Navigant Research Blog

Initial Quality Study Highlights the Commercial Risks of Vehicle Automation

— June 29, 2016

Connected VehiclesFor many years after J.D. Power and Associates began conducting its Initial Quality Study (IQS) 3 decades ago, most problems reported by customers in the first 90 days of vehicle ownership were either defects or non-functional features. However, in the past decade, the nature of reported problems has shifted toward what J.D. Power calls design-related issues. This could pose a serious problem for manufacturers as they rush to introduce autonomous driving technology.

At a recent meeting of the Automotive Press Association in Detroit, J.D. Power vice president Renee Stephens presented the 2016 IQS results. The industry as a whole improved by 6% in 2016 to just 105 problems per 100 vehicles, the best improvement in 7 years. Among the reported problems, those that fall into the audio, connectivity, electronics, and navigation areas continue to represent the largest category of complaints.

Voice recognition and connected devices still befuddle consumers. Numerous manufacturers including Ford have seen ratings decline in past years as a result of difficulties using infotainment systems. “Expected reliability remains the most important consideration when purchasing a new vehicle, cited by 49% of owners,” said Stephens. “It’s critical that technology be implemented correctly or consumers lose trust.”

Potential Problems

An increasing number of new vehicles now include advanced driver assist systems (ADAS) such as adaptive cruise control and lane keeping aids. However, if features don’t work as expected by the consumer, they often get turned off after a few false positives or surprises. This highlights a potentially serious problem for the auto industry in the coming decade as semi and fully autonomous systems are increasingly rolled out in the marketplace. Navigant Research’s Autonomous Vehicles report forecasts that nearly 5 million autonomous vehicles are expected to be sold in 2025, a volume that is expected to grow to more than 40 million in 2030.

Regardless of current ADAS and whether future autonomous systems work as the engineers intend them to, it is absolutely imperative that they work as consumers expect. Autonomous capability will add significant cost to vehicles, and until there is a shift toward on-demand mobility services, consumers will have to absorb that cost. If their experience with the stepping stone technologies is excessively negative, the market will reject these technologies.

Contradictory Views

This will be particularly true if consumers realize that autonomous systems don’t work at all in the scenarios where they are most likely to want to hand over control, such as in poor weather. A major market force for automated driving is improving safety. Related to the general functionality of these systems is the problem of ethics where, as is often the case, the public has contradictory views. A new study by MIT professor Iyad Rahwan shows consumers want autonomous vehicles to minimize casualties in the event of unavoidable crashes. However, that only applies if that person is not the potential casualty. It comes down to protect everyone—but protect me first.

If society as a whole is ever going to benefit from the potential of autonomous vehicles in reducing collisions, congestion, and energy use, much will have to change in society. Consumers will have to be educated in how these systems work so that expectations can be set appropriately. If the bar is not adjusted, consumer complaints in IQS and other studies will skyrocket, and this technology could die on the vine.


Ralph Nader Enters Automotive Hall of Fame: A Legacy

— June 24, 2016

Electric Vehicle 2For more than 5 decades, many in Detroit and other automotive capitals have considered Ralph Nader to be public enemy number one. Despite the strong feelings against Nader throughout much of the auto industry, the lifelong consumer advocate will be inducted into the Automotive Hall of Fame in July 2016. While Nader first came to prominence with the publication of his book Unsafe at Any Speed, the industry would probably not be where it is today without his efforts.

When Nader’s book was published in 1965, there were almost no safety-related automotive regulations. A year later, the U.S. Congress enacted the first Motor Vehicle Safety Act, and the era of automotive regulation began. Within the next few years, emissions and fuel economy were also being regulated and the automobile would never be the same.

Rules Are Good

Over the past 50 years, the industry has fought virtually every new regulation tooth and nail, and in the process, it has seriously eroded consumer trust. While repeatedly claiming that new rules were technically impossible to meet and/or too costly but ultimately managing to meet the rules (for the most part), automakers and suppliers have chipped away at their own credibility.

Thanks to those rules, engineers were forced to convert vehicle systems from mechanical to electronic controls. Beginning with basics such as ignition and later anti-lock brakes, today’s vehicles have up to 100 computers and more than 100 million lines of code. There are already production vehicles on the road from Mercedes-Benz, Volvo, and Tesla with semi-autonomous capabilities. Fully autonomous vehicles aren’t far off.

Despite the animus between them, the efforts of Nader and colleagues like Joan Claybrook and Clarence Ditlow on issues such as airbags have spurred the industry to develop and adopt more capable and affordable sensing and processing systems. Those same systems have become the enablers for the transformation of urban mobility that is projected in Navigant Research’s Transportation Outlook: 2025-2050 white paper.

While there have undoubtedly been backward steps along the way—such as the ongoing Volkswagen diesel emissions scandal—overall, today’s vehicles are safer, more efficient, cleaner, and better performing than at any time in the 130-year history of the automobile. The industry also remains incredibly profitable, with more vehicles being sold than ever. The reality is that regulations have enhanced the transportation industry and personal mobility, rather than killing it.

An Inflection Point

The industry now stands at an inflection point, as mobility is about to be transformed. This is uncharted territory, and there are no rules that govern it. There are countless new players stepping up and hoping to grab a piece of the mobility pie. The potential to make a quantum leap in safety is there if autonomous vehicles are executed properly.

However, many of these new players are coming into vehicle control from a software-based technology space, where “fail fast and iterate” is the model. That’s fine when talking about apps. If they crash, it’s an annoyance. If an autonomous control system fails, lives may be at stake. If autonomous vehicles are executed poorly, it could drastically undermine a half-century of work by Nader and many others.

The time is right for the industry to step up to the plate and work with regulators to develop common-sense rules for autonomous vehicles that don’t stifle innovative ideas. At the same time, they must set standards for system performance and mechanisms to validate that performance.

Ralph Nader upset the apple cart 50 years ago; he deserves a place in the hall of fame. The auto industry needs to embrace that legacy for the future.


FordPass Points to a Future beyond Selling Cars

— June 21, 2016

CarsharingAt first glance, the FordPass smartphone app seems like an also ran, a remote control app similar to what other automakers have been making for years. However, after spending a week driving the 2017 Ford Escape and having a conversation with Don Butler, Ford’s executive director of connected vehicles and services, it’s clear that FordPass is the beginning of something potentially much larger. This is the first automaker-produced app that is specifically designed to provide services even to drivers who don’t own a vehicle from that brand.

The 2017 Escape and Fusion are the first Ford-brand models to offer SYNC Connect, the company’s new telematics service. Ever since Ford announced its SYNC mobile device connectivity system in 2007, the company has focused mainly on brought-in solutions. SYNC has used the phone to enable features like automatic emergency calls and vehicle diagnostics. Connect adds a 4G LTE data modem to the redesigned SYNC 3 that debuted in 2015. Until now, Ford had only used embedded cellular telematics on its premium Lincoln models and plug-in electric vehicles.

No Subscription Fees

The addition of a built-in data modem enables Ford to add capabilities such as remote start and lock/unlock similar to what GM’s OnStar and other telematics systems have offered for 20 years. However, unlike most other automakers, Ford has opted not to charge any subscription fees for SYNC. Basic services will be provided for 5 years at no additional charge beyond the option price of Connect. OnStar now provides 5 years of free basic services on new cars and 3 years on vehicles from 2011 on that are reactivated. Premium brands such as BMW include up to 10 years of service in the purchase price of the vehicle.

The FordPass app was developed in collaboration with San Francisco, California-based Pivotal, a cloud platform development company. Following the spring 2016 launch of FordPass, Ford also announced a $182 million investment in the company. “Ford is reorganizing into a hardware, software, and services company,” said Butler at the recent TU-Automotive Detroit conference. “We recognize that software and services cut across multiple boundaries and FordPass is a platform for delivery of some of those services.”

Shifts Are Coming

Navigant Research’s recently published white paper, Transportation Outlook: 2025 to 2050, projects shifts in the current model of vehicle ownership. As this model changes, Ford wants to be ready to manage the new relationship that people have with mobility. FordPass is a component of the automaker’s new Smart Mobility subsidiary that is structured to capitalize on business partnerships, much like Ford Credit. The full business model of FordPass is still being worked out, but one of the first elements that extends beyond vehicle control, roadside assistance, and live chat support is parking. FordPass will enable users to find, reserve, and soon even pre-pay for parking—regardless of the brand of vehicle they drive. It also will likely include some revenue-sharing component with partners in exchange for leads.

 FordPass Find Parking


(Source: Ford Motor Company)

At the 2016 North American International Auto Show in Detroit, Ford used the platform to reserve parking spaces available for media. Drivers only had to show a QR code on their phones to gain access. Other potential future additions to FordPass include localized deals with other merchants, usage based insurance, or ride-hailing systems such as the Dynamic Shuttle service that Ford is currently piloting at its Dearborn, Michigan product development campus. The shuttle service was deployed prior to the release of FordPass, but it could be easily integrated in the future along with carsharing and bike-sharing, or even transit passes.

Ultimately, for Ford and every other automaker, it comes down to expanding the scope of their business from manufacturing and selling vehicles to moving people and goods from place to place efficiently.


BEVs Moving Beyond 200 Miles

— June 14, 2016

EV RefuelingBy the end of 2016, the first long-range battery electric vehicles (BEVs) for the mass market will finally become available. Over the next 3 years, the long-range BEV is expected to emerge as the market standard as BEVs with ranges below 100 miles disappear from automaker new vehicle lineups. The long-range BEV under $40,000 is a marked achievement in the industry that is expected to significantly increase plug-in electric vehicle (PEV) adoption past the 1% penetration rate it has struggled to surpass in all but a few global markets. But how far past 1% will the 200 miles/under $40,000 move penetrate?

Practical Limitations

The leap in range and affordability is a significant achievement, but BEVs still have to overcome significant hurdles before the tech can effectively replace the conventional internal combustion engine (ICE) vehicle. For all its flaws (expensive fuel, upkeep costs, and emissions), the conventional option cannot be matched yet in terms of cost, fueling convenience, range, and capability. Parity across all these factors, among all light vehicle types, is a long way off.

Even at a 200-, 250-, or 300-mile range, a BEV is a hard sell to anyone without a place to charge their vehicle at their residence or at their work. For those without this specific access, charging needs are likely only met through fast charging when the BEV state of charge nears depletion. Unless one is so fortunate to have access to a Tesla Supercharger, charging a 60 kWh+ BEV from 0% to 100% on public fast charging equipment (around 50 kW) will likely be an hour(s)-long engagement, and the energy cost savings analysis is not encouraging in this scenario unless subsidized.

In the United States, the share of the market without access to workplace or residential charging is not likely a minority. Over 56% of respondents to Navigant Research’s annual Electric Vehicle Consumer Survey indicated they did not have access to an electrical outlet at their residential parking space.

Analysis of survey responses reveals that people without access to residential charging are far less likely to consider BEVs than those with access. Near 30% of those without access indicated they would not consider a BEV regardless of range, while 34% of those without access that would consider a BEV would only do so if the vehicle achieved a range over 300 miles. In contrast, around 17% of those with access would not consider a BEV regardless of range and only 22% of those who would consider a BEV would only do so at over 300 miles.

As of yet, BEVs play particularly well to two or more car households where one conventional car can be used for more demanding driving requirements and the BEV can be utilized for short driving needs. 200 miles will likely expand the number of households replacing one vehicle with a BEV, but it will likely make little headway in convincing the two or more car household to replace an additional vehicle.

Addressing the Gaps

Residential and workplace charging are fundamental to market growth, but speedy increases in development will never address all the needs of those limited to on-street parking at both their residence and workplace. Public charging infrastructure that can match the speed of a pump alongside an actual marketing campaign for PEVs from the established OEMs will improve conditions for all consumers. However, the only way such an infrastructure is developed is if a robust fast charging business model emerges for fuel retailers—and the only way that happens is via the steady increase in the long-range BEV population (or via additional government support).

This is not to say that the battery will not eventually replace the ICE; it’s likely it will. But adoption will not follow the same speed of the disruptive technologies BEVs are so often compared with. An all-electric future is highly probable, but it is not near.


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