2017 ARTICLES
Cards Reshuffled in Mobility. CES Showed Incumbents Fight Back
January 2017
Electric mobility’s new ecosystem: structure, players and trends
February 2017
The Blurring Line between new Mobility Services and Public Transit
April 2017
How key success factors converge for significant EV sales growth
May 2017
Who will pioneer Autonomous Mobility on Demand (AMoD) and how?
June 2017
Mobility Ecosystems - Current State of Play for 21 Key Players
September 2017
Why EVs will soon proliferate: OEMs’ plans, ICE bans and infrastructure
October 2017
An Inside Look at Silicon Valley’s Mobility Ecosystem
November 2017
Commercial Vehicles go Electric, Autonomous, Connected and Shared
December 2017
Cards Reshuffled in Mobility. CES Showed Incumbents Fight Back
January 2017
New mobility service providers have emerged rapidly. Electric mobility, autonomous and connected vehicles are maturing quickly and tech companies are eager to use these disrupting innovations to grab part of the mobility business. A drop in individual car ownership is clearly foreseeable. Consequently, traditional carmakers’ revenue and profits from selling and maintaining cars are being threatened. They are now forced to redefine their business model and adapt at warp speed. How are tech companies moving in? What strategic options do carmakers have given their current positioning and resources? What if a new player was to gain a dominant position in a critical space? CES 2017 gave us some indications as to how the mobility deck of cards is being reshuffled.
Tech companies are entering the mobility space
Google's Way Apple, Microsoft and IBM fight to make inroads in the automotive ecosystem. Google and Apple want to take over the core system of cars with some sort of “carOS”. Way is already working closely with Chrysler with their autonomous driving system. Microsoft has recently entered the game with Azure, a cloud-based platform hosting carmakers’ connected vehicle applications. Renault-Nissan and BMW are collaborating with Microsoft on this venture.
Amazon, Microsoft and Apple are progressively positioning themselves inside cars via their AI-based, voice-activated assistants Alexa, Cortana and Siri. This technology will enable vehicle-to-home communications, help manage agendas and offer many other applications that make life easier. By the way, it was clear at CES that Alexa is in the lead in gaining a foothold with OEMs such as VW, BMW, Ford or Hyundai.
Chip makers Intel, Nvidia and Qualcomm are also investing heavily in the mobility space, mainly through autonomous driving. Nvidia already powers Tesla’s camera and radar-based autonomous driving functions with its computing platform and is getting ready to launch a much more powerful version, PX2. Nvidia presence at CES 2017 was significant and included an autonomous driving demonstration on a closed track. Intel just announced they will take a 15% stake in map maker and location service provider Here which BMW, Daimler and Audi acquired in 2015. Qualcomm recently announced its “Connected Car Reference” platform dedicated to connected cars and V2X.
Ride hailing services (Uber, Lyft, Gett, Didi Chuxing…), car sharing programs (ZipCar, Bollore’s BlueCarSharing…) and ride sharing services (BlaBlaCar, WazeRider…) are progressively pulling mobility customers away from the carmakers’ sphere. They offer anywhere-anytime mobility solutions which are particularly appealing to a young urban demographic who realize that individual car ownership means money is tied up in an asset that is used only 10% of the time.
Incumbents have few options to react
Few carmakers have anticipated this profound shift and recognized the need to take action. Among them is Ford, whose chairman Bill Ford declared in Jan 2008, “Don’t assume we’re always going to be in the car business. We’re going to be in the transportation business, and it’s going to look very different 20, 30, or 50 years from now.” In 2009, Daimler launched Car2Go, its car sharing program which reportedly now has 2 million registered customers and has passed the break-even point.
The mobility transformation has clearly accelerated in the past 12-18 months. Many newcomers have now changed gears and are investing heavily to grab a share of the mobility market. Given this, carmakers are certainly not standing still; they are fighting to protect their revenue and profitability. Most of them are pivoting from making cars to providing mobility solutions — or at least communicating about it! The increasing technological content brought about by autonomous driving and vehicle connectivity will necessarily result in hi-tech players gaining an increased share of the value chain. They will provide hardware for autonomous and connected vehicles, mapping services, new sensors, cloud-based platforms, voice activated and artificial intelligence-based functionalities, etc., which carmakers have neither the expertise nor the financial justification to develop on their own. Yet, they need to build the necessary expertise to integrate these new technologies in their vehicles and progressively bring to market electric mobility, autonomous driving and connectivity.
Carmakers integrate new tech and pivot to provide mobility solutions
Given the above limitations on technology and the need to react to revenue and profitability threats, manufacturers should extend the scope of the relationship with their customers and enrich the user experience; this is what incumbent players call becoming “mobility providers.” They must also avoid any one player gaining a dominant position in a strategic space of the mobility market.
What does it mean to become a mobility provider for a carmaker? In what adjacent space are they legitimate? What extra expertise can they reasonably bolt on to their existing business? What new activities will make the best use of their existing assets, at least in the medium term? This is a complex equation, especially as neither the precise steps of this deep transformation nor their timing can be quantified. We just know it is happening!
Given that people are increasingly looking at cars as one of the means to get from A to B, carmakers must reposition the automobile on a continuum and build the journey around it. This will include many more touch points with customers and therefore potential value added through an extended user experience. Carmakers have the opportunity to use the car as a multipurpose user interface, repositioning the pure mobility role within a multimodal network. They must build the in-house expertise to offer completely new services. The main players are building new structures with armies of coders to address this challenge.
Some carmakers showed possible way forward at CES
At CES 2017, Mercedes presented an extended user experience where they accompany their customers from the time they wake up to the end of their day. Wake-up time is adjusted based on the person’s agenda, traffic and weather. Days are organized with the help of artificial intelligence, including (autonomously) picking up kids at school, reserving a restaurant, adapting the day’s agenda in case a reshuffling is needed, etc. These services would certainly provide brand differentiation. They would also allow to sell content and collect fees as reservations are made and services rendered. The vehicle becomes a comfortable, work/entertainment-enabled space to travel and make the day a pleasant one.
BMW focused their CES exhibit on the vehicle interior: a moving cocoon adapted to autonomous driving. This was their opportunity to showcase applications of haptic technology and holographic controls in order to enrich the “driver’s” experience. They also presented their vision of an extended user experience — which seems less mature that Daimler’s — aimed at helping customers throughout their day.
Several carmakers are also building their own car sharing and ride hailing services, following in Daimler’s footsteps (Car2Go). Ford launched GoDrive, VW announced Moia, BMW has DriveNow, etc. The alternative consists in partnering with (or buying into) existing businesses. GM invested $500 million in Lyft, VW put $300 million in Gett and PSA invested in Communauto. Speed is of the essence here as there are now strong players. Uber and Didi have taken a head start and already built significant awareness by investing huge sums of money to develop a wide presence, with over 250 cities for Uber.
Carmakers are also taking steps to avoid any sort of market domination by one single player. BMW, Audi and Mercedes-Benz jointly acquired map maker Here from Nokia in 2015, so as to create a counter-balance to Google. In Sept 2016, the same players launched an alliance with 5 major mobile telecoms network equipment firms to accelerate the development of the infrastructure needed for self-driving cars.
To secure the development of electric mobility, carmakers are also playing an increased role in the critical development of the EV charging network, addressing both density and charging speed issues. Ford, VW Group, BMW and Daimler announced a plan in late 2016 to set up charging stations along major highways in Europe. They aim for increased density and faster charging points (up to 350 kW when only 8% of charging points in Europe are above 43 kW today).
Overall, carmakers have taken full measure of what is happening in the mobility space. They are investing heavily, changing their culture to become more agile and building the necessary competencies to secure their sustainability. Even so, the future is far from written.
Marc Amblard
Also published on LinkedIn (https://goo.gl/Bj4s7u)
Electric mobility’s new ecosystem: structure, players and trends
February 2017
The global fleet of battery electric (BEV) and plug-in hybrid electric vehicles (PHEV) reached 1.26 million units at the end of 2015, double that of 2013. As the market is picking up, carmakers have recently announced significant growth in their BEV and PHEV portfolio. The most aggressive manufacturers anticipate that up to 25% of their 2025 global sales will come from BEVs and PHEVs, with many new models to be introduced between 2020 and 2025. China will represent the largest BEV/PHEV market in the near term, followed by Europe and the US. Whereas the development of the Chinese market stems in high regulatory pressures, that of the European and US markets will depend more on the customers’ willingness to switch to electrified vehicles. The three key conditions for such a switch are (1) the price of EV battery packs, (2) the time needed to “fill up” and (3) the density of the charging infrastructure. The removal of these roadblocks, the last two of which we analyze here, give way to the emergence of a new ecosystem. What are its components, its main players and success factors?
Whereas the movement towards electric mobility is accelerating for all mobility solutions, from one wheeled vehicles to passenger buses and delivery trucks, this article focuses on passenger cars.
The charging station
It all starts with the station itself. Products range from 3kW (wall mounted AC solutions for homes) to 120 kW (Tesla’s fast charging DC station for intercity corridors). Much more powerful solutions have recently been announced, rated at up to 350-400 kW for super-fast charging. Prices range from about $500 for a home charger to an estimated $200k for the 350-400 kW stations that begin to get rolled out.
Whereas current station design relies on a hand-operated cable, high power stations will require heavy, cooled cables that will probably require a robot to handle the connection to cars. In parallel, induction charging is available as a stationary solution, with maximum rating currently at 11 kW, thus suitable for overnight charge. Similar solutions are also being tested as a mobile charging option — electromagnetic loops are embedded in the road. It seems thought that we are still a long way to commercial applications.
Companies offering charging solutions include ChargePoint (400 kW station announced at CES and available this summer), ABB, EVBox, EverCharge, PowerDale or DBT. Players involved in induction charging include WiTricity, Momentum Dynamics or Evatran.
The charging infrastructure
There were one fast, publicly available charging station (> 43 kW) for every 45 BEV/PHEV and one slow station for every 8 vehicle globally at the end of 2015; these ratios vary largely between countries, e.g. 115 (fast) and 140 (slow) in the US. In Europe, there are currently about 100,000 charging stations whereas about 480,000 BEVs/PHEVs were sold there in the past 3 years. The European commission estimates that one public charging point per 10 cars is required in addition to private chargers. The charging network has room to grow!
The charging infrastructure can be segmented according to time available to charge. There are three main segments: home, destination (mall, office, ..) and en-route (mainly along main corridors). Each segment presents a unique use case, with available charging duration ranging from 15-30 min en-route, minutes to hours at destination and the whole night / weekend at home. Charging solutions vary greatly between segments, from a power rating of 3-11 kW / AC at home (overnight charge), to 22 kW / AC (30 miles in 30 min.) at destination, to 43-120 kW / DC currently (up to 170 miles in 30 min.) for stations located mainly on corridors.
Power is critical for stations located on intercity corridors as a fast charge is expected. Ideally, stations installed there should provide 2 hours of driving (150-200 miles) in 15 minutes. To this end, the industry is working on a 350-400 kW charging infrastructure. Yet, on-board power electronics will not be able to cope with the projected this level of power for a couple of years, when on-board voltage will likely increase from 400 V to 800-1000 V — this still generates a high current of 400 to 500 A. In the meantime, these high powerful stations will be used to charge multiple vehicles at a time (e.g. 3 x 120 kW).
Infrastructure investors and operators
Carmakers have nothing to do with refueling vehicles with internal combustion engines. It is a very different matter with electric mobility as oil companies are not willingly venturing in the deployment of charging stations — it radically challenges their business model. In addition, public funds are not massively available to invest in this infrastructure. This is why carmakers are playing an increasing role in the EV charging network; they must address both station density and charging speed issues if they are to largely increase EV sales, a condition to achieve CAFE targets (-4% per year).
Tesla invested in its proprietary charging network from the beginning. They now offer the fastest chargers, rated at 120 kW, which deliver about 170 miles of range in 30 minutes. As of last November, Tesla had 4,600 such supercharging points worldwide (of which 800 in Europe), located in 800 stations. Interestingly, they announced recently that charging would no longer be free for cars ordered after Dec 31, 2016 (prepare for the arrival of Model 3?). Another early investor, Nissan, co-financed a program to install 2,000 stations in Europe between 2013 and 2016.
More recently, Ford, VW Group, BMW Group and Daimler announced in late 2016 a plan to set up charging stations along major highways in Europe, seeing the need to address the underdeveloped German market and boost the rest of the continent. The consortium aims for increased density with high-powered charging points, adding 1,000 stations rated up to 350 kW by 2020. In the US, Volkswagen will invest $2 bn over 10 years in EV infrastructure and awareness program as part of the Diesel-gate settlement. In parallel, office building managers and mall operators are also investing in charging stations, the latter as a way to retain shoppers on site longer. As for home charging, US-based EverCharge has been focusing its station deployment efforts on apartment complexes and parking structures.
Electric utilities and car/home energy management
Electric utilities are obviously key players in the development of electro-mobility. It does not just represent growth their business. It also creates a potential challenge in the management of their grid — will it resist if all BEVs/PHEVs charge at the same time just before a long holiday weekend? On the positive side, battery packs can provide storage capacity, in particular as an increasing share of power will be generated from intermittent sources such as wind and solar.
One interesting example of utilities investing in the infrastructure network is Denmark’s Clever. Owned by several utilities, the company has already installed 750 charging points in Denmark and Sweden and will soon deploy 350 kW stations with Germany’s E.ON. As far as the grid load is concerned, it is possible to anticipate when BEV/PHEV owners will likely connect their vehicles to a charging point. But can individual charging patterns be centrally orchestrated in order to minimize the overall impact on the grid? Can charging times and locations be influenced, possibly with pricing incentives, in order to avoid massive investments in the grid? These are questions BMW and PG&E, the electric utility in the San Francisco area, are trying to address with their on-going experimentation. Lastly, the use of car batteries for energy storage requires that the on-board electronics allow reversibility (electricity flowing back to the grid). Renault has partnered with The Mobility House to experiment vehicle-to-grid, but no commercial solution is expected for a couple of years. Even so, this is promising and will go hand-in-hand with charging optimization.
The home offers unique conditions to coordinate local power generation, electricity storage and charging optimization. Tesla has clearly understood this, as demonstrated by their complete home package. Other home/car energy management solutions are coming to the market, such as Energy Box offered by Germany’s EnergiDienst. This is certainly a promising space as both BEVs/PHEVs and decentralized power generation will be increasingly common.
Associated services
The charging station represents a new and critical contact point with drivers. Therefore, it offers a unique opportunity to generate new business. Companies have emerged to provide services such as referencing stations, informing on their availability, invoicing across networks (incl. cross border roaming), connecting parking services at destination or with other mobility modes, etc. German company Hubject (investors are BMW, Bosch, Daimler, Siemens, energy provider EnBW and VW Group) seems to have a head-start in this space in Europe. As of Dec. 2016, they had brought together 240 partners. They also collaborate with competitors around Europe to jump-start the deployment of the charging infrastructure. In the US, PlugShare offers a crowd-sources database of charging stations along with the availability status.
A market for used car batteries
Autonomy being a critical factor, no significant drop in battery capacity can be accepted. This is why Renault, the BEV market leader in Europe, replaces their battery packs once actual capacity has dropped to 70-75% of its nominal value, which occurs after about 10 years in operation. At that time, batteries still have a life (about 5 years) in stationary packs for use in homes or by electric utilities. Renault is partnering with France’s Bouygues to put such packs on the market in 2018. More such initiatives will emerge as BEVs and PHEVs accumulate an increasing number of miles.
Conclusion
The development of electric mobility will accelerate over the next five years. It will transform the way we use cars and the way they are integrated in our environment. This will result in the emergence of a completely new ecosystem as briefly outlined above, with new players and business models. It will also impact the development of smart cities. Autonomous driving will develop in parallel, with the introduction of small commercial fleets announced for 2020-21. These will be necessarily electric. Then, one can imagine that it will be easier to tell a driverless car when and where to charge! What other synergies can we expect? The future is around the corner.
Marc Amblard
Also published on LinkedIn (https://goo.gl/LSFIF3)
Autonomous Driving: the Current State of Play
March 2017
The “DARPA Grand Challenge”, first organized by the US Dept. of Defense in 2004, gave autonomous driving a big boost. Autonomous vehicles (AVs) represent the most important disruption since we moved away from horse-pulled carriages and will revolutionize mobility as we now know it. AVs have the potential to drastically reduce casualty — humans are the cause of about 90% of deaths on the road. AVs will foster the development of mobility as a service, which will allow more people to be mobile, in particular those who cannot afford a vehicle or can no longer drive. In addition, AVs will allow “drivers” to make much better use of their time, especially while cruising on highways or stuck traffic jams. There are also economic benefits for the emergence of AVs, from driver costs to fuel economy. But the impact of AVs will not be only positive; a massive deployment in taxi and truck fleets will have a devastating social impact; this will have to be managed carefully.
What is the current state of play in autonomous driving? Who are the key players? What are some of key technical and regulatory challenges? In what settings are experimented AVs likely to be deployed first?
Where are we today with autonomous driving
Autonomous driving is progressively coming to reality thanks to new sensor technology, HD mapping as well as powerful computers for analytics, sensor fusion, deep learning and path planning. This will allow to safely address the 3 key building blocks of autonomous driving systems, namely sensing (the driving scene), mapping (finding the vehicle’s precise location) and driving policy.
Several carmakers have announced dates for the possible introduction of Level 4 autonomous vehicles — at least from a technical standpoint. Tesla, which has a head-start with Autopilot, talks about of 2019. For Ford, Nissan, Volkswagen/Audi, BMW, Volvo or PSA, it will be 2020 or 2021 with an initial focus on mobility services and/or fleets. Yet, the path is still long and steep. Industry participants introduce increasingly sophisticated advanced driver assistance systems (ADAS) to prepare for full autonomy. But there are still tremendous technical roadblocks on the way to Level 4 (or 5) autonomy. These are the ability to essentially understand, 3D-model and predict the driving scene, find the vehicle’s exact location (within centimeters) and finally safely negotiate its way among road users and obstacles.
Experimentation is paramount to develop systems and ensure safety
Companies have learned a tremendous amount and continue to do so from experimentation. Google has accumulated over 2 million miles of autonomous driving since 2009. Delphi had crossed the continental US. Most carmakers and several major Tier 1 suppliers have been testing AV on open roads. Pioneer companies EasyMile, Navya and Local Motors are already testing their Level 5, 10-12 passengers shuttles in over 10 countries, in cities like Paris, Las Vegas, Dubai or at industrial sites.
Ridesharing services have also been experimenting with autonomous driving — this is of strategic importance as we will see later. Uber performed a live test in Pittsburg last year and is about to repeat the experiment in Arizona. Nutonomy organized a similar test in Singapore in 2016.
Trucks are potential beneficiaries of the current development. Mercedes Trucks has been experimenting autonomous driving for some time. Otto Trucks (now Uber) was founded in early 2016 to create add-on equipment for trucks to operate autonomously; they tested their solution on open roads. Peloton Technology pairs trucks via a cloud-based operation center, synchronizing acceleration and braking for both vehicles. According to the company, this yields a 4.5% fuel saving for the leading truck and a 10% saving for the following one.
Artificial intelligence is a core component
AI is at the heart of the development of autonomous driving systems, contributing mainly to object recognition and decision making protocols to quickly boost safety. This explains why a number of AI startups that have emerged to focus on automotive; they include Nuro, Drive.ai, PlusAI, or Argo AI in which Ford last month committed $1 bn over the next five years. Big tech players, such as Nvidia have already gained significant experience in the field, but reproducing our brain’s capacity to analyze situations and make the right driving decision every time may be more difficult that AI developers think.
Map-based or end-to-end AI-based autonomous driving
3D/HD maps allow for vehicle localization within centimeters by comparing the scene captured by sensors and that are stored on the map. Massive efforts are being made to progressively build 3D/HD maps of the road network — there are about 4 million miles of roads in the US alone. Some players drive dedicated mapping vehicles, some crowdsource the data from vehicles in service. Crowdsourcing will provide real time updates, allowing vehicles to know at all times where construction sites or potholes are located.
There is an emerging debate about the relative roles of 3D/HD maps vs AI assistance. UK’s FiveAI promotes an end-to-end autonomous driving solution with no 3D maps required, combining advanced computer vision and deep neural networks. Even if a pure AI-based autonomous driving solution may not be for the near term, progress made in this area will benefit map-based solutions and increase overall safety.
Who are the key players
Several carmakers took part in the “DARPA Grand Challenge” including Ford, Volkswagen and GM. Today, the leading carmakers are Tesla, Ford, the German companies, Volvo as well as Renault/Nissan not far behind. They invest heavily in in-house resources as well as in startups, as demonstrated by GM’s acquisition of Cruise for $1 bn in March 2016, of Ford’s very recent $1 bn commitment to Argo AI.
A few Tier 1 automotive suppliers are betting on the market, such as Valeo, Delphi, Continental, ZF/TRW, Bosch, Renesas or Autoliv. They progressively bring to market sensors (camera, LiDaR, radar) as well as data fusion hardware and software. But the integration of AI and heavy-duty computing power in the system requires new skills. This is why Bosch and ZF recently announced they will partner with Nvidia to integrate the chip maker’s Drive PX computer in order to complete their AV system.
The foreseeable growth in AV brings major tech companies into the game. Besides Waymo’s early move (following Google’s acquisition of 510 Systems), chip makers have been investing massively in AV, in particular Intel, Nvidia and Qualcomm. Nvidia will have its Level 3-capable Drive PX car computer ready by late 2017 and Level 4 in 2018. The most recent move is Intel’s $15 bn acquisition of vision specialist Mobileye this March. Intel’s preexisting 15% equity in map-making Here helps make Intel-Mobileye-Here a key piece in the AV chess game. Intel-Mobileye expects their turnkey system to cost about $5,000 by 2019.
Maps are critical a piece of the autonomous driving puzzle, at least for the time being. This explains why Daimler, Audi and BMW bought Here from Nokia for 2.8 bn € in 2015. Whereas Google or TomTom build their maps by driving dedicated vehicles, Tesla, Civil Maps — and soon Here — crowdsource their data. Mobileye plans on using the 15 million vehicles already fitted with its cameras to provide the data. It has also signed agreement with Volkswagen and BMW to install its data generation technology (REM) on their vehicles as from 2018, with the objective to support the creation and updating of HD maps; BMW and Mobileye will transfer the data to Here. It is interesting to note that China’s NavInfo recently became a shareholder of Here. All these players are putting their pieces into position on the chessboard.
Driving autonomy will be a matter of life or death in the long run for ridesharing companies like Uber, Lyft of Didi. This explains why Uber acquired Otto 6 months ago and is testing AVs. Not only will AVs offer significant benefits (no driver cost, fleet management…), their existence will lower the barrier to entry. In fact, carmakers have been busy building partnerships in the mobility-sharing space for this purpose. Speed is of the essence for ridesharing players!
A regulatory environment under construction
The “Geneva Convention on Road Traffic” (1949) did not account for autonomous driving! Country by country, state by state, authorities are testing the waters, but we are yet to see legislation that fully takes AV into account. Last September, the US Federal Government issued an Automated Vehicle Policy articulated around a 15-point safety assessment, which sets an overall framework that still makes space for innovation. California is going one step further: the state’s Dept. of Motor Vehicles just published a proposed regulation to establish a path for the testing and deployment of fully autonomous vehicles. The essential part of the regulation addresses the private use of fully autonomous vehicles on public roads.
Obviously, companies have been allowed to test their prototypes on open roads to prepare for full scale deployment. Several countries, states and cities around the world have granted permits for private companies to test AVs with trained “drivers”. In California alone, 27 companies are now authorized to test AVs; they include incumbent carmakers and system suppliers, new carmakers and pure tech players. Last month, PSA was granted a permit to operate AVs on French roads with untrained “drivers”. By the end of 2017, It will be possible to test vehicles without driver/passenger onboard on Californian roads. The yardstick is moving!
Future deployment
Level 5 shuttles will soon be part of the landscape being the first fully autonomous vehicles to be commercially available. Costing currently $200-250k and operating at up to 25 mph, they will first operate on well defined A-to-B-to-A routes or be used in confined environments, such as university and corporate campuses, industrial sites or residential communities. These vehicles will allow for automated mobility on-demand, supported by cloud-based fleet management and user interface services offered by companies such as BestMile, Renovo, Vulog or RideCell. As far as individual vehicles, carmakers have announced the availability of their Level 4 vehicles from 2019 to 2021. Whereas the deployment of these vehicles on highways is potentially within reach, it will be much more difficult in dense urban environments where understanding and predicting the driving scene is be much more of a challenge. Imagine trusting your AV around Paris’ Arc de Triomphe at rush hour!
Trucks will be a strong beneficiary of autonomous driving — except from a social standpoint. In the short term, the significant fuel savings provided by platooning should trigger massive take-up for solutions like the one proposed by Peloton Technology (see above). Whereas mining trucks have been operating autonomously for a couple of years already, other types of vehicles should also reap the benefit of progress made in automotive, such as forklifts or agricultural equipment.
Insurance and liability will be significantly impacted
The insurance sector will be heavily disrupted. Since humans are the cause of about 90% of deaths on the road — and probably a similar percentage of crashes in general — insurance premiums ought to reflect the benefits of autonomous driving. The NHTSA’s study that followed Tesla’s May 2016 fatal crash shows that the carmaker’s crash rate dropped almost 40% after Autosteer (part of the Autopilot systems) was released. Banking on this promising finding, US insurance company Root recently introduced a premium discount of about 10% for Tesla drivers for all miles driven while they detect Autopilot is being used. Another aspect of mobility insurance will be liability once we reach higher levels of autonomy. Who bears the responsibility for an accident? In the case of Level 3, how do you define whether the “driver” regained control fast enough?
And then what…
Mobility and safety will benefit immensely from autonomous vehicles. But will there still be space for driving pleasure? Toyota says they will not eliminate the option for the driver to take over. And how about BMW’s “driving pleasure”? A better future may be to still make cars dedicated to actual driving, possibly on dedicated roads, while we let computers get us from A to B as we work, sleep or watch a movie.
Marc Amblard
Also published on LinkedIn (https://goo.gl/4ruLxr)
The Blurring Line between new Mobility Services and Public Transit
April 2017
The development of alternative mobility solutions, in particular ride-sharing, ride-hailing and car-sharing, continues to deeply transform the urban transportation landscape, well beyond simply taxi operators. The forthcoming emergence of driverless vehicles will further rattle the status quo. Yet, the deployment of such solutions will likely be quite different depending on the region, as outlined below. In most cases, the line between new mobility solutions — mostly private — and public transit will become blurry. What do we observe today? What can we expect for tomorrow?
Public transit is of a very different nature depending on whether you live in European, American or Chinese cities. European urbanites enjoy dense networks of metros, tramways and buses which are safe and clean for the most part, and used by people of all social origins. By contrast, Americans cities suffer from limited investment in public transportation over the past decades, as individual cars have been the dominant force. The few metro and city bus lines are by and large antiquated and used by poor people. China offers a different situation; the huge growth in urban population has forced cities to make massive investment in metro lines over the past 15 years. Yet, traffic congestion and air quality remain major issues, which drives a massive push for electric vehicles.
City governments, regardless of location, create policies aimed at improving their constituents’ quality of life, today and tomorrow. Practical objectives include ease of movement for all, air quality and safety. To this end, public transit agencies are progressively embracing solutions that increase network capillarity (e.g. new routes with smaller vehicles) and reduce traffic congestion (e.g. pooling), all the while taking care not to destroy their economic model.
In the U.S., where public transit is scarce, there is much space for private operators to offer new mobility services. The necessity for new solutions is fueled by the decline in the percentage of young people who obtain a driver’s license (also a trend in in Europe). Uber and Lyft provide user-friendly, cheaper alternatives to taxis. Pooling services reduce ride cost further and limit congestion for everyone’s benefit. Competing issues can arise when new solutions duplicate public transit services, funneling passengers from the latter and therefore jeopardizing the transit agencies’ fragile economic balance. After Uber, Lyft is currently testing such a service in San Francisco: “Lyft Shuttle” operates on fixed routes with preset stops, using privately owned vehicles. Similarly, Ford is testing Chariot, a startup it acquired in 2016 which operates company-owned passenger vans on fixed routes. Such new services must be properly coordinated with transit agencies with the objective to maximize short and long term benefits for all citizens. The solution will eventually be based on services that are complementary in space and operating time. The public and private lines will blur.
In Europe, shared bikes and electric cars have already become integral parts of the transit landscape. Recently arrived ride-hailing solutions are disrupting taxi operations and are often rejected by city governments…for now. However, their emergence has indirectly benefited customers with a clear improvement in taxi service quality. Transit authorities are now testing autonomous shuttles as a way to increase network capillarity — and probably reduce operating costs. RATP, Paris’ transit agency, is testing such shuttles made by France-based EasyMile and Navya. This takes place in the city center where regular buses may offer too much capacity or are too large size. Similar experiments are taking place in Switzerland where public transit is excellent, as well as in several other countries (including the U.S.). It is interesting to note that investors in EasyMile and Navya respectively include Alstom (a global leader in metros, tramways and trains) and Keolis (a private operator that transports 3 billion passengers annually). The lines are blurring.
Carmakers, both in Europe and the U.S., are accelerating a shift from making cars to providing mobility. Daimler and Ford were the early movers back in the late 2000s. Most competitors are now following, including Volkswagen which has announced that its first mobility offering will be an electric shuttle operating between scheduled buses and ride-hailing services.
In order to complete the future urban mobility landscape, one should add bikes as well as electric two- and four-wheelers offered as a shared service, further increasing network capillarity. All theses modes of transportation will have to operate seamlessly to provide a truly user-friendly experience. Startups like Moovit and Swiftly offer platforms that bring together various modes in order for travelers to combine them in the most effective way. Ultimately, city governments will have to strike the right balance between public and private mobility solutions to reach their goals and provide ease of movement for all, as well as clean air and safety for their constituents.
Marc Amblard
Also published on LinkedIn (https://goo.gl/VFlCZd)
Photo credit: Urban Hub
How key success factors converge for significant EV sales growth
May 2017
I recall the early trial of a purpose-designed battery electric vehicles (BEVs) in the late 1990s when GM introduced its purpose-built EV1, with 160 miles range (Gen II with 26 kWh) before “pulling the plug” in 2002. Then few OEMs introduced BEV versions of production vehicles, such as Renault with its Kangoo. These early attempts, without going back to the early 1900s, failed for at least three reasons: a very narrow product offering, limited performance combined with a high price, and a scare network of slow charging stations. The emergence of Tesla Model S crystallized a rally around EVs, building on early BEV attempts as well on Toyota’s uninterrupted HEV/PHEV efforts since 1997. Global warming and rising pollution levels have clearly become more evident, triggering a tightening of emission regulations across the globe, in particular in China. Actions are needed and EVs, whether hybrid (HEV), plug-in hybrid (PHEV) or even more so BEVs, offer the obvious solutions. But are we making progress on the three past pain points for BEVs to progressively become mainstream? The answer is clearly YES, but to what extent?
Where do BEV and PHEV sales stand? Last year, China was by far the largest market with 350k cars sold (of which 260k BEVs). Europe came in second with 222k (of which 90k BEVs), and then the US with 157k (of which 84k BEVs). This represented respectively 1.5%, 1.3% and 0.9% of total car sales.
Acceleration of BEV product offerings
The buzz and relative success of Tesla Model S since its 2012 launch caught everyone’s attention, in particular Daimler, BMW and Audi which compete in the same price range. The early announcement of the Tesla Model 3, the recent launch of the Chevy Bolt (both around $35k), and to a lesser extend the mature Nissan Leaf and Renault Zoe, bring modern BEVs much closer to the heart of European and US markets. Incumbents are urgently scrambling to react at a time when electrification is required to meet emissions regulations. This is particularly true in China where the government is pushing hard to boost EV sales, aiming for 5m BEV and PHEV by 2020 with its New Energy Vehicle policy. This push may also give Chinese carmakers a strategic advantage as the global market goes electric.
As a result, a massive product blitz will start around 2019-2020 for all OEMs, e.g. Volkswagen (25 electrified vehicles by 2025), Ford (25 electrified vehicles by 2021), Daimler (10 BEVs by 2022, vs 2025 initially announced), PSA (11 electrified vehicles by 2021), etc. Even Toyota, who rejected BEVs in favor of Fuel Cell EVs, announced last November the launch of an accelerated BEV development program, led directly by its CEO. The biggest boom in BEV offerings is in China, as demonstrated at the recent Shanghai Motor Show. In China, there are currently about 70 BEV or PHEV models on the market.
Boost in BEV performance at lower price points
Range anxiety has long been a major road-block, but it is progressively being addressed. The Nissan Leaf offered 84 miles (EPA) when launched in 2010, the first Renault Zoe about 100 miles in 2012 (estimated from NEDC values) and the BMW i3 85 miles in 2013. Upgrades introduced in 2016 lifted the autonomy of these more common BEVs to respectively 107, 170 and 130 miles. The Chevy Bolt, introduced in 2016, with its 60 kWh battery, and the forthcoming Tesla Model 3 offer respectively 238 and 215 miles, a significant improvement, for about $35k. At a much higher price point, Tesla Model S’ autonomy ranges from 210 to close to 300 miles (with 60 to 100 kWh). Whereas this is still less than half of what a mid-size Diesel-powered car offers, recent ranges have become acceptable if combined with a dense and quick charging network (more below).
BEV prices remain high compared to equivalent ICE vehicles due to battery cost. This cost has substantially dropped from $1000/kWh in 2010 to about $250 today. Technical improvements and increased volumes are expected to bring cost to $100 somewhere around 2025-2030 depending on the source. Tesla anticipate that they will reach this threshold even earlier. As a result, BEVs are expected to be competitive with ICE-powered cars around 2025 when taking into account the total cost of ownership.
What about BEVs driving performance? Early models were slow. The Tesla Roadster, while sold in small volumes, started to change perception. The Tesla Model S much further enhanced it, with 0-60 mph times between 5.5 and 2.3 sec (yes!). Currently the Chevy Bolt and BMW i3 reach 60 mph in about 7 sec. And Porsche realized vehicle electrification will help enhance their sporty image.
Acceleration in charging network density and performance
The sufficient presence of charging stations at home, at destination (e.g. work, shopping) and en-route (e.g. intercity corridors) will be a decisive factor for plug-in vehicle growth. The European Commission estimates that one public charging point per 10 cars is required in addition to private chargers. There are currently about 50k charging points in the US, 100k in Europe and 150k in China. A number of initiatives, both public and private, have been announced to enhance the charging network, in both density and power. OEMs are very much involved, such as Nissan (2k points installed in Europe over the past few years), a consortium led by Daimler, BMW, Ford and Volkswagen (1000s of high-powered charging points in Europe by 2020), Volkswagen ($2bn invested in the US in ZEV infrastructure and awareness programs over 10 years as a result of Diesel-gate) or Mercedes (recent $82m investment in US charging solutions leader ChargePoint).
Charging speed is also a critical factor, especially for stations located on intercity corridors. Ideally, stations installed there should provide 2 hours of driving (150-200 miles) in 15 minutes. To this end, the industry is working on a 350-400 kW charging infrastructure. However, the necessary on-board hardware is not available yet — voltage will increase from 400V to 800-1000V. Tesla’s superchargers provide 170 miles of autonomy in 30 min at up to 120 kW. The new BEVs recently announced show further progress, with Volkswagen promising 200+ miles charged in 30 min at 150 kW.
Incentives to sustain the development of the market
The picture painted above looks very promising. However, BEVs still represent an emerging market. As such, it needs to be sustained by public incentives until economies of scale emerge, to justify the development of both vehicles and infrastructure. There have been several examples of volumes dropping significantly when incentives were massively reduced (e.g. Netherlands). Most European countries offer public incentives ranging from 500 to 15k€ per vehicle. In the US, there is a $7.5k federal tax deduction in addition to state-specific incentives. China is not any different with up to $9k of state incentives. Public subsidies should be progressively reduced as the BEV ecosystem matures and eventually eliminated.
Conclusion
It seems obvious that the conditions for a full deployment of plug-in vehicles will be met within the next few years: a broad selection of models offering competitive performance and priced in the market, supported by a dense and fast charging network. The future of mobility is definitely electric, and it is coming fast.
Marc Amblard
Also published on LinkedIn (https://goo.gl/E1Cq9X)
Who will pioneer Autonomous Mobility on Demand (AMoD) and how?
June 2017
The race towards autonomous vehicles (AV) is intense. Billions are being spent in developing sensors, computing hardware, software and maps as well as in testing in various types of driving situations. Even though the roadmap to Level 5 remains unclear, intermediate levels of autonomy are visible. Level 2 is a reality. The most advanced carmakers have announced the release of Level 3 cars around 2019, though some will skip this level. The first Level 4 cars announced for 2021 will be for specific applications. However, autonomous shuttles are likely to offer the first AV use cases, contributing to public acceptance for autonomous driving in general.
Autonomous shuttles are already becoming part of the landscape in a number of test cities around the world. They are being evaluated by public and private operators and will be the first autonomous vehicles a large number of people will become accustomed to. Costing currently $200-250k for a capacity of 12-15 people and a top speed of 25 mph, they are tested on pre-determined routes or as a ride-hailing service in geo-fenced areas. They currently operate on virtual tracks, which makes them ideally suited for confined environments, such as city centers, university and corporate campuses, industrial sites, residential communities or amusement parks.
These electric shuttles are being (or have been) tested in cities like Paris, Las Vegas, Lausanne, Taiwan, Singapore, Perth or Dubai. Disney is evaluating the solutions for possible deployment at its Orlando park. So far, the focus has been placed on moving people by providing last mile mobility, shuttling passengers between locations or simply as a way to eliminate drivers’ costs. Notwithstanding, goods could provide a new set of opportunities, for example to move merchandise on industrial sites or make deliveries in dense city centers.
Key shuttle makers Navya and EasyMile, and to a lesser extent Local Motors, have already gained significant experience in various settings with their respective products Arma, EZ10 and Olli. EasyMile has reportedly logged 1.5m passengers. Newer players such as Auro Robotics, which focus on university campuses, and SoftBank’s SB Drive are joining the race; the latter is targeting to put autonomous shuttles on public roads by 2020. And even more players are joining in.
Tier 1 automotive mega-supplier ZF announced last month they were partnering with mini-EV maker e.Go to enter the market. Their JV, e.GO Moove, will develop and manufacture e.GO Mover, a 15 passenger shuttle with Level 4 driving autonomy using Nvidia’s AV hardware. Similarly, Daimler and Bosch have partnered with the goal of producing a self-driving taxi by 2020. Furthermore, Volkswagen’s Moia mobility arm plans to test autonomous prototypes in their fleet by 2019 and to deploy the service in 2021, probably with a vehicle inspired from the I.D. Buzz concept car.
It is interesting to note who some of these shuttle startups are raising funds from and why. Alstom (rail equipment and services) has invested in EasyMile to expand its product offering. In parallel, Keolis (transit operator) has injected cash into Navya to integrate autonomous shuttles in their fleet and Valeo (Tier 1 auto supplier) did the same to develop its technology offering.
Autonomous shuttles will operate in fleets to provide Automated Mobility on Demand (AMoD). These fleets must be managed and operationally optimized. That is exactly what another set of players have emerged to do. Among the most experienced in this field is BestMile, which operates both the back-end (dispatching, routing, energy management, operator interface) and the front end (user interface), partnering with the key shuttle makers. Renovo leverages its expertise in self-driving software and data analytics to scale AMoD fleet operations. RideCell, an other player, builds on its car-sharing experience to offer AV fleet operations. There is also a big fish in the game: Tier 1 auto supplier Delphi tested AMoD in Singapore in 2016 with local transit operator LTA. They just partnered with transit operator Transdev to evaluate AMoD in France as a last mile mobility solution, from a train station to a university campus.
The mature technology and various proofs of concept combined with significant interest on the part of public and private operators will make autonomous shuttles the first widely visible AVs. Cities may even race to put them on their streets as a way to showcase their sense of technological modernity.
Marc Amblard
Also published on LinkedIn (https://goo.gl/1WldNU)
Will New Tech Lead to Sustainable Mobility?
July 2017
Mobility as we know it today cannot be qualified as sustainable when we consider its impact, whether short or long term, on people and our planet. Depending on the region in the world, current mobility solutions are seldom socially inclusive (unequal access to transportation) and they often contribute to destroying our environment (pollution, global warming, excessive use of natural resources).
Will the ongoing, deep transformation of mobility, ie electrification, autonomous and connected vehicles or new shared mobility solutions, contribute to making mobility as a whole more sustainable? Let’s consider the impact of this transformation on people and our planet, leaving aside the third pillar of sustainability, i.e. economic benefits.
Impact on people
Public transit —by and large mass transit —routes are mostly organized along high traffic corridors, leaving low density areas with little or no mobility solutions. Those with insufficient means to afford a car are often left behind, as the lack of transportation makes it difficult for them to find and hold a job.
The emergence of more flexible, cheaper mobility solutions will progressively make it easier for more people to get around. For instance, a typical US city offering few public bus lines will likely improve its service quality by shifting as least some of its budget to pooled ride sharing solutions. Citizens will benefit from a more flexible, point-to-point mobility service which is also likely to be less expensive in the end. This shift could greatly benefit those typically left behind, either for economic or health reasons. However, private companies will most likely focus their service to the most profitable areas / routes unless local governments properly regulate the conditions under which they operate.
In Europe, public transit networks are much denser thanks to a multi-modal approach and generally more compact urban areas. The emergence of autonomous shuttles (e.g. EasyMile or Navya) provides an additional solution to the existing mobility options, thus allowing to more finely tailor the best suited mode according to specific needs (traffic, operating hours, frequency …). Similarly, ride sharing services — whether short distance (e.g. Uber) or long distance (e.g. BlaBlaCar), individual or pooled, with fixed routes of point-to-point service — have already largely increased the mobility alternatives as well as the overall geographic coverage. This application of the sharing economy to mobility also provides easy access to driving jobs. Thanks to these services, mobility will provide more social inclusiveness.
Whereas new mobility services will, in general, include more people in society, autonomous vehicles (AV) will have the opposite effect. In effect, driving is a job for a significant portion of the population. AVs will progressively eliminate the need for cab and truck drivers (several million in the US alone), who will have to be trained for and reallocated to others jobs. Future regulations for AVs must take this point into consideration and not only consider risks and liabilities. This social dimension is the reason why the Indian Premier recently expressed his opposition to the emergence of AVs.
If AVs will create a significant shift in jobs, they can potentially lead to a massive reduction in road-related deaths, which currently amount to 25 to 35k per year in both the US and Europe. Indeed, human errors are the cause for 90-95% of accidents. Also, the progressive replacement of internal combustion engine-powered (ICE) vehicles by electric vehicles (EV) should result in a drastic reduction in premature deaths caused from outdoor air pollution (2.4 million estimated by the UN). Overall, electric and autonomous vehicles will be beneficial for society.
Impact on our planet
Global warming is real and transportation is a significant contributor. It also relies overwhelmingly on fossil fuel, absorbing 20-25% of global energy consumption. Over the past years, cities like London, Paris and Rome have been putting increasing pressure on drivers to drastically reduce the use of personal cars in their city centers in an effort to reduce congestion and more importantly to lower CO2 and NOx levels. The issue of air pollution was exacerbated last year by Volkswagen Group’s “Diesel Gate”, which contributed to driving Diesel market penetration in Europe — from 54% in 2014 to 50% in 2016; and this drop in gaining momentum.
Solutions to pure ICE-powered vehicles exist in different varieties, from 48 volt (recently introduced) or 400 volt hybrid, to plug-in hybrid (PHEV) and full battery electric (BEV) — and potentially fuel cell later. Last year, China was by far the largest market for such vehicles with 260k BEVs and 90k PHEVs sold. Europe came in second with 90k BEVs and 132k PHEVs, followed by the US with 84k BEVs and 73k PHEVs. This represented respectively 1.5%, 1.3% and 0.9% of total vehicles sold in each market, and a global increase of 40% vs 2015.
In recent weeks, in an effort to accelerate the pace towards green transportation, several — mostly European — state officials have announced their intention to progressively eliminate ICE vehicles. Norway, a large oil producer, has long been the leader in green mobility, featuring the highest EV penetration (until recently Tesla’s 2nd market after the US): ICE sales will be banned there by 2025. France also announced a similar ban by 2040. The UK just reported a similar move by 2040 with a plan to removed all ICE vehicles from the roads by 2050. More recently, India and Germany are considering doing the same by 2030.
In the shorter term, several major European cities (eg Paris, Stuttgart) are planning to ban diesel-powered cars from 2025, forcing a shift to gas and, better yet, electric vehicles. China is also taking a drastic measure to address the major pollution issue in its major cities. The government’s New Energy Vehicle (NEV) program aims for zero emission vehicles to reach 8% of all units sold in 2018 and 12% in 2020. In addition, the whole fleet of Beijing taxis (70,000) must be EVs by 2022 and all new taxis introduced in Shenzhen must currently be EVs.
How will OEMs cope with this necessary trend? Tesla is showing the way, and the coming year will prove whether the Silicon Valley company can become mainstream and financially viable with Model 3. It must be noted that Tesla benefits from having no legacy ICE assets. Volvo recently announced that all new vehicles and 100% of their production will be electrified after respectively 2019 and 2025. Daimler, Volkswagen and BMW indicated last year that 15% to 25% of their sales would be electrified by 2025. Electric product plans have been boosted across the board and a number of new products will hit the market starting in 2019. Even the previously reluctant Toyota announced in late 2016 they will launch a BEV, now planned for 2022. The movement is in full steam.
Will people buy these cars? A survey performed by Deloitte in Jan 2017 regarding moving away from gas and diesel engine showed that they want to. Fifty three percent of Chinese respondents would prefer a BEV, PHEV or an other alternative to ICE for their next vehicle, followed by Japanese with 42%, Korean 42%, German 28%, Indian 27% and American 24%. EVs’ other pain points, namely price, autonomy and availably of charging points, are progressively being removed (see this article for more info), which will make the transition to EVs possible.
Electrification will apply not only to cars but also to 2-wheelers and buses. CityScoot, Scoot, SwiftMile already offer shared e-scooters and e-bikes in Paris and the San Francisco area. As far as e-buses go, China is again the largest market with 160k vehicles sold in 2016. It is anticipated that 25% of new buses sold globally in 2025 will be electric, 25% powered by natural gas and the balance still by diesel engine, vs largely diesel today.
The electrification of mobility is great for the environment where mobility is consumed but not necessarily for the planet as a whole as electricity itself is indeed often dirty. This transition must be accompanied by the greening of electricity production. Coal is still used for over 70% of electricity produced in China, 46% in Germany, 34% in the US, 23% in the UK and 2% in France. Symmetrically, renewable energies represent respectively over 22%, 26%, 13%, 19% and 16% of the mix in the same countries (Source: World Bank). Norway, the global leader in electrified mobility, generates 98% of its electricity with renewable energy … a great example.
Conclusion
Engineers, regulators and consumers are coming together to accelerate the transition towards sustainable mobility. New solutions will generate economic benefits (i.e. lower cost of transportation), in particular in countries with lower purchasing power. Sustainability will become a reality when people have equal access to clean means of transportation.
Marc Amblard
Also published on LinkedIn (https://goo.gl/4QJbU4)
Mobility Ecosystems - Current State of Play for 21 Key Players
September 2017
The automotive industry is undergoing a major transformation which impacts the way its players operate. Deeply transformative megatrends, namely the emergence of electrified, autonomous and connected vehicles, along with Mobility as a Service (MaaS), are forcing incumbents to revisit their business model. Collaterally, it changes the way they interact with other players, whether inside or outside the traditional space. Incumbents are building new ecosystems with new cooperation and coopetition models. They are also shifting their technical expertise and industrial base to adapt to this revolution. We will analyze the ecosystems that 21 key players have built in order to create full technology and service stacks that will eventually allow them to offer electric, autonomous and connected MaaS. We will also look at the challenges they are addressing and the outcome that should be expected.
The automotive industry was initially rather vertically integrated, until OEMs spun off big chunks of their in-house supply base in the 1990s (GM’s Delphi, Ford’s Visteon, PSA’ Faurecia, …). This allowed OEMs to reduce in-house engineering teams while increasing pressure on costs — purchased parts represents about 70% the cost base. This created a rigid series of supplier-customers relationships (OEM-Tier 1, Tier 1-Tier 2, …) which has only provided incremental innovation. The transformative megatrends we observe today are triggered (or exacerbated) by players outside the traditional sandbox of OEMs and Tier x suppliers, e.g. Tesla for EVs, Uber for new mobility solutions or Google for autonomous driving and a number of startups related to the connected vehicles.
Taking a radical turn, incumbents have been investing in a number of startups, performing pilots or proofs of concepts with others, partnering with software, hardware, data and internet companies, collaborating with competitors, joining open source platforms, and in doing so, testing all sorts of alternative business models. What does this look like?
Following is a comprehensive, but non exhaustive, analysis of the ecosystems assembled by the most active carmakers (8), auto Tier 1 suppliers (6) as well as tech companies and other new players (7) in the mobility space. This analysis covers partnerships related to electric vehicles (EV), autonomous driving (AD) and connected vehicles as well as MaaS and the vehicle itself. An asterisk* indicates the company has a financial stake in this player.
The Carmakers
Daimler
Daimler has developed one of the most comprehensive ecosystems among all carmakers. They jumped early in MaaS, first organically (Car2Go), then externally, recently co-leading a $92m round in peer-to-peer car sharing company Turo. AD is also a key focal point.
-
Electric: Chargepoint*, Hubject*
-
Autonomous: Bosch, Here*, Intrix, Momenta*, Quanergy*, Baidu
-
MaaS: Uber, Careem*, Via*, Turo*, Volocopter*, Flinc*
BMW
BMW focused the development of its ecosystems on EV charging and autonomous vehicles. They created an open AD development platform, in line with previous initiatives. BMW’s efforts in MaaS seem to remain mostly in-house (DriveNow/ReachNow).
-
Electric: Chargepoint*, Hubject*, StoreDot*
-
Autonomous: platform joined by Intel/Mobileye-Delphi-Continental-FCA, Bosch, Intrix, Nauto*
-
Connected: IBM, Zendrive*
-
MaaS: RideCell*, Moovit*
Volkswagen Group
The VW Group has built its ecosystem mainly on autonomous driving and MaaS. This is in line with their intent to operate fleets of fully autonomous ride-sharing vehicles in several cities globally as early as 2021, using their Sedric series of vehicles.
-
Electric: Hubject*
-
Autonomous: Here*, Intel/Mobileye, Bosch, Intrix
-
Connected: Mobvoi*, Parkopedia
-
MaaS: Gett*, Didi, SilverCar
Renault-Nissan
Building on being the first mover and leading the global EV market, the Alliance continues to focus its ecosystem development on a broad electrification offering, including charging networks, integrated home-vehicle solutions and second lives for EV batteries.
-
Electric: EVGo, The Mobility House, Gireve, EnergiDienst, Green Charge Networks
-
Autonomous: ChronoCam*
-
Connected: Microsoft
-
MaaS: Karhoo, Transdev
PSA
Constrained by its size and financial resources, PSA has focused its ecosystem on MaaS. They consolidate various mobility solutions under the in-house program Free2Move. More recently, PSA has partnered with AD startups to launch pilots.
-
Autonomous: nuTonomy, AImotive
-
Connected: Parkopedia
-
MaaS: Communauto, KooliCar, TravelCar
Ford
Ford made a particular effort to build an ecosystem which will allow for an accelerated development of both autonomous driving ($1bn committed to ArgoAI) and shared mobility (just partnered with Lyft). Several internal initiatives support this latter effort, eg bike-sharing.
-
Electric: Deutsche Post
-
Autonomous: Velodyne*, ArgoAI*, CivilMaps*
-
Connected: Parkopedia, Pivotal*
-
MaaS: Chariot*, Swiftly*, Lyft
GM
GM made focused but significant investment in startups, including $1bn in Cruise and $500m in Lyft. The two are being assembled to eventually offer automated mobility on demand. This appears to be a rather narrow ecosystem.
-
Autonomous: Cruise*, Nauto*
-
MaaS: Lyft*, Feezu*
Toyota
Toyota is a late comer to both EV and AD. They recently sold their stake in Tesla after deciding on an accelerated EV development program. The company has not been keen on partnering for tech, though a $100m was created in July to invest in AI and robotics.
-
Electric: ChargePoint*, Mazda, Denso
-
Autonomous: Nauto*, Luminar
-
Connected: IBM, Parkopedia
-
MaaS: Uber*, Grab*
The Tier 1 Auto suppliers
Bosch
The autotech giant already enjoys a broad spectrum of in-house tech and expertise. Bosch has nevertheless been on a partnership binge this year, in particular focusing on AV and associated tech.
-
Electric Hubject*
-
Autonomous: Nvidia, TomTom, Daimler, BMW, Baidu, Sony, ChronoCam*, TetraVue*
-
Connected: Sensoro*
ZF
ZF broadened its safety-related product scope when they acquired TRW in 2015. Recently, ZF focused its ecosystem development on AD, established a JV with e.GO Mobile to develop a robotaxi and partnered with Faurecia on autonomous vehicle interior.
-
Autonomous: Nvidia, Ibeo*, Astyx*, Baidu
-
Connected: IBM
-
MaaS: e.GO Mobile
-
Other: Faurecia (for AV interior)
Continental
Addressing the chassis/safety, interior and powertrain markets, Continental seems to develop its ecosystem on both EV and AD. More partnerships should be expected as the company is opening an office in Silicon Valley, aiming for over 120 people by year end.
-
Electric: Schaeffler
-
Autonomous: BMW AV platform (along w/ Intel/Mobileye, Delphi and FCA), Baidu, Elektrobit*, Advanced Scientific Concepts*
-
MaaS: EasyMile*
Valeo
France’s 2nd largest supplier is leveraging both EV and AD megatrends though few partnerships have emerged. Valeo has announced the creation of an artificial intelligence research center in Paris, which is likely to attractits own ecosystem.
-
Electric: Siemens
-
Autonomous: Gestigon
-
Connected: Cisco (parking solution), Carzapp*, CloudMade*
-
MaaS: Navya*
Delphi
The Detroit-based supplier spun off its engine component business last May to focus on advanced electronics. Delphi’s ecosystem parallels this new focus, most partnership being in the AD space and connected solutions.
-
Autonomous: BMW AV platform (along w/ Intel/Mobileye, Continental and FCA), BlackBerry, Quanergy*, Innoviz*, LeddarTech*, Renovo, Baidu
-
Connected: Automatika*, Movimento*, Otonomo*, Control-Tec*
-
MaaS: Transdev
Faurecia
The company’s seating and interior businesses will be transformed by AD while its exhaust business will suffer with EV. The visible ecosystem is limited but points to more electronics in vehicle interior and a (long term) shift from internal combustion to fuel cell.
-
Electric: Stellia (for Fuel Cell EVs)
-
Connected: Parrot*
-
Other: ZF (for AV interior)
Tech companies and new players
Google / Waymo
Waymo has a limited ecosystem as all the necessary bricks for automated MaaS are being developed in-house, except the vehicle itself. The solution can be offered as a complete package or installed on vehicles built on Waymo’s specs. Waymo may also invest in Lyft.
-
Autonomous: full hard- and software stack, mapping and navigation in-house, Intel
-
Connected: in-house
-
MaaS: in-house (Waze), Lyft
-
Vehicle: FCA
Intel
Intel paid $15bn for Mobileye in March and has reportedly spent $1bn in AI over the last 3 years, part of which went into startups. The chip giant is also investing in or partnering with companies dealing with AD sensors, mapping or even working with Waymo on AD.
-
Autonomous: Mobileye*, Here*, Waymo, Itseez*, AEye*, ChronoCam*, VW Group, BMW AV platform (along w/ Delphi, Continental and FCA)
-
Other: Movidius* (AI), Nervana* (AI)
Uber
Driving autonomy has been a deeply strategic endeavor for Uber. Yet, they have focused on developing the necessary tech in-house after spending about $700m on Otto last year. Key partnerships ought to be with vehicle manufacturers, either cars or trucks.
-
EV space: ChargePoint (for vertical take-off and landing vehicles)
-
Autonomous: Otto*, deCarta*
-
MaaS: Didi*
-
Vehicle: Daimler, Volvo, Toyota
Lyft
The #2 ride-sharing company in the US has accelerated over the past months, taking advantage of Uber’s difficulties. Lyft also recently created a new division to develop AD tech and just partnered with Waymo to strengthen this development.
-
Autonomous: nuTonomy, Drive.ai, Waymo
-
MaaS: Didi
-
Vehicle: JLR
Didi
The largest global ride-sharing company has invested in other regional ride-sharing players, in particular in S-East Asia and India.
-
MaaS: Grab*, Ola*
-
Other: Apple ($1bn investment in Didi)
Tencent
The Chinese internet giant has received the blessing from the local government to spearhead the development of electric mobility in order for China to gain energy independence. This is clearly visible in Tencent’s mobility ecosystem.
-
Vehicle: Tesla*, Nio*, Future Mobility Corp*
-
Autonomous: Here*
-
MaaS: Didi*
Baidu
The Chinese internet search giant follows a similar path as Tencent, though clearly focusing on AD. The Apollo autonomous driving platform aims at developing an open source AD stack. Baidu boasts 70 partners, including big names in the auto industry.
-
Vehicle: Nio*
-
Autonomous: Velodyne*, Continental, Apollo open source AD platform (incl. Bosch, Daimler, TomTom, Continental, Delphi, ZF, Ford, Nvidia, Microsoft, Grab)
Conclusion
As shown above, the automotive industry — and the mobility sector at large — is undergoing not only a profound technological shift, but also a radical transformation in the way its players operate. Who could imagine 3 years ago competitors, whether at OEMs or suppliers, collaborating to develop open source platforms? Who could anticipate that large incumbents could engage directly with months-old startups staffed with 10-20 people? The incumbents will not go back to their vertical relationship structure anytime soon, but neither will they give way to newcomers. This is truly an exiting transformation, the outcome of which is yet to be built.
Marc Amblard
Also published on LinkedIn (https://goo.gl/tuydQL)
Why EVs will soon proliferate: OEMs’ plans, ICE bans and infrastructure
October 2017
In my previous articles, “Electric mobility’s ecosystem: structure, players and trends” (Feb 2017) and “How key success factors converge for significant EV sales growth” (May 2017), I analyzed the composition, status and trends of the electrified mobility ecosystem. This article examines electric vehicle (EV) sales trends, OEMs’ EV product plans, future bans on internal combustion engine (ICE), new developments in charging infrastructure as well as a profitability outlook. Thanks to this combination of factors, EVs sales are building massive steam.
Sales accelerate steeply though they are still marginal
Plug-in vehicles — battery electric vehicles or BEVs, and plug-in hybrid vehicles or PHEVs — represented 0.86% of global vehicle sales in 2016 vs 0.62% in 2015. China contributed about half of all plug-in vehicles sold (351k, excluding 190k commercial vehicles) compared to 221k for Europe and 157k for the US. But volumes are up significantly in 2017. In the US, BEV and PHEV sales grew 50% for the first half of 2017 to 87k (BEV: + 57% to 44k, PHEV: +44% to 43k). In Europe, plug-in sales increased by 36 % over the first 9 months to 148k (BEV: +43% to 71k, PHEV: +30% to 77k). In China, plug-in passenger cars sales were up 43% for the first 6 months to 181k. Despite significant sales growth, BEV and PHEV are still marginal, representing 1.4% of passenger vehicle sales in China, 1.2% in the US and 1.7% in Europe.
The shift towards EVs in Europe is boosted by the shrinking appeal of diesel engines resulting largely from Volkswagen’s Dieselgate. The diesel market share across Europe dropped from 52% in 2015 to 47% YTD 2017 and the slide continues. In Germany, the shift is even more drastic as the share of diesel decreased from 48% to 41% and even 38% in August. It is also increasingly costly to reduce NOx emissions and city governments are progressively forbidding access to diesel vehicles. As a result, European OEMs will spend less resources developing diesel engines and will narrow their historically broad engine portfolios to focus on the development of EVs.
Who dominates the EV market? The Renault-Nissan Alliance sold some 500k EVs to date, i.e. about 300k for Nissan’s Leaf, the global sales leader, since its introduction in 2010, and 200k for Renault’s Zoe, Europe’s market leader, since its introduction in 2012. Tesla comes second in cumulated sales with about 250k to-date; sales last quarter (when 220 Model 3s were registered) correspond to an annual run-rate of 105k vehicles. Still launching at the Fremont, CA plant, Model 3 shows promising demand with reportedly 450k paid reservations waiting for delivery. GM’s Volt (PHEV) and the more recent Bolt EV (BEV) are gaining traction in the US where they both passed the Leaf (at the end of its life) with 15k and 14k units YTD vs 10k. As to the Chinese market, it is overwhelmingly dominated by domestic brands.
Massive electrification of OEMs’ product portfolios will boost demand
In 2012, there were a total of 6 BEVs on the market between Europe and the US, i.e. Nissan Leaf, Renault Zoe and Kangoo, Tesla Model S and Roadster and Mitsubishi i-MiEV (aka Peugeot iOn/Citroën C-Zero in Europe). There are 15 BEVs in 2017 and we can expect over 50 by 2022. The number of PHEVs on the market will grow even more steeply.
A first wave of announcements took place at the 2016 Paris Auto Show (see my article). Since then, it has been a cascade of announcements by most key players. They continue to present with increasing detail how and when they will electrify their portfolios. Some go full electric (BEV), others will introduce electrified versions on each of their models, others seem to be taking a wait and see approach. One thing is clear, we will witness a blitz of BEVs, PHEV and 48v HEVs starting in 2018.
As the global market leader, the Renault-Nissan-Mitsubishi Alliance plans to offer 20 electrified vehicles by 2022, of which 8 BEVs. This will include an $8k, 60 mile range, Renault Kwid-based BEV to be produced and launched in China in 2019. Renault alone is planning 8 BEV and 12 hybrids by 2022. Daimler will offer electrified powertrains on all 50 models by 2022 (BEVs, PHEVs and 48v HEVs), incl. 10 BEVs. BMW ’s range will include 25 electrified vehicles — 12 BEVs and 13 PHEVs — by 2025. The VW Group is pushing for synergies never seen before amongst its many brands. The result: an electrified version for each of its group models by 2030. Volkswagen (the brand) will introduce 80 new electrified vehicles by 2025, aiming at selling 1 million EVs per year by then. Audi will roll out 20 electrified vehicles before 2025, incl. a dozen BEVs; aiming at generating 30% of their overall sales from BEVs and PHEV then. Lastly, Skoda will launch 5 BEVs or PHEVs by 2025. GM will unveil 2 new BEVs within the next 18 months and will offer 20 electrified (incl. FCEVs) globally by 2023. PSA plans to launch 5 BEVs between 2019 and 2021 and to introduce electrified powertrain variants in 80% of its models by 2023. Ford has announced hybrid versions of all Lincoln models and a total of 13 electrified vehicles by 2022. All Volvo cars introduced after 2019 will be either EVs or HEVs; the company will launch 5 BEVs between 2019 and 2021, making Polstar an all-BEV brand. Jaguar-Land Rover will offer electrified versions of all new vehicles starting in 2020. No news from FCA. Little has emerged out of Japanese OEMs besides Nissan; the others have historically favored (P)HEV. Toyota and Honda have been pushing FCEVs (fuel cell) recently, all but Nissan are clearly followers in the BEV trend.
Electric vehicles are increasingly appealing
According to a recent study by the consulting firm Roland Berger, Asian consumers are much more eager to buy an EV as their next vehicle (50%) than Europeans (30%) and even more so Americans (15%). The study shows that the lack of desirable models is a reason for 31% of American buyers to stay away from EVs, vs 42% for pricing or insufficient infrastructure. In Asia, the ratios are 20%, 42% and 54% respectively whereas Europe is somewhere in between with 23%, 49% and 37%. A booming range of electrified vehicles covering varied price points and form factors will definitely have a significant positive impact on EV sales.
Vehicle performances are also clearly improving. Range, perhaps the most critical parameter, went from 75 miles on average for the vehicles offered in 2012 (except the more exclusive Tesla with 200+ miles) to 130 miles in 2017 (same exclusion). The Bolt EV I drive is homologated at 238 miles, though I can get about 10% more if I don’t go on the freeway. I love the accelerations and the energy regeneration. It is painful to get back into my other (ICE) car which converts kinetic energy into heat whenever I brake. I am sold. Another key improvement to the product appeal has to be the charging speed. In a couple of years, the market will benefit from high power charging stations, ie up to 350 kW vs 120 kW for Teslas and 43 kW at best for all other models. Overall, a good proof of EVs’ market appeal is Tesla’s $35k Model 3: 450k paying reservations to-date.
Charging Infrastructure gains in density
The relative lack of charging infrastructure — about 60k stations in the US, 110k in Europe and 200k in China — is certainly a deterrent to EV deployment. According to Roland Berger’s study mentioned earlier, 54% of Asian car buyers cite this as a reason for not buying an EV (#1 reason); the proportion is 42% in the USA and 37% in Europe. The key players are stretching their muscles to address this issue. Tesla is boosting its global supercharger network from 6.3k currently to 10k by end 2017. US charging market leader ChargePoint is investing in Europe where it benefits from an $82m capital injection by Daimler. A number of initiatives are at work in the US (eg Electrify America, imposed on VW Group after the Dieselgate) and Europe (eg Daimler-Ford-BMW-VW’s joint effort or Nissan’s own deployment plan).
The end of the internal combustion engine is now programmed
Norway, France and the UK are pro-actively setting deadlines for the extinction of the ICE species, respectively in 2025, 2040 and 2040. The German parliament is pushing for 2030. The city of Paris just presented its plan to ban diesel cars by 2024 and gasoline ones by 2030. The US government is heading in the other direction, planning to roll back fuel economy targets, but it is counteracted by California’s recent initiative to potentially also ban ICE vehicles by 2040.
China has taken the most aggressive steps towards EVs. Though it is aimed mostly at gaining energy independence, the recently announced New Energy Vehicle (NEV) policy will clearly benefit air quality. The NEV policy will impose quotas to all OEMs selling more than 30k vehicles per year, ie a “score" of 10% in 2019, 12% in 2020 etc. The 12% translate into BEVs or PHEVs representing about 4% of all vehicles sales. In parallel, Beijing announced a plan to transform its entire taxi fleet (70k gas and diesel vehicles) to electric propulsion within 5 years, whereas the city of Shenzhen requires that all new taxis entering the fleet be electric.
How about profitability?
Until now, acquisition prices have been kept within (certain) customers’ reach thanks sub-par OEM margins and public incentives. Whereas the latter will progressively disappear, the former are expected to get back in line as volumes grow and battery tech brings cost reduction. According to key industry players, electric cars will be economically on par with ICE-powered ones by 2022-2025. Renault claims their next generation of BEVs will generate an operating profit that exceeds the group’s 7% margin target, whereas the current generation only has a positive margin on variable cost. Similarly, GM says their next batch of electrified vehicles will be profitable. Tesla has been in the red for the past 12 years (except 2 profitable quarters), but promises that Model 3 will bring profitability. First movers (Renault-Nissan, GM and Tesla) clearly have an advantage.
A shift to renewable energy sources is a must
EVs by themselves do not solve the environmental issue. Replacing ICE by electric power will improve air quality only where vehicles are used. In order to maximize the impact of this deep transformation — eg address global warming and air quality issues — power generation must be greened. Utilities must massively shift to renewal sources at the expense mainly of coal and natural gas burning power-plants. Good news: the International Energy Agency (IEA) is increasingly bullish about the development of renewables. According to the agency’s Sept 2017 report, the share of renewables in power generation will reach 30% in 2022 — 69% for Denmark — up from 24% in 2016. One more reason why EVs will get increasing traction.
Wrap-up
Plug-in sales trends are promising. But it is the combination of a broad range of attractive and affordable products, an adequate network of charging stations and a set of fine-tuned yet aggressive regulations that will trigger a full fledge shift towards true zero emission vehicle fleets. The EV boom is near!
Marc Amblard
Also published on LinkedIn (https://goo.gl/s1xBQF)
An Inside Look at Silicon Valley’s Mobility Ecosystem
November 2017
Silicon Valley (SV) is at the forefront of the deep transformation mobility is experiencing, which will massively impact the automotive industry. Over the last few years, SV has become a hyperactive melting pot of startups, large tech companies, industry incumbents, academia, incubators and venture capitalists (VCs) that together imagine, develop, test, finance and scale new tech or business models for tomorrow’s mobility. Located at the heart of SV, Tesla and Google (Waymo) have certainly been the initial master-disruptors of the mobility space, respectively with vehicle electrification and autonomous driving. It is one thing to read about SV, its various players and new initiatives, it is a very different — and truly exciting — thing to experience it as I do everyday, living in Palo Alto. In this article I analyze SV’s mobility ecosystem, its structure and modus operandi.
Prior to moving to SV, I spent over 25 years in the mobility space (automotive and rail) between Europe and the US Mid West. I decided to move to SV because of the concentration of mobility-related initiatives taking place here, which is truly unique. I have come to realize the significant difference between what you read from afar and what you learn speaking with locals, listening to startups pitches and attending conferences, etc. which allows you to hone in on the information that really matters.
What constitutes Silicon Valley’s mobility ecosystem?
SV has long been known for its world class universities, its dynamic set of investors, the presence of major tech companies and its fertile startup environment. Google’s effort in autonomous driving (started in 2009) and Tesla’s industry-rattling Model S (2012) definitely accelerated the development of a local mobility-related ecosystem which relies on several groups of stakeholders.
Major tech companies have boosted their investment in mobility, following Google’s lead with Waymo. Intel spent $15bn to acquire Mobileye earlier this year. Nvidia is investing large amounts in autonomous driving and startups. Apple is in a start-and-stop mode but will not stay away from this deep transformation. Uber — and increasingly Lyft — are also busy developing autonomous driving solutions of airborne mobility alternatives. China’s Baidu and Tencent have also established a presence in SV, leverage local talents (Baidu plans on recruiting 200 engineers in SV and investing $1.5bn in startups globaly) to fuel their development.
The local universities are excellent and have a strong presence in Mobility as well. Stanford’s Center for Automotive Research and Berkeley’s Institute for Transportation Studies actively fuel innovation, train talents and spin off startups sometimes partnering both professor and student. These universities attract smart people from around the globe who come to study here, and many stay. This creates a very multicultural, multiethnic and truly cosmopolitan population which contributes to increasing creativity.
New startups emerge pretty much daily. Most are eliminated as they progress through the growth stages, from developing a concept with founders’ funds, to Seed round, Series A, B … to acquisition or IPO for the happy few. Employees move easily from one startup to another as the State of California forbids non-compete clauses in employment contracts. Serial entrepreneurs will found several startups, whether previous ones have failed or succeeded, as failure is an integral part of the local culture. Moreover, speed is an essential value as startups strive everyday to gain traction in the market and make the most of their often limited funds. But they face difficulties when dealing with potential corporate partners which operate with a significantly longer time horizon. One more thing: some European startups open an office in SV or even move their HQ here — I know several startups who have done this. The reason is simple, VCs in SV reportedly invest on a basis of higher valuations than in Europe.
Startups are supported by accelerators which provide various resources to accelerate their development. Services range from help to prepare pitches (3 minutes to convince), mentoring, introduction to potential investors, connections with corporates (proofs of concept, investment, scaling opportunities), back office assistance (e.g. legal, financial) to investing their own money. Incubators filter through the many candidates to select the ones they will accelerate. I mentor mobility startups at two SV accelerators / incubators (Plug and Play and FrenchTechHub), which allows me to give back, but also see first hand some very exciting new solutions.
Over 10 global incumbent OEMs and many more automotive suppliers have offices in the SF Bay Area, mainly within a 10 mile radius of Palo Alto where Tesla has its HQ. Local teams may have as little as one person, 50-60 (BMW and Renault-Nissan), 200 (Ford and Daimler) and up to 300 (Bosch). Whereas some of these outposts have been here for a while (1998 for BMW), about half of the existing ones opened in the last 5 years. Most major players from Europe, Detroit, Japan and China have a presence in SV, and more are coming — Faurecia just announced theirs. The scope may include an innovation lab that performs Proofs of Concepts or test new business models with local startups, a R&D center that is integral to companies’ R&D network or a scouting office that identifies relevant technologies and startups for partnership or investment purposes.
Several new OEMs are trying to replicate Tesla’s adventure and have established development centers in California, mainly in SV. They include Lucid (300 people in SV), Nio (Tencent recently led a $1bn fundraising round), Faraday Future (based in LA), SF Motors, FMC or Chanje. These new players are for the most part first interested in the Chinese market, yet they tap the local ecosystem to advance their interest in order to realize their objectives.
Finally, investors are essential enablers of this ecosystem, and their spending in mobility is booming, in particular in autonomous driving startups. According to McKinsey, $31bn were in invested globally by VCs, tech companies and auto players ($2bn only) in 2016, the largest chunk of which in SV. There are hundreds of funds here. Yet, only a handful of them specialize in mobility. Some of these have over $100m to invest, including Autotech Ventures, with $120m, or another VC that is currently raising even more capital from mobility players. The money comes from corporations, wealthy individuals, family offices or sovereign wealth funds. Corporate Venture funds also have a strong presence in SV, with the objective to enhance enterprise value; they invest in startups that will help their corporate owners deploy their strategy. Among those are BMW’s iVentures, Airbus Ventures or Total Energy Ventures. Alternatively, corporations directly invest; for example, GM spent $1bn to acquire Cruise Automation last year and recently Google led a $1bn investment round in Lyft.
The SV ecosystem works closely together
SV is home to a dynamic combination of academics, research, real life evaluation of all sorts, development, partnerships and investment. Incumbent players come to SV to be at the forefront of technological and business model innovation. They work with incubators and VCs to screen and select startups with the intent to partner with and possibly invest in them, and try to adapt to SV’s fast pace — startups are often shocked by how slow corporates move. Universities train talents, spin off startups and collaborate with corporates on research projects. Startups benefit from SV’s large pool of talents, VCs’ deep pockets and a business and cultural environment that favors risk taking.
Opportunities to navigate this ecosystem are plentiful, ranging from conferences, meet-ups, startup pitches, various networking events to one-to-one meetings with startup founders. Connecting with locals also allows me to separate hype from reality and decipher what is really happening, which partnerships succeed, which technologies work, which startups gain strong traction. Overall, this local ecosystem is multifaceted and moves very fast; it requires a local presence with a broad network to understand it and make the most of it. It is the price to pay in order to surf on the deep transformation wave.
Based in Palo Alto, I focus on the four mobility megatrends, ie electrified, autonomous, connected and shared mobility. I assist incumbents players in making the most of what is going on in SV through the scouting of startups and tech, representation and assistance in corporate development. I also advise and mentor startups including product-market fit, go-to-market strategy, partnerships and business development.
Being in contact with both the SV crowd and incumbents back at their HQs, I have come to realize that a reality check is often necessary. At times there is a disconnect regarding the vision of future mobility (particularly its timing) whether you listen to people based in SV and those back at incumbents’ HQs. In fact, the reality lies somewhere in-between. But at the end of the day, Silicon Valley is definitely shaking the mobility space and shaping its future. Being passionate about mobility, I am really excited to be in SV and take an active part in the profound transformation of the 125-year old automotive industry.
Marc Amblard
Also published on LinkedIn (https://goo.gl/zoskCz)
Commercial Vehicles go Electric, Autonomous, Connected and Shared
December 2017
Mobility is currently undergoing a profound transformation, specifically with electrification, driving autonomy, connectivity and sharing. The most visible and commented applications of this transformation relate to passenger vehicles. However, buses, heavy trucks and light commercial vehicles are also increasingly adopting these four megatrends. They do so with a different approach as these vehicles are assets used by professionals. Thus, economics, especially total cost of ownership (TCO), will play a much more important role in the speed of adoption of new technologies and business models. Let’s see how the four megatrends impact the various types of commercial vehicles.
Electrification
Several countries have planned to ban the sale of fossile fuel powered vehicles. This will take place in 2025 in Norway and in the Netherlands, and in 2040 in France, the UK and China. India, Germany and the state of California are considering similar bans in 2030, 2030 and 2040 respectively. Electrification makes sense for commercial vehicles because of their predictive routes and their high utilization rate which increasingly justifies the extra cost. In addition, the decision to acquire commercial vehicles is essentially based on TCO and increasingly on their societal impact. Therefore, the shift from diesel to electric is likely to be happen faster than for cars.
— Buses —
Cities are taking initiatives to ban diesel buses earlier than countries. The mayors of 12 major cities recently signed the C40 Fossil-Fuel-Free Streets Declaration, pledging to add only fully electric buses in their cities from 2025. The city of Paris plans to have 80% of its 4,500 bus fleet powered by electricity and 20% by natural gas that same year. Experts forecast that 25% of all city buses sold globally in 2025 will be electric, 25% natural gas powered and still 50% diesel. Few companies play in the e-bus market. China’s BYD is the global leader, thanks to the size of its domestic market where 160k units where sold in 2016. Founded in 2004, California-based Proterra offers several e-buses with a range of up to 350 miles — the 660 kWh-battery probably costs about $150k and has a 5t weight. GM and BMW both contributed to the $372m raised to-date. Other players include Yutong in China, New Flyers, Solaris or Complete Coach Works in the US. All major bus manufacturers should shortly announce their e-bus offerings.
— Light commercial vehicles (LCV) —
LCVs are a key component of city logistics. In Europe alone, over 2 million units are sold each year, of which 13k were fully electric last year (+38% yoy). Fleets will progressively switch to e-LCVs, first in cities with regulated access. These vehicles drive limited and predictable distances each day and have a high utilization rate. Both small electric vans, Renault’s Kangoo Z.E. (170 mi NEDC range) and Nissan’s e-NV200 (175 mi NEDC) lead the European market with close to 4k units each in 2016. In third position was Deutsche Post’s “Street-Scooter,” a large, fully electric van built in collaboration with Ford. Other large vans are coming such as San Francisco-based Chanje’s V8070 (100 mi EPA, 2017) in the USA, Renault’s Master (2017) and Mercedes’ Vito and Sprinter (2018 and 2019). This market segment will most likely be quickly electrified given its urban focus.
— Heavy trucks —
This is a recent territory for electrification. Nonetheless, regulations are emerging that may speed up the shift to e-trucks: Canada’s province of Ontario just introduced a rebate of up to 60% of the incremental cost of electrification (max ~USD60k). Market players include BYD — trucks ranging from Class 5 / 7.5t (155 mi range) to Class 8 / 35t (92 mi EPA) — and Daimler with the Fuso eCanter (100 mi EPA). The most talked about e-truck is Tesla’s Semi. Presented in Nov 2017, the $200k, Class 8 truck promises 500 miles of range at full load and a TCO 17% lower than that of a diesel truck assuming $0.07/kWh. Tesla intends to guarantee this very aggressive rate based on its future solar, super fast mega-charger, which is supposed to provide 400 miles of range in 30 minutes — hard to believe for this 35t vehicle as it corresponds to delivering about 1-1.5MW (vs 120 kW for the supercharger). Bottom line, over 400 pre-orders have been placed to date for production starting in 2019. Only a month after the product was presented, this number is already significant relative to the 26,000 Class 8 trucks built each year in the US. Navistar and Volkswagen’s Truck and Bus both plan on launching an electric medium duty truck by late 2019. We should expect all truck makers to progressively introduce their own e-trucks. They may end up playing catch-up behind Tesla!
— Fuel cell electric trucks —
Fuel cells (FC) offer an alternative to battery storage for long distance and load capacity optimization. However, refueling stations are very expensive at $1m+ each. H2 stations are rare, even in Japan, the most developed market, where there are about 80. Yet plans exist to have 500 stations in California by 2022 and 400 in Germany by 2023. Only two players seem to be working on FC e-trucks. Toyota recently signed a project with the port of Long Beach and the CARB to operate a Class 8 truck fitted with two Toyota Mirai fuel cells. The truck will run on a fixed route within metro LA and charge at a purpose-built 1MW power and H2 generation station. The other player is US-based Nikola, whose future truck is announced with 750 mi of range.
Electrifying commercial vehicles makes sense for regulatory and economic reasons, as battery cost continues to drop below $200/kWh. However, weight remains an issue as a Class 8 truck requires about 1.5t worth of batteries for each 100 miles of range, which reduces the load capacity. Nevertheless, electrification is coming and is here to stay. In a report published in Sept 2017, McKinsey estimated that battery electric propulsion systems will be at TCO parity with diesel between 2022 and 2025 (depending on the region) for buses, between now and 2021 for vans and light trucks, and between 2023 and 2031 for heavy trucks.
Autonomous Driving
Bringing autonomous driving to all vehicles will reduce road casualties and free up time for drivers to perform more value-adding tasks. There will also be economic benefits specifically for trucks, i.e. reducing fuel consumption, addressing a shortage of long haul drivers and lowering the cost per mile (driver cost represents about ⅓ of total cost). Thus, decisions to partially or fully automate truck fleets will be largely based on economics at the micro level and by their social impact at the macro level.
Major truck manufacturers are working on their own solutions to bring some level of driving autonomy, including Daimler Trucks with its Highway Pilot system or Paccar, which is testing a Level 4 (eyes and mind off in specific conditions) solution. However, several companies are trying to disrupt the industry. Uber and Tesla are forging ahead with their own autonomous trucking solution. In mid-2016, Uber acquired the then 4-month old Otto (for a reported $700m) which was working on truck driving automation.
Another startup is Peloton Technologies, which has raised $78m (investors include Volvo, UPS, Denso and Magna), and is currently pilot-testing a platooning solution, where driving autonomy is limited to regulating speed. This results in a significant reduction in fuel consumption, with savings of around 5% for the leading truck and 10% for the lagging one. China’s TuSimple is testing a Level 4 solution that is intended to allow for the removal of the driver on freeway segments. A regional driver picks up the shipment and drives it up for 100 miles to a freeway where he/she gets off. The autonomous truck then exits near the point of delivery and a local driver takes the wheel to the end point. Thus drivers don’t have to spend weeks away from home. Other startups working on autonomous trucks include Embark, which is testing its solution with Ryder and Electrolux, as well as Starsky.
Connected vehicles
Commercial vehicles are working assets. As such, they must enable timely deliveries and provide the lowest TCO, highest up-time and no break-downs. Whereas telematic solutions have been around for many years, new sensors, big data combined with artificial intelligence, analytics and cloud computing allow for new services that will bring additional efficiencies. An essential service is remote diagnostics combined with predictive maintenance, such as the solution proposed the startup Preteckt. This minimizes the cost of maintenance as well as reduces the risk of breakdown. Michelin has been offering “tire as a service” for some time. Algorithms combined with modern V2X solutions allow the tire giant to minimize operating cost and maximize truck availability as tires can be delivered to parking areas while the driver rests.
Connected trucks allow for other services such as the above mentioned Peloton’s platooning solutions whereby trucks communicate with each other (V2V) and with the startup’s platform. V2V can also benefit active break assistance and adaptive cruise control systems, as a truck can see what is in front of the truck ahead of it. Driver monitoring is another application. Deep learning-based face and posture analysis solutions, such as Eyeris, provide valuable input on the state of the driver, e.g. his/her level of cognitive awareness, which in turn allows for increased safety and productivity. Many other applications and use cases are yet to be imagined!
Sharing the cargo space
In 2017, nearly $800bn will be spent on trucking services in the US only, with 40% of trucks operating empty, according to Convoy. The startup, which has received funding from Bill Gates and Jeff Bezos, is applying the ride-sharing model to the trucking industry. It has built a real-time platform to connects shippers with drivers and fleet owners in an effort to maximize truck load, thus reducing shipping cost. Ride-hailing giant Uber started Uber Freight in early 2017, offering a similar service to maximize cargo space utilization and reduce cost: they are off to a strong start.
Although ride-sharing services have developed quickly, they have focused on transporting people using passenger vehicles. Recognizing the need to transport goods — e.g. from the hardware store back home — the startup Truxx was founded to connect people who need to move things with other people who own pickup trucks or vans. More applications of the sharing economy are yet to be imagined.
Increasingly, commercial vehicles are being impacted by the same four megatrends as passenger vehicles, using much of the same technology. Yet their speed of deployment will be driven much more by economic considerations then by emotion. Exciting times ahead!
Marc Amblard
Also published on LinkedIn