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Self Driving Cars V11


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Self Driving Cars V11

  1. 1. Self Driving Cars, Autonomous Vehicles & Shared Mobility Reality, Timelines & Impacts 1 Kevin Root September 2015 V1-Sept 2015 Prepared by Kevin Root
  2. 2. Target Audience & Document Objective This document is an overview of key findings that I have compiled from reputable sources as well as my interpretation for how we in the auto industry and technology space will be effected. I believe most of my industry colleagues are interested in better understanding the impact on existing businesses and timelines. I anticipate this might be a good thought starter for many organizations. NOTE This document was designed to be read, not presented. It is text heavy by design and contains many links to additional sources of information. I am careful to reference resources and provide a list of additional references at the end of the deck. Automotive technology leaders, strategists & product planners & managers Technology/Application developers & suppliers Manufacturers & suppliers TARGET AUDIENCE 2V1-Sept 2015 Prepared by Kevin Root
  3. 3. About Me I am both a car guy and a technologist. I have spent over 25 years in the automotive industry specifically in digital marketing and technology. I have led product and strategic planning for some of the largest technology vendors in the industry. Besides cars and driving, my passion is researching consumer behavior and technology in order to anticipate and proactively take advantage of shifting patterns. When I started this project I was blown away by the magnitude of changes that will occur with autonomous cars. I decided to compile my findings and share so that others can start to contemplate and plan for what will be the most significant innovation in our lifetime. I wanted this document to be a compilation of published works and reports from others. As such, I have kept my opinions out of this so that the reader can draw their own conclusions without influence. That said, I have many strong thoughts and views of my own and am happy to share them. Drop me a line! - Kevin Root 3 I can be reached via LinkedIn at V1-Sept 2015 Prepared by Kevin Root
  4. 4. Key Definitions As in many emerging technology spaces, definitions and terms differ depending on the source. In this document, I use terms consistent with many leading publications on the topic. SELF-DRIVING CAR Any car with features that allow it to accelerate, brake, and steer a course with limited or no driver interaction. •  Autonomous vehicle: can drive from point A to point B and encounter the entire range of on- road scenarios without needing any interaction from the driver. •  Fully autonomous are further divided into user- operated and driverless vehicles. Because of regulatory and insurance questions, user- operated fully autonomous cars will come to market within the next five years, while driverless cars will remain further out. 1 4V1-Sept 2015 Prepared by Kevin Root
  5. 5. Key Definitions As in many emerging technology spaces, definitions and terms differ depending on the source. In this document, I use terms consistent with many leading publications on the topic. VEHICLE-TO-VEHICLE (V2V) is an automobile technology designed to allow automobiles to "talk" to each other VEHICLE-TO-INFRASTRUCTURE (V2I) Communications for Safety is the wireless exchange of critical safety and operational data between vehicles and roadway infrastructure, intended primarily to avoid motor vehicle crashes SHARED MOBILITY The shared use of a vehicle that enables users to have short-term access to transportation modes on an “as-needed” basis 2 3 4 5V1-Sept 2015 Prepared by Kevin Root
  6. 6. Connected Cars vs. Autonomous Cars CONNECTED CARS are vehicles that use a range of communication technology – including dedicated short range communication(DSRC) to relay information about their speed, heading and direction to other vehicles, to roadside infrastructure, to traffic operations centers and even to pedestrian smartphones. Commonly referred to as vehicle-to- vehicle (V2V), vehicle-to-infrastructure (V2I) and vehicle-to-pedestrian (V2P), and collectively as V2X. Connected vehicles are projected by the U.S. Department of Transportation to reduce roadway fatalities caused by impaired drivers by more than 80 percent when all vehicles are equipped with such features. 6V1-Sept 2015 Prepared by Kevin Root
  7. 7. Connected Cars vs. Autonomous Cars AUTONOMOUS CARS are vehicles that are capable of piloting themselves without human intervention. Using a combination of sensors, video, LIDAR and high-end processing power, the advent of autonomous cars has shifted into high- gear in recent years. Just a few years ago, most projections placed the arrival of autonomous cars on U.S. roads at some time in the mid-2020s. Now automakers like Tesla, GM and Honda are aiming to develop viable autonomous vehicles much sooner. 7V1-Sept 2015 Prepared by Kevin Root
  8. 8. The Situation 8V1-Sept 2015 Prepared by Kevin Root
  9. 9. The transition to electric and driverless cars will usher forth a step-change in both quality of life and economic productivity, and potentially be the most transformational social development since the World Wide Web. It will change the way we live and many of the fundamentals of the global economy. - Levi Tillemann The Great Race: The Global Quest for the Car of the Future 9V1-Sept 2015 Prepared by Kevin Root
  10. 10. Cars are used only about one hour a day and sit idle in a parking space or garage most of the time. The car, on our estimates, is the world’s most underutilized asset,... We believe it's the most disruptable business on earth. -  Morgan Stanley lead auto analyst, Adam Jonas 2015 10V1-Sept 2015 Prepared by Kevin Root
  11. 11. In the future, people will buy mobility rather than cars. 11V1-Sept 2015 Prepared by Kevin Root
  12. 12. It will gain momentum within 5 years. Its impact will be significant within 10 years 12 2015 2020 2025 2030 V1-Sept 2015 Prepared by Kevin Root This evolution is just over the horizon.
  13. 13. Cars are generally an individual’s largest or second-largest investment, depending on whether they own a home. And yet cars sit unused about 96% of the time. 13V1-Sept 2015 Prepared by Kevin Root
  14. 14. Dynamic Forces & Emerging Transportation ARE CHALLENGING TRADITIONAL VEHICLE OWNERSHIP MODELS. These include: •  Increased urbanization, global warming, increasing congestion & highway fatality rates, electrification, connected cars, adoption of ride sharing and constant connectivity, all contribute to the increased potential for disruption of the current automotive model. •  Welcome to the age of “TaaS” – Transportation as a Service and “transportation tech”. 14V1-Sept 2015 Prepared by Kevin Root
  15. 15. The Vision of Autonomous Vehicles 15V1-Sept 2015 Prepared by Kevin Root
  16. 16. AV Vision of the End State TRANSPORTATION FOCUS WILL SHIFT. •  Mobility over ownership •  Use a smartphone app to summon an autonomous vehicle which will arrive in 5 minutes or less, that can be used for anything from commuting to the office, taking kids to school or shuttling us to the airport. 16 Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  17. 17. Key Benefits Instead of fighting rush-hour traffic, we will be able to read, watch the morning news, or get an early start on the workday. We’ll enjoy chauffeur service for less than bus fare. Cost will be about 39 cents a mile for a two-passenger vehicle, a fraction of what it costs to own, insure, maintain and operate a personal vehicle. 1 2 3 17 Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  18. 18. Other Benefits •  Most importantly, vehicle fatality rates will drop as these vehicles are immune to the distraction, fatigue, road rage, impatience, intoxication, and the foolish mistakes that cause 93% of all accidents. •  Accidents will be rare, mostly erasing the 30,000 annual fatalities from car crashes in the US. 18 Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  19. 19. 19 The Use Case for Autonomous Vehicles V1-Sept 2015 Prepared by Kevin Root
  20. 20. Key Benefits •  CHILDREN: Over-scheduled parents will get their lives back as their kids share rides with parent-approved friends, and parents organize driverless vanpools for sports teams. •  TEENAGERS: Texting while driving will disappear as the leading cause of death for teenagers as will all reckless driving due to impaired judgment and driving under the influence. Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal 20V1-Sept 2015 Prepared by Kevin Root
  21. 21. Key Benefits •  ADULTS: Safely use phones, laptops, and tablets. Some will get a jump-start on the work day, others will socialize or enjoy a video. •  ELDERLY: No longer dependent on driving, aging will have little to no effect on transportation and independence. •  DISABLED: Enjoy improved mobility with on-call, door-to-door service in specialized vehicles. •  WORKING POOR: Greater access to higher- paying jobs with inexpensive, reliable transportation. Higher quality of life and time savings not having to rely on buses and other mass transit. 21 Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  22. 22. Key Benefits •  CITIES: Parking garages are turned into city parks, housing or other needed space. •  MASS TRANSIT: Driverless cars will provide better transit service than local buses for a fraction of the cost. •  HIGHWAYS: The national average ratio of 1.08 commuters per vehicle will increase and highway congestion declines as vehicles are able to pool together at higher speeds. •  ENVIRONMENT: Unless gasoline drops below about 60 cents a gallon, autonomous cars will be electric. Decreased burning of oil and increased use of solar combined with newer low-emissions natural gas generators will significantly slow climate change. •  POLICE: With the appropriate judicial clearances, an officer could ask the vehicle to identify its occupants and location histories. Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal 22V1-Sept 2015 Prepared by Kevin Root
  23. 23. Families will save thousands of dollars a year by switching from two cars to one or from one to none. 23V1-Sept 2015 Prepared by Kevin Root
  24. 24. 24 Autonomous Vehicles Today V1-Sept 2015 Prepared by Kevin Root
  25. 25. The Major Players •  While most automakers are focused on incremental self-driving features, Google leads the pack in developing truly driverless cars. •  Sergey Brin has suggested that Google will not sell cars but simply sell mobility. He believes that people will be able to summon a vehicle with a smartphone quickly and easily and be driven wherever they wish to go. •  Audi, BMW, Volvo, Nissan and Tesla have also recognized the opportunity and have aggressive plans to move beyond the limits of self-driving vehicles. •  Other automakers have undisclosed plans for greater vehicle autonomy. Technology/Ride sharing companies Automotive manufacturers/OEMs Key Suppliers/Vendors 25 This section covers THREE PRIMARY GROUPS working on autonomous cars today 1 2 3 V1-Sept 2015 Prepared by Kevin Root
  26. 26. Technology & Mobility Companies The leader in fully autonomous. Something in the works? In a partnership with the University of Arizona and Carnegie Mellon, has set up the Uber Advanced Technologies Center in Pittsburgh. Reportedly testing self-driving technology focused on mapping and optics challenges. 26 GOOGLE APPLE UBER V1-Sept 2015 Prepared by Kevin Root
  27. 27. Google •  Approximately 50 vehicles – 23 Lexus RX 450h SUVs and 25 purpose-built prototypes currently driving around Mountain View, California. •  Fleet of self-driving cars have already driven more than 1.1 million miles in autonomous mode and are being tested in Mountain View, California, and Austin, Texas. •  Currently driving 10,000 autonomous miles per week on public streets. 27 Source Googles’ Self Driving Car Project Website V1-Sept 2015 Prepared by Kevin Root
  28. 28. Google’s Fully Autonomous Car •  See Google’s Self-Driving Car Project Website here •  View Google’s video demonstrating their fully autonomous vehicle here 28V1-Sept 2015 Prepared by Kevin Root
  29. 29. Tesla Motors TESLA MOTORS infrastructure positions it well to capture a significant part of the TaaS market: •  Direct and online sales with a global network of showrooms and galleries located in urban centers around the world. •  About 160 (as of end of 2014) Tesla Service Plus Centers locations with more coming online. •  Network of Supercharger stations for owners to charge their vehicles for half an hour for free improving the adoption rate of electric vehicles overall. ANALYST COMMENTS •  Trip Choudhry picked up Tesla Motors Inc (NASDAQ:TSLA) in the $1 trillion TaaS industry because it believes the company is fundamentally strong. The brokerage firm believes that the electric vehicle maker can emerge as a multi-product firm due to its revenue streams. For the next ten years, the brokerage firm expects the company to sustain more than 50% year- over-year growth. •  Morgan Stanley (NYSE:MS) analyst, Adam Jonas, expects the company to commercialize an app-based mobility service before the end of the year 2018. The brokerage firm believes that the opportunity will be an addition to the existing model of selling human-driven cars. The analyst expects a big potential in the driverless car for Tesla. 29V1-Sept 2015 Prepared by Kevin Root
  30. 30. Automotive Manufacturers While it is assumed that all OEMs are working on some form of self driving or autonomous driving vehicles, these are the most visible players. Electric vehicle start up: In July of this year, Faraday Future (FF), a new electric car company, created headlines when it announced plans to challenge Tesla with a new electric vehicle claiming a launch in 2017. 30V1-Sept 2015 Prepared by Kevin Root
  31. 31. Self-Driving vs. Driverless There are numerous automakers working on self-driving cars, but self-driving and driverless are very different concepts, though sometimes both are referred to as autonomous cars. Self Driving Driverless (No Controls for humans) 31V1-Sept 2015 Prepared by Kevin Root
  32. 32. Go to Market Approaches Traditional OEM business models typically make new technology, including driverless features, available in luxury lines first before introducing it in stages to the volume lines in order to maximize revenue and pay for R&D faster. 32 It is largely believed that most OEMs are focused on rolling out self driving cars, while Google and Tesla are focused on fully autonomous cars. Notable exceptions are Audi, Volvo, BMW, and Nissan, that report focusing on fully autonomous vehicles as well. OEMs and tech companies are evolving via separate paths. OEMs are encumbered by R& D models that hinder their ability to evolve as fast as tech companies. V1-Sept 2015 Prepared by Kevin Root
  33. 33. OEM Progress 33 TESLA IS TESTING ITS AUTOPILOT SYSTEM using current Model S owners. Tesla's Autopilot isn't the only autonomous or semi-autonomous system out there now. INFINITI OFFERS a series of driver aids that allow the car to stay inside a lane as well as brake & accelerate according to surrounding traffic. AUDI, BMW, NISSAN, VOLVO all have fully autonomous technology in development that can function without input from the driver. EARLIER THIS YEAR, A CONVOY OF AUDI RS7s drove autonomously on public roads from San Francisco to Las Vegas. IN 2017, VOLVO REPORTS THEY WILL HAVE 100 CUSTOMERS try out its production autonomous cars on city streets in traffic. Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  34. 34. Google’s Advantage? Google is betting that they can use technology to bypass the city & highway infrastructure hurdles required by some self-driving vehicle approaches. Unlike OEMs, they are not encumbered by model roadmap interruptions and lost revenue from bypassing the new feature trickle down approach, they are developing for the end state of fully autonomous driverless cars and appear to have a sizable lead. 34V1-Sept 2015 Prepared by Kevin Root
  35. 35. Key Suppliers & Vendors QNX QNX Car Platform is a commercial Unix-like real-time operating system. Its hub-and-spoke architecture allows for many applications to run simultaneously, securely, and stably. DELPHI Delphi has been working on more affordable ways of reducing the complexity of advanced safety systems. For example, it is working on a multi-domain controller designed to do the same work as multiple electronic control units. This will reduce the complexity of the system, cost and weight. CISCO SYSTEMS It wants to play a role in producing the security software and router hardware that would be used to deliver connected and autonomous car services. And it’s teaming with Continental to do so. COVISINT Covisint’s core technology is helping people and systems to communicate and collaborate securely over the Internet and is very much in demand today as a way for driverless cars to securely communicate with external factors such as traffic lights and emergency vehicles. VERIZON Verizon released a connected car system in August with an OBD-II dongle that will provide services like real-time diagnostics data, GPS tracking, and roadside assistance. The system, called Hum, will require a two-year subscription that costs $15 per month, and will compete with other connected car systems based on OBD-II dongles like Automatic and Dash. 35V1-Sept 2015 Prepared by Kevin Root
  36. 36. Key Suppliers & Vendors CONTINENTAL It announced early in 2013 that automated driving would be at the core of its long-term business strategy. Its goal is to make fully autonomous driving a reality by 2025. One of its first projects is connecting cars via wireless networks—a pathway toward better real-time traffic and navigation, more passenger entertainment features, safety-hazard warnings, and eventually driverless cars. The German company has already formed alliances with Cisco, IBM, and others to work on V2X communication systems, which many experts view as key in the development of autonomous vehicles. 36V1-Sept 2015 Prepared by Kevin Root
  37. 37. Key Suppliers & Vendors MOBILEYE Offers monitoring technology that uses a single camera and a "system-on-chip" to warn cars of imminent dangers (a pedestrian collision, lane departure, or forward collision) as well as headway monitoring, intelligent high-beam lights, traffic- sign recognition, adaptive cruise control, and speed limit indications. NVIDIA Nvidia wants to make a car’s computing components upgradeable. The same way you start with top-of-the-line computing components via periodic upgrades, you can boost the brainpower of your connected car. AUTOTALKS Recently, it produced the world’s first automotive-grade chipset ready for series-production. The technology analyzes data transmitted by the on-board processing units of nearby vehicles in order to warn drivers of any imminent danger and communicate with transportation infrastructure. COHDA WIRELESS Cohda's chips enhance wireless communications to quality levels beyond commercial off-the-shelf IEEE 802.11p transceivers, allowing cars to more effectively see through obstacles or around corners. 37V1-Sept 2015 Prepared by Kevin Root
  38. 38. 38 Shared Mobility V1-Sept 2015 Prepared by Kevin Root
  39. 39. A Case for Shared Mobility For about half as much, $4,680, or 39 cents per mile, Shared Mobility can provide door-to-door service for those same 12,000 miles while you relax in the back. And if you'll rideshare it's only $ 2,280 a year. Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal 39 per year $9,100 Americans spend an average of $9,100 per year (76 cents per mile, based on 12,000 miles per year) to own and maintain a personal automobile. That doesn't include the average cost of over $ 2,000 a year if you need downtown parking. Cars sit idle 96% of the time. 96% per year $4,680 V1-Sept 2015 Prepared by Kevin Root
  40. 40. A Case for Shared Mobility Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal 40 76% 76.3% of all US commuters drive alone. Of those who drove to work, nearly 94% drove alone. 94% V1-Sept 2015 Prepared by Kevin Root
  41. 41. A Case for Shared Mobility 41 Source : Morgan Stanley V1-Sept 2015 Prepared by Kevin Root
  42. 42. Ford’s Shift to Mobility Thinking •  New mobility, car sharing, ride sharing- what does that mean for us? “We are thinking through that," said Mark Fields, Ford's chief executive, at a recent investor conference. "We are thinking like a car and truck company, but we are also thinking like a mobility company.” •  “As more megacities emerge around the globe, vehicle-sharing might not be just a choice. It could be a virtual requirement,” says Ford executive Jim Holland, VP vehicle component and systems engineering. •  Ford is preparing to conduct peer-to-peer car-sharing trials, administered through Ford Credit, in which owners could rent vehicles for short-term trips, similar to business models run by Zipcar and operating or in the works at rival automakers. 42V1-Sept 2015 Prepared by Kevin Root
  43. 43. Toyota Tests Shared Mobility •  One vision of Toyota's future is playing out in Grenoble, France, where residents can rent from a fleet of 70 pod-like Toyota i-Road and Coms electric cars for short city trips. The i- Roads have three wheels and two seats. The Coms have four wheels but fit just one passenger. •  "It is a sharing program like what you see in Portland with bicycles,” Toyota North America CEO James Lentz said. •  Drivers can check out and return the cars at various charging points. Through a subscription, they pay the equivalent of $3.75 for 30 minutes. Because the vehicles are so small, its easy to build out their parking and charging infrastructure, the automaker said. •  In the U.S., Toyota is offering a membership service to buyers of its small Scion branded cars. Some buyers in Phoenix, Miami and Northern California are part of a pilot program that allows them to borrow a Toyota truck, van or hybrid for 10 days in their first year of ownership. 43V1-Sept 2015 Prepared by Kevin Root
  44. 44. UTILITY PERFORMANCE STYLE PRICE CONVENIENCE & PERSONALIZATION 44 What really matters to consumers? V1-Sept 2015 Prepared by Kevin Root
  45. 45. What Matters to Consumers 45V1-Sept 2015 Prepared by Kevin Root
  46. 46. Consumer Attitudinal Changes 46 Source: KPMG V1-Sept 2015 Prepared by Kevin Root
  47. 47. How do passionate drivers feel about AVs? 47 Source: KPMG V1-Sept 2015 Prepared by Kevin Root
  48. 48. Consumer Outlook & Feeling 48V1-Sept 2015 Prepared by Kevin Root
  49. 49. Consumer Outlook •  33% of all adults said they would never consider buying or leasing a fully autonomous vehicle, according to a Harris Poll that defined the self-driving car as "a car, truck, or SUV capable of navigating without or with limited human input." •  Not surprisingly, older generations reported a much higher aversion to buying/leasing a fully autonomous car than younger generations. •  22% of Millennials (ages 18-37), 36% of both Generation X (ages 38-49) and Baby Boomers (ages 50-68), and 50% of Matures (ages 69+) said they would never buy/lease a fully autonomous vehicle. •  22% of respondents said that when the "bugs" have been worked out, they would consider buying a fully autonomous car. •  Millennials are more concerned about the price of the fully autonomous car than consumers in other age brackets. 23% of Millennials said they would purchase a self-driving car when the price drops. 49 Source: Harris Poll Interactive 2015 V1-Sept 2015 Prepared by Kevin Root
  50. 50. 50 Timelines & Phases V1-Sept 2015 Prepared by Kevin Root
  51. 51. Stefan Moser, Audi Head of Product and Technology Communications, said the upcoming A8 “ will be a fully autonomous, self- driving vehicle”. Due in 2017, the A8 will be Audi’s autonomous motoring pioneer. “We plan to have driverless cars on the market no later than 2018. In 2013 we plan to expand the number of Google employees using cars. Thereafter it will not take longer than 5 years to get the cars into the market.” Sergey Brin, Google Co-Founder, Oct-12 “Driverless cars are coming to showrooms by 2020; ready for show time by the end of this decade.” - Carlos Ghosn, Nissan CEO, Jan-13 Five or six years from now we will be able to achieve true autonomous driving where you could literally get in the car, go to sleep and wake up at your destination. It will then take another 2 to 3 years for regulatory approval. “ [2023] `Elon Musk, Tesla CEO, Oct-14 “For Jaguar and Land Rover it will happen within the next 10 years. We will provide fully autonomous cars by 2024.” Dr. Wolfgang Epple, JLR Dir of Research & Tech, Oct-14 “Fully autonomous vehicles which can drive without human intervention and might not even have a steering wheel could be available on the market by 2025.” Dieter Zetsche, Daimler Chairman, Jan-14 Timelines 51 2017 2018 2020 2023 2024 2025 V1-Sept 2015 Prepared by Kevin Root
  52. 52. The Rollout Phases Source: Morgan Stanley 52V1-Sept 2015 Prepared by Kevin Root
  53. 53. The Rollout Phases Source: Morgan Stanley 53V1-Sept 2015 Prepared by Kevin Root
  54. 54. From Morgan Stanley lead auto analyst, Adam Jonas (accompanies previous slide): The two most important technological trends in automotive transportation are the sharing economy and autonomous driving. Those trends will fuse into what he calls “shared autonomy” or what is essentially a world of competing robotic taxi services. Jonas has boiled down the massive change the automotive world faces into a chart with four quadrants, or phases of disruption. The horizontal axis illustrates the transition from individual vehicle ownership to an era where cars are shared assets. The vertical axis shows the transition from human to robotic driving. The first quadrant represents the auto industry model for more than 100 years, Jonas said. High-tech is limited to gadgets for driver convenience or entertainment. The next quadrant shows how people are starting to use Uber and other services to slowly relinquish their ownership and control of the car. This is an era during which taxis (including so-called car-sharing services like Uber) could become “so cheap that only rich people own cars.” This allows for hundreds of new entrants into the fleet management business, Jonas said. The biggest impact will be felt in dense mega-cities that can support these services. Quadrant three depicts how people will give up control of the automobile to a computer, using steering wheels and pedals less over time. During this phase, most cars are still owned by individuals, but the rising competition from mega-fleet managers operating human-driven vehicles with automated driving features gains momentum, Jonas said. At the same time, society will benefit from improvements in vehicle safety and efficiency. Finally, quadrant four depicts the "shared autonomy." Jonas envisions “roving fleets of completely autonomous vehicles in operation 24 hours a day, available on your smartphone.” An individual’s transportation cost per mile falls to as low as 25 cents a mile, or roughly 1/10th that of a traditional taxi, Jonas said. These automated taxi systems get launched in the megacities of developed countries, spread to the close suburbs and then become connected to other cities in a hub-and- spoke network of autonomous highways, Jonas said. 54 Morgan Stanley Outlook V1-Sept 2015 Prepared by Kevin Root
  55. 55. Estimated Self Driving Vehicle Unit Volumes •  Business Insider estimates show that 104,000 cars with self-driving capabilities will be shipped this year (2015). •  BI estimates that by 2020, shipments will grow to 5.49 million, rising by a compound annual growth rate (CAGR) of 89%. These estimates include cars and trucks shipped to both enterprises and consumers. •  The installed base of cars with self-driving features will grow even faster, from 140,000 this year to just under 10 million in 2020, up by a CAGR of 134%. 55V1-Sept 2015 Prepared by Kevin Root
  56. 56. 56 Impact V1-Sept 2015 Prepared by Kevin Root
  57. 57. Potential Impact When we do reach the driverless car phase, the economic outlook for entire industries will undergo a massive shift with the survival of key industries being at extreme risk. These include: 57 For the sake of this compilation, I’m focusing primarily on the effects on automotive and technology players. •  Oil industry •  Big insurers •  Automotive manufacturers (OEMs) •  Automotive suppliers •  Franchise dealerships •  Automotive technology & digital marketing firms & other retail solution suppliers V1-Sept 2015 Prepared by Kevin Root
  58. 58. Potential Impact OEMs & Dealerships •  A Barclays report released in May predicts that in a society dominated by self-driving cars, U.S. auto sales might fall 40% and vehicle ownership could drop 50%, forcing entrenched automakers such as Ford Motor Co. and General Motors to adapt or die. •  The auto industry will likely see a collapse of new car sales. Cheap used cars will flood the market. Since each mobility service vehicle can replace about five personal vehicles, far fewer cars will be sold and even fewer maintained*. •  Industry profits rely heavily on revenue from options, aftermarket parts, maintenance, and service. Yet, maintenance on electric vehicles is notoriously low, choking off this source of revenue*. •  Automakers that survive will shift most of their business to create transit companies, or to selling their vehicles to those who do*. 58 *Source: Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  59. 59. Potential Impact Technology & Retail Partners Technology, marketing and consumer research & buying portals will need to adjust their products and services to a smaller pool of dealers and new customer base offering a different approach to transportation and mobility. Nimble forward-thinking companies, tech start-ups and mobility-focused companies and suppliers will pour in to fill market gaps. 59V1-Sept 2015 Prepared by Kevin Root
  60. 60. Potential Impact General Transportation •  In the shorter term, look for companies such as Enterprise Rent-A-Car and Uber to compete with car dealers, taxi companies and even automakers. Dealers, now the intermediaries between manufacturers and drivers, may find their business model squeezed*. •  "Selling us trips will be where the profits are — not making cars,” Geoff Wardle, executive director, Graduate Transportation Systems and Design at Art Center College of Design in Pasadena. 60 Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  61. 61. Potential Impact General Transportation UBER IS CLEARLY INTERESTED in replacing its drivers with self-driving vehicles. This transition will make its services so inexpensive and ubiquitous as to make car ownership obsolete. 61 THE FIRST BIG IMPACT THAT ROBOTICS has on the workforce will likely be in transportation, where self-driving cars could put millions of drivers out of work in less than a decade. BI Intelligence predicts that self- driving car shipments will increase rapidly after 2018. Companies that employ large numbers of drivers, like Uber, are likely to be early adopters, possibly putting their drivers out of work. Source: Business Insider. A STUDY FROM UC-BERKELEY shows that once users try car-sharing services, they are half as likely to own a car. PRICEWATERHOUSECOOPERS estimates, “autonomous vehicles would reduce the number of vehicles on the road by 99 percent, and the fleet of cars in the U.S. would fall from 245 million to 2.4 million V1-Sept 2015 Prepared by Kevin Root
  62. 62. Potential Winners & Losers 62 WINNERS LOSERS Source : Bridges, Rutt (2015-05-10). Driverless Car Revolution: Buy Mobility, Not Metal V1-Sept 2015 Prepared by Kevin Root
  63. 63. Challenges & Barriers to Adoption 63V1-Sept 2015 Prepared by Kevin Root
  64. 64. Open Issues & Challenges Consumer trust & awareness of benefits of mobility over vehicle ownership. 64 Expected lobbying to slow the use of adoption by groups like ride share service drivers, factory workers and dealership owners who are likely to be severely impacted. Self Driving Technology ability to operate in environments with conditions not yet technically possible--snow, sleet, icy roads, blowing sand, and other conditions making it difficult to read the roadway. Proven dependability & longevity of autonomous vehicles and related self- driving technology. 3 421 V1-Sept 2015 Prepared by Kevin Root
  65. 65. V1-Sept 2015 Prepared by Kevin Root Barriers to Adoption REGULATIONS ARE THE BIGGEST BARRIER TO SELF-DRIVING CAR ADOPTION AND A GRAY AREA IN MOST COUNTRIES RIGHT NOW. •  For either semi or fully autonomous self-driving vehicles to become widely available, regulations will need to be put in place that address what types of self- driving capabilities are allowed on the road and who is responsible if the vehicles crash. COST IS THE SECOND MAJOR BARRIER TO SELF-DRIVING CAR ADOPTION. •  There will likely be an added cost for buyers when purchasing a self-driving car with either semi- autonomous or fully autonomous features. •  Business Insider expects electric vehicle customers to pay for self-driving features first because these individuals are often tech-savvy and high-income. Next, they expect luxury vehicle owners to opt for self-driving car features in new cars. Finally, when the prices of the features drop further, they will likely be purchased by economy class vehicle customers. Presumably those most interested in safety will opt for these features first. CONSUMER RELUCTANCE IS ANOTHER BARRIER TO ADOPTION, although this barrier will certainly lessen dramatically over time as consumers acquire more information about autonomous vehicles, their benefits and features. 65 Source : Business Insider
  66. 66. Statistics 66V1-Sept 2015 Prepared by Kevin Root
  67. 67. 96% 75% 70% 94% Statistics Cars sit idle 96% of the time. Google thinks self- driving taxis could have utilizations of 75%+. Stanford estimates we’ll need 70% fewer cars to provide the same trips. 94% of accidents are from human error, & these could be eliminated. A study by the Eno Centre for Transportation, a non-profit group, estimates that if 90% of cars on American roads were autonomous, the number of accidents would fall from 5.5m a year to 1.3m, and road deaths from 32,400 to 11,300. 67V1-Sept 2015 Prepared by Kevin Root
  68. 68. 90% 30% Statistics A study by the University of Texas estimates that 90% penetration of self-driving cars in America would be equivalent to a doubling of road capacity and would cut delays by 60% on motorways and 15% on suburban roads. With cars in constant use, much less parking space would be needed. Parking accounts for as much as 24% of the area of American cities, and some urban areas have as many as 3.5 parking spaces per car; even so, people looking for parking account for 30% of miles driven in urban business districts. By liberating space wasted on parking, autonomous vehicles could allow more people to live in city centers; but they would also make it easier for workers to live farther out. If you can sleep on the journey, a longer commute becomes feasible, notes Mr. Fagnant, who foresees a “simultaneous densification of cities, and expansion of the exurbs. 68V1-Sept 2015 Prepared by Kevin Root
  69. 69. References & Resources 69V1-Sept 2015 Prepared by Kevin Root
  70. 70. References - Click for link • Driverless Car Revolution. Buy Mobility, Not Metal: Book by Rutt Bridges • Driverless Cars: Trillions are up for Grabs: Book by Chunka Mui’ • Google Self Drive Car website: • Google Monthly AV reports: • Changing Nature of Mobility Report: Deloitte Review 2014 70V1-Sept 2015 Prepared by Kevin Root
  71. 71. References - Click for link • IF AUTONOMOUS VEHICLES RULE THE WORLD From horseless to driverless Article Economist 2015 • Driverless Cars: Consumer Perception of Future Autonomous Mobility NADA 2015 • The Self Driving Car Report: Business Insider 2015 Report • Preparing a Nation for Autonomous Vehicles: Eno 2013 Report 71V1-Sept 2015 Prepared by Kevin Root
  72. 72. References - Click for link • Connected Vehicles Enter Mainstream: Report by Deloitte 2012 • Self Driving Cars: Are we ready?: Report by KPMG 2013 • Urban Mobility Blueprint: Report by E&Y 2013 • Transforming Personal Mobility: Report by Columbia University 2013 • Uber’s Plan for Self-Driving Cars Bigger Than Its Taxi Disruption Article: 2015 • Uber wins, GM loses when driverless cars rule the road: Article- Fortune 2014 72V1-Sept 2015 Prepared by Kevin Root
  73. 73. Acknowledgements KEY RESOURCE & CREDIT While I have compiled content from many sources and provided references and links to much of it, the majority of this content was sourced from a recent book published by Rutt Bridges titled: DRIVERLESS CAR REVOLUTION: Buy Mobility, Not Metal 2015. I found his citations and presentation of the information to be very balanced and credible. CONTRIBUTION Editing was provided by Eliza Kelly, who has been my co-author and all star research project manager on a number of primary research projects over the years. She can be reached at 73V1-Sept 2015 Prepared by Kevin Root