Navigant Research Blog

Mobility Services Target Driving Less (or at Least More Efficiently)

— September 1, 2016

CarsharingThe problem of urban congestion includes both too many cars simultaneously on the road and too few places to park them. New mobility services from Ford and Lyft are using data analytics and last-mile ridesharing to solve these twin challenges.

Increasing urbanization (82% of people now live in urban areas in North America, according to the United Nations) is intensifying the pressure on city streets and roadways and encouraging more urban dwellers to forego owning a car because of the expense and hassle of finding a place to park. Realizing that vehicle sales to city residents may start to flatten, automakers (including Ford) are diversifying their revenue streams with mobility services.

The recently unveiled FordPass app enables any car owner to pre-book a parking space in garages in more than 160 cities. FordPass also includes phone access to humans to help customers get around in traffic or find other mobility options, and the company also opened its first FordHub mobility storefront in San Francisco. When you also consider the company’s FordPay payment service, it’s clear that the automaker isn’t afraid to borrow from a certain Cupertino company’s playbook. (What’s next, the iFordFone?)

Autonomous Future

Ford also continues to march toward releasing a fully autonomous vehicle. The automaker recently invested in lidar manufacturer Velodyne’s autonomous sensing technology. Ford also announced its intention to produce a fully autonomous car by 2021 for use in ridesharing services. Uber, Lyft, and many other companies see taking those pesky compensation-seeking drivers out of the equation as the future of ridesharing.

Navigant Research forecasts that annual mobility services revenue will reach $4.8 billion in 2020. Automakers will play a significant role in these services, which include carsharing and ridesharing services, congestion charging programs, EV charging services, intelligent traffic management, and smart parking systems.

Smart Urban Mobility End-User Services Revenue by Region, World Markets: 2015-2024

Mobility(Source: Navigant Research)

If an autonomous vehicle is electric, it would reduce urban emissions while also addressing the problem of limited parking. If used to get people to and from mass transit stations, ridesharing programs can reduce the overall vehicle miles traveled by removing trips into the city core. Such is the case in the Denver suburb of Centennial, where light rail customers can request a free Lyft ride if they live near the Dry Creek train station. While using tax dollars to put people in private cars may seem counterintuitive, if it increases the utilization of light rail, it can be viewed as a net positive in solving the last mile challenge and reduce the cost when compared to limited-use bus services. Employees who work for XOJET, which provides luxury rides above the clouds, can also now access Lyft to get to and from their hotels and airports while they are accommodating the jet-setter crowd.

 

Ford Sets a Date for Its Autonomous Vehicle Future

— August 19, 2016

Connected VehiclesOn August 16, Ford held a press conference to announce its plan to launch a fully autonomous vehicle in 2021. Even though the response at the live event was strangely unenthusiastic, there were a number of points that were important for the future of autonomous vehicles and the automotive industry in general.

The headline news was that in 2021, Ford intends to launch a Level 4 (SAE Standard J3016) fully autonomous vehicle. To clarify the nature of the car, CEO Mark Fields made it clear that it would not have a steering wheel or control pedals, even though last year Ford said it had no plans to sell wheeled pods in which people are merely along for the ride.

The company also said that it would be several years after 2021 before individuals can buy it; it is aimed at carsharing and ridesharing fleet operators. Ford Smart Mobility LLC may become one of the first customers. Ford and GM are already piloting their own systems on shuttles for their employees, as noted in a blog earlier this year by my colleague Sam Abuelsamid.

Skipping a Step

Ford also said it would continue to develop and improve its driver assistance features up to Level 2 (partial automation), but it would not be introducing any vehicles with Level 3 (conditional automation) because company researchers had concluded that there was no safe way to ensure that drivers would remain alert enough to resume control in an emergency after an extended period of automated driving. Ford vehicles in the future will either have a range of assistance features or be driverless.

This is a change from the gradual automation theme that has prevailed in the industry until now, although Ford has been saying for the past year that it doesn’t believe that Level 3 is viable. Solving the Level 3 handover issue has been an important topic at recent technical conferences, and Ford has now confirmed its position. While most other OEMs have been working on Level 3, many are now coming around to the idea that the Level 2 to 4 jump is inevitable.

Although convenience and mobility were the focus of the announcement, Ford also acknowledged that safety is a big part of the reason to promote more driver assistance and eventually fully autonomous vehicles. Providing mobility to those without access today, such as the elderly and infirm, was another of the high-level goals. There are also potential opportunities in local package delivery.

Future Investments

Also included in the press announcement were investments in a series of companies providing key pieces of the future autonomous vehicle:

  • Velodyne: A supplier of lidar sensors
  • SAIPS: An Israel-based computer vision and machine learning company
  • Nirenberg Neuroscience: A machine vision platform for performing navigation and object recognition
  • Civil Maps: A provider of high-resolution 3D mapping capabilities

However, Ford made it clear that it was not interested in simply installing autonomous driving software developed elsewhere. It sees its future as a system integrator and will keep most of the development and integration roles in-house.

When asked about powertrain for this new vehicle, Ford said that it would leverage one of its global platforms, but would not confirm whether it would be all-electric or not. The company noted that it has experience with hybrid drive as well as electric and the powertrain has not yet been chosen.

Ford intends to expand from being primarily a vehicle manufacturer to become a mobility company and has drafted a timeline for this shift. This aligns with Navigant Research’s Transportation Outlook white paper that was published in early 2016, and the timing validates the forecasts in our Autonomous Vehicle reports. It will be interesting to see how other OEMs react.

 

How Will Wireless Connectivity, Vehicle Autonomy, and Electrification Converge with On-Demand Mobility?

— June 13, 2016

CarsharingIn the future, urban transportation is expected to be electric, autonomous, and on-demand. This is the vision that captures the major trends in mobility and is one that companies like Uber and Google already appear to be working toward. Navigant Research believes that on-demand shared transportation services—whether carsharing, ride-hailing, bikesharing, or even public transit—will converge with the major vehicle technology trends of electrification, wireless connectivity, and autonomous driving capability to create a low-carbon transportation system for cities over the next 25 years. Navigant Research has covered these trends in its recently published Transportation Outlook: 2025 to 2050 white paper and will discuss them further in a June 14 webinar, Changing Models for Urban Mobility.

Convergence Underway

This convergence is happening already. The first piece, wireless connectivity, is a key building block technology for a future where personal transportation transitions to mobility as a service. By 2025, Navigant Research forecasts that more than 1.2 billion vehicles globally are expected to be connected to their surroundings and/or to each other through either built-in or brought-in communications technology. At a baseline, these systems will provide real-time safety alerts and traffic notifications to drivers; the more mature and full-featured systems will support semi-autonomous driving systems. In this same timeframe, the number of vehicles equipped with some form of telematics will also grow rapidly. By 2025, most new vehicles in developed markets are likely to have telematics offering various types of services to the driver. Today, this type of connectivity is already central to electric vehicles (EVs), which have navigation systems that alert the driver to available charging stations and provide battery charge status updates.

The convergence is also already occurring between vehicle electrification and shared mobility. EVs are an increasingly popular option in carsharing schemes in cities. Indeed, city officials looking to control pollution in congested city centers are actively encouraging the use of EVs in carshare services. For example, officials in London pushed hard to bring to the city an electric carsharing scheme similar to the successful Autolib’ service in Paris; the new service opened in spring 2016. Carsharing services already see a greater percentage of EVs in their fleets than is found in the wider passenger car population. Navigant Research estimated that plug-in hybrids and battery EVs represented more than 15% of all vehicles in carshare services as of 2015. While these EVs are largely concentrated in a handful of services—such as the all-electric Autolib’, all-electric carshare companies in China, and in some of Daimler’s and BMW’s carshare services—EVs are expected to expand to many more carshare operations through 2025 and beyond. One reason for this is that carsharing will be a growing option for automakers to put certain types of cars into service—primarily fuel-efficient, electric-powered, and autonomous—and many OEMs are expected to operate these transportation services themselves as a way to offset reductions in revenue due to falling vehicle sales in urban areas.

Mobility as a Service

Carsharing is a key building block for the future of mobility as a service, and is now a well-established industry that feels familiar rather than new. But in fact, this business is at the early stages of major upheaval that will change the role it plays in urban mobility. First off, automakers are entering the market in earnest, and it is expected that almost all major automakers will be offering some type of shared vehicle service by 2025. A second disruptor is the rise of the one-way operational model. With drivers no longer required to return vehicles to the same parking spot where they picked it up, carsharing significantly expands its use case for city residents. Carsharing now can provide true on-demand mobility and be used for spur-of-the-moment travel needs and for shorter one-way trips than is typical for conventional round-trip carsharing. This new operational model makes carsharing more like the third major disruptor in the shared vehicle sector: the explosive popularity of ride-hailing apps like Uber and Lyft. While these two types of services can be seen as competing, they are better thought of as complementary, each offering a different type of experience for the customer. Carsharing acts as a replacement for owning a car, whereas ride-hailing is more directly a replacement for conventional taxi services. One-way carsharing and ride-hailing services may well compete for customers, but Navigant Research believes that the urban mobility model of the future will have both carsharing and ride-hailing.

Autonomous Opportunity

Both services probably will be early markets for autonomous driving technology, the final piece of this low-carbon mobility as a service model. It is likely that autonomous vehicles will initially be integrated into shared fleets in a controlled and regulated setting. Sites like central London, Paris, and Singapore are anticipated to be among the first. From 2025 on, a number of entities—including carsharing companies, taxi fleets, ride-hailing companies, and automakers—are expected to be operating autonomous fleets. In particular, automakers likely will embrace the autonomous fleet idea as an extension of their current involvement in carsharing schemes and will seek to incorporate them into their EV models. GM has announced it will begin offering autonomous Chevrolet Volts for its employees to drive at its Technical Center in Warren, Michigan in late 2016.

According to the United Nations, by 2050, as much as 66% of the world’s population is expected to live in urban areas, and the individually owned vehicle will probably become a rarity in most large cities. The possibility that shared mobility may lead to less use of public transit has been an oft-cited concern among city officials and sustainable transportation advocates. A 2016 report by the Shared-Use Mobility Center found that services like carsharing and ride-hailing are actually complementary to public transit. The report, which focused on users in seven U.S. cities, noted that the people that use shared modes of transportation the most were the most likely to use public transit and to own fewer cars. Navigant Research also believes that, from 2025 onward, public transportation itself will become more of an on-demand service, which will use buses much more efficiently. Connectivity and data analysis will enable the efficient dispatch of vehicles to where passengers need them, keeping idle time to a minimum. These services can be fully integrated with the other types of on-demand options in the city, making multi-modal travel more robust and seamless.

 

Toronto versus Austin: How City Regulations Can Make or Break Ridesharing

— May 31, 2016

Electric Vehicle 2Ridesharing apps such as Uber and Lyft are often less expensive and more convenient (i.e., faster responding) than taxis. This has resulted in an explosion of ridesharing businesses over the past several years; Uber alone is estimated to be worth over $60 billion. However, the rapid global expansion of ridesharing services has created a legal quandary in jurisdictions all across the world. In the United States alone, Uber is involved in over 150 lawsuits. While the conflicts between municipalities and ridesharing companies can be complex, the essential argument often boils down to this: Are ridesharing companies a distinct legal entity with their own set of rules, or should they be regulated like traditional taxi cab organizations?

A Tale of Two Cities

Two major cities with large ridesharing presences—Toronto, Ontario and Austin, Texas—were both recently met with threats of complete operational shutdown by ridesharing companies. Proposed regulations by both cities were deemed to be unfair by the industry if enacted. In Toronto, the regulations implemented ended up being reasonable enough for Uber to continue offering its services in the city. The same cannot be said for Austin, however, as both Uber and Lyft have completely ceased operations in the city, citing overly burdensome regulations.

To see how the regulations in Toronto were acceptable to the ridesharing companies and the ones in Austin were not, let’s examine some of the key measures instituted by both cities. In Toronto, numerous key regulations were introduced to level the playing field between Uber and established taxi services:

  • Taxis are now able to offer discounted rates (similar to Uber)
  • Taxis are now able to implement fare hikes during peak hours (similar to Uber)
  • UberX* fares will increase (must charge same base fare of $3.25 per ride as taxis, with a licensing fee of $0.30 per ride)
  • UberX drivers will have to pass a city-mandated background screening
  • UberX drivers need to have $2 million in insurance coverage and all-weather tires for winter
  • UberX vehicles must display some type of signage for identification (i.e., magnetic placard)

*UberX, where drivers use their private vehicles to transport passengers, is the cheapest and most common service from Uber. Some rules may differ for UberXL, UberSelect, UberBlack, and UberPool services.

While Austin had proposed rules that are similar to the regulations instituted in Toronto, the city added additional measures such as the mandatory fingerprinting of drivers, restrictions on where drivers can pick up and drop off passengers, and a time-consuming data reporting scheme. These seem to have been the deal-breaking regulations for Uber and Lyft.

Finding the Right Balance

Ridesharing companies undoubtedly enjoy benefits that are absent to traditional taxi cab companies due to the inherent advantages of the shared mobility business model. However, ridesharing deserves some recognition for innovating in an industry that has been relatively unchanged and void of outside competition for decades. Ensuring that city regulations aren’t overly burdensome on ridesharing companies is important — thousands of residents in Austin have been deprived a source of income, while many more have been deprived of a service that was improving mobility, reducing incidents of drunk driving, and expanding transportation options to underserved parts of the city.

Conversely, it is important that ridesharing companies are regulated to ensure safety for passengers and so that traditional taxi companies aren’t operating on a completely different regulatory playing field. Toronto seems to have found a reasonable balance that allows both types of businesses to operate on a similar set of rules while also recognizing the clear distinctions in service delivery and organizational structure between ridesharing and traditional taxi services.

 

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