Navigant Research Blog

Ford CEO’s ‘Perfect’ Comments in Context

— December 22, 2016

EV RefuelingThe potential softening of US Corporate Average Fuel Economy (CAFE) standards that has been discussed of late has reignited the debate about consumer acceptance of electric vehicles (EVs). Under current regulation, EVs are crucial to automaker compliance strategies, but not all EVs are the same, nor are they treated similarly under the regulations. It’s an important aspect to clarify here as the debate about CAFE standards questions whether there is enough consumer demand for EVs to enable automakers to meet the standard’s targets. The administrators of CAFE, the Environmental Protection Agency (EPA), suppose it does, but some in the automotive industry disagree.

The most recent commentary provided to the debate was by Ford CEO Mark Fields, which Business Insider claimed “just perfectly summarized the biggest problem for electric cars.” Fields, in arguing there is not enough EV demand stated: “In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry … fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”

Hybrids and Plug-Ins

Fields’ data point deserves some deeper analysis. In the automotive industry, the term EV or electric car encompasses hybrids, plug-in hybrids (PHEVs), and battery electric vehicles (BEVs) because all these vehicles use electricity either harvested from vehicle braking and/or from the grid for traction. Within the design of current regulations, PHEVs and BEVs are heavily incentivized and provide far more benefit to automaker CAFE compliance strategies than do hybrids (though hybrids are an important component).

Fields’ statement is accurate when considering the entire pool including hybrids, but it does not address the demand of plug-in vehicles specifically, around which most of the debate has centered. To start, the laggardly market growth for EVs over this time period is specific to hybrids, which have contracted from the 2008 2.3% figure to 2% year to date. Of note, a vast majority of sales come from one automaker (Toyota). Meanwhile, plug-in (BEV and PHEV) sales started in 2011 and now have over 0.8% of the market year to date, and there is no one consistent or dominant market leader. Lumping all EVs together in regards to CAFE compliance is inexact when automakers are generally complaining about the requirements for plug-in EVs, which are in reality gaining market share and increasingly common among automaker portfolios, and are the vehicles which are most critical to automaker compliance.

Reasons for Decline

Given that, there are many reasons hybrid share may be in decline. One that usually gets a lot of attention is oil prices, which not only historically reduces sales of hybrids, but also has prompted a growing percentage of new vehicle sales to be SUVs and trucks (a market nearly devoid of hybrids) and fewer passenger cars. Another factor is the increasingly more fuel efficient non-EVs (due to CAFE standards), but the last and more critical reason is competition from the plug-ins themselves. Before the plug-ins arrived, hybrids were the energy efficiency leaders. Since plug-ins arrived, sales have arguably taken away from hybrids, and the impact to the overall hybrid-inclusive EV market has been relatively marginal in growing sales, which fuels the arguments for those who are critical of consumer demand for EVs.

Ultimately though, the feasibility of automaker compliance with current regulation hinges on consumer acceptance of plug-ins, not hybrids. To that effect, Fields’ data in relation to consumer demand and CAFE compliance is not perfect. Hybrids and other fuel efficiency technologies are certainly helpful but cannot be relied upon in isolation. Consumer response to battery cost and energy density improvements teased by the Tesla Model 3 and represented in the near-term BEV rollout of the Chevrolet Bolt will provide greater clarity here. However, regardless of the success these models may realize or have already realized, it is unlikely to have a significant impact on whether CAFE standards will be softened or not.


The Internet of Things and Time Series Data

— December 21, 2016

Cloud ComputingThrough the Internet of Things (IoT), the world is becoming more and more interconnected and intelligent. Enormous amounts of data are being generated while the cost to store it is decreasing. Consequently, companies are looking to leverage this data to conduct analysis and deliver insight into their businesses. According to Navigant Research, IoT will represent a $500 million addressable market by 2020; most industries are expected to transform themselves in some way as homes, offices, cars, and even healthcare services become smarter through IoT devices.

Among all types of data, time series data (e.g., data from sensors) is becoming the most widespread. Unfortunately, collecting, storing, and analyzing massive amounts of this data is often not possible with traditional SQL databases. The challenge with time series data is that reads and writes to the database must be fast, reliable, and scalable.

What Is Time Series Data?

Time series data is any data that has a timestamp, such as IoT device data, stocks, and commodity prices. This data also often has very high write volumes, so it must be compressed and yet must also be easy to retrieve. While storing time series data is not a new challenge, the need to collect and analyze massive amounts of it from thousands of devices is a more recent requirement. Traditional SQL databases are not designed to manage time series data as these databases input each data point separately, thereby creating a massive number of duplications.

With such high volumes of information, it can be challenging to find a simple, scalable solution to easily store and access data. However, there are distributed NoSQL databases geared toward time series data storage that are designed to scale horizontally, making it easier to add capacity. Some of these databases and their users include:

  • InfluxData InfluxDB: Used by Nordstrom, Cisco, eBay, SolarCity, and Telefonica
  • Elasticsearch: Used by Verizon, Symantec, Facebook, Salesforce, Emerson, and Esri
  • IBM Informix: Used by Morgan Stanley, Lehman Brothers, and NASA
  • Kairos DB: Used by Proofpoint, Enbase, Abiquo,  and Lampiris
  • Basho Riak TS: Used by The Weather Company

What’s Next?

Tremendous value can be generated by deriving insights from times series data. Example use cases include utilities with smart meters that create billions of data points a year; smart building companies that detect security break-ins or inefficient energy usage in real time; and vision sensors in autonomous vehicles that collect critical data to guide driving. The possibilities for IoT and time series data are profound, but the technology requires high-speed data processing, storage, and analytics in order to be as effective as possible.


US Government Struggles with IoT Vision, but Opportunity Exists to Get It Right

— December 21, 2016

CodeThe US government needs to up its Internet of Things (IoT) game, according to a new report that calls efforts so far uncoordinated and lacking a strategic vision. I tend to agree. The report, produced by the Center for Data Innovation, does, however, credit the government for having initiated an array of activities in support of IoT action in the private sector.

Report authors Daniel Castro and Joshua New note the many potential benefits of IoT technology across a variety of economic sectors, such as manufacturing, agriculture, transportation, and healthcare. Noticeably absent, however, is energy (which could be a mere oversight). Nonetheless, the authors characterize current government IoT projects as relatively small scale and one-off.

The report joins a growing number of voices opining about what should be done by government in the wake of the October 2016 Mirai botnet attack. A letter from Senator Mark Warner (D-Va.) to outgoing Federal Communications Commission Chairman Tom Wheeler raised legitimate concerns surrounding wirelessly connected consumer devices. (Warner is a cofounder of the Senate Cybersecurity Caucus.) Wheeler’s response points out the need for postponing next steps until the Trump administration is in place.

Security experts like Bruce Schneier have also told Congress of the imminent need for oversight of the IoT because of the potential for serious dangers if left unchecked. Schneier said the recent botnet attack illustrated the catastrophic risks involved, and he has urged action now while there is time to make smart decisions.

Blockchain to the Rescue?        

Others are suggesting Trump and his advisors consider blockchain technology. The idea would be to leverage the consensus mechanism inherent to blockchain that enables all of the computers in a system to agree on which new data is valid and which is a threat. My colleague Stuart Ravens explored the blockchain concept for distributed energy in a recent report, and the technology could be useful for multiple industries.

While there is ample evidence to be concerned about the federal government’s role in regard to the IoT, officials are at least struggling with the issues and are not clueless to its significance at this point. They see the economic value of IoT technologies and the opportunity to get it right with regulations, especially with a new team in place come January. There is reason to believe the IoT will get the attention it deserves in the coming years, or they could blow it. But at least they are on notice to seize the chance to provide a framework for success, from both a security and an economic perspective.


Congress Steps into the IoT Security Fray

— December 15, 2016

Cyber SecurityCongress stepped into the fray surrounding Internet of Things (IoT) device security (or the lack thereof) recently when it held a hearing on how to combat distributed denial-of-service (DoS) attacks, which exploit connected devices as a means of thwarting web activity. The most glaring example of such an attack came on October 21. An IoT botnet called Mirai was directed at web services provider Dyn, which then spread from there to paralyze numerous well-known Internet sites like Amazon, Netflix, and Reddit.

Members of the House Energy and Commerce Committee heard testimony from experts like Bruce Schneier, a renowned cybersecurity expert, who said during the hearing he thinks a new federal agency may be necessary to regulate IoT, despite what may be the incoming administration’s reluctance toward more government oversight. “I don’t see the choice as being between government involvement and no government involvement, but between smart government involvement and stupid government involvement. I would rather think about it now,” Schneier said.

Slow Down, Offer Support

Another participant in the process, Craig Spiezle, executive director and president of the Online Trust Alliance (OTA), attended the hearing and submitted a written statement to the committee. Spiezle sees two main issues that need resolving. First, IoT manufacturers should embrace basic cybersecurity principles when designing new products and avoid the tendency to move too quickly to launch products out of expediency while sacrificing security. Second, IoT vendors need to provide adequate ongoing support for their products throughout their lifecycles and not security updates out of the equation. His organization is also recommending that retailers pull IoT products off shelves if those products do not meet certain minimum security standards.

Nothing was resolved during the hearing, though new legislation or rules are likely to be promulgated at some point, given the potential harm from these kind of attacks. Meantime, there are other governmental and industry efforts to thwart attacks that exploit IoT technologies. For instance, the National Institute of Standards and Technology (NIST) has created a framework that outlines IoT security standards. Also, the Z-Wave Alliance recently announced new security requirements for all of its certified IoT devices. Lastly, computer scientists are working on a style of software programming called formal verification that is ostensibly hack-proof and could one day be used as a method for enhancing the security of IoT devices and systems.

There are real efforts underway to fight back against IoT attacks. Nonetheless, the vulnerabilities of a connected society are not going away soon, and efforts to stay ahead of nefarious actors has to be ongoing. What seems clear is that business as usual in this regard is no longer acceptable, as Spiezle and others argue, and fundamental changes are required in how IoT products are developed, sold, and supported. I could not agree more.


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