Navigant Research Blog

Safety Must Come Before All Else with Automated Driving

— September 21, 2017

There are plenty of potential benefits that go along with automated driving, including providing mobility for those that can’t drive, making more work or leisure time available while commuting, and eliminating the parking lot crawl. But the foremost priority in introducing automated systems must be safety. That may mean slowing down deployments to make sure we have all the right pieces in place first.

Examine the Data

On the same day that US Secretary of Transportation Elaine Chao announced updated and streamlined federal guidelines for automated driving, the National Transportation Safety Board (NTSB) issued its report in a fatal crash involving Tesla AutoPilot in May 2016. While the Department of Transportation (DOT) streamlined the voluntary guidelines first issued by the Obama administration in 2016, no new enforceable regulations have been proposed. In fact, enactment of any new federal motor vehicle safety standards is unlikely during the current administration in Washington.

The NTSB examination of the crash that led to the death of Joshua Brown was its first involving automated driving technologies. “In this crash, Tesla’s system worked as designed,” NTSB Chairman Robert Sumwalt said. However, the AutoPilot interface did an inadequate job of informing drivers of what it was actually capable of and ensuring that it was only used in appropriate circumstances.

Recognize Limitations

AutoPilot is designed to provide semi-automated driving only on divided, limited access highways. The technology used—forward-facing radar and cameras—is currently not adequate to reliably detect vehicles crossing the path of travel in challenging lighting conditions or even to consistently detect lane markings for the steering control.

NTSB recommends that automakers add safeguards to limit where these lower level automation systems can be engaged and more actively monitor drivers to ensure they are ready to take over when the system cannot function. Some automakers have already started doing this, including General Motors. GM’s SuperCruise system includes high definition maps of more than 160,000 miles of divided, limited access highway across North America, and the system is geofenced to prevent activation anywhere but these roads. GM delayed the introduction of SuperCruise prior to the Tesla crash to add these and other features.

Educate Customers and Staff

Companies developing automation technologies also need to get more actively involved in educating customers and their sales and support staff about how these systems work. The National Safety Council launched an education program in 2016 dubbed “My Car Does What?” to put materials in state motor vehicle licensing offices. More recently, supplier Bosch launched the online Automated Mobility Academy to help educate consumers about new technology.

Deploy Highly Automated Vehicles

As highly automated vehicles (HAVs) approach initial deployments in the next 4 to 5 years, engineers working on the production designs are beginning to implement the features that will be required to ensure safety. Current advanced driver assist systems (ADAS) do just that, assist the driver. Ultimately, the driver can still control the vehicle and bring it to a stop even if traditional or advanced assists fail. In an HAV, there may not be anyone to take over or a control interface to use.

Navigant Research’s Automated Driving Vehicle Technologies report projects that by 2026, nearly 9 million redundant high performance compute platforms will be needed for HAVs. GM’s third-generation automated Chevrolet Bolt prototype has been developed with production in mind and it includes the necessary redundant systems.

User experiences that properly inform the people in the vehicle and are ready to operate safely even with no one aboard will be crucial to successful deployment of HAVs. Every company—from upstarts like Tesla to the oldest like Mercedes-Benz—must take this into account.

 

Taking the EV Mainstream

— September 19, 2017

The plug-in EV (PEV) is rapidly evolving to become a viable mainstream option for almost every car buyer. As ever with automobiles, there is no silver bullet solution. This year there are several unique variations on how best to serve the needs of drivers seeking to minimize energy use as the PEV landscape matures. Navigant Research’s EV Geographic Forecasts report projects 50% growth in North American PEV sales this year and market share of between 7% and 11% by 2026.

Design is always a matter of balancing priorities. Priorities can depend on the target market, how the vehicle will be used, and budgets.

Tesla’s Approach

Tesla is trying to build on the premium brand image it has cultivated while creating the impression of going mainstream. The Model 3 has been promoted as an affordable long-range EV with a price starting at $35,000. That will yield a spartan car. Most customers will actually be paying far more to include current options, bringing the price to at least $59,000, with additional performance options to be added later.

GM

General Motors (GM) took a different approach with the Chevrolet Bolt, opting for maximum possible electric range and utility while keeping the base price under $30,000 (after federal incentives). Even including all options, the Bolt is still less than $44,000 before incentives. While some reviewers have criticized the hard plastic interior, the vehicle’s real-world range, handling, and utility have garnered very positive feedback.

Hyundai and Nissan

Hyundai and Nissan, by contrast, have veered even harder toward trying to maximize the value proposition of their respective EVs. The Hyundai Ioniq Electric and Nissan LEAF both have starting prices before incentives below $30,000 and even highly equipped models will still only hit about $36,000.

The Ioniq, built on a dedicated electrified platform with hybrid, plug-in hybrid, and battery-only flavors, went for maximum efficiency with a slick five-door hatchback body strongly reminiscent of prior-generation Toyota Priuses and a moderately sized battery. Hyundai aimed to keep both cost and weight down with a 28 kWh battery, less than half the capacity of the unit in the Bolt. With its modest weight and low drag, that’s enough for 124 miles of driving range and a leading efficiency of 136 MPGe combined.

After trying out a slightly futuristic design with the original LEAF, Nissan decided it needed a more conventional look in order to get an audience beyond early adopters. While the five-door hatchback configuration and basic dimensions are carried over, the LEAF now incorporates contemporary Nissan design cues both outside and in the cabin. Aside from the propulsion system, it’s now just an ordinary compact hatchback. With a more efficient drivetrain and battery that has grown from 30 kWh to 40 kWh, the LEAF is now expected to go at least 150 miles on a charge, double what it did when it debuted in 2010.

Chrysler

Fiat Chrysler, which has long derided EVs, has now opted to build on one of its core strengths with the Pacifica Hybrid. Like Nissan, FCA is focusing on the ordinariness of the driving experience with its plug-in hybrid minivan. The key distinguishing feature is that it has 35 miles of real-world electric driving range, enough to meet most daily commuting needs without burning any gas. But as a family hauler that might be used for road trips, no additional planning of where to stop and charge is required.

Buyers of vehicles that burn fossil fuels have long had choices ranging from tiny sports cars to full-size trucks. We’re now reaching the stage where those that want to avoid gas stations have choices at increasingly affordable price points as well.

 

The Demise of the Uber Leasing Program

— August 22, 2017

Recently, Uber announced that it will discontinue the vehicle leasing program it has offered to drivers for the past 2 years. Average losses of $9,000 per leased vehicle were cited as the reason, but this only serves to highlight the problem that independent transportation network companies (TNCs) like Uber, Lyft, and Didi are likely to face as the transition to automated vehicles (AVs) begins. Companies that currently operate with minimal physical assets, relying instead on independent contractors, will face a huge challenge surviving as standalone businesses when confronted with building or buying massive fleets of costly AVs.

The leasing program was designed to provide drivers operating on the Uber platform with access to new, well-maintained vehicles at a relatively affordable price that also included unlimited mileage and free maintenance. For passengers, knowing that a ride won’t be a broken-down rattle trap makes using the service much more appealing. Many of the drivers operating on these services don’t have the financial wherewithal to get a loan or a lease on a new vehicle, so the program seemed like a great path toward earning more money.

Since Uber doesn’t manufacture vehicles, it has to acquire them before leasing them to drivers. Wall Street banks loaned the company $1 billion in 2015 to get the program launched, but Uber’s lack of vertical integration means added costs at every level in the value chain. Losses originally projected to be about $500 per leased car increased 18-fold. This is not a formula for a building a sustainable enterprise.

Not Just Uber

Uber is not the only company acquiring cars. Following General Motors’ (GM’s) $500 million investment in Lyft in early 2016, the automaker launched Express Drive to provide low cost rentals of GM cars to Lyft drivers. Unlike Uber, GM has a ready supply of relatively new off-lease vehicles available. GM tapped this supply for Express Drive as well as its more traditional carsharing service, Maven, that also launched in 2016.

Like most other automakers, GM has a captive finance arm through which it could fund the program at lower cost than Uber. Repurposing off-lease vehicles for these mobility services reduces the supply of used vehicles in the market, helping residual values. Having these relatively new vehicles in the field also exposes people to contemporary GM products that may have a marketing benefit. The network of thousands of GM dealers can provide maintenance and repair services, something for which a TNC would likely have to pay a premium. In spring 2017, GM added Maven Gig, which provides similar low cost rentals to drivers on platforms beyond Lyft.

Vertical Integration Is Key

GM may be losing some money on the current Express Drive and Maven Gig programs. However, unlike the TNCs, the automaker is profitable and can afford to subsidize this effort. Doing so also helps to reduce potential losses in other parts of the business. For a TNC without this level of vertical integration, it’s unlikely such a program would aid in reaching net profitability in any realistic timeframe.

The same factors that benefit an automaker in this regard also come into play when looking at the deployment of automated mobility services. If Uber has to pay Volvo or some other automaker for very expensive vehicles, plus cover insurance maintenance and fuel, even eliminating the cost of drivers may not lead to profits. It’s likely that only acquisition by an automaker can save TNCs from extinction. Yet, that may only happen if their inflated valuations collapse.

 

Automated Driving Space Threatens to Follow App Store Revenue Model

— July 27, 2017

Ride-hailing provider Lyft has shifted course and decided to develop its own automated driving system, joining most of the major automakers, suppliers, technology companies, and hundreds of startups in Silicon Valley and elsewhere. If the smartphone app economy is any example, this is not a good thing for any of the new players. The land rush into this space seems eerily similar to what happened in the years after Apple began allowing third-party apps onto the iPhone. Lots of early players made some money and many of them got healthy buyouts, but the vast majority never made a dime.

As of 1Q 2016, studies of Apple App Store revenue showed that the top 1% of publishers took home 94% of the more than $1.4 billion generated. The vast majority of apps in the stores of Apple, Google, and other companies have never earned anything. A 2014 analysis of the more than 1.2 million apps then available in Apple’s store showed zero downloads.

And the Automated Vehicle Market?

Most of the startups jumping into the automated vehicle space are focused entirely on developing the control software while using off-the-shelf hardware. Unfortunately, for most of these new entrants, the software side is quickly maturing. It seems increasingly unlikely that anyone is going to make a huge algorithm breakthrough that is going to justify a high purchasing or licensing price as these vehicles start coming to market in the next few years. A few more big acquisitions like Cruise Automation may happen, but it is rapidly becoming a buyer’s market for automated driving startups.

While the software will continue to evolve as engineers learn how to make it deal with edge cases, the real effort now needs to be focused on the hardware side. The cost of sensors and compute platforms must come down along with power consumption. Sensors must get more robust to withstand the rigors of daily use in the real world outside the mostly perfect weather bubble of Silicon Valley. Everything has to be integrated into the rest of the vehicle and made to work in all climates. These are expensive and time-consuming activities that startups are ill suited for.

The Right Moves?

Companies like Waymo are making the right moves in developing both the hardware and software as well the mobility services component for deployment. They are also forming partnerships with automakers to provide vehicles, rental companies for servicing, and network companies like Lyft for additional deployments.

Until now, Lyft has focused on partnerships with vehicle providers, including General Motors (GM), Waymo, nuTonomy, and Jaguar Land Rover. For Lyft to decide to develop its own automated driving stack seems like a needless waste of resources for a company that has yet to approach profitability.

Too Many Players?

Navigant Research’s Leaderboard Report: Automated Driving ranked incumbent OEMs such as Ford, GM, Nissan, and Daimler, along with suppliers like Delphi and newcomers like Waymo, at the head of the pack. There are already too many players in a transportation ecosystem that is likely to see significant consolidation in the next 2 decades. Anyone entering now is far more likely to be the next Color than the new Instagram. Venture capitalists considering putting money into self-driving startups that will probably part of the 80% with zero downloads are probably looking at a race to the bottom as that technology becomes commoditized. They should instead be focused on interesting new kinds of services that build on the data emanating from those vehicles.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Sam Abuelsamid","path":"\/author\/samabuelsamid","date":"9\/26\/2017"}