Future mobility business models

Frost & Sullivan Automotive Principal Consultant, Pietro Boggia, comments on the latest status of the autonomous car, as presented at MWC

The concept of autonomous vehicles has been thoroughly discussed in terms of advancements of the enabling technologies involved. The terms ‘autonomous’ and ‘driverless’ are however, often confused: complete driverless vehicles in the true sense are still a long way off, but the penetration of the enabling technologies is increasing constantly in the market.

Advanced Driver Assistance technologies (ADAS), such as lane departure warning, automated park assist, blind spot detection, and forward collision warning are already being considered as standard fitment in cars. In addition, connectivity brings advanced communication technologies between vehicles (V2V) and between vehicles and infrastructure (V2I) to the scene, to assist in overtake, emergency breaking, turning at congested intersections, weather and road geometry information among others. All these advanced driver assistance features are paving the way for fully automated cars of the future, where the driver will be present in the car to take on the control only when required. Don’t expect driverless cars to experience a breakthrough market entry, as infrastructure, policy, insurance and ultimately the end-user won’t be ready for that for the next few years. Think more about an incremental wave of innovation from ADAS technologies, to semi-autonomous vehicles with increasing technology penetration for progressive driver substitution.

OEM Activities

One of the OEM that is leading the way in the field of autonomous cars is certainly Tesla, who recently announced the launch of an over-the-air software upgrade this summer, enabling all existing vehicles to run in ‘Autopilot’ mode towards the nearest charging station, during freeway driving mode but also assisting during parking mode. What is really surprising about this announcement is that this is a car we can buy today, which will be given the ability to drive itself in a few months via the same setup, very similar to what happens when we receive updates for our iPhone.

In the meantime Google is starting to open up its driverless car project, which has already put hundreds of vehicles on roads in California and Nevada. Google’s approach is much more drastic as the company is working on building a fully self-driving car, without even being fitted with a steering wheel. The ultimate goals behind this revolutionary idea are increased safety for passengers and savings on time and costs spent on traffic. Google is simulating thousands of real-life situations to make this car a reality. In future, V2V communication will also enable vehicles ‘to learn’ in real time from each other in different challenging real-life situations non predictable by testing or simulation.

In the UK, self-driving prototypes will move from off-road to on-road activities this summer, thanks to a Department of Transport ruling. We’ve already seen the self-driving Audi at the Consumer Electronics Show in Las Vegas this past January; that too, has been tested in California. BMW and Mercedes are also on the case, while chipmaker NVidia has dedicated its most powerful chip ever to the forthcoming slew of driverless cars.

Feedback from the Mobile World Congress

In fact, IT shows such as the CES in Las Vegas or the most recent Mobile World Congress (MWC) in Barcelona, where some OEMs announced their (no so) future plans and news about autonomous cars, are quickly replacing the most common auto shows such as Detroit or Frankfurt in the headlines of new technology announcements.

This includes Renault-Nissan, which will launch autonomous cars in 2016 – as was announced by CEO Carlos Ghosn: their autonomous vehicles differ from true driverless vehicles, such as the ones Google has been testing in California, as humans retain an element of control. Carlos said they will limit accidents and make driving more pleasant. Volvo is going to test driverless cars in Sweden: speaking at the Mobile World Congress, Klas Bendrik, CIO of Volvo, said, the company is developing a driverless car, which would be tested by ‘normal people on normal roads.’ In February, Volvo revealed details of its ‘Drive Me’ program, which will see the company work with transport authorities and legislators to get driverless cars on the roads as soon as 2017. Ford pointed out that while technology will be ready soon, policy and insurance will not.

Key Questions

Some key questions are coming along with the driverless vehicle concept:
•        Why the need for an autonomous car? Key reasons are:
o        Saving lives
o        Saving time
o        Saving money
•        Will autonomous cars be the same as cars we see on roads today?
o        Not necessarily, as autonomous driving will open up the possibility for OEMs to explore new product concepts designed around new business models, extending the range to different market niches including electric micro vehicles aimed for specific customer segments, e.g. elder people.
•        Will driverless cars come incremental or as a disruptive innovation?
o        They will likely be introduced as an incremental penetration of autonomous technologies, driven by OEMs as an industry push to continuously differentiate their product offering, until the regulatory frameworks and customer acceptance will be ready to generate a broader demand in the market. In this context, autonomous highway driving is due to become a mainstream by 2020, while driverless trucks will also be introduced for platooning towards 2022.

What seems to be a worrying trend for automakers is that self-driving cars will bring with them a new concept on how we use, and eventually buy, cars, as self-driving vehicles are the ideal platform to build new business models on it, related to the sharing economy and the concept of mobility on-demand. This may eventually result in a threat for mass-makers as with fewer cars on the road, less differentiation among autonomous vehicles based on vehicle performances, selective purchasing preference will likely favour premium brands where a larger amount of differentiating new technologies will be available compared to the offering from low-end makers.

Collaboration Will Be Key

‘There are so many unknowns and we cannot solve all the problems ourselves, so there are a lot of opportunities for start-ups and competitors that invest and develop new technology’, said Carlos. The rise of Auto IT and related technologies, such as connectivity, autonomous cars and V2X communication (also called Cooperative Systems) pose a serious technology challenge to OEMs, as they have a clear lack of internal skills and require suppliers to cover this gap. But unlike the traditional automotive business model, where OEMs traditionally retain the branding and the overall added value on the product, new technologies are pulling the role of OEMs away from the centre stage of the value creation in favour of solution providers, mobility integrators and in general to technology providers. A clear example for this trend is Fiat Chrysler. CEO Sergio Marchionne said, he is open to an alliance with Apple or Google as he seeks a partner to merge with.

Driverless cars only have one problem: we love driving. Will OEMs start to offer driving simulators to their customers to keep them loyal to the brand and products? Will the automotive industry use gamification to remind their customers of the pleasure of a good ride?

I personally believe that at a certain point traditional OEMs will create a lobby against the totally driverless vehicle, which I would not call a ‘car’ in the usual sense anymore, unless they drastically change their business models and their customers’ acceptance towards a new era of a driverless ride.

Autonomous vehicles, the connected car, vehicle prognostics and cyber security are just four of the current trends in the automotive and mobility space, which will be discussed during Frost & Sullivan’s annual industry event ‘Intelligent Mobility: Future Business Models in Connected and Automated Mobility’, taking place at the House of Lords and the Royal Garden Hotel in London on 1 and 2 July 2015. For more information, visit: http://ow.ly/L74Ar