Navigant Research Blog

Automakers Look to Stay Relevant in Rapidly Changing Mobility Landscape

— April 15, 2014

How fast is the urban mobility landscape changing?  Last year, when Navigant Research published its Carsharing Programs report, San Francisco, California-based rideshare company Lyft operated in around four U.S. cities and touted 30,000 members.  A year later, Lyft operates in 30 U.S. cities and, in April, the company raised $250 million in a Series D investment round.  Lyft immediately began making moves to secure greater market share by lowering its prices in all cities by up to 20%.  Meanwhile, Uber, the U.S. leader in app-based car services, continues to add new UberX service locations, including one in Singapore, after raising $258 million in funding in August 2013.

Granted, Uber and Lyft are not carsharing companies exactly.  They are mainly alternatives to taxi or livery services.  But they do share DNA with carsharing.  These companies operate somewhat like peer-to-peer (P2P) carsharing services, such as Relay Rides, which also serve as a way for non-professional drivers and those in need of a car to connect, as well as to maximize the utility of someone’s underutilized car.  And, P2P car services could compete with one-way carsharing, a business model that has taken off in the past few years thanks to companies like Autolib’, car2go, and DriveNow.  These services are all part of the new collaborative economy, which depends on a radically new attitude toward car ownership and the ubiquity of smart devices, apps, and software that makes the collaboration as seamless as possible.

Changing Times

The dramatic growth of P2P car services is just one example of how dramatically the transportation landscape is changing, with a clear shift away from the privately owned car as a primary transportation mode.  Yes, this change is still largely concentrated in major urban areas and in developed countries.  Meanwhile, rising car markets (like China) continue to show increases in sales to first-time car buyers, even as the pace of auto sales growth has slowed somewhat.  Still, in a world that is becoming increasingly urbanized, and with the rise of megacities (cities with populations of 10 million or more), this mobility transformation is going to spread.  In the world’s large cities, automakers will find their businesses increasingly squeezed by a range of other transportation options, including the P2P car services and carsharing.

How much of a threat will these options be to car companies?  Carsharing will cut into car sales to some degree, but based on Navigant Research’s forecasts, vehicle sales reductions directly related to carsharing will be tiny compared to the total passenger car market, which globally reached around 82 million in 2013.  But the broader transformation of urban mobility will have an impact on auto sales, as the many options for personal mobility make it easy to forgo buying a car during the time that fuel costs will be rising, along with the indirect costs of driving such as parking and traffic congestion.

This helps explain automakers’ interest in offering carsharing, which has the potential to provide substantial revenue.  BMW and Daimler in particular each came roaring into this market in the last 18 months, capturing significant market share in the European cities where they operate.  Daimler reports having 600,000 members in its car2go service, while BMW reports 215,000 members in DriveNow.  In the Navigant Research report Alternative Revenue Streams for Automakers, revenue from original equipment manufacturer (OEM)-owned carsharing services is forecast to be in the billions as overall demand for collaborative car ownership grows and more OEMs enter this market.  Carsharing represents a prime opportunity for automakers to ensure they play a central role in the changing mobility landscape.

 

U.S. National Parks and Electric Vehicles: A Match Made in Heaven?

— April 8, 2014

The U.S. Clean Cities program and the National Park Service (NPS) recently announced nine new projects to deploy clean vehicles at U.S. national parks. These projects are part of the Clean Cities National Park Initiative launched in 2010. The nine projects mainly feature plug-in electric vehicles (PEVs) and hybrid electric vehicles (HEVs).  Around 21 vehicles will be installed through the funding, including some low-speed electric vehicles (EVs).  The projects also include the installation of EV chargers for park visitors. While any move to make the U.S. parks cleaner is welcome, the relatively modest ambitions of this funding effort reflect the challenge that parks present in the adoption of EV or HEV technology.

Parks have long been an attractive target for greener transportation. This is not only for symbolic reasons, but also for practical reasons. Diesel and gas vehicles are noisy and disruptive. Park vehicles may spend time idling, which is both an emissions problem and a cost concern given the large amount of fuel essentially wasted during idling. These factors would seem to make PEV and HEV technology a good option, but to date, deployments have largely been pilot or demonstration programs and there has yet to be a full-scale shift toward electric drives at the U.S. parks.

A Building Barrier

One major barrier has been the lack of truly commercial vehicles available. As discussed in the Navigant Research report Hybrid and Electric Trucks, most of the traditional truck original equipment manufacturers (OEMs) are offering hybrid versions in the larger trucks classes that are not applicable to the park service. In the truck category, parks would primarily utilize utility trucks, pickup trucks, or vans and trucks outfitted to transport passengers.  These would be vehicles in the Class 2b light duty category or medium duty Classes 3-5, where, until recently, there was more attention focused on producing electrified vehicles for delivery service.

Even though pickup trucks are among the top-selling vehicle in the United States, U.S. OEMs have tailed off production of hybrid pickups and only ever offered demonstration models of plug-in trucks.  However, in the past 18 months, there has been an uptick in companies focused on these class levels and in applications with some applicability to national parks. In January, U.S. startup VIA Trucks announced a major commitment by Canadian company SunCountry to place VIA’s plug-in vans into passenger transport services at Best Western hotels. VIA also develops plug-in electric utility trucks, which will be used at several electric utilities in a pilot project funded in part by the U.S. Department of Energy (DOE). U.S. company Odyne Systems will be delivering 120 utility trucks through the same DOE funding; the plug-in system allows utility workers to avoid engine idling by running equipment off of the battery.

Looking at the larger class of passenger buses that are used in national parks, the biggest push is coming from China’s BYD, which has been targeting parks and transit agencies. While most of the company’s orders are outside of the United States, BYD is making a strong push for the U.S. market. After winning bids in Los Angeles and Long Beach, California, the company began to face major backlash from activists and its U.S. competitors. The Long Beach order was recently canceled, although, evidently, the reason was simply a paperwork glitch. In any case, this environment would make it difficult for the NPS to adopt these buses until BYD becomes more established in the United States through transit deployments like the one in Los Angeles.

While increased vehicle availability will help make electric and hybrid options more feasible for any park looking to convert, the issue of the price premium still looms large. With hybrids costing well over 25% more than conventional vehicles and electric buses often reaching a 100% price premium, cash-strapped public services like the NPS will likely find themselves unable to make the switch even if they want to. Lower-cost options, like propane, continue to see uptake in national parks for this reason. This also explains why the Clean Cities National Park Initiative is still necessary to move these vehicles into U.S. parks.

 

Google Glasses Best Use: Safer, More Efficient Driving

— March 28, 2013

Storm_Port_webA West Virginia legislator recently called for the use of Google Glass – a new consumer electronic device about to be launched by Google – to be banned while driving cars. The politician claims it is an attempt to avoid distracted driving. Unfortunately, he’s got it backwards. The use of Google Glass while driving should be encouraged, not forbidden. It offers a safer and more efficient user interface than we have today.  It also opens up possibilities for better control of the car, which means better mileage and less consumption of gasoline society-wide.

The fact is that the current practice of looking down to scan instrument panels or change the radio station is inherently unsafe. The Air Forces of the world realized that long ago and now the use of the head-up-display (HUD) is widely used by fighter pilots. HUDs were first developed for fighter pilots as a means to keep their line of sight pointed straight ahead while still being able to scan their instruments. The first HUD’s projected instrument displays onto the cockpit glass. Unfortunately, researchers found that this led to the pilots’ committing the sin of cognitive tunneling – the act of focusing on an item in the near field of vision instead of keeping their eyes focused at infinity on the wide field of vision (a good thing to do when you’re in the middle of a dogfight). Subsequently, HUDs were redesigned to give basic information in as visually simple a fashion as possible. By keeping only a few key readings on the windshield and displaying the data in simple geometric forms, the pilots soon found themselves permanently focusing on the wide field while subconsciously absorbing the information that was being presented to them – the ideal way to use an HUD.

A Google Glass-type device, likewise, is an ideal form factor for presenting limited but crucial information to a driver without interrupting their line-of-sight. The limitation of data is key: the answer to cognitive tunneling is limiting the amount of data being presented. The driver isn’t there to read a book, after all. By using an intelligent device like Google Glass, the car can present only the information the driver needs to see at the present moment (an unsafe speed warning, an upcoming turn to be made, an empty gas tank, etc.). The device can also bring advanced safety systems into play by broadcasting lane drifting warnings or other cars approaching that might warrant defensive maneuvers. Google Glass, all in all, has the potential to significantly add to the safety of the driver and riders.

Another key element that Google Glass can deliver is useful voice control. Although voice control is improving in automobiles, it is far more difficult to yell a perceptible command at a device that is 2-feet away from the driver’s mouth (ask anyone who has used Ford Sync about this issue) than it is for a device that the driver is wearing. Additionally, Google Glass is rumored to have bone conduction capabilities, meaning that it always detects when the wearer (and not an inconsiderate passenger in the backseat) is speaking.

The utility of Google Glass doesn’t have to end there. If a driver wants to save more fuel, a Google Glass app could provide an icon that provides persistent feedback on their driving habits. Simple changes to driving habits can easily lead to significant fuel savings. Too hard on the brakes? The icon could vibrate. Accelerating too quickly? The icon could glow yellow. That sort of persistent feedback is not possible from a smartphone or an instrument panel on the dashboard, but it could be easily processed by the wearer of a Google Glass device. This kind of driving would be especially advantageous for drivers of hybrids and pure electric vehicles, since optimization of regenerative braking habits is one of the easiest ways to improve mileage.

With all of the good things that Google Glass can do, it needs to be emphasized that it, like any consumer electronics device, must be limited while the user is driving. There needs to be a “Drive Mode” that shuts off visual text alerts, emails, and movie streaming while the wearer is driving. If that happens, and if the price drops considerably from its current $1,500 peak, it will be the norm for drivers to buckle in, adjust their seatbelts, and turn on Google Glass.

 

Ford Targets Home Energy

— January 17, 2013

KyudoFord Motor Company intends to become your home energy management supplier one day – or at least try to.  The automaker announced a new effort at the Consumer Electronics Show (CES) last week in Las Vegas called MyEnergi Lifestyle, and the ensemble of players Ford has brought together for this project is impressive.

The companies joining Ford in MyEnergi include Eaton, SunPower, and Whirlpool.  Nest Labs and chipmaker Infineon are two other firms rounding out the group.  The goal is to show how typical consumers can significantly reduce electric bills by combining smart home appliances, cloud computing, solar panels, off-peak pricing, and plug-in vehicles.  Besides the car, which Ford would sell, the package of goods necessary for MyEnergi to achieve its goal includes:

  • Energy efficient appliances like refrigerators, dishwashers, and clothes dryers
  • Hot water heaters
  • Connected smart thermostats
  • Rooftop solar systems

Ford quoted a Georgia Tech computer model that predicts a 60% decrease in energy costs and a 55% cut in carbon savings from a typical home that adopts MyEnergi Lifestyle products.

That sounds impressive.  But so is the estimated price for all the gear: a Ford C-Max Hybrid goes for $25,200, a new energy efficient Whirlpool refrigerator costs around $1,100, a new clothes dryer is around $500, a basic hot water heater sells for around $500, the Nest thermostat runs $250, and a rooftop solar system goes for around $10,000.  The total comes to $37,550.  How long for a payback on that investment?

Half a Century

A typical energy bill in the United States is $1,248 per year.  It would take around 50 years to pay back the equipment investment ($37,550 divided by $748.80, which is 60% of the annual bill).  These are averages, of course, and a homeowner could start with one or only a few products, so the initial investment would be less, but so would the savings.  The vision Ford has seems out of reach for typical household budgets today. Where it does make sense is for a family doing a major home remodel or building a new dwelling; but add to that a new plug-in car?

So while MyEnergi Lifestyle is an intriguing concept by Ford and its partners, it has major hurdles and this idea is probably ahead of its time.  First, plug-in vehicle demand remains sluggish; for example, Nissan sold fewer than 10,000 LEAFs last year, less than half the original estimate.  Second, electricity consumption is not expected to rise rapidly; the Energy Information Administration projects electricity use in the United States will increase on average just 0.7% a year for households through 2040; thus, with relatively flat consumption, prices aren’t likely to jump quickly either, and without a big spike consumers are not likely to feel much pain.  Third, it will take at least another 5 years to get significant numbers of people to upgrade to products like smart appliances or more efficient water heaters.  Color me skeptical at this point.  I need to see stronger market drivers and fewer, or weaker, inhibitors.

 

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