By Jeff Sanford
Toronto, Ontario — June 5, 2017 — In this week’s Autonomous Report, we look at what Jim Hackett’s ascension to CEO and President of Ford means for the company’s autonomous vehicle (AV) efforts, Intel’s latest study on the coming “Passenger Economy,” why electric cars may not be the “greenest” option and much, much more!
– A series of stories have appeared in the media over the last few weeks commenting on the promotion of Jim Hackett to the top spot at Ford. Hackett is being billed as the one who will negotiate the coming era of automated vehicles (AVs). One of the longer pieces appeared on MIT Technology Review and noted some interesting details:
• “… the auto industry seems on the verge of a cyclical downturn in sales following six straight years of unit-sales increases, and following several years of poor stock performance for the company.”
• “The move acknowledged that Ford, which has hundreds of its own people working on autonomous driving, needed still more talent in the driverless category and was willing to spend aggressively to get it. ‘The problem we have to solve—and there won’t be many bigger than this—is about picking large amounts of data, blades of grass being collected by a lawn mower traveling at 70 miles per hour, and organizing and making sense of all of it. It’s a much harder problem than the world realizes,’ Hackett said at the time.”
• “Ford must step up its recruitment of scarce talent to a workforce that increasingly will be comprised of software engineers, experts in artificial intelligence, digital mapping specialists, and those with proficiency in sensing devices such as radar, lidar, and cameras…”
• “Today carmakers sell to …drivers through an extensive network of dealers, which makes profits both selling and servicing cars. In a world of self-driving vehicles, individuals could stop buying cars, and instead use fleets owned and operated by a third party. Ford and its competitors could become the manufacturer and third-party owner, a seller of rides as well as vehicles.”
• “’Dealers see a lot of money being spent on things like artificial intelligence and never hear what that means,’ says one dealer, who requested his name not be used. ‘Is Ford creating cars that won’t need service, electrical vehicles that have far fewer moving parts? What does all this mean to me, a dealer?’”
– A study released by Intel predicts a new “Passenger Economy” that will, “… emerge to support the idle time when drivers become riders … Mobility-as-a-Service will disrupt long-held patterns of car ownership, maintenance, operations and usage. The economic opportunity will grow from US$800 billion to US$7 trillion as autonomous vehicles become mainstream.”
According to Intel there is a “yet-to-be-realized economic potential when today’s drivers become idle passengers … New digital business models ushered in by personal computing, the internet, ubiquitous connectivity and smartphones gave birth to whole new economies. Autonomous driving will do the same.” According to the report, “…autonomously operated vehicles commercialization will gain steam by 2040 – generating an increasingly large share of the projected value and heralding the emergence of instantaneously personalized services…From onboard beauty salons to touch-screen tables for remote collaboration, fast-casual dining, remote vending, mobile healthcare clinics and treatment pods, and even platooning pod hotels, vehicles will become transportation experience pods.”
The full report can be found at Accelerating the Future: The Economic Impact of the Emerging Passenger Economy.
-The Toyota Research Institute (TRI) has announced that it is, “… exploring blockchain technology for use in the development of a new mobility ecosystem that could accelerate development of autonomous driving technology.” Blockchain technology, according to Wikipedia “… is a distributed database that is used to maintain a continuously growing list of records … typically used by peer-to-peer technologies … By design, blockchains are inherently resistant to modification of the data.”
AVs will require huge amounts of data to “teach” the learning-based software in these cars. According to a story on Finance Magnates about blockchain tech and Toyota, “Hundreds of billions of miles of human driving data may be needed to develop safe and reliable autonomous vehicles … Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal, thereby bringing forward the safety, efficiency and convenience benefits of autonomous driving technology.”
– A story on Tech Crunch about the developing financial realities of the new AV economy suggests that at, “… some point within the next two to three years, consumers will come to expect car connectivity to be standard, similar to the adoption curve for GPS navigation.” The story goes on to say that as, “… this new era begins,” a new financial metric will be used: “ARPC (average revenue per car).”
In brief, the OEMs will see more revenue-generating touch points for these cars: “Early in 2016, [this] transitional process began with the quiet but dramatic announcement of a statistic that few noted at the time. The industry crossed a critical threshold in the first quarter when net adds of new connections (32 percent) rose above the net adds of smartphones (31 percent) for the very first time.”
Corporate leaders are looking forward to this era, with good reason. “The possibilities for revenue generation through connected cars are endless. Some automakers may try the Kindle-like model to bundle the hardware cost into the price of the car, but most mobile carriers will prefer it to be spread out into a more familiar pricing model with a steady stream of income … The first true killer app for connected cars is likely to be some form of new media, and the monetization potential will be vast.”
– A common assumption of AVs is that the cars will be largely electric. But the reality of electric vehicles are not, “… necessarily the greenest option out there. In fact, some hybrid vehicles can be greener options than fully electric cars,” according to a recent story on Salon. According to one expert consulted, “If you are a relatively low-mileage person, you should stick with your gas-powered car.” The reason: “The vehicle’s so-called embodied carbon, meaning all of the energy that was used to build the car from scratch—including the extraction and processing of raw materials, and shipping parts and vehicles across oceans in bunker fuel-powered ships. Every time you roll off the dealer’s lot in a new set of wheels—electrified or not—your personal carbon footprint grows immensely … Electric cars aren’t much different than gas-burning vehicles in this regard. In fact, the US Union of Concerned Scientists estimates that it takes about 15 percent more embodied carbon to produce an electric vehicle (EV) than it does to manufacture a gasoline-powered car, largely because of the materials and fabrication processes used to make the battery packs.”
– Uber is trying out a new insurance scheme for drivers. “Uber will be charging customers in eight states an extra 5 cents per mile to cover the fees for personal injury insurance as part of an eight-state pilot program. The cost to drivers will be 3.75 cents per mile,” according to a report in New York magazine. One critic of the program suggests that, “Instead of paying workers’ compensation premiums to cover all of its workers, as responsible businesses do, Uber will charge drivers for the medical care and time-loss benefits that the rest of us get by virtue of working at a job …”
– AV optimists promise that the, “… mass adoption of AVs will be the changing look and feel of the city … Roads will be smaller due to less traffic. People will start living further away from the city since they will be able to work in their cars. There will be a massive reduction in parking spaces throughout the city,” according to a report on Inland News. “A 2011 study at the University of California-Berkeley found that the United States has somewhere close to a billion parking spots. Since there are around 250 million cars and trucks, that means we have four times as many parking spots as we do vehicles … These spaces will need to be transformed into something more useful … The look and feel of a city will change rapidly.” Overall that seems like a good thing. Anyone living in a major urban centre understands the enormous difficulties presented by traffic congestion. However, a deep dependence on AVs will become a new reality. The author points out that, “There will come a point where the autonomous vehicle industry will be too big to fail. Our daily life will be too dependent on these cars. When this time comes, will the private or public sector be responsible for making sure everything is working?” An interesting question that currently does not have an answer.