This data is then transmitted and collected in order to update maps. Earlier this year, Ford invested in a startup called Civil Maps that is developing a similar system using cameras and any other sensors on the vehicle that can provide relevant data.

Even when the vehicle sensors can’t see the road, if they can see landmarks, they can triangulate and calculate position to within a few inches. Last winter, Ford demonstrated the ability to do precisely this with its autonomous prototype using a high-definition map generated using LIDAR. The future ability of autonomous vehicles to successfully operate in varied conditions will depend in large part on the contributions that we all make toward improving the quality of maps.

 

Lucid Motors Is the Latest Silicon Valley EV Upstart

— November 28, 2016

Electric Vehicle 2Chances are you’ve never heard of Lucid Motors. The company has been around for nearly a decade but only recently rebranded itself from Atieva in mid-October. Despite (or perhaps because of) its lack of public awareness, several members of the Lucid team came to Los Angeles for some private briefings during AutoMobility LA. I had an opportunity to learn about what Lucid is planning, get a VR walk-around of the company’s finished vehicle design, and check out one of its prototypes.

The Lucid team includes former Tesla staff among its ranks, including CTO Peter Rawlinson and marketing director Zak Edson. The company’s as-yet-unnamed luxury sedan is scheduled to go into production in 2018 and will be built at a US factory, although no site has yet been announced. Atieva was launched in late 2007, focusing on producing batteries for commercial EVs. “Atieva-powered vehicles have accumulated more than 20 million miles of real-world use with a faultless safety record,” said Rawlinson.

Smaller Footprint, Larger Interior

Rawlinson joined Atieva in 2014 when the company decided to build cars from the ground up. Despite the achievements of Tesla, Rawlinson explained that he still saw a lot of untapped potential in repackaging everything to take advantage of the electric drive system. Tesla’s Model S has the footprint of a large luxury car, but only has the passenger volume of a midsize sedan at 94 cubic feet. However, it meets the US Environmental Protection Agency’s large car designation based on its 26 cubic feet of cargo space, bringing the total to the 120 cubic feet threshold to qualify as “large.”

Rawlinson and Derek Jenkins, Lucid’s vice president of design, sought to reverse that trend with a smaller footprint (akin to a midsize Mercedes-Benz E-class) and an interior volume of 112 cubic feet for occupants. The Lucid sedan uses a similar skateboard layout to other modern dedicated battery EVs (BEVs), with the battery pack under the floor and electric motors at each axle.

In mid-2016, Lucid published a video showing off the performance capabilities of an in-development powertrain prototype based on a Mercedes-Benz Metris cargo van. Using a 600 horsepower (hp) front motor and 400 hp rear motor, the van is capable of sub-3 second 0-60 mph acceleration.

Better Batteries

Lucid has been developing its own proprietary battery chemistry that Rawlinson claims will have 20% greater volumetric energy density and will be less vulnerable to deterioration from repeated fast charges. Assuming Lucid and its cell manufacturing partners can deliver, this will help enable the company to deliver a 100 kWh battery with an optional 130 kWh unit to deliver driving ranges of 300 and 400 miles, respectively. The company plans to equip its car with a sensor package capable of Level 4 autonomous driving. The package includes four solid-state lidar sensors, short- and long-range radar and cameras, and ultrasonic sensors.

The prototype that Lucid brought to Los Angeles had an incomplete interior, but based on the VR demo and looking at the test vehicle, it does appear to be more roomy than Tesla’s Model S. Pricing won’t be announced for some time but it will likely be comparable to the Tesla and in line with Lucid’s goal of delivering a zero-emissions executive jet for the road. Lucid plans to publicly reveal its car on December 14 at its engineering facility in Fremont, California.

 

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