Navigant Research Blog

For Self-Driving Cars, Automakers Consult Silicon Valley

— December 10, 2014

The fully autonomous vehicle (AV) is coming, and early models will be on roads sometime around 2020.  To reach this milestone, automakers are turning to Silicon Valley for its expertise in connected devices, the Internet of Things, and human-machine interfaces.  A recent tour of the 18-month-old Nissan Research Center (NRC-SV) in Sunnyvale, California underscored the importance of this trend in relation to the automotive industry’s development of the AV of the future.

While some autonomous drive systems that rely on cameras, lasers, and sensors, such as lane keeping and automatic braking, don’t require vehicle connectivity, the fully autonomous vehicle will.

Reaction Time

The fact that AVs are likely to be far safer than non-autonomous, human-driven vehicles has been well-established.  However, to provide the type of near guaranteed safety the auto industry and customers require, the fully autonomous vehicle described by NRC-SV Director Martin Sierhuis will be “the most complex system in the world.”

For starters, the fully autonomous vehicle needs to be able to communicate with other vehicles and infrastructure, anticipate/predict human and non-human (animal) behavior, be personable, constantly observe and relay information back to the Internet, and act quickly upon information received from all these sources.

Watch for Deer

Information on weather conditions, traffic congestion, and road construction are valuable assets to other vehicles and, in an ideal system, can be transferred seamlessly.  Further, observations made by vehicles can be used to maintain a near real-time map of the world, given changes to road infrastructure.  However, the most valuable pieces of information will be on how AV predictive systems can be improved and how AVs fail.

A major challenge for AVs is the unpredictability of the world.   The awkward four-way stops, the sudden trajectory deviations, the deer on the side of the road, the ear buds-wearing bicyclists in downtown San Francisco, etc. all have to be accounted for.  To function effectively, an AV must be able to predict both human and animal behavior better than humans do.  Predictions are based on data; as more data is accumulated on humans through AVs, they will in turn be better able to predict human behavior and, therefore, safer in the more pedestrian-centric urban environments.

The above are all examples in which the sharing of information from AV to AV will avoid catastrophe; however, it must be assumed that failures will eventually happen.  Yet, the silver lining will be that when the AV eventually does fail, the circumstances of that failure will be shared, and the overall system will learn from it.  As Sierhuis explained, “The same accident will never occur again.”


Utilities Could Accelerate the E-Truck Market

— December 9, 2014

In November, a group of 70 U.S. utilities announced a major commitment to buying plug-in vehicles (PEVs), an initiative that could have a major impact on the plug-in truck market in the United States.  At a White House ceremony, a group of investor-owned utility executives committed to spending 5% of their annual fleet budgets on PEVs.  This reportedly will total around $50 million annually spent on PEVs.

It’s no surprise that utilities support the use of PEVs in their fleets, since it allows them to shift fuel budgets from petroleum to their own power.  But the reality of utility adoption of PEVs is that, while a handful of very forward-looking utilities, such as Pacific Gas & Electric and Florida Power & Light, have been fairly aggressive about integrating PEVs into their fleets, many others have tried one or two or have been looking to see the results of trials from the first movers.

Trucks, Not Cars

With this joint commitment, utilities can have a much bigger impact on the U.S. market for PEVs. But the best way to spend the money to really move the market for PEVs forward will be to spend it on trucks, not on passenger cars.  Passenger cars offer more bang for the buck, and create fewer headaches since passenger car PEVs have already been proven in the consumer market.  But for that reason, there is considerably less need for utility purchases to push the market.  $50 million would buy around 1,700 Nissan LEAFs, for example.  That is less than 2.0% of the total PEVs that Navigant Research projects to be sold in the United States in 2014 in its report, Electric Vehicle Market Forecasts.

If utilities invest in electric trucks, they could have a much bigger impact.  Plug-in trucks are still in the pilot, demonstration or very early commercial stage, as discussed in Navigant Research’s report, Hybrid and Electric Trucks.  This market suffers from low overall volumes and a splintered market, with many small niches to fill, including urban delivery vans, bucket trucks, service vehicles, and suburban or long-distance delivery.  One reason so many e-truck companies come and go is the challenge of achieving sufficient volume to bring down costs through economies of scale.  If utilities team up to place larger orders for plug-in trucks, they can have a real impact on the market.

Market Maker

For example, $50 million could buy around 250 plug-in bucket trucks with electric power takeoff, one of the more promising applications for plug-in trucks.  While that number may seem small, companies targeting this space are currently seeing orders in the tens – and these are still largely supported by government funding.  Whatever the application, a combined effort to place larger orders for plug-in trucks could have a major impact on this still-struggling market – and  could pay off for utilities that will benefit from using more fuel efficient trucks should this market succeed.


How EVs Can Aid the Smart Grid

— December 8, 2014

The plug-in electric vehicles (PEVs) available today can help grid operators manage the grid – although few in use actually do.  This is not too much of a problem now, but as more PEVs populate roads, utilities are likely to become increasingly concerned with managing and making use of these mobile assets.  Today’s PEVs represent a significant increase in residential electricity demand and, if unmanaged, could cause problems with distribution-level transformers and could drastically increase demand during peak hours when PEV owners return from work and plug in their vehicles.  The effect would force utilities to make upgrades to distribution networks that would likely be passed on in the form of higher rates to consumers.

Contrarily, PEVs also represent an increase in load that could be used to capture renewable electricity generation and help balance generation with demand, theoretically making electricity marginally cheaper and cleaner.

This latter scenario would likely decrease electric bills, as the utility would be able to provide more energy through the existing infrastructure, thus avoiding transformer capacity upgrades.  Most of the technologies to accomplish this process have already been developed, and multiple companies and organizations, such as GreenLots, PowerTech Labs, and the Electric Power Research Institute (EPRI), are busy testing respective platforms for future deployment.  However, to achieve such a paradigm, utilities need to develop demand response (DR) programs that are both simple and compelling to the consumer – not an easy task.

Thin Margins

A PEV owner’s understanding of why the charging of his or her car should be scheduled or managed by the utility is not fundamental to the owner’s participation in any given utility DR program.  However, the price at which the PEV owner will choose to participate in the program is.  In other words, the more money saved, the more PEV owners will be willing to participate.  Given that, there is a problem: driving on electricity is really cheap.

Most battery electric vehicles in use have an operating efficiency of around 3 miles/kWh, and the average residential electricity price in the United States is around $0.13/kWh.  This means that if the average electric vehicle is driven 1,000 miles in a month, energy costs will be slightly over $40.  This low energy cost means the actual savings from participation in a DR program would also be low and might not justify the investment from the utility or the energy aggregator for the smart charging infrastructure.

On the other hand, investment costs are zero for the PEV owner, as much of the necessary system elements already come standard on PEVs.  They will likely be low for utilities and/or energy aggregators depending on how many vehicles participate.  Additionally, the costs and savings equation will vary widely across the United States, based on a utility’s ability to balance the grid without PEVs.  The trick for utilities and energy aggregators will be to make DR compelling enough to attract future PEV owners who may be less tech-savvy than initial PEV adopters.


Plummeting Gas Prices Raise Another Hurdle to Meeting CAFE Standards

— December 1, 2014

National average gasoline prices have continued to slide in the United States, down more than 10% from the same time last year.  This marks the first time in nearly 4 years that a gallon of gas has been so cheap.  While undoubtedly great news for the average consumer, who could be saving $10 to $20 per trip to the gas station, the same cannot be said for the hybrid and electric vehicle (EV) industry ‑ and, perhaps surprisingly, the auto industry at large.

Automakers in the United States are being pressed to meet increasingly stringent fuel economy requirements, organized under Corporate Average Fuel Economy (CAFE) standards.  CAFE requires new passenger cars, light duty trucks, and medium duty passenger vehicles to meet an estimated combined average fuel economy of 34.1 mpg in model year 2016 and 54.5 mpg by 2025 (compared to the 24.8 mpg new-car average fuel economy in 2013).  In order to meet these requirements, automakers will need to sell significant amounts of plug-in electric vehicles (PEVs) and hybrid electric vehicles (HEVs).  However, a drop in the price of gasoline will surely affect the sale of all types of EVs, as the connection between gas prices and EV sales is well-documented.

How Long Can They Last?

Lower gas prices simply reduce one of the main advantages of electric cars: operating costs.  If consumers aren’t saving enough money by charging their vehicle with electricity versus fueling with gas, significantly fewer consumers will be willing to deal with the extra upfront costs and charging requirements of EVs.

Horizontal drilling and hydraulic fracturing have largely been given credit for decreasing gasoline prices in the United States.  These new techniques, as controversial as they are, have transformed the country into the world’s leading petroleum producerAccording to the U.S. Energy Information Administration (EIA), America’s domestic oil production grew from 5.6 million barrels per day (bbl/d) in 2011 to 7.4 million bbl/d in 2013 and is forecast to reach 9.5 million bbl/d in 2015.  These signs point indicate that low gas prices could persist, barring any major disasters in the Middle East.

Possible Rollbacks

The U.S. government is poised to review the CAFE standards in 2017.  If gas prices stay below $3 a gallon over the next few years, regulators may have to consider either rolling back the CAFE requirements or giving the automakers more time to reach them.  The same logic holds true for the zero emissions vehicle (ZEV) states.  Eight states have signed on to introduce at least 3.3 million plug-in vehicles and hydrogen fuel cell EVs to their collective roads by 2025.  Forcing automakers to sell a specific quantity of ZEVs will become even more difficult if consumers see the economic advantages of ZEV operating costs quickly diminishing.  Ultimately, if long-term crude prices remain below $80 per barrel, regulators will be forced to become more innovative in their strategies to decarbonize the transportation sector.  Meeting emissions objectives may need to include mandates to address the fuel itself through the addition of more biofuels or refining gasoline and diesel fuels to be more efficient.


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