Navigant Research Blog

As Smart Parking Market Expands, New Players Emerge

— June 15, 2015

Big_Periscope_webThe parking industry is being transformed by new technologies that are enabling cities to significantly reduce levels of congestion. It is estimated that drivers searching for parking are responsible for about 30% of traffic congestion in cities. Sensor networks that detect vehicle occupancy are providing the basic intelligence behind smart parking systems, but other players are emerging with alternative products and strategies for reducing congestion.

Sensors and Their Limitations

Sensor networks, which generally consist of sensor hardware, communications technologies, and software applications, provide real-time parking availability information to make it easier for drivers to find a parking space. Large cities such as San Francisco, Los Angeles, and Moscow, among others, have adopted these types of sensor-driven smart parking systems that have demonstrably improved the chronic congestion in their respective city centers. According to Navigant Research’s new report, Smart Parking Systems, the installed base of sensor-enabled on-street smart parking spaces is expected to surpass 1 million worldwide by 2024.

Sensors provide excellent accuracy into vehicle occupancy, and Navigant Research estimates that sensor costs are decreasing by 10% to 15% per year. Nevertheless, the primary barrier to more widespread adoption of sensor-driven smart parking networks is the high upfront cost for cities to buy, install, and run the sensors. It can cost cities anywhere from $200 to $350 in upfront costs per parking space to install a sensor network, in addition to monthly software fees.

New Solutions?

Some new players in the market, such as Parko and ParkAide, are looking to offer cities a different parking solution at a significantly lower price tag—but with much less accuracy than sensors. Israeli startup Parko raised $1.1 million in seed funding in mid-2014, and uses crowdsourced data to help drivers find available parking spots. The company uses advanced algorithms analyzing anonymous data from when people park on the street, which spot they park in, and when they leave. This data is combined with GIS land-use information, parking supply figures, road types, regulations, current traffic, day of the week, weather, holidays, and local events to determine which streets and parking spaces are more probable to have open spots. This creates scenarios on the company’s app such as “most probable” and “least likely parking availability.” Similarly, ParkAide’s Mobile Parking Availability product is a general public mobile application that shows and direct consumers to a probable open parking space.

While Parko and ParkAide offer an innovative and lower-cost parking solution compared to sensors, they are unlikely to replace the use of sensor networks for smart parking. The advanced algorithms, while likely helpful tools, do not provide the accuracy of sensors.  Above all, they do not provide city transport departments with the control over parking fees and regulation that smart parking systems do.

These companies will also need to prove their apps’ utility to drivers in real-world situations. Residents living in cities with high traffic congestion often already know which streets are more likely than others to have parking availability. Nevertheless, if these algorithms are able to provide help to drivers unfamiliar with an area, then they will have a role to play among the range of new urban mobility options that are emerging.

 

South Korea Looks to Jump-Start Its PEV Market

— June 10, 2015

South Korea has evidently tired of being a laggard when it comes to plug-in electric vehicle (PEV) adoption. Total PEV sales in 2014 were 850, well under one-tenth of 1% of the country’s 2014 light duty vehicle (LDV) sales. Compare this to its neighbor Japan, which had around 33,000 PEV sales in 2014. While that is still less than 1% of all LDV sales, Japan had around 110,000 PEVs in use as of the end of 2014, compared to around 1,800 in South Korea.

South Korea is now looking to jump-start the PEV market, announcing major investments in charging infrastructure and promoting technologies that can make PEV charging as easy as possible.

It’s somewhat surprising that South Korea’s PEV market has been slow to develop given the country’s reputation as a high-tech center and, more significantly, its strength in the lithium battery market. The lack of truly market-competitive PEVs has been a key factor. The Kia Soul electric vehicle (EV) was introduced in 2014 and quickly shot to the top of the PEV sales figures for South Korea. This year is expected to see the Hyundai plug-in hybrid go on sale, so Navigant Research expects faster sales growth of PEVs in South Korea. But a potential roadblock will be the difficulty of home charging in a country where much of the population lives in multi-unit dwellings.

Removing the Roadblocks

The government in South Korea’s largest city, Seoul, is looking to remove this roadblock with an innovative plan to support 100,000 new charging locations. As of the end of 2014, Navigant Research estimates there were fewer than 100 public stations in Seoul and around 700 to 800 privately owned stations.  So, at first glance, installing 100,000 stations seems challenging indeed, but the stations will really be standard 220 outlets, where a portable charger can be plugged in. South Korean company Powercube manufactures the chargers, which reportedly cost under $1,000 and can be equipped with an RFID reader that will allow Powercube to track the user’s electricity consumption.  The EV driver will be billed directly by Powercube. The RFID reader also transmits the time of the charging session, which suggests that the driver can take advantage of time-of-use rates.

The city government is looking to secure parking spots in garages and apartment complexes where drivers will have ready access to an outlet to plug in. The chargers, called  EV-Line, only charge at 3.3 kW/hour, so they won’t be especially fast chargers. This could hinder interest, if the drivers knows it will take up to 8 hours for a full recharge, and could also cause problems with drivers unable to access an outlet as an EV occupies the designated parking spot for many hours. The program seems to be a way to address the charging problem without the massive investment that would be required to install large numbers of Level 2 public chargers, which cost $2,500 and up and have significant installation costs, as well.

Making the Commitment to the PEV Market

South Korean company Kodi is also jumping in to the low cost charging market. The company is set to release a 3.3 kW mobile charger, the MTC, that will also use a standard 220V outlet and be made available for under $1,000. Drivers will be able to manage the charger through their smartphones, which will also allow them to be billed for electricity used.   Other initiatives include POSCO ICT’s commitment to installing its charging stations in hotels and across South Korea and telecom company KT Corporation’s pilot program to re-purpose unused telephone boxes into charging stations.  South Korea is showing a real commitment to making PEV ownership more attractive and significantly moving the needle on PEV sales.

 

Innovation in New Mobility Offerings

— June 2, 2015

Rideshare app company Uber is continuing on its phenomenal growth trajectory. In the 6 years since the company launched in San Francisco, it has expanded into 300 cities in 58 countries. What’s more, Uber has raised $5.9 billion in 10 funding rounds. During the most recent funding round, in early 2015, the company was valued at an astonishing $40 billion, and it anticipates a $50 billion valuation in its next funding round. The much smaller rideshare app company Lyft, which operates in over 60 cities, has raised around $1 billion and was valued at $2.5 billion in its most recent funding round.

It is interesting to compare these companies to another company in the new mobility sector, carshare company Zipcar. Since it was founded in 2000, Zipcar has spread to around 250 locations and boasts more than 700,000 members. Although this is not an apples-to-apples comparison, it is interesting to note that Zipcar’s valuation from its 2011 initial public offering (IPO) was $1.2 billion; yet, in 2013, Avis Budget Group purchased Zipcar for $500 million.

Comparing Rideshare and Carshare

Uber is essentially being valued as a tech company, whereas carshare companies are more like a traditional business. This difference may seem somewhat counterintuitive since rideshare apps and carsharing are both part of the growing mobility sector. Both are services that thrive in the digital age. Rideshare services like Uber and Lyft would not exist without the smartphone. These services take advantage of the perpetual connectedness that a smartphone offers, for both drivers and users. Carsharing, on the other hand, is not dependent on smartphones, but it has embraced the ease of use that smartphones offer. While carshare companies can still operate from website and smart card access, the use of a smartphone app to locate and book cars opens up new business model opportunities like one-way service, where the vehicle can be returned to any location. One-way service encourages more impulse usage, with someone realizing that a car might be an easier way to get where they are going based on traffic or weather conditions.

The possibility of more usage is key to the success of carsharing because, in spite of the enormous success of the carshare sector over the past 15 years, companies can still struggle to consistently report a profit. Carshare companies have significant expenses due to vehicle leasing, maintenance, and fueling, as well as parking, which can be very costly. By contrast, rideshare companies don’t bear the costs of physical infrastructure. Fundamentally, what these companies are is a matchmaker service, and this requires significantly less upfront investment. This is part of what has allowed Uber to expand so swiftly. And these services are used much more frequently, with over 1 million rides occurring daily. Carshare companies are more like a traditional business with ongoing physical infrastructure costs that make it harder to scale as rapidly.

What will be interesting is to see how Uber and Lyft can leverage their strengths to create new revenue streams. It will also be interesting to watch carshare companies evolve in this new environment. Zipcar has been rolling out one-way service, while Swiss carshare company Mobility Cooperative invested in sharoo, a company that offers a private carsharing platform. The new mobility space will increasingly encourage these kinds of innovations and partnerships.

 

The EV Could Mean the End of the Brake Pedal

— June 1, 2015

The battery electric vehicle (BEV) will likely remain a small fraction of the overall automotive market for many years to come, according to Navigant Research’s report, Electric Vehicle Geographic Forecasts. However, spending time with the BMW i3 left me pondering the possibilities for changing the automotive human-machine interface by eliminating the brake pedal.

A recent New Yorker article by Malcolm Gladwell about automotive safety brought to mind the 2010 Toyota recall crisis prompted by consumer complaints about sudden unintended acceleration. While the automaker replaced the floor mats and accelerator pedal assemblies that could stick, the root cause of most of the reported incidents was determined to be pedal misapplication by drivers. This is a recurring problem for many brands, most prominently Audi in the mid-1980s.

What Does Pedal Misapplication Have to Do with BEVs?

BMW’s 2007 megacity project to investigate sustainable transportation in a world with increasing number of densely populated urban centers settled on electrification as a key component of any solution. BMW partnered with California-based AC Propulsion to retrofit a fleet of MINI hatchbacks, to gather real-world data on how people used EVs.

The MINI E featured unusually aggressive regenerative braking. Previous EVs I had driven had been programmed to replicate the behavior of traditional vehicles with a little bit of creep ahead when the brake was released and mild deceleration similar to engine braking when the accelerator pedal was released. Releasing the right pedal of the MINI E brought on about 0.5g of deceleration, which would be considered hard braking under most circumstances. Real-world driving data has shown that 80% to 90% of stops involve deceleration of less than 0.3g, with most being less than 0.2g.

In addition to electric propulsion, BMW decided to rethink everything about urban driving, including braking. Since the MINI E, many manufacturers have introduced plug-in vehicles, and virtually every one of them has defaulted to the traditional approach for brake control. Most of these vehicles include some form of simulated down-shift that triggers stronger regenerative braking, but most drivers are probably unaware this even exists.

The ActiveE, a second-generation EV prototype, came out in 2011, followed by BMW’s definitive BEV, the i3, in 2014. Like its predecessors, the i3 retains the one-pedal strategy, and it makes perfect sense in a vehicle targeted for urban driving.

“I would say that it’s absolutely the most calming car I’ve driven in stop-and-go urban traffic jams. I think the single-pedal drive has benefits I didn’t appreciate,” said John Voelker, editor-in-chief of GreenCarReports.com. “Sebastian Blanco of Autoblog and I drove it together at the Amsterdam launch, and we both struggled to figure out why being caught in horrible, chaotic, European rush hour was just fine. Seriously, the only car I’ve ever been able to call soothing.”

During a 90-mile round trip drive to a meeting with the i3, I could count the number of times I touched the brake pedal on my fingers, and once I became accustomed to it, I found it worked extremely well. When considered from a safety perspective, dropping the brake pedal would immediately eliminate instances of pedal misapplication since a driver only has to release the pedal to stop. Fewer accidents mean less congestion, wasted fuel, and time. Since all new vehicles include electronic stability control, the ability to tie brake application to movement of the accelerator pedal already exists even for non-EVs. It seems like only a matter of time before the brake pedal follows other anachronisms like the manual transmission and the foot-operated high-beam switch into the annals of automotive history.

 

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