Navigant Research Blog

Urban Automated Vehicle Deployment Needs Coordination

— March 8, 2018

There’s little doubt that ride-hailing as a means of urban transportation is on the rise, and that trend is expected to continue unless something dramatic changes. Urban congestion is also on the increase globally. While there is a clear correlation, causation is still open to some debate—although studies seem to indicate that ride-hailing is at least partly to blame.

As of early 2018, there are probably no more than 1,000 highly automated vehicles (HAVs) being tested on the public in cities around the world. Those tests are going to start turning into commercial applications for ride-hailing possibly as soon as later this year, and before these vehicles proliferate, we need to have the conversation about how to integrate these vehicles without exacerbating the congestion problem.

What Will Entrepreneurs Do?

Left to their own devices, we already know how entrepreneurs, especially those backed by mountains of Silicon Valley cash, are likely to deal with this. They will rush as many vehicles as possible into the marketplace (primarily, in densely populated cities) in order to establish a dominant position early. This has happened in many areas of the technology sector, and it certainly has been the strategy of Uber and Lyft.

Is Ride-Hailing the Future?

Navigant Research’s Mobility as a Service report projects that, by 2026, ride-hailing services will be providing more than 160 billion rides annually and with nearly 1 trillion vehicle miles traveled.

From a consumer perspective so far, ride-hailing has been a huge boon, providing convenient access to rides at reasonable prices (except during rush hour and inclement weather). While I don’t use ride-hailing at home, I haven’t rented a car during a trip in many years and I rarely take traditional cabs. The convenience factor often makes it a great alternative to traditional transit.

Ride-hailing companies claim that for each of the vehicles deployed on their platforms, they replace multiple individually owned vehicles, which should reduce congestion. However, often these vehicles are without passengers as drivers wait for a ride request. To provide short wait times for customers, the companies entice more drivers with higher fares via surge pricing. While this makes sense economically, it also puts more cars on the road at times of high demand, increasing congestion. Also, the platforms have no control over where drivers choose to deploy themselves.

What Is the Potential for HAVs?

HAVs provide an opportunity to address the problem of urban congestion, but only if they are deployed in a coordinated fashion that is probably anathema to those of a more libertarian bent in the tech industry. Nonetheless, cities are going to need to step up and play an active role in shaping deployment plans for HAVs, and companies involved in the sector are going to need to cooperate.

Any regulatory frameworks need to allow for enough flexibility for multiple companies to compete with services and retain the potential to be profitable. At the same time, service providers need to be prepared to share enough data to enable the optimization of the mobility ecosystem so that excess vehicles are kept to a minimum while still meeting the needs of residents.

However, not every resident is going to be able to afford to take an HAV for every trip. A multimodal ecosystem with a range of vehicle types and operational models from point-to-point to fixed-route mass transit will persist. To the degree possible, trips should be optimized with the use of whatever mode makes the most sense. The HAVs should also be optimized to keep empty trips to a minimum, which will benefit everyone by reducing congestion and maximizing profitability.

 

Premium Auto Brands Lead the Way to 200+ Mile BEVs

— February 22, 2018

In the race to create long-range battery EVs (BEVs), premium brands are taking the lead. Navigant Research projects over 6 million BEV sales globally by 2026. Because range anxiety is a leading deterrent of consumers looking to purchase an EV, increasing the range of BEVs will be crucial to expanding the market.

Over the past few years, several premium brands have announced they would bring to market BEVs with capabilities of at least 200 miles, with many pushing that number to over 300 miles of range. Apart from Tesla’s Model S and Model X, no premium automaker has released these long-range BEVs. However, 2018 is anticipated to be the year we start to see these new models come to market.

Premium Automaker Electric Promises

The following timeline showcases the increase in announced/expected premium brand long-range BEVs:

Announced Premium Brand 200 + Mile Range BEVs

(Source: Navigant Research)

Audi and Jaguar will likely continue Tesla’s long-range trend in 2018 with the crossover style Jaguar i-Pace and Audi’s SUV e-tron Quattro. The i-Pace is expected to have a range of 220 miles, while the e-tron Quattro will have around 300 miles of range. Audi is also expected to release another all-electric SUV by 2019, along with Aston Martin’s RapidE, Mercedes Benz’s Concept EQ, Porsche’s Mission E, and the Fisker EMotion. Looking to 2020 and beyond, BMW, Tesla, Infinti, and Volvo are all anticipated to release long-range BEVs—in Tesla’s case, the revamped Roadster with 600 miles of range (and a hefty price tag).

Premium brand commitments to electrification comes in more than just the form of single vehicle announcements. Volvo, Aston Martin, and Jaguar Land Rover have announced plans to go all electric or hybrid over the next decade, with Volvo promising this lineup by 2019. In 2017, Porsche installed its first 350 kW charging station at its Berlin office. The ultrafast charger is being developed for the Mission E to allow customers to recharge quickly.

Affordable, Long-Range Vehicles Not Far Behind

More details of these long-range vehicles will be unveiled closer to the release dates, but it is already clear that premium automakers are committing to an electric future. As with many consumer markets, premium and luxury automakers are often early adopters of trends and technologies that are later picked up by economy brands.

While these premium brand long-range BEVs will have a hold of the market for the time being, economy brands like Ford and Hyundai are announcing their own long-range BEVs, which will likely have a substantially lower price tag. Some premium brands, like Tesla, have begun offering less expensive electric models to meet this demand for non-luxury long-range BEVs and to compete in both market segments. If automakers stick to their electric promises and all begin producing EVs, we will continue to reduce emissions from the transportation sector and move toward a greener, cleaner future.

 

Colorado Charges Forward with Plan to Support EVs

— February 8, 2018

While California garners deserved headlines for being the most ambitious state in promoting EVs, Colorado is pushing with its own aggressive agenda. On January 24, Colorado Governor John Hickenlooper announced the debut of the Colorado EV Plan to a crowd outside Colorado’s Alliance Center. The plan, developed in support of his 2017 executive order Supporting Colorado’s Clean Energy Transition, outlines specific programs, strategies, and goals to electrify travel corridors around the state to support the widespread adoption of EVs.

In his speech, Hickenlooper announced Colorado was eighth in EV market share last year, and that the Colorado EV Plan is “a big step toward pushing that forward.”

The plan’s five goals include:

  1. Increase adoption of light duty EVs to reach goal of 940,000 EVs in Colorado by 2030
  2. Increase the number of electric transit vehicles to 500 by 2030
  3. Increase the number of employers that provide workplace charging to employees
  4. Develop strategies and partnerships that prepare property owners for future investments in EV charging infrastructure and electrify challenging facility types
  5. Lead by example by accelerating the purchase of EVs for agency fleets and investment in EV charging infrastructure

Charging Infrastructure Expected to Benefit

The plan details that 15% of the $68.7 million Volkswagen (VW) settlement funds that the state will receive will go toward light-duty EV charging infrastructure, the maximum allowable under the settlement terms. Colorado also intends to capitalize on public-private partnerships and the grants provided through new and existing programs.

Hickenlooper spoke to how the plan fulfills Colorado’s commitment to the Regional EV West memorandum of understanding (discussed in a previous blog). This bipartisan effort brings together eight states (Arizona, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho, Montana) to connect and electrify over 7,000 miles to establish the Intermountain West EV corridor. The plan also mentions that Colorado will investigate opportunities to partner with cities, manufacturers, and transportation network companies (i.e., Lyft and Uber) to support the electrification of a variety of mobility options.

While the plan is good news for EV enthusiasts, it also marks declining support for other alternative fuel vehicles. The plan commits to changing the ALT Fuels Colorado program—which since 2014 has provided grants for the construction of publicly-accessible compressed natural gas, propane, and EVs—to begin directing funds toward the build out of the EV fast-charging corridors.

Colorado currently has only 53 DC fast-charging stations, and Hickenlooper stated that, “we probably need 4 times that, but the demand [for charging infrastructure] is not going to decrease, it’s only going to increase.” Increasing public charging infrastructure will relieve some of the anxiety that prospective and current EV owners may have about vehicle driving range.

Demand Is Great, but What’s the Cost?

The high estimate scenario for the goal of 940,000 EVs on the road by 2030 requires as many as 632 fast charger stations to support the EV population, or 580 additional chargers in the next 12 years. According to Navigant Research’s recent report, DC Fast Charging Equipment for EVs, this would require approximately $60,000 per charger, or $34.8 million. With the VW settlement funds of just over $10.3 million allowed to be used for EV charging infrastructure, this leaves the Colorado Energy Office looking for another $24.5 million from the private sector, the ALT Fuels Colorado budget, or other funding opportunities to build out the infrastructure needed to support almost 1 million EVs in the state.

 

Electricity Landscape: Expanding Demand

— January 30, 2018

On January 16, 2018, I attended the US launch of the International Energy Agency (IEA)’s World Energy Outlook (WEO) 2017 at the Center for Strategic and International Studies. Dr. Fatih Birol, Executive Director of the IEA, presented findings from the WEO and highlighted four megatrends in the global energy system:

  • Rapid deployment and falling costs of clean energy technologies
  • Growth in electrification of energy
  • China’s shift to a more services-based economy and a clean energy mix
  • The US’s position as the biggest oil & gas producer globally

Taking these megatrends into account, as well as projections on where existing policies and announced intentions may lead the energy systems, WEO’s New Policies Scenario expects global energy needs to increase by 30% between 2018 and 2040. This growth is mainly driven by India, whose share of global energy use is expected to rise to 11% by 2040. Southeast Asia also contributes immensely to overall growing demand. Developing countries in Asia Pacific are expected to account for two-thirds of global energy growth.

Growing Demand for Electricity

With a rising standard of living in many developing countries, more people will want to buy appliances and electronic devices powered by electricity. Innovative transportation technologies are gaining momentum and are projected to increase electricity demand as well. For example, China will need to add the equivalent of today’s US power system to its infrastructure by 2040 to meet rising electricity demand; India needs to add a power system the size of the current European Union. In fact, global investment in electricity overtook that of oil & gas for the first time in 2016. Dr. Birol emphasized the importance of China and India’s future energy decisions. Their decisions will play a huge role in determining global trends due to the scale of investment and deployment.

WEO Electricity Demand Projections to 2040

(Source: International Energy Agency)

Heating and Cooling Demand Ramping Up

The growing demand for heating and cooling is among various drivers for electrification of energy. In particular, consumers in warmer regions will increasingly install cooling systems. There is great potential for energy savings with energy efficient HVAC products, but that market remains largely untapped at present. According to the recent Navigant Research report, Market Data: Energy Efficient Buildings – Asia Pacific, the energy efficient HVAC market in Asia Pacific is expected to reach $25.6 billion in 2026. Specifically, China’s market is expected to grow at a 10.5% CAGR between 2017 and 2026; and 11.4% in India. Today, heating and cooling in buildings account for approximately 40% of energy consumption.

In addition to demand for heating and cooling, the EV market is expected to grow rapidly. EVs can lead to a major low-carbon pathway for the transportation sector. Notably, Europe and China are aggressively promoting EV deployments. Navigant Research projects global plug-in EV sales to reach 8.3 million by 2026.

Increasing Electricity Demands

Overall, end-use electrification is expanding. The IEA expects the share of electricity in final energy demand to increase from 18% today to 26% in by 2060. So, what does the growing electrification of energy mean? Electrification creates environmental benefits by shifting many end uses of electricity away from fossil fuel sources. It also creates opportunities for boosting energy efficiency.

While there are still many challenges to overcome, such as enforcing energy efficiency regulations and developing EV infrastructure, the electrification of large sectors of the economy holds great growth potential. This growth will be driven by rapidly evolving technologies, emerging innovative business models, and shifting regulatory environment. Together, these are referred to as the Energy Cloud, disrupting the traditional electricity landscape. To learn more about how industry stakeholders can prepare and manage their organization to maneuver through the Energy Cloud disruption and position themselves for long-term success, see Navigant Research’s white paper, Navigating the Energy Transformation.

 

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