Navigant Research Blog

Automakers Turn to OSs to Add Revenue

— April 8, 2015

Automakers looking to continue their revenue growth are challenged by the diminishing prospects for post-sale revenue from replacement parts. Conventional cars are becoming increasingly reliable and electric vehicles (EVs) need little servicing due to their reliance on electronic rather than mechanical components.

Meanwhile, connected vehicle technologies are enabling automakers to remotely deliver software for entertainment, safety, and performance upgrades. Central to this new revenue stream are vehicle operating systems (OSs) that can receive content from automakers or stream it from mobile phones.

Google’s Android Auto and Apple’s CarPlay software platforms are starting to take over, according to auto executives who spoke on a panel during the recent South by Southwest conference.

A Flat World

“Android and CarPlay have made a flat world” for app developers looking for space inside vehicles, said Nick Sugimoto, senior program director at Honda. Google’s Play Store, a popular service for downloading music, videos, and games, currently is not being used for sales within cars today, added Sugimoto, but Honda is working with the company to define an automotive platform.

Jenny Kim of Hyundai Ventures said that while her company also supports Android and CarPlay, Hyundai has its own offerings for music and mirroring mobile phone applications. Its Blue Link is used to connect to the car to the home and networked home devices. Hyundai subsidiary SoundHound, which provides the platform for the Hyundai Sonata, announced that it can also identify the music being played on wearable devices.

Moving control of popular applications from the mobile phone to the dashboard enhances safety, according to Sugimoto. Instead of looking at the phone on your lap, drivers can be looking forward at the display, he said.

Beyond Honda and Hyundai, Android and CarPlay are becoming the default automotive OS on many other models, such as the recently announced Volkswagen Passat Alltrack that supports both platforms. Conversely, Ford has switched to BlackBerry’s QNX OS for its in-vehicle platform.

In the Air Tonight

Connected vehicle technology is being leveraged most in EVs, which include wireless connectivity so that drivers can monitor the state of the battery charge, find charging stations, and perform other functions. Tesla Motors has been the most aggressive in over-the-air upgrades to vehicles to boost performance or enhance safety remotely rather than having to recall vehicles to be serviced. Tesla recently issued a remote upgrade for the Model S that will alert drivers if they stray out of range of one of the company’s Supercharger stations when driving on a low battery.

“There’s no question, over the air is coming” as a mechanism for issuing fixes and adding new features, said Hyundai’s Kim. Over-the-air distribution costs less and allows automakers to keep up with the advances in software outside of their normal 5-year or more development cycle.

For details on the varied initiatives that car companies are exploring to boost revenue, see Navigant Research’s report, Alternative Revenue Streams for Automakers.

 

Uber Expanding into Electric and Autonomous Vehicles

— April 7, 2015

Since Uber’s creation in 2009, the adoption of the company’s mobile app-based transportation service has exploded and the service is now available in 56 countries and over 200 cities worldwide. In fact, it was recently reported that there are now more Uber cars than yellow cabs in New York City. With nearly $3 billion in total funding raised by 2015, Uber is looking to expand its business into the growing electric vehicle (EV) and autonomous vehicle markets.

Offering local customers emissions-free transportation options, Uber has partnered with BYD to provide electric e6 taxis in Chicago. Uber drivers have the option to rent the e6 taxis from the Green Wheels USA dealership for $200 a week, and Uber customers will be able to choose an EV through the smartphone app when booking a vehicle. This new option gives users added flexibility in their riding choices, and more cities around the United States can expect Uber EVs as an option in the near term.

So Long, Driver

Likely to be more disruptive than the introduction of EVs, autonomous vehicles could have a much more notable impact on Uber’s business. In February 2015, Uber announced that it is setting up a laboratory in Pittsburgh to develop self-driving technology. In partnership with Carnegie Mellon University, the company will reportedly be developing the core autonomous technology, the vehicles, and associated infrastructure at the Pittsburgh facility. Uber CEO Travis Kalanick has stated in the past that he would gladly replace human drivers with a self-driving fleet of vehicles, as Uber drivers reportedly take home about 75% of every fare.

Beyond massive savings on costs for Uber, and potentially its customers, autonomous vehicles would make Uber a much safer service—not just in terms of smoother running vehicles with (likely) fewer accidents, but also in terms of the well-being of the passengers. Uber has come under intense scrutiny as of late, as accusations of assaults on passengers by Uber drivers have come from numerous customers from a variety of countries. While Uber does conduct background checks on its drivers, prosecutors in California are suing the company for alleged exaggeration regarding the rigor of its background checks.

Navigant Research’s report, Autonomous Vehicles, projects that globally, close to half of all new vehicles sold in 2035 will have some form of autonomous driving capability installed. Uber may have autonomous vehicles on the road even sooner, which would go a long way toward ensuring safer driving and safer environments for customers who would no longer have to consider the possibility of a dangerous driver.

 

Congestion Charging Makes a Comeback in Major Cities

— March 31, 2015

Congestion charging—and similarly ambitious programs for traffic management—are once again on the agenda for the mayors of large cities struggling with traffic jams, rising pollution levels, and shortfalls in transport funding. The fact that a traffic pricing scheme is again under discussion in New York is a significant indicator of the changing mood, and there are reasonable grounds to believe that this time it might happen.

Other cities are also stepping up their programs to manage or reduce private vehicle use. The mayor of Paris is considering a series of restrictions on high-emission vehicle use in the city, starting with a ban on older diesel engine vehicles. Madrid—another city suffering from poor air quality caused mostly by diesel vehicles–has introduced intelligent parking meters that charge higher fees for more polluting vehicles (there is no charge for electric vehicles [EVs]), and there are plans to extend the current controlled areas for vehicle access to other parts of the city. Beijing’s city leaders are also considering a form of congestion charging, though public resistance continues to be a considerable barrier in the Chinese capital.

Pioneers

Singapore led the way on road user charging in cities in the 1970s, but it was the introduction of the London Congestion Charge in 2003 that seemed to herald the wider adoption of such schemes around the world. However, enthusiasm waned after similar projects were rejected in cities like New York, Manchester, and Edinburgh. For most city leaders, such large-scale projects were seen as politically risky. So although road charging is used on many highways around the world and is becoming more attractive as an alternative to general road or fuel taxes, the reference cases for urban congestion control remain relatively few. Alongside London and Singapore, Stockholm, Gothenburg, and Milan are still the most notable examples.  While many cities still grapple with basic arguments over congestion management, Singapore continues to evolve its approach and is now proposing a new system, which will give it almost total visibility on vehicle movements in the city.

Political Courage

Gaining acceptance for a congestion charging scheme requires strong, even brave, political leadership and the willingness to engage with citizen and business concerns. Apart from a common resistance to paying for something that was previously free, many citizens and businesses are wary of schemes that are not linked to improvements in the transport system. The London and Stockholm schemes, for example, were both linked to funding improvements in transport infrastructure, and this is a key part of the recent proposals for New York, as well.

It’s also important that a city can offer viable alternatives in terms of connected and reliable transit scheme. The growing acceptance of EVs in cities (which are excluded from many charging schemes) and the availability of electric car-sharing programs like Autolib’ Paris means that there are now ready alternatives to commuters who can’t or don’t wish to abandon their own vehicle.

Congestion charging schemes today are part of a much broader debate on the nature of urban mobility, with better information and more alternatives available for many city travelers. Once again, we are looking to see if New York will pick up the baton.

 

California Utilities Look to Manage EV Charging

— March 27, 2015

Through multiple programs aimed at both supply and demand, California has developed the most vibrant market for plug-in electric vehicles (PEVs) in the world. According to the forthcoming update of Navigant Research’s report, Electric Vehicle Geographic Forecasts, the total number of light duty PEVs in California is expected to surpass 140,000 by the end of this year and 1.5 million by 2023. The state’s electric power sector is taking note because the speedy PEV market growth may pose problems if PEV charging isn’t managed well.

The most likely problems will occur at the residential transformer, where a cluster of PEVs may outstrip a transformer’s capacity, requiring costly upgrades and/or repairs. To date, this issue has been fairly minor, with California’s three major utilities (Pacific Gas and Electric [PG&E], Southern California Edison [SCE], and San Diego Gas & Electric [SDG&E]) reporting that, of the 97,350 PEV customers in their combined service territories from July 2011 to October 2014, there have only been 126 PEV-related infrastructure upgrades.

Getting Worse

These problems are likely to worsen with the aforementioned 10-fold increase in PEVs in under 10 years. Looking ahead, the California Public Utilities Commission (CPUC) launched a PEV submetering pilot in September 2014 through the big utilities. The pilot is designed to lower energy costs for PEV owners through time-of-use (TOU) rates that incentivize off-peak charging and measure their energy consumption for vehicle charging apart from their overall energy consumption. By separating PEV charging, utilities could assess how best to influence PEV charging beyond TOU rates to avoid infrastructure upgrades.

Although TOU rates are effective at managing demand for a more efficient grid at the generation and transmission level, their effect on localized demand issues like transformer capacity is limited. Automated charging of PEVs based on TOU rates essentially creates a new spike in demand at the beginning of the off-peak period. This spike looks marginal at the grid level, but can be fairly drastic at the transformer feeding a cluster of PEVs.

Leading Edge

Thus, utilities, electric vehicle supply equipment (EVSE) manufacturers, and EVSE service providers are looking to create more dynamic and advanced PEV charging schemes to manage charging at all levels of the grid. Greenlots, for example, recently announced its partnership with EVSE LLC to demonstrate the company’s SKY Smart Charging system in 80 Level 2 workplace chargers at SCE facilities. The SCE project will examine how PEV owners respond to demand response events and dynamic pricing schemes for a number of purposes, including mitigating local transformer issues.

Outside of California, other PEV markets are expanding, too; utilities in these areas will need to begin testing and implementing similar technologies and programs soon. Companies competing for utility services in California now will be well served by expansion elsewhere and likely represent the leading edge of charging services development for years to come.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Smart Transportation Program, Utility Innovations

By Author


{"userID":"","pageName":"Electric Vehicles","path":"\/tag\/electric-vehicles","date":"4\/21\/2015"}