Automotive Megatrends Magazine Q3 2016

Gill Pratt,
Toyota's
billion dollar
robot man
Let us be your guide...
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Welcome
Welcome...
Automotive Megatrends Magazine
...to the Q3 2016 issue of Automotive
Megatrends Magazine.
ISSN: 2053 776X
In hiring Dr Gill Pratt, Toyota laid bare

its ambitions in AI and autonomy. In Publisher:
Automotive Megatrends Ltd
appointing David Strickland, the Self- 1-3 Washington Buildings
Driving Coalition made clear the Stanwell Road, Penarth
urgency with which the five founding

CF64 2AD, UK
stakeholders want to usher in

autonomous cars. www.automotivemegatrends.com
T: +44 (0) 2920 707 021
megatrends@automotiveworld.com
This issue of Megatrends includes
exclusive interviews with Pratt and Registered number: 08000516
Strickland, as well as an exciting mix VAT number: GB 171 5423 23
of expert insight into future mobility,

future business models, future Managing Director:
manufacturing, future regulations, Gareth Davies
and even the future of products and

brands themselves. Editor:
Martin Kahl
Contributors:
Frank Pietras
Freddie Holmes
Ian C. Graig
Jeffry Jacob
Martin Kahl, Megan Lampinen
Editor Michael Nash
Norbert Dressler
Richard Harrington
Shwetha Surender
Søren Bernt Lindegaard
Wilfried Aulbur
Xavier Boucherat
Production:
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Contents
18
23 27
Artificial intelligence, real opportunities: exclusive interview with Toyota's Gill Pratt
Product and brand under threat in the
30 33
David Strickland on the urgent need for self-driving cars
auto industry of the future
36 40
Defining moment as regulators
A platform strategy for the connected car
question 'driver' of self-driving car
New megacities inspire smart mobility

In the factory of the future, your colleague will be a robot
solutions
10 Automotive Megatrends Magazine

Contents
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Artificial intelligence
Artificial intelligence,
real opportunities:
exclusive interview with
Toyota's Gill Pratt
Dr Gill Pratt, head of Toyota Research Institute, talks exclusively to Megatrends
about the role of AI in the auto industry of tomorrow. By Freddie Holmes
epending on who you talk to,
D the concept of artificial

intelligence (AI) conjures up
varying visions of the future – one of
a world where robots live in perfect
harmony with humans, another where
“
robotic intelligence has progressed
too rapidly for mankind to control.
Science fiction would suggest we still
have some time to wait, but the fact is
that the development of robotics and
AI has reached a point at which such
visions now merit serious discussion.
In November 2015, Toyota announced

it would invest US$1bn to develop a
standalone company that would focus
on the development of AI and
robotics. Shortly before the
announcement, the Japanese OEM
had also said it would invest US$50m
Through deep learning, robots

in a partnership with the
Massachusetts Institute of Technology
can classify different objects

(MIT) and Stanford University for the
same reason.
roughly as well as a human

Dubbed TRI (the Toyota Research
Institute), the Silicon Valley-
being. They still don't really

headquartered company is a sizeable
supplement to Toyota’s efforts in
understand what things mean

driverless cars. The R&D powerhouse
is supported by a second facility
located near MIT. Plans to develop a
third facility in Ann Arbor, Michigan are
also under way, and will be a stone’s

“
Eventually, autonomous cars

will drive better than people
in most circumstances
AI makes smart cars

smarter
throw away from Mcity, a 32-acre For example, if a parent is holding a
autonomous vehicle proving ground. child's hand on the pavement, the
In August 2016, TRI invested US$22m chance that the child is about to run
into the University of Michigan’s efforts across the street is different to a
in AI, robotics and autonomous Alongside AI, industry stakeholders teenager riding a bicycle. As
driving. may also be familiar with the terms humans, we have the ability to draw
machine learning (ML) and deep realistic conclusions from certain
The primary focus for TRI is to learning (DL). situations, but robots do not share
accelerate the development of the same ability just yet.
technology that can operate a car AI describes anything that acts in an
more effectively than a human driver – intelligent manner that is not “We have all kinds of information that
hardly surprising given that its parent controlled by a natural system, i.e. an we bring to bear when we see one of
company is the largest vehicle animal or a human. ML is a form of those scenes,” says Pratt. “There is
manufacturer in the world. A particular AI that can adapt and learn from this incredible human ability to
focus is also placed on allowing those experiences. DL is a refined form of generalise and think: ‘Well, if I were
that cannot drive the opportunity to ML that uses deep neural networks that parent or child, how would I act?’
make use of a car. Outside of – layers of algorithms that are Presently, AI systems – even DL
driverless cars, TRI will also investigate designed to recognise patterns. ones – are very good at perception,
ways of improving total mobility, but not at cognition. I think we still
moving people “across the room, The question is, how can these have a long way to go with this.”
across town and across the country.” technologies help the automotive
industry in its pursuit of cars that can If autonomy is to be trusted, it must
Assuming the role of Chief Executive drive themselves? Can AI both drive drive in a substantially safer way than
at TRI is Dr Gill Pratt, ex-Director of the and think like a human? humans, he affirms.
Rewriting unwritten
DARPA Robotics Challenge, which
rules
arguably catalysed the development of “Eventually, autonomous cars will
autonomous cars. Pratt’s interest in drive better than people in most
robotics dates back to his childhood circumstances,” says Pratt, “but I
where he was ‘enthralled’ with robots, don't think there's a person on
and in 1979 he joined MIT. After 21 earth right now that knows when that In the 1950s, Isaac Asimov’s series
years, he joined Franklin W. Olin will happen.” AI, he continues, is of science fiction novels I, Robot
College to work on its automation and an absolutely vital component to (which were later adapted into the
robotics programme, before moving the fully autonomous car, but it needs film under the same name in 2004)
on to the Defence Advanced Research further refinement. “Through DL, defines three laws of robotics.
Projects Agency (DARPA). He was robots can classify different objects
then headhunted by Toyota. roughly as well as a human being Firstly, a robot must not injure a human
can. They can understand the or allow them to come to harm. A robot
Speaking exclusively to Megatrends, difference between a book and a must also obey orders from human
Pratt explains how robotics and AI train, for example, but turning that beings, except where such orders
are likely to become commonplace perception into cognition is still would conflict with the first law. In
not only within the automotive very hard to do,” he admits. “They addition, a robot must protect its own
industry, but also across many still don't really understand what existence – again, as long this does
aspects of modern life. things mean.” not conflict with the first or second law.
If the driverless car can eventually

think by itself, many believe it too
needs to operate with a set of morals
to allow for ethical decision making.
What does the car do if avoiding a
pedestrian involves driving into
oncoming traffic? Pratt is aware of
the dilemma here, but contests
the validity of the term ‘morals’ in
“
this context.
“To call it ‘morals’ is a little bit of a

mistake,” he suggests. Instead, Pratt
believes the driverless car will need to
operate through a set of rules. “There
are many unwritten rules between
drivers behind the wheel. Humans
negotiate by looking at people in other
cars and gauging their facial
expressions, but we don't have ways
for an autonomous car to do that kind
of negotiation,” he observes. “We'll
need to have a published set of rules
that can be used amongst different
Autonomous cars could be

manufacturers and pedestrians.”
Are robots our
safer if they were good enough,

friends?
but autonomous driving where

A common theme has developed
the car drives by itself is not

among robotics companies; many
“
robots share common characteristics
the only way to get there

with natural – living and breathing –
things.
Honda’s robotics subsidiary, Asimo, has

been developing ‘the world’s most
advanced humanoid robot’ since 2000.
Google-owned Boston Dynamics is
gunning for advanced ‘human ‘Big Dog’ bounding around the woods Pratt explains that there are
simulation’, and has developed a series surrounding its development centre, and “emotional reasons” why robots are
of robots to assist the US armed forces. the near six-foot tall ‘Atlas humanoid’ commonly designed to mimic natural
Videos posted online depict the robotic strolling alongside an engineer. beings. “For the programmers of
these robots,” he says, “it's easier to
control them if they resemble animals
or people. We've built the world to fit
Humans negotiate by looking at

ourselves, so building a robot that
looks like us makes it a natural fit.”
people in other cars and gauging

If robots are being developed to
appear familiar, should the interaction
their facial expressions, but we

also feel familiar? Pratt thinks so.
don't have ways for an

“There's a very well-known effect in
psychology and computer science
autonomous car to do that kind

where people will anthropomorphise
a machine,” he observes. “We've
seen this in the car business for
of negotiation
a very long time; people refer to
their car in loving terms, they name
it and imagine that it has moods. The
robot itself is going to very much be
of that style.”

“
Once we have machines in our

homes helping us in a variety of
ways, I think we'll see more of
that bond between people and
particular machines
Recalling his time working with the car does not simply become a providing a welcome boost to R&D
DARPA robotics challenge, he notes domestic appliance. initiatives. Why, then, is a future
that people “bonded tremendously with involving automated driving still up
the robots,” and when the machine “With the rise of the smart phone and for debate? The short answer is that
encountered difficulty or fell down, the the Internet, there is a tendency for autonomous cars need to prove their
audience gasped. “When it was young people to express their worth, and that takes testing. And
successful – even at the simple tasks – personality through information that is plenty of it.
there were incredible cheers,” he added. online, rather than in a piece of
hardware sitting in the driveway,” he “We tend to call this the trillion mile
If consumers eventually form an observes. “Once we have machines in problem,” says Pratt. Globally, Toyota
emotional bond with their robot our homes that are helping us in a produces around ten million vehicles a
counterparts, be it their car or an variety of ways, I think we'll see more year (10.08 million in 2015), which last
automated home droid, Pratt believes of that bond between people and around ten years, each travelling
it is “very likely” that AI will become a particular machines.” This could be roughly 10,000 miles each year, he
necessity in the same way that the welcome news for dealerships looking explains. “Multiply all that out and
smartphone has. “I think that will be to maintain new car sales in a world together, they travel a trillion miles a
good,” he affirms. “There are many where mobility as a service is year. The most advanced of the
better things to do in life than spend all increasingly popular, he suggests. autonomous car software makers –
The trillion-mile
your time doing dull dangerous tasks. Google – has tested close to two
problem
It would be neat for us to use the million miles since its driverless car
technology we have on earth to do programme started in 2009. There's a
things that are more worthwhile.” big difference between two million and
one trillion.” He explains that this makes
In addition, AI could have a The conversation around autonomous it very difficult to build an autonomous
meaningful impact at the dealership. cars has grown from a hushed car that is error-free in all of those
Cars are often an emotional purchase discussion to a collective roar, but it is miles, and consumers will not tolerate
for many drivers, with driving worth pointing out that the underlying any mistakes.
performance and exterior styling the technology has been around for a long
primary attraction. Over time, the time. For example, an autonomous Pratt addresses the suggestion that
interest has shifted slightly toward a vehicle developed by Stanford autonomous cars are ultimately an
desire for premium qualities inside the University and Volkswagen won the expensive and time consuming answer
vehicle – luxury materials, driver DARPA Grand Challenge more than a to an issue that could ultimately be
assistance technologies and decade ago. solved by wearing a seatbelt and not
connectivity services. There have driving when drunk or distracted. He
been suggestions that the car will Since then, various OEMs have agrees, but counters the argument,
become less of a personal device and released timelines that outline when suggesting that “some kind of
more of just a means of getting from A to expect an autonomous vehicle technology that can make an evasive
to B, but Pratt believes that a robotic from their brand, and government manoeuvre to avoid a crash” is also a
personality could help to ensure the investments around the world are solid fix.
“
In the same way that

we have quality control
in elevators – in their
construction, approval
and inspections – we
need to have very
good quality control in
autonomous cars to
make sure they truly
are safe
As such, TRI is currently developing two ‘Research Priorities for Robust and Pratt agrees that as with any
different approaches to autonomous Beneficial Artificial Intelligence,’ technology, there are associated
driving – dubbed ‘chauffeur’ and investigated the future impact that AI benefits and dangers. Luckily for the
‘guardian’ mode. The former can collect could have on human life. It notes automotive industry, he does not
a consumer and take him or her home. that the growing capabilities of AI believe AI presents a danger. Instead,
They could even fall asleep, suggests “are leading to an increased potential he believes the risk is in quality control.
Pratt. Guardian mode effectively for impact on human society,” and “In the same way that we have quality
observes the human driver and is ready that “it is the duty of AI researchers control in elevators – in their
to step in if required. This, says Pratt, is to ensure that the future impact is construction, approval and inspections
not what most people would call an beneficial.” – we need to have very good quality
autonomous car. control in autonomous cars to make
This would suggest that AI could sure they truly are safe,” he says. “I don't
“It's rather a car that has a tremendous potentially have negative, if not think that the ethical, scary AI issues
number of safety features to prevent it – unsafe implications. An open letter are something we need to worry about
no matter what – from causing an signed by more than 8,000 experts in beyond this mind-set of quality control.”
accident,” he explains. Autonomous cars the field – including Professor
can be safer than human drivers if the Stephen Hawking and Tesla Chief At the 2016 Consumer Electronics
technology is developed enough, but a Executive, Elon Musk – called for Show, (CES), Pratt remarked that most
car that drives by itself is not the only researchers to not create something of the easy work had been done in
way to improve road safety, he affirms. that cannot be controlled. In 2014, autonomous driving, but the hard work
An existential issue
Professor Hawking had warned that is still waiting to be done. AI will be an
success in creating AI could not only important aid here, he says, but
be the ‘biggest’ event in human assures Megatrends that the
history, but also the last. “The automotive industry, its stakeholders
Early in 2015, a paper published by
development of full AI could spell the and the public can sleep easy: the world
the Association for the Advancement
end of the human race,” he told is not about to be overtaken by out-of-
of Artificial Intelligence, titled
the BBC. control robot cars.

Self-driving cars
David Strickland on the urgent

need for self-driving cars
David Strickland was recently named as Counsel and spokesperson for the
Self-Driving Coalition for Safer Streets. Freddie Holmes caught up with the
former NHTSA Administrator to discuss the Coalition’s long-term
goals in the face of short-term adversity
n April 2016, Ford and Volvo joined “The long-term goal is to have a decades, and we have been
I forces with Google, Lyft and Uber to

form the Self-Driving Coalition for
Safer Streets. The latter three may be
regulatory environment to allow the
full deployment of self-driving
vehicles where there is no
generally successful,” he says.
“However, our reductions have not
been as significant as those in
comparatively new players in the expectation for the driver to intervene developed countries in Europe and
automotive industry, but they are in the driving task,” he tells Asia.” The US has work to do in
deemed to possess the skills required Megatrends. For Strickland, there is Strickland’s eyes, and the Coalition’s
to make self-driving vehicles a reality. no time to lose. efforts could prove instrumental in
encouraging change.
“
Fronted by David Strickland, the former For the first time in a very long time,
Administrator of the US National road fatalities in the US have Automated driving technology is not
Highway Traffic Safety Administration increased year-on-year. According to only expected to drastically improve
(NHTSA), the Coalition is under the NHTSA, the number of road deaths in road safety by eliminating driver
direction of a seasoned vehicle and 2015 rose 7.7% to 35,200, compared distraction and poor decision
road safety advocate. Specifically, he with 32,675 in 2014; NHTSA data also making, but also provide those with
will serve as the Coalition’s Counsel shows that 94% of all road collisions limited mobility the access to on-
and spokesperson, responding on a are a result of human error. demand transportation. As Strickland
moment-by-moment basis to the puts its, driverless cars are “the new
challenges of deploying autonomous “We have been fighting this war Holy Grail” for the automotive
vehicles in the US and beyond. against crashes and fatalities for industry.
The expectation that a

self-driving car will never
make an error, ever, is
ludicrous
“
Self-driving cars
Ride-sharing is one application that has

tremendous promise, but Ford and Volvo Cars are
also members of the Coalition, and they have
plans for private cars with full self-driving ability
Blanket regulation “The goal is to try to get it right at the a red light, for example. “There’s
first cut so that we can unleash going to have to be some recognition
innovation in the most efficient way, of differences at certain levels,” says
First on the list of duties is to address
but always keep our eye on the fact Strickland, and suggests that it
the regulatory framework surrounding
that uniformity doesn’t mean a would be simpler to tweak a group of
automated vehicle technology;
weakened or a lesser standard,” he variations than to have firm
namely how, where and when it can
says. “It shouldn’t be the Wild Wild limitations depending on where a
be tested and eventually released on
West out there. There should be driver is in America.
public roads.
some notion of uniformity to make
sure that everybody – once the rules “If you have a self-driving vehicle
The Coalition – along with most
are established – has an even that is licensed for testing in
stakeholders – is pushing for a
playing field on which to deploy and California and want to bring the
national regulation that carries across
compete.” vehicle over to Nevada, you drive it
borders to allow the free-flow of
to the California line, change over to
autonomous vehicles from one state
He observes that there may Nevada plates and then go across.
to another. A patchwork of regulations
eventually be small differences as That’s the only way to be legal,” he
would make smooth national
certain states have varying police, explains. “If that’s how individual
deployment of autonomous vehicles
traffic safety and enforcement laws. states treat self-driving vehicles, it’s
difficult; a single blanket regulation cut
In addition, not every locality in going to be really hard to be able to
from the same cloth is the objective,
America allows cars to turn right on get the full benefit.”
he explains.
Uber is one of the five founding

members of the Self-Driving
Coalition for Safer Streets, along with
Google, Lyft, Ford and Volvo Car

Self-driving cars
Five cohorts Ride-sharing, or A fatal incident

private ownership?
The five partners of the Coalition are all On 7 May 2016, the first death linked
firmly involved in autonomous driving in to automated vehicle technology
While the inclusion of two ride share
some form. occurred in Florida when a Tesla
companies would suggest the
Model S in Autopilot mode collided
Coalition is pushing for autonomous
Ford has been carrying out extensive with an 18-wheel truck. It was
taxis, Strickland explains that this is
testing at Mcity, a mock-up town in reported that the semi-autonomous
not the only application with a
Michigan used to replicate various system could not distinguish
promising future.
driving situations. The OEM has also between the white paint of the truck
been testing its self-driving technology and a bright skyline, and as such did
“Ride-sharing is one application that
in winter conditions and in absolute not slow down or try to avoid the
has tremendous promise, but Ford and
darkness. collision. While safety advocates
Volvo Cars are also members of the
have called for the system to be
Coalition, and they have plans for
Google began the development of its renamed and deactivated until
private cars with full self-driving ability,”
self-driving technology in 2009, and has deemed ‘safe’, others believe this was
explains Strickland.
since racked up just under 1.8 million an incident waiting to happen.
miles of autonomous driving on public
However, he suggests that autonomous
roads. Ride share platform Lyft recently It is worth noting that this was not the
ride-sharing will likely arrive first in
partnered with GM with the aim of first time autonomous vehicle
meaningful volumes. “[Private
deploying autonomous fleets in the next technology has been involved in a
ownership] will be further out in the
couple of years. collision on public roads. An
future than a ride share application in a
autonomous Google car was
congested megacity.” He suggested
Volvo is gearing up to launch the public involved in a low-speed collision with
that, similar to Google’s test cars, there
aspect of its Drive Me initiative; 100 a bus in February 2016, and
will be a fleet of self-driving vehicles that
vehicles equipped with self-driving according to the US Department of
can go no faster than the internal speed
technology will be driven by members Motor Vehicles (DMV), a Nissan Leaf
limit of 25mph (40kph) in a downtown
of the public in Gothenburg, Sweden in fitted with Cruise Automation
area: “That’s probably going to be one
2017. In May, Uber announced it would technology had crashed into
of the earliest applications for people to
“
launch a hybrid Ford Fusion test car in a parked car in San Francisco a
be exposed to self-driving cars in a
Pittsburgh to test self-driving technology month earlier.
consumer environment, and then it will
and gather mapping data, and in
grow from there.”
August it unveiled plans to work with Speaking at the Autonomous Car
Volvo on autonomous vehicles, Detroit conference in March 2016,
In the long-term, Strickland believes
including a fully autonomous car that Strickland’s successor and current
automation will be available through a
Uber intends to use in its alternative taxi NHTSA Administrator, Dr Mark
number of applications, from ride-
fleet. That announcement came shortly Rosekind, spoke of not letting the
sharing to private vehicles that can drive
after Ford committed to launching a pursuit of ‘perfect’ autonomous driving
independently in all areas and weather
high-volume, fully autonomous SAE technology get in the way of deploying
conditions. The latter is “ultimately what
level 4-capable vehicle by 2021. ‘good’ technology that can still save
folks are aiming for,” he muses.
We should not let a crash due to a

self-driving vehicle or ADAS feature
pause or delay our movement towards
autonomy. That technology really is the
most direct answer to reducing human
error behind the wheel
Self-driving cars
Controversy has surrounded Tesla's Autopilot technology since a fatality in May involving a Model S which
crashed into a heavy truck whilst in Autopilot mode
lives. However, in the wake of the He adds that although it was not a we have seen that in the multivariable
“
Autopilot incident, Rosekind received question of if, but when such an notion of chaos, unintended things
a letter from four safety advocates, incident would occur, “it probably came happen and you have to address that,”
including another former NHTSA earlier than we all would have thought.” he explains. “The expectation that a
Sooner rather than

Administrator, Joan Claybrook, that self-driving car will never make an
later
called this ideology a “false dichotomy”. error, ever, is ludicrous.”
“No technology can deliver on a promise That is not to say that ‘near perfect’ is
of safety if it is rushed into vehicles with unattainable. Six Sigma is a data-
known deadly defects,” the letter reads. Ultimately, Strickland agrees that driven methodology that aims to
However, Strickland is unconvinced that given the rising number of road eliminate defects in any given
the event in Florida will change how deaths in the US and the fact that process. Strickland expects that
regulators look at the deployment of nearly all can be attributed to human through this approach, the industry
autonomous drive technology. error, the deployment of autonomous can strive to develop autonomous
Administrator Rosekind has already spoken to the fact

that while the Tesla crash is immensely tragic – much
like every crash that leads to a fatality – 35,000 people
lost their lives in crashes in 2015. The Model S crash
was, unfortunately, one of way too many in 2016
“Administrator Rosekind has already driving technology should continue vehicle systems that are 99.99%
spoken to the fact that while the Tesla without delay. effective. “You want to make sure of
crash is immensely tragic – much like that, just like any good automotive
every crash that leads to a fatality – “We should not let a crash due to a manufacturer would do with any
35,000 people lost their lives in self-driving vehicle or ADAS feature safety system… But you can’t tell
crashes in 2015. The Model S crash pause or delay our movement towards consumers that anything is 100% safe
was, unfortunately, one of way too autonomy. That [technology] really is because it is just not true,” he admits.
many in 2016,” he says. “As a former the most direct answer to reducing
Administrator myself, my perspective human error behind the wheel,” he Sitting and waiting for ten to 15 years
is that there was always going to be a affirms, but notes discomfort with the for a bullet-proof system is foolhardy,
situation where an advanced driver concept of ‘perfect’ autonomy. “No he concludes. “Doing so would leave
assistance system (ADAS) or self- vehicle system ever created is 100% benefits at the table. We can help keep
driving system was involved in a crash safe. You can build countermeasures, people safe faster with this technology
that led to a fatality.” but in the history of automotive safety being deployed.”

Automotive retail revolution
Product and brand under

threat in the auto industry of
the future
“
Automotive retailers that fail to reinvent themselves in light of changing
preferences will not stand the test of time, cautions futurist James Carter.
By Megan Lampinen
obility concepts are
M changing rapidly with the

impact of digitisation and the
What happens to the dealer in all

rise of the sharing economy. What
are vehicle manufacturers and
of this? How will the OEMs support

dealers doing on a sales and
marketing side to move themselves
towards this new mobility? Not
the dealers if they're investing in

enough, warns mobility futurist
James Carter. Also Principal
ride-sharing and car-sharing,

Consultant at Vision Mobility, Carter
raises red flags for those retailers
essentially taking away retail sales,

that fail to reinvent themselves in
light of changing preferences.
which essentially takes away dealer

"The direction of new mobility, the
business?
development of autonomous vehicles
and the notion of mobility as a
service is completely divergent from
how OEMs and dealers as a whole
are thinking," he told Megatrends.
"They are not understanding or
opening their minds to what could
happen in the future. I believe it's a gradual change, in which the industry For dealers, the question is how to
big threat for both OEMs on a sales model is refined. "To me, the most survive the revolution. "How do they not
and marketing level and interesting things are going to happen become Kodak? How do they become
dealerships."
Change is coming,
between now and 2030," he forecast. Fujifilm instead, which completely
He expects the rise of the connected branched out into other areas away
and soon
car to take place in the 2019-2021 from its main film line? It pivoted into
timeframe, followed by the digital cameras and things like selling
emergence of mobility as a service optical equipment, which Kodak wasn't
between 2022 and 2025. After that able to do," he observed. "That's the
Carter believes that the coming 15 autonomous vehicles should arrive. question in my mind. Also, what is the
years will see some of the most By 2026 and onwards, a fully leadership that OEMs need to show
significant industry changes. After developed and more mature new their dealer body to make dealers
that will come a period of more mobility paradigm will establish itself. relevant in new mobility?"
“
What will happen to the dealer in all of this?

How will the OEMs support the dealers
if they're investing in ride-sharing and
car-sharing, essentially taking away retail sales?
Significant declines in
ownership
reason that people will no longer Urbanisation is also eating away at
want to buy a vehicle." the traditional ownership model. Cities
make convenient locations for car and
At the same time, the cost of using a ride-sharing services like Zipcar and
Carter points to numerous factors mobility service, such as calling a Uber. OEMs have been increasingly
that will significantly impact car vehicle on demand or a pay per use active on this front, launching their
ownership, the first of which is a arrangement, is expected to fall. By own programmes, taking stakes in
“
dislike of the current dealership 2030, Carter anticipates a “significant” these start-up companies or even
experience. "People hate buying drop in costs for these types of acquiring them outright.
cars. They hate the sales process schemes. "It is much more an on-
that happens now. Studies have demand style that will reduce the cost "The question I keep asking, and one
shown that more than 80% of people of ownership," he emphasised. on which people have been very
dislike the current sales process, and silent, is what happens to the dealer
90% of people hate bargaining. They Then there are the Millennials and in all of this? How will the OEMs
dislike the lack of transparency that their waning interest in obtaining a support the dealers if they're investing
comes with the purchase process for driving licence. "Over the last 15 in ride-sharing and car-sharing,
a vehicle," he said. "This really opens years we have seen a real decline of essentially taking away retail sales,
up the world for retail disruption on new people wanting to obtain their which essentially takes away dealer
the automotive side. That's one licence," he noted. business? To me that is a
fundamental question that I haven't
seen any senior person in an OEM
answer. That's a real conundrum," he
When people get in a train or

observed.
Dealer revenue
in a bus or in a taxi, they don't

sources
care what brand of vehicle it

Today, most retailers have three main
is. Although it will not be that

sources of revenue: new and used
car sales, parts and service. New
extreme with autonomous

mobility will impact all of these.
"Parts will be impacted because
cars, current interaction and

vehicles are going to crash much
less frequently," forecast Carter.
"Dealers make a considerable
brand awareness is going to

amount of money selling crash parts
to body shops and repairers. With a
be much reduced
30-40% margin in those parts, it's a
gold mine."
The service side of the operations is

likely to take a big hit from the rise of
the electric vehicle (EV). By 2030,

Carter expects EVs to account for is not getting through to the people interact with their vehicle by
20-30% of the entire car parc and distributors about what they need to an action, i.e., they drive. They're
50% of new vehicle sales. By 2045, be planning in the future. I've been able to feel the roads, the steering,
he predicts that all new vehicles sold talking mostly about a 15-year the engine performance. It's very
will be electric. window. If you start thinking about much a part of the car sales process
“
what could happen in the next 15 and a very interactive part of how the
EVs require much less maintenance years and applying it to their thinking, car makes you feel," he explained.
than traditional gasoline or diesel- it really worries me," he confessed. "All of those things are taken away
powered vehicles, and with no need when you interact with autonomous
for the regular oil change, services As an example, he points to a vehicles. OEMs can no longer
could be restricted to such areas as dealership investing in a new distinguish themselves by the way
tyres and brakes. "Instead of being multimillion dollar facility. "How do you the car makes you feel when you're
every 5,000 or 10,000 kilometres, the amortise such a large spend over 15 driving in it."
service intervals are going to be or 20 years, a typical mortgage, when
30,000 or 40,000 kilometres," he the transportation world is going to Becoming simply a passenger
predicted. "People won't be going change so dramatically?" changes everything. "When people
into dealerships." get in a train or in a bus or in a taxi,
People hate buying cars. They hate the current

sales process. They dislike the lack of transparency
that comes with the purchase process for a
vehicle. This really opens up the world for retail
disruption on the automotive side
In terms of straightforward retail Overall, Carter suggests that OEMs they don't care what brand of vehicle
sales, Carter expects volumes to need to get all aspects of their it is," he pointed out. Although it will
decline with the rise of car and ride- organisation thinking and preparing not be that extreme with autonomous
sharing. As a result, GM, Ford, along the same lines. "There may be cars, current interaction and brand
Toyota and Volkswagen – to name small pockets within the company that awareness is going to be much
but a few – are aligning themselves concentrate on aspects of these reduced."
to new mobility. “With their trends, but as a whole, the entire
investment, they are almost saying organisation is not necessarily moving What users could be loyal to,
that the sales opportunities are in in that direction. And incumbents do however, is their in-car digital
this ride-sharing, car-sharing field tend to be slower, and they tend to assistant. "Your interaction will not be
and not with dealers. It is pretty easy think much more about their legacy necessarily with the car or the brand
to project a decline in retail sales," he systems. Dealers could easily end up but with the digital assistant,
commented. This will become only being a legacy for them if they are not commanding it to do what you want
more pronounced as autonomous able to reinvent themselves into a to do. This isn't necessarily the brand
vehicles start to come out in volumes mobility provider," he warned. "It's an of the car or the manufacturer of the
and an individual can call up a self- attitude and a focus on what might car," he elaborated. The role of this
driving vehicle whenever required. happen. If they don't get their heads digital assistant of the future is also
Everyone on the
around it, it could be a challenge." likely to extend beyond the vehicle,
same page Branding under

such as arranging grocery deliveries
threat
or bringing up online content while
you ride in the vehicle. For those
players in the automotive industry
While many OEMs have picked up unprepared for new and future
on these megatrends, awareness In Carter's view, the rise of business models, Carter’s
isn't always making its way through autonomous vehicles represents a conclusion is an ominous one: "The
to the retail side of things. "While you death knell to automotive brand advent of the digital assistant will be
might have head office thinking about loyalty and it all boils down to how we a much greater part of our lives than
autonomous vehicles, the message interact with the vehicle. "Right now, any car or brand.”
Connected car software
A platform strategy for the

connected car
Wind River believes it has developed a scalable underpinning for the
connected car. Freddie Holmes speaks to the Californian software developer
to find out more
onnected cars are already development. Headquartered in McCammon, General Manager of Wind
C central to the growth strategy

of many vehicle manufacturers,
and as with any component or system,
Alameda, California, the software
developer believes it can simplify the
development of connected cars. Just
River, explains to Megatrends. “Many
vehicle manufacturers try to find ways
to reuse common components
cost efficiency is an important factor. as a rolling metal chassis is now between vehicles so that they can
With the rise of global platforms and commonly shared across various maximise their cost efficiency and
expanding model lines, OEMs are vehicles in a brand’s portfolio, the speed up their time to market, and then
looking to their suppliers for connected supplier believes it can deliver a similar focus differentiation on places that drive
solutions that are scalable. strategy through its Helix platform. the most direct value to the consumer.”
In 2009, Intel acquired Wind River for The term ‘chassis’ has been adopted For example, an OEM may build a
the better part of US$884m, “because it mirrors a strategy that compact car and use the same
significantly expanding Wind River’s OEMs use internally when it comes to chassis for its compact SUV model.
pool of resources for technology building the overall vehicle,” Marques This allows common components to
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be reused, meaning additional becoming increasingly clear as new He believes that this is a wake up call
investments are only made when connectivity features continue to find for OEMs to invest where necessary.
absolutely necessary. “We have been their way into the car. In fact,
able to prove that we can do the same consumers no longer view the car as “I would really like to see OEMs spend
thing with software,” says McCammon. a connectivity blackspot, and have the majority of their money on the
developed an expectation for features that are going to make them
Building the software ‘stack’ up or continued access to the Internet, feel most differentiated from their
down describes the addition or navigation and entertainment inside competition, or enhance their
subtraction of features, and can help the vehicle. As McCammon observes: relationship with their consumer,” says
OEMs tailor individual connected car “The centre console on the car is McCammon. Helix Chassis allows an
“
strategies depending on the vehicle in becoming a hub of communication OEM to do just that, as opposed to
question. “If we develop the core and entertainment.” redeveloping the skeletal parts of the
elements that need to be reused connected system for each model.
frequently and create easy interfaces Just as OEMs set themselves apart in
for that core software, we can provide terms of engine performance and Add in the promise of autonomous
that same kind of flexibility and speed exterior design, connectivity is also driving, and the value proposition of
to market,” he says. becoming an important differentiator connected technology becomes even
for many brands. As much as 60% of sweeter. As more driving scenarios
Differentiate to penetrate the market the value of a luxury car may stem become automated, the opportunity
The parallels between new vehicles from the inclusion of “unique for the driver to disengage from the
and electronic consumer devices are connected features,” says McCammon. task of controlling the vehicle and
As the consumer looks to become

more engaged with media on a
continuous basis, the notion of
interfacing with the automotive
experience is logical
“
Vehicle manufacturers try to find

ways to reuse common components
to maximise their cost efficiency. We
can do the same thing with software
monitoring the road increases. The car have their mobile phone, a smart watch,
is expected to eventually become an a tablet and a laptop. The consumer
additional living space, allowing all trend is about finding more ways of
passengers the freedom to carry out media engagement. As the consumer
tasks safe in the knowledge that the looks to become more engaged with
driverless system is in control of the media and communications on a
vehicle. McCammon muses that this continuous basis, the notion of
will open up a wealth of new interfacing with the automotive
opportunities inside the car. experience is logical,” he says.
“I foresee an instance where I have a “OEMs are looking at the way

screen where I could potentially make consumers act – such as the fact that
notes; I can draft professional there's a rise of texting while driving
communications, catch up on texts and more often than not consumers
and emails, and maybe for the children are either connected or on a phone,”
there will be more entertainment he adds. “We’re looking to try to satisfy
interfaces,” he suggests. “I also see the behaviours that we see in the
passengers being able to catch up on consumer, so the drive is a
the news in multimedia as opposed to convergence of consumer behaviour
purely audio today. Those experiences and the OEMs' desire to make the
coming into the cabin will become experience of the car more desirable.”
much more commonplace.”
Who wants to get

In a future where every device,
connected?
machine and building is harnessing
and producing data, the connected
car may be one of the strongest
examples of the Internet of Things
To the casual observer, the (IoT). Enabling the car to interact with
conversation around connected cars all the other aspects of a consumer’s
has exploded in recent years. These connected lifestyle is not simply a
vehicles are no longer a concept, and logical step, but a natural
consumers can already purchase progression, concludes McCammon:
highly connected vehicles in most “Most people won't ever come into
dealerships. However, what has contact with a robot at an assembly
remained slightly ambiguous is why plant or interact with a logistics
connected cars have come to the fore. system, but they do get into their car
at home and move through traffic to
McCammon explains that a another location to perform some
convergence of megatrends has function – grocery shopping or
created the perfect storm for both picking up the dry cleaning – and
consumers and the automotive industry. then go to work. Think of all the
“It's not uncommon for a single benefits you could have if those
individual boarding an aeroplane to things all knew each other.”

Self-driving car regulation
Defining moment as
regulators question 'driver'
of self-driving car
Ian C. Graig, Chief Executive of Global Policy Group, looks at the confusing
definition of the word ‘driver’ as autonomous drive technology evolves
he rapid emergence of the US move toward that safer future by self-evident until autonomous vehicles
T autonomous vehicle technologies,

with their far-reaching implications
for highway safety, is posing myriad
encouraging the development and
deployment of V2X technologies. At the
same time, however, those officials
started to move from science fiction to
the highways.
challenges for government safety recognise that a safe transition to a Take away the human driver, and many
regulators. One of the most daunting more self-driving future requires a of the regulations that have long helped
of these challenges goes to the very regulatory structure that can meet the ensure that vehicles are safe become
heart of regulators’ mission to ensure challenges raised by the development inapplicable, outmoded, or simply
that the next generations of vehicles of autonomous vehicle technology – irrelevant. The same holds true for the
are safe: how should regulators challenges that were unimaginable procedures used to test whether
define who or what is the ‘driver’ of a when many current safety rules were vehicles comply with those safety
“
self-driving vehicle? written. regulations. The regulatory structure
also must help ensure a safe transition
Advances in vehicle-to-vehicle (V2V) Defining who or what is driving a self- during a time in which vehicles driven
and vehicle-to-infrastructure (V2X) driving vehicle is vitally important to by humans may interact on the
technologies, which could eventually building that regulatory structure. Many highways with wholly or partly self-
lead to the development of fully current vehicle safety regulations are driving vehicles. Concerns about those
autonomous vehicles, offer the hope of premised on the quaint notion that a transitional challenges have grown
a future with far fewer crashes and less vehicle will be actively controlled by a more intense as vehicle manufacturers
traffic congestion. Officials at the US human driver seated behind the wheel, (most recently Ford) announce plans to
Department of Transportation and its operating the steering and brakes and begin deploying some fully autonomous
National Highway Traffic Safety monitoring the gauges and other vehicles on US highways within the
Administration (NHTSA) hope to help indicators – a notion that was largely next several years. At least initially,
Many current vehicle safety

regulations are premised on the
quaint notion that a vehicle will be
actively controlled by a human
driver seated behind the wheel
“ An exchange between NHTSA and Google’s Self-

Driving Car Project illustrated how regulators and
vehicle manufacturers alike are grappling with the
conceptual challenge of defining the “driver” of a
fully autonomous vehicle
some of those vehicles may still have interfaces (steering wheel, brake pedal, vehicle with a human driver.” The letter
traditional driver controls like a steering etc.) but rather are driven entirely by the addresses over 50 specific instances in
wheel and brakes, but others may not. vehicle’s computer-based self-driving which federal motor vehicle safety
system (SDS). Ford has said that its standards could be affected by not
This issue is particularly vexing in the vehicles will also be completely having a human “driver,” including rules
US, where vehicle manufacturers autonomous, lacking controls and related to the steering wheel, pedals,
themselves ‘self-certify’ that their interfaces that would allow a human to mirrors, etc. – driver controls and
vehicles meet applicable federal motor wrestle control from the vehicle’s SDS. interfaces that would notably be lacking
vehicle safety standards (FMVSS). In contrast, the Tesla Model S involved in Google’s self-driving car.
Without a clear definition of who or in a widely reported fatal crash earlier
what is driving, vehicle manufacturers this year while its Autopilot system was Some media reports portrayed this as
will face a major challenge certifying engaged and essentially driving the car a ruling by NHTSA that a computer-
that a self-driving car complies with still featured conventional controls and based SDS can be considered a car’s
safety regulations that are premised on interfaces that could allow the human “driver” under federal standards. But the
the presence of a human driver. This driver to take control. letter does not go that far. Instead, it
lack of clarity could raise liability merely states that it would be
concerns, while potentially slowing the In a letter that addressed questions “reasonable” for purposes of discussion
deployment of autonomous vehicle earlier raised by Google, NHTSA said it to interpret the SDS as the driver of the
technologies. would interpret the Google car’s self- Google vehicle, since the vehicle lacks
driving system itself, rather than any of the conventional controls that would
An exchange earlier this year between the vehicle’s occupants, as the “driver” allow a human to drive it. The letter
NHTSA and Google’s Self-Driving Car for purposes of answering Google’s explicitly notes that NHTSA cannot use
Project illustrated how regulators and questions about federal safety such an interpretation to make
vehicle manufacturers alike are standards. Using this interpretation as substantive changes in existing statutes
grappling with the conceptual challenge a “foundational starting point,” NHTSA and regulations, however. In this case,
of defining the “driver” of a fully went on to explore “whether and how” those statutes and regulations define a
autonomous vehicle. Google’s self- Google could certify that such a self- vehicle’s “driver” as the human
driving cars do not have any driving vehicle meets standards occupant seated immediately behind
conventional driver controls or “developed and designed to apply to a the steering wheel.

“
Regulators and both traditional and

non-traditional vehicle manufacturers are
exploring how vehicle safety regulations are
affected or challenged by autonomous or
semi-autonomous vehicle technology
The exchange between NHTSA and technologies are already appearing on to address some of the regulatory
Google illustrates the process through vehicles sold in the US, particularly on issues associated with safely deploying
which regulators and both traditional luxury models. Indeed, concerns have self-driving vehicles on public highways,
and non-traditional vehicle been raised about whether self-driving for example.
manufacturers are exploring how features are being pushed into the
vehicle safety regulations are affected market at a pace more typical of A formal rulemaking might be required
or challenged by autonomous or semi- information technology products than to change the regulatory definition of
autonomous vehicle technology. automobiles. “driver” in light of the ongoing
NHTSA stated in its letter that many of development of self-driving vehicles,
the questions raised by Google The rapid development of V2X however, as NHTSA indicated in its
“
presented issues “beyond the scope technologies is leading NHTSA to letter to Google. NHTSA also warned
and limitations of interpretations,” and address the associated regulatory that even defining the SDS as the
that such issues could only be challenges using a mix of traditional “driver” of a self-driving car would
addressed through “other regulatory regulatory mandates, informal merely be a starting point, and would
tools or approaches.” guidance, interpretations of existing not answer all the questions
regulations, and voluntary agreements associated with certifying such a car’s
Such approaches could include a with vehicle manufacturers. While only compliance with federal safety
rulemaking to write new safety regulations written through a formal regulations. A further complication is
standards using a formal “notice and rulemaking process have legal statutory the role of the US states in this debate,
comment” process. Such a process can authority, more informal approaches as each state defines who can obtain
take years, however, and autonomous can address some issues on at least an a license to drive a vehicle within its
vehicle technology is moving forward at interim basis. NHTSA is expected to borders. The state of California, for
a much faster pace. Many V2X release guidelines soon that will begin example, is developing rules that
would require a licensed driver to be
present and able to take control at all
Defining who or what is driving

times in a self-driving car.
Defining who or what is driving a self-
a self-driving vehicle is an
driving vehicle is an essential step in
the ongoing transformation of the
essential step in the ongoing

automobile and of the statutes and
regulations designed to ensure
transformation of the
highway safety. As NHTSA noted in its
letter to Google, however, arriving at a
automobile and of the statutes

new definition of “driver” hardly
answers all the regulatory questions
raised by autonomous vehicle
and regulations designed to

technology. Such questions in fact
seem to arise almost as quickly as
ensure highway safety

automotive firms develop and seek to
deploy the new V2X technologies that
are fundamentally changing the nature
of the automobile and the automotive
industry itself.
Megacities and smart mobility
New megacities inspire

smart mobility solutions
What role will the car play in the smart city of tomorrow? Michael Nash
investigates
report by the UN’s Department
A of Economic and Social Affairs

shows that the global
population reached 7.3 billion in 2015.
This figure is set to grow to 8.5 billion
by 2030, 9.7 billion by 2050 and 11.2
billion by 2100. Even though such
predictions come with a degree of
uncertainty as they are based on a
medium projection variant, the “global
population is virtually certain to rise in
the short-to-medium term future.”
The report is backed by data from the

World Health Organization (WHO),
“
which also forecasts considerable
growth in the global urban population.
This is set to rise by 1.84% per year
between 2015 and 2020, 1.63%
between 2020 and 2025, and 1.44%
between 2025 and 2030. The trend
will be particularly noticeable in China,
the US, across Europe and even in
less developed countries like India.
With urban populations flourishing, the

number of megacities – metropolitan
areas occupied by over ten million
people – is also set to rise globally.
The UN believes that around 54% of
There will be many more megacities

the world’s population currently
resides in urban areas, but expects
in the near future. The housing in

this figure to rise dramatically as
people are drawn to megacities
these places is becoming denser,

through employment and various
other social factors.
space is at a premium, and people

The rise of the megacity poses
still want to travel from A to B and

numerous challenges, both for city
planners that aim to predict the way
make good use of their time while

that mobility will change to suit
increasingly dense populations and, in
doing so
the automotive industry, OEMs that
are developing low and zero emission
transportation solutions, including
highly connected autonomous
- Matt Jones, Moovel Group
vehicles.

“ There’s a clear trend already forming that car ownership will

decline across cities and megacities in the future. There’s
also a convergence around the idea of paying for a trip, not
for a car, which represents a considerable change in
consumer behaviour - Kate Roberts, Zipcar
Rapid rate of change One of the key trends governing the automotive industry as a whole, said
development of these products is the Jones, is faced with the challenge of
growing number of megacities in the seamlessly connecting these
Several OEM executives have recently
world, added Jones, who recently left consumers with vehicles that they
described the current rate of change
Jaguar Land Rover to join Daimler’s don’t own, making them personalised
across the automotive industry as
mobility services subsidiary. “We can and efficient.
unprecedented. The industry
already see urban populations
sentiment was summed up by Carlos
growing in places like Seoul, Tokyo, According to Kate Roberts, Director of
Ghosn, Chairman and Chief Executive
Shanghai, Mumbai, Paris and Global Partnerships at Zipcar, “There’s
of the Renault-Nissan Alliance, at the
London, to name a few,” he noted. a clear trend already forming that car
2016 New York International Auto
“There will be many more megacities ownership will decline across cities
Show: “There has been a lot of talk
in the near future. The housing in and megacities in the future. There’s
about disruption, about new
these places is becoming denser, also a convergence around the idea of
competitors who promise a new
space is at a premium, and people paying for a trip, not for a car, which
approach to what a car can be. Much
still want to travel from A to B and represents a considerable change in
of this unease over potential
make good use of their time while consumer behaviour.”
disruption has resulted from the rapid
doing so.”
emergence of new technologies and
Car-sharing services, such as Uber,
so-called mobility services, all of
Challenges for OEMs and suppliers Lyft and Zipcar, will compete for
which are competing to establish a
Jones described the way consumer customers, and will therefore naturally
new vision of our industry’s future.”
behaviour has changed to suit these seek to differentiate themselves from
conditions, with an increasing focus the competition. This exclusivity “just
The same views are held by the
and reliance on being constantly doesn’t make sense when we
service providers, who are gearing up
connected. “Previous generations consider seamless connectivity in
for a sharp spike in demand for
might have thought that using a phone daily lives,” believes Jones. “Instead,
innovative transportation solutions
to text or call someone was a we need open standards and active
and new business models. Speaking
distraction to driving. It’s the other way collaboration between many partners
to Megatrends, Matt Jones, Chief
round with Millennials – they want to to effectively integrate and connect
Product Officer at Moovel Group in
be able to connect to social media or people in mobility.”
North America, echoed this statement;
order lunch while on the move.”
OEMs and Tier 1s are working
Ben Foulser, Associate Director,
“tirelessly” to produce the latest
Millennials also know that they don’t Transport Technology at KPMG,
innovative products, he said,
can use car-sharing instead. The - KatewillRoberts, Zipcar
have to procure their own vehicle, and agrees with this idea. “Each company
intensifying and accelerating this rate
naturally work to get one over on
of change.
“
the other company, so that their
Widespread use of autonomous

business model thrives,” he told
Megatrends. This is where authorities
driving, especially in the case of a

will play a vital role.
Challenges for
mobility on demand service,
authorities
would influence city planning as

less parking space would be
“If you leave the development of
technologies and services such as
car-sharing down to the OEMs and
required, and even less road space

suppliers, they will all come up with
conflicting solutions,” Foulser noted.
as driverless cars can drive closer

“There is a big risk that the best
outcome for mobility in the megacity
to each other
will be lost as a result. Authorities must
ensure that the best interest of the city
- James Fu, nuTonomy
and its inhabitants is at the heart of
mobility.”
The simultaneous rise of the megacity

and the connected car also poses
problems for city planners. They must
consider the evolution of vehicle-to-
infrastructure (V2I) technology, and
how to use it to create the optimum
environment for mobility and
consumers.
“Planners and infrastructure providers

are already working together to
integrate technology into the
megacity,” Foulser affirmed. “They are
looking at embedding Wi-Fi receivers
and transmitters in street furniture, like
street lamps and traffic lights, and
even in the roads.”
However, this type of investment is

costly, he added. “It’s not the
From megacity to
technological capability that makes
smart city
seamless V2I communication a 15- “The right approach towards
year pipedream. It’s the practicalities developing autonomous driving should
of funding it from a government and not require any infrastructure,” he
local authority perspective. In my suggested. “However, widespread use
opinion, all authorities are struggling of autonomous driving, especially in Innovation is rife not only in megacity
with investing in these ideas and the case of a mobility on demand development, but also among smaller
finding an optimum balance in market service, would influence city planning cities seeking to capitalise on the
investment and a solid business case.” as less parking space would be being smart. In the Finnish capital of
required, and even less road space as Helsinki, plans are under way to
Foulser thinks that authorities have driverless cars can drive closer to each eliminate the need for private car
conflicting interests when it comes to other while maintaining the throughput.” ownership within a decade, by
investment in megacities, just as combining innovative transportation
OEMs do with connected car Singapore, said Fu, could become a solutions with app-based services and
technology. However, James Fu, flagship for smart, connected mobility new business models.
Director of Singapore Operations at in megacities. He believes that the
nuTonomy – a company that develops adoption of autonomous vehicles in Melander Pihla, Transportation
self-driving tech for vehicles and any megacity could also enable Engineer at the City of Helsinki,
recently started testing the world’s first “integrated use of land where cars and believes there are several
driverless taxi service in Singapore – people can coexist as driverless challenges facing both OEMs and
believes that costly investment in vehicles are inherently safer,” which is city planners as more megacities
infrastructure for vehicles is another possibility that must be taken develop. “The main challenges are
unnecessary. into account by city planners. related to how to serve all the needs

we have in the city, which often have multi-modal transport system that will vehicles using alternative sources
conflicting interests,” she said. be optimised in megacities to make of energy will increase, while the
“Increasing the use of sustainable everyday movement as efficient as role of public transport and
modes of transport is a challenge, possible. “People will be able to jump especially the light-rail system will
as well as finding resource-efficient on a bike before grabbing a subway grow. Cycling and the use of light,
ways to develop and enable the across town, and then an on-demand motorised vehicles will become more
growth of the city without weakening car for the final stretch of the journey popular too.”
accessibility or safety of the to the office. This type of model will be
“
transportation system.” a true test for megacities – authorities, Rus thinks that the transportation
OEMs and transport providers will all network as a whole will become
Pihla revealed that Helsinki’s city have to collaborate and use data so increasingly connected to the IT
planners first consider the needs of that they know exactly when they infrastructure, providing a system
pedestrians when planning traffic and need to provide a service.” that ensures mobility on demand.
transportation systems, before thinking She also expects residents of the
of cyclists, public transportation, goods This prediction is echoed by Daniela megacity to be able to travel
transport and finally private cars. “The Rus, Principal Investigator of the efficiently “using real-time and
main aim is to increase the share of Future Urban Mobility and historical transportation data to
sustainable transport modes, even if Interdisciplinary Research Group, determine the routes and location of
only 30% of trips are currently done by Singapore-MIT Alliance for Research stops on an hourly basis. Mobility on
private car,” she added. and Technology (SMART). “Public demand will also be facilitated by
Increasing the use of sustainable

modes of transport is a challenge, as
well as finding resource-efficient ways
to develop and enable the growth of
the city without weakening accessibility
or safety of the transportation system
- Melander Pihla, City of Helsinki
An abundance of
services
transportation will become a utility, state-of-the-art technologies for self-
available anywhere, anytime,” she driving vehicles. Taking a driverless
noted. “It will consist of a network of car for a ride will be as easy as using
vehicles providing backbone a smartphone.”
What will mobility look like in transportation for many people over
megacities from 2030 and beyond? long distances. There will also be Much is set to change, but one thing
Like many experts, Moovel’s Jones fleets of transportation pods that will is certain: the megacity of tomorrow
thinks that vehicles will undoubtedly be cover the transportation needs of will need innovation in transportation.
smarter, more connected and even individuals for short hops and for the People may not want what they see
autonomous. These autonomous first and last mile part of their long as the inconvenience of vehicle
vehicles will still need to operate journeys.” ownership, but they will always want
alongside non-autonomous vehicles, to get from A to B, and they will want
and even those that are not connected. Helsinki’s city planners envisage a to do it with all of the benefits,
dramatic increase in car-sharing, convenience and relative luxury of a
The development of vehicles must which “will get a big boost from the nice vehicle. The role of the car may
also compliment other transport rise of self-driving cars,” Pilha evolve – but it will continue to have a
systems, noted Jones, describing a asserted. “Also, the number of role to play.
Factory of the future
In the factory of the future,

your colleague will be a robot
“
As production line technology evolves, robots will take on more of the heavy
lifting, leaving humans to do the work that adds true value. By Xavier Boucherat
he idea of the factory of the
T future - that the way things
Defining human-robot
are currently produced can be
improved through process and
collaboration isn’t easy,

technology - is far from new.
Thanks, however, to rapid advances
because within the

in digital and electronic technology,
consultancies, technology giants,
suppliers and vehicle manufacturers
automotive industry, we have

all now see the factory of the future
as a very real aspect of their
always clearly separated

business strategy.
where robots and machines

As automation increases, the
Utopian (dystopian?) notion that a
work from areas where human

vast factory of robots could be
overseen by one or two human
operatives is now a very real one. Dig
workers operate
a little deeper, however, and it
becomes clear that humans have no
need to fear for their jobs - the
factory of the future may theoretically
be possible, but the products that
consumers the world over desire still
require more than a little of that
human touch.
this is only the beginning, and suppliers questioning whether human-robot
Vehicle manufacturing concepts are like Comau will need to move carefully. collaboration is simply a stepping
changing, and as such, it’s an exciting stone on the path to total automation,
time to be making robots. That’s the Human-robot collaboration is a case or a long-term solution. As a supplier
conclusion of Maurizio Cremonini, in point. “We began to look at the of robots, Cremonini is unsurprisingly
Head of Marketing at robotics potential for this a year ago, to see in no doubt that the automated factory
manufacturer Comau. Trends that will what technology can support the is possible; for OEMs, however, it is
come to define the vehicle factory of concept, which is at a very early more a question of whether such as
the future, such as human-robot stage,” he says. “Every day we see concept is even desirable.
collaboration and connected new developments, new applications
manufacturing, have already received and new interpretations of the “From a purely conceptual standpoint,
plenty of attention from OEMs and human-robot collaboration concept.” I think everything can be done with
suppliers. But according to Cremonini, At this early stage, it’s worth robots,” he asserts. “We see so many

“
Ready for work: the aim of human-robot collaboration is not to replace workers with robots, but to make
the work safer and lighter for human factory workers
Whilst there will be more work

between humans and robots in future,
I don’t think the automotive industry
can get rid of human beings
incredible applications today, from humans and robots will collaborate in in the latter area, he says, are no
nano-robots to the biggest robots sectors that are completely more than tools – very sophisticated
capable of moving a complete car. If automated today. Some tasks, tools, but managed completely by a
we’re talking about accuracy and suggests Cremonini, could be done human.
precision, these could be done by a more efficiently with human
robot, but I think human control and involvement, particularly where high “What we are doing today is sorting
intervention is always going to be levels of accuracy, precision and final assembly tasks into segments and
absolutely mandatory when it comes attention to detail are required. sub-segments, and measuring every
to the most critical tasks. So whilst task that can be supported or improved
there will be more work between But it will take time before the real through human-robot collaboration,” he
humans and robots in future, I don’t potential becomes clear, and specific continues. “The reason we’re working
think the automotive industry can get applications for human-robot so precisely and methodically is we are
rid of human beings.” The goal is not collaboration are defined. Again, not sure that collaboration solutions
to replace workers for robots, and Cremonini stresses the need to and associated technology can be
thus cut costs for OEMs, but rather to carefully assess the concept of applied immediately.” Introducing the
make the work safer and lighter for human-robot collaboration and its technology might require modifications
human factory workers. purpose. “Defining human-robot to other parts of the manufacturing
collaboration isn’t easy,” he explains, process, or the way the car is built in
In fact, he suggests, human-robot “because within the automotive the body shop before it arrives in the
collaboration may lead to some jobs industry, we have always clearly final assembly area. Equally, there may
within automotive manufacturing separated where robots and be opportunities for collaboration
being ‘re-possessed’ by workers. machines work from areas where technology to perform multiple tasks at
Comau is forecasting a future where human workers operate.” Machines once, lending it added value. It will be
Side by side: OEMs and suppliers across the auto industry see the factory of the future as a very real aspect
of their business strategy, with strong emphasis on human-robot collaboration
important for suppliers and OEMs to screws, or fixes problems in the the area around the cell, proximity
identify these requirements and dashboard installation. Seat sensors that can monitor the area
opportunities. installation is another possibility. directly around the robot, and then
Finishing touches The factory of the

touch and force sensors so that, in the
future - now
case of contact, the machine knows it
needs to stop moving.
These new applications are most likely
“The approach will not be to provide
to be found in the final assembly area,
Some examples of human-robot each of these every time,” says
where many of the required tasks can
collaboration are already in operation. Cremonini, “but they will be options
be delicate and tricky. “Having robots
At Audi’s Ingolstadt facility, which each time we face a new application, a
work together with human beings will
produces the A4, A5 and Q5, workers new environment, or a new kind of
not imply any kind of reduction in the
are handed parts by a robotic ‘Part4you’ interaction between human beings and
accuracy and care that human beings
arm equipped with sensors that can robots. If humans are working with a
give,” says Cremonini. “There are
identify the right part in a box. At Ford’s robot, you cannot really avoid a
areas where you have workers
plant in Cologne, a robotic arm can lift situation in which the human worker
suffering from fatigue due to heavy
shock absorbers with ease, allowing the could interfere in the robot’s action
lifting, or ergonomic positioning, and
worker to fit faster and more safely. area.”
Elsewhere in the
human-robot collaboration can
Meanwhile, robotics supplier Dürr has
improve that. We think this is one of
factory
developed a collaboration cell for gluing
the main drivers supporting the
components to the vehicle body, whilst
concept of collaboration.”
Kuka has worked with Mercedes-Benz
on machines that can assist workers
Basic applications could include
with tiring overhead work. Beyond human-robot collaboration,
mounting batteries and other heavy
Comau is look at other developments.
components. As the technology
But safety remains a significant barrier. A big part of what drives innovation in
advances, and robots learn to work at
Making industrial robots safe for human the field of robotics and manufacturing
a speed compatible with humans, they
workers to be around is no mean feat, is helping OEMs and suppliers to work
could begin to collaborate on trickier
and without the correct combination of more efficiently and productively with
tasks requiring precision. For example,
sensor technology the risk of a heavy, the space they have, both in greenfield
says Cremonini, a robot arm could
fast-moving robot hitting a worker is and in brownfield situations. New ideas
work inside a car to move a
high. There are numerous options, are now beginning to take a more
dashboard whilst a worker applies
including laser scanners, which monitor definite shape. In late 2015, Groupe

PSA (formerly PSA Peugeot Citroen) activities, and harmonises numerous availability of batteries, and the
unveiled its own thoughts on how tasks,” admits Cremonini. “But if you autonomous capabilities of AGVs, but
automotive manufacturing plants may look at the new products on the market, with batteries becoming lighter and
evolve over the long-term. Among the such as very small electric cars, these smaller, everything appears to be
numerous, radical suggestions set out are basically modular concepts using moving in the right direction, says
by the OEM was the idea of an entirely pieces of steel, welded or mounted Cremonini.
flexible plant, in which no robots are together, and here we think the concept
fixed to the ground, and manufacturers becomes feasible.” Finally, controls architecture is also
are free to configure production lines as likely to simplify. A modern day welding
they wish. One concept from Comau involves the line uses multiple programmable logic
use of robots that can be hung from controllers (PLC), and each robot has a
So how realistic is the prospect of an cell ceilings, as opposed to factory single control. In the future, Cremonini
automotive plant with no fixed robots? ceilings. If necessary, the cell can then says, PLC suppliers such as Rockwell,
For Comau, says Cremonini, it’s be moved. Then, instead of using Siemens and Schneider will work
becoming more likely by the day. The conveyor belts, vehicles under together with controls provided by robot
company has been developing construction can be moved from one producers, thus integrating electronic
concepts around moveable cells for production station to another using control of the robots. Currently, each
years. These will allow manufacturers to automated guided vehicles (AGVs). robot producer designs within its own
adapt a manufacturing process to the This allows for even space-productivity architecture and operating system, with
floor space available. optimisation. “We suspect this will its own proprietary electronics and
become feasible,” says Cremonini, software.
The idea can be taken even further. “and maybe in the future we will see
Some newcomers, says Cremonini, are some specific examples.” “Every time you have to integrate a
considering the idea of a moveable robot into the welding line, you end up
factory, which would allow them to Further predictions from Comau include with at least three levels of control,” he
produce cars in one area before the integration of small AGVs and small says. “You get one big brain controlling
dismantling the system and moving to robots, particularly in manufacturing the line, another controlling the station,
another area, whether to meet excess logistics. “Perhaps in the future,” and then one for each robot.” A single
demand in different markets, or to take suggests Cremonini, “we will have PLC, he concludes, would mean being
advantage of manufacturing conditions. small robots mounted on AGVs which able to work with a number of robots
can travel to a depot, pick pieces and with the same software and interface. A
“This might sound very strange if you drop them into trailers which can then more streamlined system would lead to
consider traditional car manufacturing, serve the line.” These developments will fewer errors, and allow workers to make
which involves a variety of welding depend on the power, cost and more efficient use of their time.
The prospect of a car factory

with no fixed robots is becoming
increasingly realistic, says
Comau's Maurizio Cremonini
Insuring driverless cars
Premium concern: insuring

the success of the
autonomous car
How will autonomous cars affect the automotive insurance industry?
Megan Lampinen investigates
icture this: you’re sitting back, It is hardly an exaggeration to
P reading a book, when all of a

sudden, you have a front row
seat in a car crash scene – literally.
suggest that the automotive
insurance industry could be dealt a
massive blow by the rise of self-
Your car, which you’d put into self- driving car technology and the
drive mode, has just been hit by growing acceptance of business
another vehicle. Or maybe your car models involving shared vehicles.
hit the other vehicle. The other car’s Not only do self-driving vehicles
driver claims you were at fault. You promise tremendous safety
have no idea – you weren’t even improvements, they also no longer
looking. require a human driver to be in
control at all times at the wheel.
Who is responsible for the crash? "Basically, everything is predicting
You? Your car? The other driver? fewer road accidents going forward,"
How should the situation be David Williams, Technical Director at
resolved? This, and many more AXA Insurance, told Megatrends.
complex questions about liability and
insurance are right at the top of the Great news for consumers; not so
long list of questions to be addressed good for the current insurance
by stakeholders in the development industry, which will suffer from falling
of autonomous drive technology. premiums and falling insurance claims.
In May 2016, Swiss Re and HERE "The future of mobility looks poised to
published the findings of their joint upend that [traditional] model and
research study into the impact of change nearly everything about auto
autonomous driving on the insurance insurance: who the customers are,
industry. ‘The future of motor what products they demand, and how
insurance – How in-car connectivity to market to them," write the authors
and ADAS are impacting the market’, of Deloitte's paper, 'Insuring the future
(Swiss Re/HERE, 2016) found that of mobility'. They suggest that
autonomous drive (AD) technologies "insurers may have to rethink their
could reduce insurance premiums role in the mobility ecosystem and
globally by US$20bn by 2020. The their relationship to drivers, owners,
research noted that motor insurance and vehicles."
Early days
is the largest source of premiums
globally, generating 42% of all ‘non-
life gross premiums’. According to
Finaccord, the combined global
Future mobility involves a shift
value of car insurance premiums in
towards shared as well as
2014 stood at US$671.3bn, with that
autonomous vehicles, and both
value representing a CAGR of 5.2%
mean big challenges for insurers. "As
since 2010.

“
we move to shared ownership of
We look at individual elements

vehicles, it becomes the operator
that has to insure the vehicles as
of things that are going to be

opposed to the users," suggested
Phil Harrold, Partner at PwC. "As we
move to different taxi systems,
part of the driverless cars of

there's a need for the providers to
ensure adequate insurance is in
the future, and we already see

place, otherwise the industry could
potentially start to lose confidence.
the impact they can have

As for automated vehicles, then you
really are at the cutting edge of who
insures. I suspect there will be a
number of lawyers who become very
- David Williams, AXA Insurance

engaged in a number of test cases in
the early days, which will then lead to
some changes."
Insurance providers are well aware of

OEMs. Things like maintenance and Beyond the insurance aspect of liability
the changes under way, and they
personal liability-type insurance lie the intertwined issues of corporate
have started to respond. AXA
would probably fall more on the fleet liability, corporate responsibility and
Insurance, for instance, has begun to
operator," he predicted. "But corporate reputation. It is an area
incorporate safety benefits from
insurance companies will have to approached cautiously by the industry,
increasingly autonomous technology
change their models, that's for sure." and in differing ways by the OEMs. In
into its pricing calculations. "We look
Ethics and the

October 2015, Google and Mercedes-
at individual elements of things that
Benz told a CBS 60 Minutes
liability minefield
are going to be part of the driverless
investigation, off camera, that they
cars of the future, and we already
would accept responsibility and liability
see the impact they can have,"
if their technology was at fault once it
observed Williams. According to AXA
becomes commercially available. In
estimates, automated emergency Even with autonomous vehicles, things May 2016, at an event in London
braking systems reduce the number can go wrong and collisions could organised jointly by Volvo Car and
of collisions by 15% and injuries by happen. The big question is, who, from Thatcham to explore the future of the
18%. "We are already building those an insurance perspective, will be
“
insurance industry, Volvo Cars’
into our pricing models when they responsible? Some suggest the vehicle President and Chief Executive Hakan
are fitted as standard," he added. manufacturer, others say the software Samuelsson said: “Liability is crucial.
provider. Then again, if it is some sort We don't believe it's very bold to say
James Carter, Principal Consultant at of shared fleet, perhaps it will be the that, when the car is in driven in
Vision Mobility and a passionate service provider, suggested automotive automatic mode, it is a product liability
mobility futurist, suggests that even futurist Antonio Ferreira. "It raises issue. If that system malfunctions, it is
with safety improvements there will numerous questions from a our responsibility. If you are not
still be a need for some form of responsibility perspective. I don't think prepared to make this statement, you
insurance. "I think the type of there's a clear answer. We have to see really have no product to offer. Who
insurance may be split, with areas how the market develops, and certain wants to buy an auto pilot that you have
like security and autonomous driving rules and regulations have to be put in to supervise? Either you do this, or you
performance probably falling on the place," he told Megatrends. shouldn't be in this business.” Later that
same month, the driver of a Tesla
Model S was killed when his vehicle –
As we move to shared
operating in Autopilot mode – crashed
into a heavy duty truck, raising
ownership of vehicles, it
questions about liability and bringing
the issue into the public domain.
becomes the operator that has

Much of the liability challenge stems
from ethical dilemmas in crash
to insure the vehicles as

situations, such as an incident where a
vehicle must decide between hitting a
opposed to the users

child and protecting the vehicle
occupants, or avoiding the child and
endangering the occupants. Nobody
wants to take on the responsibility for
- Phil Harrold, PwC

programming such a decision into an
autonomous vehicle, yet as Ferreira
continued, somebody will ultimately be
“
responsible for doing just that. We know

that we have the software and
I think the type of insurance may be

hardware to deliver autonomous cars,
he said – what remains open is the
question of right and wrong. “How are
split, with areas like security and

we going to accomplish that, and how
are consumers going to react?"
autonomous driving performance

Were something to go wrong and a
probably falling on the OEMs.

child were to be killed by an
autonomous vehicle, he noted, there
Things like maintenance and

would be a severe negative impact on
the public perception of autonomous
personal liability-type insurance

vehicles. "There needs to be robust
legislation and regulation, and in-depth
would probably fall more on the

talks with insurers. It's a step-by-step
situation."
fleet operator
AXA's Williams concedes that insurers
are in a good position to participate in
these talks. He sees the OEMs taking - James Carter, Vision Mobility
on more responsibility in a form of
product liability, but with a twist. "The
way things seem to be heading, there
will be more responsibility falling on the However, Williams estimates this revolution could be diversification. AXA
manufacturer under a product liability would take three years and require is already onto this. "We are in a quite
style scenario, but not in the form that considerable legal fees. good position because we don't just
we're currently writing it," he predicted. write motor insurance," said Williams.
That, in his view, would be "madness". "I have spoken to government officials "Certainly, we see motor insurance
Claims handling
who have talked about moving to a first forming a smaller proportion of our
party model so that the claim is dealt business, just because the roads are
with. Then, behind the scenes, we can going to be safer. That said, we also
spend the three years on clever lawyers think that what will happen in the future
One of the main concerns regarding and all that sort of thing. I see claims could go a number of different ways."
claims in the future is how quickly they being passed around, moved to their
are settled. "If your car is bumped into final place of responsibility after the To start with, human-driven cars are
or you are injured by another vehicle person that's involved in the accident is not expected to disappear any time
“
currently, you want your claim to be sorted," said Williams. soon. Once these do start to drop out
Diversifying
resolved quickly and efficiently. You of the market, it will take some time to
want that same situation to be the replace the entire car parc. "It is not
case when it's an autonomous vehicle. an immediate concern. Also it is not
Who is going to be best placed to deal the end of the world and it shouldn't
with those claims and what will the Overall, improvements in vehicle safety
be the end of the world for our staff
route be?" asks Williams. Today, if due to advances in active safety
either. If you have good trained staff
someone is involved in an incident and technology are expected to dramatically
dealing with road accidents, maybe
believes it was the fault of the car and reduce, if not eliminate, most of today's
we'll move them on to travel or home
the manufacturer, theoretically they insurance premiums. For insurance
insurance or something like that. As a
could sue them for a recovery. providers, the key to surviving the
large composite, we have those
opportunities," he said.
However the insurance situation
Certainly, we see motor insurance

resolves itself, AXA’s Williams expects
to see some thinning of the ranks.
forming a smaller proportion of

"There is too much capacity in the
insurance market currently. If some of
us were thinned out, that wouldn't be
our business, just because the

bad for the consumer," he suggested.
roads are going to be safer

The companies most at risk are those
with portfolios limited to motor
insurance. "If that is all they're writing,
and those premiums are plummeting
- David Williams, AXA Insurance because the roads are safer, then
they're probably going to disappear," he
concluded.

The outcome economy
Is the auto industry ready for

the Outcome Economy?
As business models evolve from delivering products to providing services,
the auto industry must prepare to make money in a very different way.
By Megan Lampinen
ow is value in the automotive "Sharing is the new buying,” notes Anil
H industry created?
industry observers see a
transition taking place, as value
Some Valsan, Global Analyst, Automotive &
Transportation at EY. “That pretty much
summarises what we believe is the
moves from the vehicles themselves manifestation of this Outcome
to the results they produce for drivers Economy in the automotive industry.
(i.e. the ability to move from one place The whole concept of shared mobility,
to another). This Outcome Economy where consumers are moving away
approach is playing out across the from owning vehicles and becoming
industry in several ways. focused on the outcome, which is
Manifestations
about getting from A to B, is a reflection
of how the Outcome Economy is
shaping the auto industry."
"People are all of a sudden starting to
Harrold also sees it playing out in
look at what automotive means. It is a
autonomous vehicle development:
form of transport in an environment in
"This area is all about looking at what
which people want to travel, as
people want out of a car. That is to get
opposed to the ownership per se of a
from A to B in reasonable comfort with
physical asset in the form of the
flexible access to the vehicle."
vehicle," believes Phil Harrold, Partner
at PwC. "It has started to manifest
These changes raise many questions
itself in the rise of services like Uber,
about the future of the traditional
which offer more or less instant
ownership models in general, and the
access to a kind of taxi system, albeit
future of the vehicle manufacturers
on a much wider basis than the old-
themselves. "We are already seeing
fashioned Hackney Carriage type
some changes, such as link-ups
setup."
between OEMs and the providers of
either the sharing schemes or the
This paradigm is playing out in the
instant taxi services," observes
emergence of numerous car share
Harrold. "The OEMs are trying to work
schemes, which are all about
out how they will be relevant in the
providing people with access to a
future and where their vehicle volumes
vehicle. This means people do not
will come from. They are entering into
need to take on the full cost of
some of these arrangements now to
ownership, says Harrold – they simply
enable them to have a stake in the
use the car as and when they need to.
future."
“
The Outcome Economy
The way that people access our traditional

products is changing fundamentally. We
call that a Swiss Army lifestyle - you get
what you need when you need it rather
than necessarily having to own it
- Mansukh (Mike) Nakrani, Ford of Europe SMART Mobility
Ford is keen to position itself at the that a Swiss Army lifestyle - you get risk, to try something new." He goes on
forefront of this change and is actively what you need when you need it rather to note that his nephew doesn't even
“
working to transition itself car than necessarily having to own it." have a driver's licence: "He works in
Generational,
manufacturer to mobility services London. He loves cars, but he doesn't
technological
provider. "The way that people access really want a car. He says, 'I can get a
our traditional products is changing taxi, I can get the Tube, I can get a bus.
fundamentally," says Mansukh (Mike) I don't see the need for a car.'" When
Nakrani, Director, Business presented with the choice between a
Associations and Ford of Europe Part of the emergence of this change new car and a new smartphone, the
SMART Mobility. Ford first observed the could be generational. Nakrani smartphone wins – no question.
trend about six years ago and saw suggests that this may be linked to the
considerable disruption coming with the fact that the younger generation are Harrold shares similar observations. "In
rise of the likes of Airbnb, Uber, Gett, more willing to try new things: "There is part, it's about generational change and
DriveNow and many others. "We call more willingness to take some level of the technology- enabled generation that
is coming along now. The expectation
of my generation was that we all owned
our own home. Speak to a 22-year-old
Sharing is the new buying. The

and they have a different view on life.
Now, that may be partly economic, but
whole concept of shared mobility,

it's also partly that they expect to rent.
They don't expect to own, which again
where consumers are moving

plays to the notion of the Outcome
Economy. That's true of the automotive
away from owning vehicles and

industry. The younger generation will
see cars as a means to an end rather
than as an end in itself," he tells
becoming focused on the

Megatrends.
outcome, which is about getting

Technology advances also play a
supporting role in these developments.
from A to B, is a reflection of how

"Connected and digital technology is
essential to be able to do what you want
the Outcome Economy is shaping

to do on the go," says Nakrani. Valsan
echoes the sentiment, underlining the
the auto industry

importance of connected digital
technology to enabling the Outcome
Economy. “It is important to separate
out connecting to the vehicle versus the
- Anil Valsan, EY
connected consumer. Ideally, the
vehicle is fully connected and offers

The Outcome Economy
consumers a seamless connected piece is about intellectual capital, problems tends to be much more
experience, from the time they book the having the best capabilities to direct and in a number of cases, there
vehicle on their mobile to stepping build technology applications that will be mandates for different types of
inside the vehicle, to having all the fit together well with what consumers vehicles, which will be introduced
settings completely personalised to want." much more quickly than they would in
Regional
their preferences." the West."
developments
However, Harrold suggests the level of Not only is disruption coming from
technology required to support an new corners of the globe but also new
Outcome Economy is minimal. Pointing industries. "Much of this disruption is
to Uber, he notes, "As long as you have Considerable regional differences being driven by companies outside
“
a mobile phone you can get a car. For are evident in the emergence of the the auto industry," said Valsan. "Not
the consumer that's a fairly low tech Outcome Economy. "It is changing so only have the adoption of car share
option, but from the operating model quickly on a daily basis and each and ride share services grown
side, the infrastructure required to region is driving it in a different way," significantly, but because these
connect all these drivers at different commented Valsan. "In Europe, models have very low entry barriers,
times and deliver the service is perhaps you are substituting a family we are seeing a significant number of
considerable. Technology has a major vehicle with some of these ride- new entrants, all very quickly. We see
role to play, particularly when it comes sharing services. However, if you new business models tested almost
to driverless vehicles, but at the very take an emerging market, the every few weeks. The Outcome
basic end – namely access to transport services are becoming a Economy is transforming the auto
– there are some relatively low tech fundamental primary source of industry but it has opened significant
solutions out there." mobility for a number of consumers." opportunity for disruption, and even
In Europe, perhaps you are substituting

a family vehicle with some of these
ride-sharing services. However, if you
take an emerging market, the services
are becoming a fundamental primary
source of mobility for a number of
consumers - Anil Valsan, EY
Developments in this space have Harrold flags North America and the those who are disrupting the
been moving quickly. Just five years UK in particular as technological incumbents are being disrupted by
ago, the industry debate was about leaders in the trend, but cautions that further new entrants."
the issue of mobile versus desktop. both will face regulatory and legal
"What consumers have shown us is challenges. The lead, he believes, will There is no clarity at the moment on
that mobile wins hands down," notes come from China. "The Chinese where these changes will happen or
Nakrani. "People do everything on a economy takes a very different which companies facilitate them, but
mobile that they would do on a tablet approach. China's big cities are they are clearly under way. "Need is
- from watching television and congested and very heavily polluted, the mother of invention," concludes
booking tickets for the theatre to and there's an urgency to move to Nakrani. "There are many very
finding out where to go and scanning more efficient vehicles and allow fewer enthusiastic and smart people who
into airlines. Now that those core vehicles into the cities. The Chinese really want to change the world for the
tenets are there, the next critical government's approach to solving better in this respect."
Virtual reality design
The game is on: automotive

product development in a
new virtual world
“
Digital visualisation and virtual reality tools in automotive design engineering
are not new, but the technology is now beginning to show its true potential
with the adoption of expertise from the video games industry.
By Richard Harrington
ll of the major vehicle
A manufacturers have adopted

real-time visualisation or
The digital car is now crucial. Using this

rendering technology to some extent,
in either 2D or 3D guise depending on
technology, OEMs can develop and

application. Computer generated
imagery has been dominant in
evaluate more configurations in less

marketing materials and the latest
digital configurators provide a virtual
time and greatly reduce the number of

realism in the sales process that
was unavailable even just a few years
physical prototypes, which are costly

ago.
and slow to build and update

The next big step forward, though, will
be made much earlier in the vehicle
lifecycle – at the very beginning of the
- Simon Jones, Director, Unreal Engine Enterprise

product development (PD) journey –
and then continued throughout the PD
process. The arrival of new
technologies that will allow engineers
to view three-dimensional, virtual
representations of everything from a
single component to a complete
vehicle will be a game-changer in the
quest for optimal efficiency, enabling
the time that would be added to a
programme by greater complexity to
be offset by ‘multi-tasking’ in the virtual
world. This flexibility and increased
speed of processes will become even
more important as autonomous
vehicles become established and the
complexity of designing and
engineering dynamic new user
interfaces grows exponentially.
New technology providing 3D, virtual representations of single parts

through to complete vehicles will be a game-changer in vehicle design
As long ago as 2010, a Jaguar Land
Rover advanced engineering

“
By making the design process leaner and buying us more

time, the technology clearly opens up more opportunity for
innovation, more discussion with suppliers and therefore
the opportunity to bring a better, more advanced product
to market - Simon Jones, Director, Unreal Engine Enterprise
manager was outlining to the media and five sides of Sony 4K projectors the platform for projects across
why digital development was scalable to 16K – the first environment automotive, aviation, architecture
becoming so important: “While the to have with that capability and and consumer electronics.
The digital car

time taken to develop a car is still heralded at the time as having the
about three years, the greater highest resolution ever realised in a
complexity of vehicles has significantly VR environment.
increased the amount of work
As a result, Epic, which is
required,” explained Ian Anderton. Other OEMs may well have
headquartered in the US state of
“The virtual reality system helps us to something more advanced by now
North Carolina, this year set up a
ensure that we still deliver the highest and are simply keeping quiet about it;
bespoke division to engage with –
quality products because we are using what is certain is that we are entering
and satisfy – demanding corporate
our time in a much more efficient way.” a new stage in the integration of VR
Time for real-time

customers like vehicle manufacturers
processes into the product
who were wanting to use Unreal
development discipline, with the rise
Engine for automotive development.
of even more advanced technologies
The latest iteration of Unreal Engine,
that have their roots in the video
That was then. Now – and still more designated 4.12, is the first to
games industry. Not only are these
importantly in the decades to come – integrate features that have been
new systems more capable, they are
it is time, or more specifically, the requested specifically by enterprise
also substantially more affordable,
benefits gained from saving it, that is customers.
allowing for greater access
the reason why automotive design
throughout an organisation.
and PD functions are becoming so “Vehicle manufacturers are well-served
engaged with real-time visualisation by very sophisticated packages and
One of the companies that will
technologies. pipelines so our role is to add value
enable more OEMs to embrace
beyond this,” comments Simon Jones,
real-time digital modelling – and with
Underpinning a development programme director of Epic Games’ Unreal Engine
it augmented, virtual and mixed
with CAVE (Computer Aided Virtual Enterprise division. “Some of the
reality – is Epic Games. Epic’s well
Environment) engineering is now biggest names in the auto industry are
established real-time development
taken as read, with every OEM able actively evaluating how they can
tool, Unreal Engine, has been
to call on the technology. The only expand their capabilities by
around for more than 20 years and
boast worth making is how cutting- revolutionising some of their processes”.
is behind some of the best-selling
edge it is: Renault partnered with
video games in history. The
technology provider Mechdyne in Jones continues: “The digital car is
company’s decision in 2015 to make
2014 to install a facility in its Paris now crucial. Using this technology,
it free to games developers and
headquarters that included a OEMs can develop and evaluate
creative agencies wanting to use the
PowerWall boasting a head node with more configurations in less time and
technology saw an explosion in its
18 rendering nodes (each with an greatly reduce the number of physical
adoption, not only in video gaming
NVIDIA GPU, the industry standard prototypes, which are costly and slow
but from companies wanting to use
for computer graphics processors) to build and update.
“Unreal Engine empowers vehicle today, but which in the coming years covers an area of 5 x 5 metres in the
manufacturers to use this technology will be universal. BMW application. The real-time
Photo-realistic
in their internal teams, unlocking the graphical output is computed by the
imagination of their designers and same Unreal Engine software platform
engineers by enabling them to do used by McLaren.
things they haven’t been able to
BMW has acknowledged that it has
before and, just as importantly, With stable rendering at a rate of 90
been employing VR in its development
allowing them to do more of it, a vital frames per second and photo-realistic
process since the 1990s but with the
capability given the proliferation of quality, the BMW system enables
new system it was “…reaffirming its
model lines, derivatives and ultra-precise tracking of every body
pioneering status by systematically
customer personalisation.” movement, allowing the wearer to
implementing technology from a
move around in the virtual
sector which has not previously been
Two of the latest vehicle manufacturers environment with zero interference –
the focal point of industrial
to confirm the importance of real-time essential for creating realistic spatial
applications” – namely video gaming.
visualisation and VR-based technologies impression and also for making it easy
are in the upper echelon of reputation for to become accustomed to wearing the
Citing the shorter innovation cycles of
product design rigour and advanced VR headset.
VR and 3D in PD
consumer electronics as enabling a
engineering delivery.
much wider scope of functionality and
lower costs for the hardware it needs,
A ‘Real-Time Rendered Future’ digital
BMW has taken advantage of
presentation of a McLaren 570S,
technical and human expertise from The mixed reality system optimises
using real CAD data supplied by
the computer games industry to interaction between individual devices
McLaren Automotive and produced
immerse PD engineers and designers and components, such as the real-
using Epic Games’ Unreal Engine,
in a virtual world where a burgeoning time model, VR headset and tracking.
was revealed at the annual Game
number of vehicle functions can be To move the experience beyond
Developers Conference in San
translated into a VR model in an merely visual sensations, BMW
Francisco in March, positioning the
increasingly realistic fashion. employs a reusable interior assembly
British supercar manufacturer firmly
produced using rapid prototyping to
within the vanguard of the new digital
Incorporating Vive VR headsets from enhance perception and integrates
space. A month later in April, BMW
mobile computing manufacturer HTC, precise acoustic inputs – for example
announced that it had become the first
the BMW system allows vehicle the sound of an engine – to further
car manufacturer to introduce a mixed
functions and interior designs to be intensify the immersive experience.
reality system devised entirely using
rapidly modelled with the aid of 3D A development engineer has the
components from the video games
visual experiences. The headsets impression of sitting in a real car in a
industry into vehicle development.
consist of two high-resolution screens real driving situation and can assess
These systems are strong indicators of
and a laser-based HTC Vive features accordingly: all-round
approaches that are ground-breaking
‘Lighthouse’ tracking system that visibility during an urban drive, for
“ The use of real-time and VR technologies is being

driven by the auto industry. The features that we are
adding to the platform are driven by the vehicle
manufacturers - they are defining the parameters
- Simon Jones, Director, Unreal Engine Enterprise

“
VR enables you to look at the

execution of detail areas without
having to make separate desktop
models. You can also sit inside
the interior environment,
immerse yourself – and by
combining VR with some
physical elements we can check
reach zones and head clearances
- Robert Melville, Chief Designer, McLaren Automotive
example, or the legibility or positioning Automotive Design Operations the design process leaner and buying
of a display depending on the viewing Manager, Mark Roberts. “We use a us more time, the technology clearly
angle or seat position. PowerWall throughout, and we can opens up more opportunity for
show the car at full-size on the deck at innovation, more discussion with
Developers worldwide will ultimately the correct ride height so we can get suppliers and therefore the
be able to take part in the design a very realistic understanding of what opportunity to bring a better, more
decision-making process from their it is going to look like on the road. advanced product to market.”
own individual offices and it is also Make believe
possible to scale the system to many And as vehicle manufacturers realise
different developer workstations, the “The next stage is to turn the digital the advantages that real-time and VR
initial vehicle designs being approved models into a physical model – we technologies will bring, it is they that
using the 3D headsets prior to usually do 40% scale models to start are accelerating the pace of change,
physical build and testing. with before scaling up to full-size when not the technology providers. “The use
we have chosen the single theme. The of real-time and VR technologies is
BMW notes in an understated fashion key for me is believability. If we believe being driven by the auto industry,” says
that, “the system already makes it in what we see, we can make the right Jones. “The likes of BMW and
possible to save a great deal of time decision and the high-fidelity, real-time McLaren are now using Unreal Engine
and effort, especially during the early rendering ability of Unreal Engine is and it’s becoming a crucial part of their
stages of development”. The impact on giving us that believability.” design validation. The features that we
future processes and practices will be are adding to the platform are driven
much greater though, as the company McLaren Automotive Chief Designer, by the vehicle manufacturers - they
explains: “VR investigations could Robert Melville, is also enthusiastic are defining the parameters.”
previously only be conducted at costly about both the current and future role
specialised facilities. By incorporating of VR in McLaren’s design processes: One certainty is that the parameters
consumer electronics, the developers “VR enables you to look at the will continue to change, with the
gain an unprecedented degree of execution of detail areas without ambition of vehicle manufacturers in
flexibility, because any modifications having to make separate desktop this technological arena limited only
can be implemented and tested very models. You can check the gap and by their ability to embrace the
quickly.” flush and size of radiuses,” he says. opportunities offered by an all-
“You can also sit inside the interior encompassing digital development
McLaren has spoken more about its environment, immerse yourself – and process. For its part, Epic sees
relationship with the enterprise by combining VR with some physical Unreal Engine as an enabling
division of Epic Games in a jointly- elements we can check reach zones technology and its Enterprise division
produced film, and also outlines the and head clearances.” as the problem-solving partner for
possibilities for the use of advanced BMW, McLaren and others with
VR and mixed reality tools in the The advantage that VR brings goes similarly demanding approaches to
product development process. beyond simply being able to validate uncompromised product delivery to
“Our current design process is structure and feature position and on market. “How far they want to go –
probably much like any other supercar to a much more fundamental level, as and how fast – is really up to them,”
manufacturer,” explains McLaren Melville acknowledges: “By making concludes Jones.
Connected trucks in India
Connectivity is transforming
Indian logistics (but there’s
plenty of room for growth)
Various factors have led to a low adoption of telematics technology in India –
but new technologies and services could quickly take off, and there is
significant room for growth. By Wilfried G. Aulbur, Jeffry Jacob, Frank Pietras,
Norbert Dressler of Roland Berger
From vehicle-centric to
connected services
ompetition and disruption An aggressive and pro-active leverage
C have become the new normal

in the global trucking industry.
Already faced with market volatility,
of truck connectivity allows, in principle,
extended value chain coverage for the
OEMs. Solutions around vehicle
companies and their associated So far, OEMs, beyond selling the truck management, load monitoring, driver
value chains must also understand itself, have focused on offering vehicle- management, operations/logistics
and define their positioning in the centric products and services, with management and time/legal
face of a range of new, disruptive OEM activities and strategies to date management have a transformative
technologies – a range that includes built around financial services, rental effect on global trucking as well as on
autonomous driving, connected solutions, spare parts sales, service the way truck OEMs access profit
vehicles, the sharing economy, the and repair solutions, and fleet pools. Vehicle management solutions
rise of e-commerce, automated management. Now, however, currently centre around activities such
manufacturing and Industry 4.0, strategies are being developed around as remote diagnostics, maintenance
workforce skilling and requirements, the generation of additional revenue planning, break down calls and
and the emergence of non-traditional streams, such as driver training and vehicle protection. Load monitoring
competitors. The range and maintenance contracts. Increased data solutions include temperature
dynamism of these new factors is capture and simulation tools allow for management, a factor of key
straining corporate resources and cost savings in the development relevance in particular in countries
challenging management teams. process, for example in the areas of such as India, where cold chains are
vehicle testing and warranty. Efforts to notoriously weak. Load detection and
Holding on to existing customers has understand driver behaviour and monitoring allows the matching of
become the OEMs’ new mantra. Total demand and to leverage these for capacity and demand and ad hoc
lifecycle customer approaches are either further vehicle optimisation or load optimisation. Driver management
key, with customer retention a major the development of new services are focuses on performance analysis,
focus. To achieve the same, OEMs are mostly in their infancy. Integrated and emergency call and driver
looking actively at extending the value connected solutions (e.g. location- entertainment; operations/logistics
they generate for their customers by based services) that are based on a management focuses on order
extending services and creating new systematic mining of the automotive management, trip recording and
tailored solutions to optimise total cost industry's "new gold" – namely, data – reporting, as well as smart navigation;
of ownership (TCO). are even less prevalent. and time management applications

Figure1
Telematics installations have been growing at 19% p.a., mainly led by

after-market segment and entry level solutions
Telematics penetration in India
Telematics installed base Split of installed base
['000 units']
Type of fitment Type of solution
OEM High end

Mid tier 1%
+19% 16%
293
31%
68%
84% Entry level
After-market
144 Split by industry Split by region
TourismOthers West
Cold Chain North
11% 13%
Retail 3% 27% 32%
12%
East 27%
21% 26% 28%
Pharma
2011 2015 Courier South
Source: Secondary Research
currently focus on speed management. traffic congestion, at €3.5bn due to margins are constantly squeezed, and
Truck connectivity solutions are driven increased logistics efficiency, and at a lack of low cost solutions, are behind
by customer demand, especially in €2.0bn due to the sale of additional this low penetration. So too are
developed countries where operators apps and services. Integrated and challenges in terms of infrastructure,
need to protect margins. In addition, connected traffic systems, inter-vehicle such as data networks, and the level
as sensors have become cheap and communication and intelligent traffic of connectivity of local authorities and
ubiquitous, as high-bandwidth warning systems simply make life business partners. India's
communication technologies, Cloud- easier, safer and more environmentally transportation sector is also still
based services and new data friendly. They also make a positive largely driven by small fleet owners
analytics approaches have become economic impact which will motivate who operate fewer than five trucks and
available, technology has ceased to regulators to drive enforcement. account for about 68% of the total fleet
be a limiting factor. Machine-to- (2012 data). Medium fleet owners (5-
machine (M2M) communication has Furthermore, OEMs are slowly 20 trucks) and large fleet owners (>20
reached a significant level of operating recognising the value of data. The trucks) account for a modest 20% and
maturity, with dedicated short range realisation that their business models 12%, respectively. While medium and
communications (DSRC) used for may be at risk not due to traditional large fleet owners have become more
time-sensitive and mission-critical competitors but due to the innovative important in the overall mix (small fleet
functions and commercial wireless power of Google, Facebook, Uber, owners accounted for 84% of all
technologies deployed for non-safety and other non-traditional competitors trucks in 1994), their volumes are too
applications. Body area networks can is driving significant investments and low to result in significant telematics
even connect bio-sensors implanted activity around data-based business penetration.
into drivers to provide driver health models and approaches.
India - significant
monitoring. Awareness of and interest in telematics
The value of room for growth

solutions has increased significantly for
connectivity
medium and large fleet owners.
According to Roland Berger research,
Indian MHCV owners in these
India's telematics landscape offers categories focus on three main features
Vehicle connectivity is also driven by significant room for growth. of telematics solutions: productivity,
legal initiatives. For example, estimates Historically, India has shown a low efficiency and cost savings/TCO
put the macroeconomic benefits of acceptance for telematics, which has optimisation. Security solutions are
telematics in Europe at about €4.4bn kept market penetration low. Price important, but not as critical as cost and
(US$4.9bn) due to the avoidance of sensitivity among operators whose margin related aspects.
Figure2
There are ~20 players in the domestic market,

top 3 account for 60% of the market
Competitive landscape
CV Telematics marketshare [India, 2014] Comments
> The Indian telematics market is highly
competitive
> The competitive environment is further
Others
expected to intensify with increasing product
17%
Trimble extensions, more advanced offerings,
30%
Mahindra technological innovations and M&A
4%
> Trimble is the market leader with 30%
Ashok Leyland Telematics
5%
market share. The top 3 participants (Trimble,
Arya Omnitalk and CMC Technology) account
Dhanus Technologies7%
for ~60% of the total market
10% 16% > To remain competitive in the market, vendors
e-Logistics 11% Arya Omnitalk not only have to develop new technologies
CMC Technology but also keep abreast of global developments
and emerging technologies that could impact
their product portfolio
Source: Secondary Research
OEMs have much to

gain in India – and
In addition, the globalisation of 68% of all installed applications,
much to do
supply chains and demands by followed by mid-tier applications
global customers for higher service (31%). High-end solutions that can
levels is forcing a professionalisation be found pre-dominantly in Western
of Indian fleet operators. Cost markets are hardly relevant, with a
escalations put pressure on margins fitment rate of about 1%. Innovative, technology-based approaches
and drive fleet owners to focus on exist in India and are gaining visibility.
TCO optimisation rather than the Most of the fitments (84%) are Take Rivigo as an example: Rivigo is
initial price of telematics solutions. aftermarket fitments rather than OEM a startup that introduced the "relay
Government efforts, e.g. the initiative fitments. While all Indian OEMs offer model" in the Indian logistics space.
to enforce the use of GPS in state- telematics solutions, these services The company operates a fleet of over
run buses, also increase the have not found too many takers. This 800 trucks (which is constantly
awareness and penetration of is a very different scenario from that growing) as well as 40 pit-stops
telematics solutions. of Europe where truck OEMs such as across India. The basic idea is to
Daimler, MAN, Scania and Volvo are switch trucks at pit-stops, i.e. a truck
Lastly, India has a number of among the leading providers of that is supposed to go from Delhi to
aftermarket players that offer telematics solutions. In India, Chennai is driven, for example, as far
relatively low-cost solutions. suppliers such as Trimble, Arya as Jaipur. In Jaipur, the truck driver
Combined with the need to optimise Omnitalk, CMC Technology and e- hands the truck over to another driver
cost in light of thin margins, such Logistics (see Figure 2) seem to be who made the journey with a truck
solutions drive adoption. more efficient in offering entry and from a pit-stop further south up to
mid-range solutions to fleet owners. Jaipur. The Delhi truck continues on
These trends have translated into a As a consequence, significant its journey south, while another
rapid growth of telematics current and future profit pools are not Delhi-bound truck is driven by the
installations as shown in Figure 1. accessed by Indian OEMs. This is an Delhi driver back to the city. Rivigo
With a CAGR of 19%, the installed area of concern, as India's OEMs claims that operating the relay model
base has increased from 144k units may not be able to harness customer allows trucks to run up to 800 km
in 2011 to 293k units in 2015. data. While competition in the (500 miles) per day rather than the
segment is fierce and driven by price typical 280 km per day which reduces
Entry level solutions - such as basic as well as technology adoption, the transit times by 50-70%. In addition, the
fleet tracking, monitoring of fleet presence of Indian OEMs is drivers’ quality of life is dramatically
utilisation, fuel efficiency and desirable and indeed crucial in the improved as they are normally back
productivity - dominate the field with mid- to long-term. home after 24 hours. Clearly, for this

Figure 3
Each stakeholder group with individual competency

profile – OEMs benefit from close customer/vehicle access
Data-based
- truck business – Competency profiles
Ensure access Exploit data Provision of services
Vehicle Customer Data Data Innovation Business
Stakeholder access 1) access 2) handling3) processing4) strength5) flexibility6)
I OEM
II Specialized supplier
III Device manufacturer
IV Network operators
V "Over-the-top"
VI Global IT leader
VII IT service provider
VIII Others (e.g. insurance,

authorities etc.)
High competence No competence
1) Access to vehicle data via respective devices and applications 4) Data analytics to extract value from amount of data
2) Access to customer data (driver, fleet operator) via respective devices & applications 5) Ability to handle short innovation cycles effectively & achieve innovation leadership
3) Data transmission and storage (e.g. cloud based) 6) Ability to adapt business processes & organization in respect of dynamic market environment
Source: Roland Berger
model to function effectively, the services (e.g. sell anonymised truck of OEMs with competitors across
company has invested heavily in driver profiles to retail outlets along various parameters such as ensuring
telematics and advanced data truck routes, etc.). Entering this data access, exploiting data, and
analytics to optimise logistics flows. element of the value chain not only providing services (see Figure 3)
Sophisticated built-in intelligence requires detailed customer highlights OEM weaknesses in the
modules help Rivigo to plan vehicles, understanding, it also requires crucial last two categories. ‘Over-the-
have real time vehicle visibility, optimise organisational changes to ensure that top’ providers such as Google and
routes, incorporate information about these ideas can be driven successfully Apple, global IT leaders (IBM,
tolls/borders, driver behaviour, and with the necessary sense of Microsoft, Oracle, etc.) and potential
performance history, etc. urgency. Lastly, OEMs have the option IT service providers such as
of a spin-off, i.e. set up a new business Deutsche Telekom have substantial
The road ahead for OEMs is that provides information-enabled assets that are relevant for telematics
interesting. OEMs can choose activities to the OEM, its competitors and can provide solid competition in
between different business models. On and other companies that can this space. And as India's example
the one hand, they can limit leverage customer insights. has shown, aftermarket players are
themselves to generating data via their not to be forgotten either.
telematics solutions. Key requirements The last two steps will require
of vehicle access and user trust as far changes in the way OEMs do OEMs globally and in India need to
as data protection is concerned are business. They need to move away take seriously the new telematics-
typically given for truck manufacturers. from "perfect plan" to "fail early, fail based products and services on offer
On the other hand, truck OEMs can cheap". A possible way to incubate or being developed. They need to
and should look at opportunities that these types of businesses identify where they want to play in
arise out of data analytics, i.e. they successfully is to leverage services terms of range of functions and
should structure data and analyse it such as the Roland Berger ‘Startup geographies; they need to
using appropriate algorithms (using Factory’. Trying to start these understand implications for pricing,
the Big Data approach). Besides businesses within the framework of system characteristics and
domain knowledge about vehicles and an established organisation will prove application scope; and they need to
use cases, this requires OEMs to build to be difficult and cumbersome. close critical knowledge gaps quickly,
up capabilities in analysing structured either internally, via acquisition or via
and unstructured data sets. The opportunities offered by partnering, e.g. in the context of
Subsequently, OEMs have a unique telematics are exciting and attractive. startup factories. Technology is
chance to improve existing services However, OEMs cannot take success changing global trucking, and it is
(e.g. fleet management) or to offer new for granted. A qualitative comparison time to think and act.
Michigan’s Planet M initiative
Planet M - Michigan's bid

for mobility leadership
Michigan is positioning itself as a leader in connected and autonomous
vehicle development. Michael Nash talks to the state's Director of
Transportation about the Planet M intiative
he automotive industry is the US state. It has adopted a vision
T evolving fast. Legislative

requirements for vehicle safety,
fuel economy and emissions are
for the connected car’s role in
transportation, with an increasingly
strong link between the vehicle and
playing a huge role, while consumer the surrounding environment.
demand is spurring unprecedented
investment in, and the rapid As a result, Planet M is playing an
development of, connected car integral role in the development of
technologies. Michigan’s Smart Corridor – a stretch
of freeway that runs straight through
OEMs and Tier 1 suppliers, as well as the heart of Michigan’s automotive and
tech companies, are bombarded with a technology development area, where
growing list of challenges as the rise of many OEMs and Tier 1 suppliers are
the connected car reaches new heights. based. It links this to a number of other
Safety is a primary concern, as recent areas that are important for the
reports highlight the vulnerability of development of connected car
connected cars to hackers. Writing technology, like MDOT’s test bed in
recently for Automotive World, Oakland County and the Ann Arbor
Shanmugasundaram M., Associate Connected Vehicle Test Environment.
Director of Product Engineering at
Happiest Minds, suggested that the “In 2014, we made a commitment as
threat of cyber attacks is “only set part of a consortium to develop 125
to worsen as more connected cars hit miles of Smart Corridor,” Kirk Steudle,
the road.” Director of MDOT, told Megatrends.
“During the summer of 2016, we
However, the connected car also agreed to expand this to 350 miles by
offers many opportunities, not just for the end of 2018. This means we need
OEMs and Tier 1s, but for academia, to continue to work with manufacturers
authorities and entire states and and suppliers to carefully and
countries. strategically identify locations for the
Smart Corridor
construction of roadside units and
extension
Smart Corridor technology.”
MDOT carried out the first phase of

freeway equipment installation in 2015
Planet M is an initiative set up by the as part of a consortium with General
Michigan Department of Motors, Ford and the University of
Transportation (MDOT) to represent Michigan. This involved installing
the collective efforts of OEMs, 17 sensors, cameras and wireless
suppliers, academia and authorities devices across a 32km (20 mile)
that are transforming mobility across stretch of freeway, which will help

“
to enable vehicle-to-infrastructure
From a deployment standpoint,

(V2I) and vehicle-to-vehicle (V2V)
communication.
V2I and V2V

opportunity
connected automation has to be
rolled out all over the country
and all over the world, so that
One of the main benefits of creating a
Smart Corridor in Michigan is the
development of technologies thanks to
we can continue this collective

real-world tests. Steudle said that
OEMs are eager to trial their new
knowledge that helps fuel

connected vehicle technologies on
public roads, as tests on private roads
progression
are limited in their ability to replicate
real life situations.
However, the primary purpose is to

make the Smart Corridor fit in
Michigan’s traffic management
system. The sensors and cameras
are currently being used to collect
data from vehicles, such as
speed and location, allowing
Michigan’s authorities to better
manage traffic flow.
“We have a corridor with about 22

traffic signals that are broadcasting
signal phasing and timings to cars,”
Steudle noted. “By connecting these up
to the cars, we can send a notification
to the driver that says, ‘If you adjust
your speed to X, you can drive through
the corridor without stopping at any
lights,’ which eases the traffic flow and
keeps everybody moving.”
This is the “initial phase” of using V2I

technology, he said. The on-going
development of Michigan’s Smart
Corridor is highly reliant on
progression in V2I and V2V
technology, as the next step would
be for the traffic signals to receive
information from cars, which could
dramatically lower the chance of a
crash. “The traffic signal could
receive information from two cars
“In 2014, we made a commitment to develop 125 miles of Smart

that are approaching an intersection,
Corridor. During the summer of 2016, we agreed to expand this to

one of which is about to run a red
350 miles by the end of 2018" - Kirk Steudle, MDOT

light,” Steudle described. “It can send
a message to the other car to tell it to
stop, even though it has a green
light. That's a long-term vision, but
a free pass for testing autonomous becoming much smarter through
we’ve already proven it’s possible
vehicle technology in real-world connectivity with other autonomous
with tests.”
The Holy Grail

conditions. cars. Society encourages people to
talk to each other, because if
Looking to the future, Steudle somebody is very smart but doesn’t
discussed the potential use of speak, the body of knowledge is
In December 2013, Michigan became autonomous vehicles along the Smart limited, but when smart people talk,
the fourth US state to allow self-driving Corridor. “The Holy Grail is connected the body of knowledge and the level of
cars on public roads. This gave OEMs automation, with autonomous cars information increases,” he mused.
“ Planet M is about leveraging assets across the

whole ecosystem of private industry, academia
and government bodies in Southeast Michigan
The same idea applies to vehicles, will be “vital” for the future of the Former glory
Steudle affirmed. Like many experts, industry. Even the state’s schools are
he believes that transport will become educating students as young as 14 in
The fact that the American Centre for
safer with the introduction of the connected car area, Steudle
Mobility is being built on the same site
autonomous vehicle technology. revealed.
that housed GM’s transmission factory
“However, I don't think we will achieve
is perhaps testament to the state’s
a truly safe environment until that “Then there are the test facilities that
endurance as a powerhouse for the
autonomous vehicle is connected, not are very important,” he remarked.
automotive industry. Several OEMs,
only to other autonomous vehicles but “One is Mcity – an autonomous
including GM, have also recently
to the Internet of Things.” village at the University of Michigan
The entire ecosystem

made investments in plants across
that has been wildly successful and
Michigan.
is oversubscribed with activity. OEMs
use it to test and carry out research
“There is no doubt that the American
for autonomous vehicle technologies.”
Planet M is not just about helping to auto industry was on its knees in the
construct smart roads and midst of the recession,” Steudle
Another is the American Center for
infrastructure, Steudle emphasised: “It’s recalled. “But it's picked itself up, just
Mobility, which is being built in
also about leveraging assets across the like all of us here in Michigan knew it
Ypsilanti Township, near Ann Arbor,
whole ecosystem of private industry, would, thanks to the determination of
on the site of a former General
academia and government bodies in people that wanted to make sure it
Motors transmission factory. This
Southeast Michigan. There are 376 would recover and once again begin
factory was decommissioned in
companies, including OEMs and to thrive. Personally, I think it is now
2009, and is now a 300-acre car park.
suppliers, involved in automotive R&D stronger than ever.”
The new facility will be a “much
in the area, which represents around
larger, more detailed version of Mcity,”
75% of global automotive companies.” In the hope of promoting further
Steudle explained, where OEMs will
growth and expansion in the
have the ability to conduct high-
On the academic side, the University automotive industry, Steudle said that
speed autonomous vehicle testing in
of Michigan and Michigan State Planet M would work to ensure “even
both rural and urban areas, certifying
University play a key role in Planet M. greater collaboration between
and validating technologies before
These are carrying out research in businesses, governments and
taking them to market.
connected automated vehicles that academia.” He also suggested that

“
We view Michigan as the centre of

this world of connected automation.
Technology in the automotive
industry is changing fast, and it is
changing because of our expertise
closer relationships could be formed Like Michigan, Nevada is also Michigan, but that’s not ubiquitous. It
between Michigan and other US positioning itself as a hub for the has to be rolled out all over the country
states, as well as other countries. development of autonomous vehicle and all over the world, so that we can
Authorities in Texas, for example, are technology. Several OEMs, including continue this collective knowledge that
establishing a similar activity, and Hyundai, Kia and Mercedes-Benz helps fuel progression.”
Michigan has agreed to collaborate have received permits to test
and help set it up. Steudle also autonomous vehicle technologies on However, despite the possibility of
revealed that MDOT has agreed to public roads across the state. Steudle working alongside others, Steudle
work alongside authorities in Ohio and would not reveal if Nevada could be a concluded: “We view Michigan as the
Pennsylvania on the deployment of potential partner for MDOT, but he did centre of this world of connected
connected automation. Partnering suggest that connected automation automation. Technology in the
with neighbouring states, he added, is must become a global phenomenon: automotive industry is changing fast,
one of Planet M’s goals, as it would “From a deployment standpoint, and it is changing because of our
permit the development of Smart connected automation must gain expertise. Over the next five to ten
Corridors that connect these locations traction all over the world. It would be years, you will see Michigan out in
in a new way. neat if it succeeds in Southeast front, leading the way.”
Michigan must overcome some very

real obstacles on the way to becoming
a world leader in vehicle connectivity
and automation
Ride-sharing
Need a lift? The business of

sharing a ride
“
As consumers quickly adapt to the notion of a sharing economy, the future of
private car ownership looks set to decline. Insero Group’s mobility expert,
Søren Bernt Lindegaard outlines the business models that will fill the void
hree notable trends look set to
T change the current automotive
Ultimately, the days of the car as a

business model: ride-sharing,
ride-sourcing and car-sharing.
personal possession are numbered;

In order for these trends to develop into
rising motoring costs will put private

viable business opportunities, however,
it is a prerequisite that those involved
ownership out of most people’s reach,

make full use of all available digital
and the car will revert to being a

technology. Applying easy-to-use
technology to car-sharing solutions will
status symbol
remove any hassle or wasted time
associated with ‘sharing’. It will also
make driving with others far easier and
more convenient than ever before.
The business of
sharing a ride
the years have progressed, ride-sharing our pockets mean we can now easily
has become an even more common go wherever we desire, whenever we
form of transportation. People used to desire.
Ride-sharing is a classic form of share a ride only with people they
transportation, one that goes back already knew, or as part of a regular Furthermore, there is a trend amongst
many years. Indeed, it is commonplace agreement with a colleague about ride-sharing operators towards leasing
to drive together to work, to the cinema sharing a lift to work. However, private cars to customers, provided that
or to visit friends or family. However, as ubiquitous Wi-Fi and smartphones in the customer agrees to make his or her
leased car available to other users. As
an example, GoMore today has 1,000
Who’s doing what? Examples of current operators of its own cars on the road and aims to
have at least 100,000 cars on the road
Service type Examples of current operators in 2020.
Ridesharing.com By leasing private cars, the ride-sharing

Ride-sharing GoMore.dk operators are less dependent on their
Blablacar customers’ willingness to share cars; at
the same time, they are successfully
Autolib (Paris) expanding their business model.
Car-sharing
car2go (29 cities) Consumers have the ability to lease a
(‘free float’ concept)
DriveNow (Copenhagen, Munich, Berlin, Stockholm etc.)
car at a more favourable price than that
Green Mobility (Copenhagen)
offered by a regular car leasing
Car-sharing TADAA! company - the only catch being that
(central point concept) LetsGo users agree to make their cars available
to others.
Lyft
Ride-sourcing
Uber Ride-sourcing is an extension of ride-
sharing. Besides sharing a ride, car
Autonomous driving Tesla, Volvo Car, Google owners now make money from
transporting people around. Now it is

Ride-sharing
not only a question of better using the

space in the car, but also offering
consumers a cost-competitive and
flexible transport solution. Peer-to-peer
transportation is thus established based
on a form of transportation that easily
could be characterised as taxi driving.
Car-sharing: From big

city to country village
Compared to ride-sharing and ride-
sourcing, car-sharing goes to the next
level and involves sharing a car with
other people. Initially, car-sharing was
primarily a stationary concept, with the
car picked up from and returned to the
same fixed parking lot. However,
during the past decade we have seen
the rise of several so-called ‘free-
floating’ concepts arise, which provide
users with access to an entire fleet of
cars that can be picked up and
delivered anywhere. Examples of
stationary models are LetsGo and
TADAA!, two nevertheless very
different models conceptually. TADAA!
targets existing communities like
housing associations, offices, hotels or
small villages, whereas LetsGo,
instead of targeting specific
communities, merely seeks to
Ubiquitous Wi-Fi and smartphones in our pockets mean we can now

establish a large parking lot with its
easily go wherever we desire, whenever we desire

fleet typically near the town centre.
Car-sharing concepts can be

established in many shapes and forms.
TADAA! provides very small Ride-sharing, for example, will become still be present as the users would be
communities with an economic more structured. As the concept able to allow other users to join some
foundation for starting a profitable car- evolves, users will no longer need to or all of the trip.
sharing business, while DriveNow decide whether they have room for a
operates at the other end of the scale, passenger, what price range they These trends will have a significant
taking an extensive customer base to prefer and so on. With pre-configured impact on the ownership structure of
create a business that is both profitable comfort settings, the cars themselves the operators as car-sharing will be
and user-friendly. will define the extent to which ride- mainly driven by large fleet owners.
sharing can be optimised. However, The same will be the case for ride-
The different car-sharing concepts can there will still be an owner present in sourcing operators, even though there
easily supplement each other. As an the car. will still be a place for privately-owned
operator, DriveNow is better suited for cars, which will be administrated by a
bigger cities, whereas TADAA! is also Car-sharing will become even more third party. The model will also apply
well suited for smaller communities. common; the cars will be able to find for ride-sharing, where private car
Self-driving cars take

their way back and forth in the cities, ownership will be administrated by a
car-sharing to the next

enabling even stationary concepts to third party, and many of the large
level
become more agile. Users can get a operators in the market will have built
ride to wherever they need to go, and up large fleets, very much like the
until they need the car again, it can GoMore business model.
service other users as a taxi or return
All the different types of car-sharing to its point of departure, from where it Ultimately, the days of the car as a
services have a bright future, especially can be of service to other users. personal possession are numbered;
when factoring in new self-driving car rising motoring costs will put private
technology. In the future, ride-sharing, Ride-sourcing will be fully automated, ownership out of most people’s
ride-sourcing and car-sharing will look and the taxi business will be without reach, and the car will revert to being
ever more alike. drivers. An element of ride-sharing will a status symbol.
Future mobility
Under the influence: future

mobility, shaped by global
megatrends
Stakeholders must embrace change to succeed in the automotive industry of
the future, writes Shwetha Surender, Program Manager, Mobility in
Frost & Sullivan’s Automotive & Transportation division
ransport is central to any premature deaths annually are linked
T economy; the sector contributes

over US$5.4trn annually to the
global economy, and provides
to air pollution. As the demand for
mobility increases and new car
registrations rise from 90 million in
essential infrastructure that drives 2015 to over 125 million by 2025, the
economic growth and enables the negative externalities associated with
movement of goods, services, and these issues are expected to rise
people. The automotive and exponentially.
Connectivity
transportation landscape is
undergoing a revolution, heavily
influenced by a few key trends.
Urbanisation
Frost and Sullivan's research identifies
connectivity as a major trend that
serves as the under bed required for
In 2010, 50% of the world’s population all future digital services. More
was living in cities. By 2030, the smartphones are now sold in a year
world’s urban population is expected than there are cars on the planet, and
to rise to 60% and by 2050 to 70%. the number of gadgets available is
The level of investment in global multiplying five times faster than
transportation infrastructure, on the people. The connected device
other hand, is expected to grow at a universe is expected to explode from
slower pace of around 5% CAGR over less than five billion to 80 billion by
the next decade. This is likely to lead 2025. This technology boom will
to challenges such as increased facilitate the development of
congestion and rising pollution unless connected car communication as well
there is better utilisation of the existing as underpin the evolution of smart
mobility services.
The cognitive era

infrastructure.
Congestion is already a serious

challenge in many urban conglomerates.
The damage associated with The second key trend is an evolution
congestion, right from wasted fuel of artificial intelligence. In a world of
costs to loss of productive time, are cognitive artificial intelligence,
estimated to cost economies machines will be able to make their
anywhere between 2% to 4% of their own decisions simply because there
GDP today. Air quality has emerged will be more insightful real-time data,
as another serious concern. The this will give them the context to
World Health Organization (WHO) make sense of it and react just like a
estimates that over 7 million human would.

Future mobility
Supporting Services
Parking Fi i l
Financial
Services
H ili T
eHailing Taxi (On-
Demand)
Integrated Mobility:
Plan, Book, Pay
Cost & Convenience
One Way C
Car R t l
Rental
Carsharing
Round Trip
“
Carsharing
P2P Carsharing
Carpooling
(Dynamic.Corporate)
Carpooling (Fixed)
Micro-mobility Dynamic Shuttle Public Transit

(On-Demand)
Bikesharing
Distance Travelled Source: Frost & Sullivan
In future, cars will be cognitive; not

only will they recognise voices and
With European car occupancy at

be able to optimise the journey; they
will also incorporate other cognitive
just 1.6 people, there is a

technologies of AI such as computer
vision and machine learning. This
tremendous opportunity to
will change the future of cars,
challenge traditional business
models and create immense
reduce private vehicle trips,

potential for innovation.
cost, and emissions through

The first step in this journey is the
automation of cars. There is still
sharing journeys with others

considerable ambiguity concerning
the legislation of autonomous
vehicles, which will determine the
commercialisation of the technology.
Frost & Sullivan's analysis forecasts
that 8 million semi and highly
Social trends
automated vehicles will enter the
market in the next ten years. Fully the environmental implications. These
automated cars are expected to be changing attitudes will drive the growth
commercialised by 2030, which is of shared mobility business models as
The next key trend is the change in the
valued as a US$60bn per annum well as greater utilisation of existing
mindset of the future customer; by 2025,
market opportunity. infrastructure in cities as more people
50% of the global working population
turn to public transport.
will be made up of Millennials. One of
Once the commercialisation of
the biggest trends in this demographic
autonomous driving kicks in, it will We are also seeing a shift in attitudes
is the reduction in the level of driving,
have far reaching impacts. For where people are prioritising access
with people expected to drive around
instance, in the US commercial over ownership making more
18% less per day in the US by that time.
trucking market, around 300,000 sustainable decisions. In response,
Since 1980, driver’s license ownership
truck drivers could lose their jobs. there is an emergence of a wide range
among 20-25 year olds has dropped
The entire landscape, as well as the of platforms to enable collaborative
20% in the US. Research has shown
future of cities, will change as a consumption like peer-to-peer platforms
that 9% of Millennials do not want to
result of this technology shift. for car-sharing and ride-sharing as well
drive because they are worried about
as shared marketplaces.
“
Future mobility
As autonomous technology causes a fall in

the price point of new mobility services, new
business models will also begin competing
with public transport and the entire
transportation landscape will see a paradigm
shift with convergence across the board
Smart is the new green An example of the first step toward that cover longer distances at lower
smart mobility is a pilot project in costs and services available on
Manila. The city is collaborating with the demand, often at a higher price. For
The next trend involves the evolution
World Bank and Grab taxi to analyse instance, public transit, whilst cheap,
of the concept of ‘smart’ in various
Grab taxis’ GPS traffic data and provide is typically limited in service scope by
industries. In the future, cars are just
accurate, real-time information for the availability of infrastructure and
part of the equation. In a truly smart
initiatives that can help reduce traffic routes. On the other hand, services
city, cars will communicate with each
congestion and improve road safety. such as taxis and other on-demand
The emerging urban

other as well as with roads,
“
door-to-door models are more
mobility landscape
crosswalks, toll ways and parking
convenient but traditionally have been
structures. Vehicles will know they
the most expensive. In-between the
need to keep a safe distance
two ends of the scale, new models
from each other, crosswalks will tell
are evolving, such as first and last
the car to slow down if there is a Within the traditional concept of mile solutions like bike sharing, micro
pedestrian approaching. Cars will mobility, urban mobility, in particular, is mobility as well as long distance
update each other on real time undergoing a revolution, heavily solutions like car-pooling services that
traffic. Technology underpins this influenced by these trends. are available at a very cheap cost per
movement toward smart, be it smart
distance travelled. These services are
cities or smart mobility within There is a gap emerging in the urban gaining traction in the market
those cities. mobility landscape between solutions because they are starting to solve
some of the core challenges we face
in our cities and in other areas.
Rise of car-sharing
Global car sales are estimated at

around US$2.3trn, but the
This need for more efficient and
effective mobility has underpinned
market opportunity for bringing

the growth of the car-sharing market.
Frost & Sullivan's research has found
together all forms of mobility is

that the global car-sharing market is
expected to grow from 7 million
members in 2015 to reach 35 million
valued at around US$5.4trn

members by 2025. The landscape is
rapidly changing as well; on one
hand, private investment into car-
sharing is continuing, but it tends to
be the larger providers that are
growing into new markets e.g. Zipcar,
Car2go, Drive Now and Bollore. The

Future mobility
market is beginning to consolidate The European market for ride-sharing and bringing in different service
with the exit of some of the start-ups alone had over 30 million members in providers through that platform.
in Europe, such as Cite car and Twist 2016. Over the last year, there has
and Hertz 24/7 shutting down its US been increased investment into ride- Amongst the mega trends, autonomous
operations. sharing leading to a spree of mergers driving in conjunction with an intelligent
“
and acquisitions; for instance, BlaBla transport ecosystem is likely to have the
Apart from urbanisation, other mega car acquired Carpooling.com and biggest impact on the taxi and eHail
trends such as connectivity and AutoHop in Europe, and expanded market. It would increase the utilisation
digitisation have had an influence on into emerging markets such as India, of each vehicle and remove the driver
this market. Advances in vehicle Russia, and Turkey. cost from the equation, leading to a
sharing technology have emerged as drop in customer fares. It could also
one of the biggest drivers for car- Transport Network Companies (eHail lead to a shift away from asset light
sharing and connectivity plays a big role models) such as Lyft and Uber are platforms to an asset-heavy model, as
in making the service more accessible merging with ride-sharing through the the need to invest in an autonomous
and convenient for customers. Data launch of services such as Lyftline and fleet might arise.
Roadmap towards
analytics is used to predict where Uber pool, where passengers share the
mobility of the future

demand will arise and ensure more cost of their journeys. The delineation of
effective rebalancing of the fleet. the business models is beginning to
Advances in vehicle sharing

Global car sales are estimated at
around US$2.3trn, but the market
technology have emerged as

opportunity for bringing together all
forms of mobility is valued at around
one of the biggest drivers for

US$5.4trn. Integrated mobility has a
role in bringing some of these
solutions together on a platform and
car-sharing and connectivity

linking them to the existing
infrastructure. Start-ups and B2C apps
plays a big role in making the

such as Citymapper, Moovit and
Moovel are targeting the high growth
service more accessible and

B2C opportunity. However, for growth
to really take off, there is a need for
behavioural changes, increased
convenient for customers

investment both from the public and
the private sectors as well as a
change in policy across different
markets. The advancements in
technology underpin a shift towards
more integrated multimodal mobility.
In the mid- to long-term, autonomous blur and this is expected to become
driving will have a significant impact on more pronounced as autonomous In the long term, the lines between
the model. In the mid-term, automated driving comes into the picture. different services will blur, and with the
parking will make the customer commercialisation of autonomous
experience more seamless, but the Proliferation of the ride-hailing concept driving, there will cease to be a
real impact will be realised when This market had the relatively highest distinction between a ‘drive yourself’
vehicles become fully automated; at growth and media exposure in 2015 model, such as car-sharing and a ‘be
that point, car-sharing will start and is facing a backlash from licensed driven’ model such as taxis.
merging with other business models. taxi drivers and regulators alike. It has
Ride-sharing – the
attracted significant recent investment; As autonomous technology causes a
next hot social

in 2016 alone, to date over US$9bn fall in the price point of new mobility
transportation trend
has been invested in ride-hailing apps. services, these business models will
also begin competing with public
Increasingly, the traditional taxi market transport and the entire transportation
is getting connected to a tech platform. landscape will see a paradigm shift
With European car occupancy at just Apps such as Hailo, Gett, Curb and with convergence across the board. In
1.6 people, there is a tremendous Arrow have emerged, and their the long term, the key trends will lead
opportunity to reduce private vehicle business model involves connecting to a convergence between
trips, cost, and emissions through traditional taxis with customers. transportation, connectivity and
sharing journeys with others. Frost & autonomous, which will unearth the
Sullivan’s definition of ride-sharing is Another trend is the expansion of the true potential of mobility. Those
when a driver is making a trip and is business model; the market is no stakeholders who embrace all three
looking to monetise the spare three or longer limited to taxi and private hire pillars together are the ones likely to
four seats in the vehicle. services but is also moving to logistics succeed.
Future powertrain technology
The hunt is on for elusive

new powertrain technology
Michael Nash speaks to FEV’s Dean Tomazic about changing trends in
engine design
lmost all of the low-hanging fruit
A for improving fuel economy and

reducing emissions has been
plucked. To keep hitting increasingly
stringent standards, engineers are
faced with identifying solutions that
may be completely innovative or
unconventional – to continue the
analogy, they need to target the fruit
higher up the tree and harder to reach.
However, most are confident that the

internal combustion engine (ICE) will
retain its position as the most popular
engine architecture in the automotive
industry over the next decade. This is
thanks to the help of a number of new
technologies that could soon find their
way to market.
The middle ground

FEV's variable compression ratio (VCR) technology could be introduced
“There is considerable development on- as early as 2017
going in engines and powertrain
technology in general,” Dean Tomazic, ratio the better the thermal efficiency. as a function of speed and load,
Executive Vice President and Chief But when you approach high loads, providing far more flexibility.” He is
Technology Officer, FEV North then knocking becomes an issue. confident that FEV’s latest solution
America, told Megatrends. The supplier This can be mitigated by spark “boasts the best of both worlds –
has long specialised in the design and retardation or enrichment, but neither good fuel consumption at low loads,
development of powertrain components is beneficial for fuel consumption.” and a lower compression ratio at
and concepts, and has a number of higher loads, lowering the need for
technologies currently in development Tomazic said there needs to be a spark retardation or enrichment.”
that will soon be launched. “reasonable middle ground” in terms
of compression ratio selection, The VCR technology can be used in
One of these, said Tomazic, is whereby fuel efficiency and peak both diesel and gasoline engines, but
variable compression ratio (VCR). torque requirements are both met. the primary market would be the
“Today’s combustion engines have a latter. This, said Tomazic, is due to
dedicated compression ratio,” he FEV has been working on VCR the fact that “the biggest bang for
explained. “The engine is under low prototypes for more than two your buck is on the gasoline side.”
load operation when driving through decades. Tomazic said that the There are also numerous
cities or busy traffic, making it technology “allows you to change the advantages exclusive to diesels, he
suitable for high compression ratios, compression ratio depending on added, but the gasoline market is the
because the higher the compression where you are in your operating map target for VCR.

“
Future powertrain technology
The diversification of technologies

will be huge. It's a trend that will be
visible across the vehicle, including
the powertrain
Time is ripe how much we are willing to compromise Tomazic also highlighted developments
on fuel consumption. This means that in exhaust gas recirculation (EGR)
we can drastically increase the power technology. “This will play a big role
So how does it work, and why hasn’t it output of the engine.” because it allows us to de-throttle the
been done before? The VCR engine and increase thermal efficiency,”
mechanism is incorporated into the Given the numerous benefits, it might he explained. “This compliments the
connecting rod, which is in turn be difficult to understand why VCR has benefits that we can get from using
connected to the piston through the not already been brought to market – VCR.”
wrist pin to the crankshaft – a and Tomazic concurs. “The answer lies
completely new connecting rod design. in the fact that fuel has been cheap, Other areas of interest and
“The beauty of the design is that it is a particularly across the US. And from a development include minimising
two-step system, so it can run at either regulatory perspective, there hasn’t yet thermal losses,friction reduction – as
high or low compression ratio.” The been any need to introduce VCR. But reducing parasitic losses can lead to
quick transitional period when both those factors are changing, and big improvements in fuel efficiency –
switching between the ratios is a feat the low-hanging fruit for CO2 reduction and electrification. “We are working
that is particularly important to and fuel efficiency improvement has heavily on 12-volt systems as well as
downsized and turbocharged gasoline gone, but we still have to comply with 48-volt applications. With the latter, e-
engines. much more stringent requirements. chargers can be incorporated into the
This means that the time is ripe for system to ramp up vehicle
“When you think about the acceleration VCR,” he remarked. performance. We can even run the air
process in these engines, there is a conditioning off the system, which
time requirement to build up sufficient FEV has a number of customers that could significantly improve fuel
boost pressure,” he noted. “In most are already testing its VCR technology, consumption and decrease CO2
applications this takes more time than incorporating it into their vehicles and emissions.”
switching between compression ratios.” running fleets on public roads for
He added that the design of the system validation. The technology could While he thinks the low-hanging fruit
allows gas and mass forces to move therefore be introduced as early as has been plucked, Tomazic is
the piston relative to the connecting 2017. confident that there is a wide array of
The vast array

rod. It also includes a shuttle valve that technologies yet to reach the market.
is located at the lower end of the “The key is to pick the right
connecting rod, which “tells the combination, because they have to
connecting rod when it needs to shift complement each other to get the best
VCR isn’t the only technology that
from high to low compression ratios or outcome,” he noted.
FEV is examining. The company is
vice versa. It’s a very simple
also looking at new variable valve
mechanism that only needs a small Looking ahead to 2025 and beyond,
train technology that Tomazic says
electric motor to power it.” Tomazic noted that the connected car
could offer many advantages in
is certain to change the way that the
combination with conventional direct
Tomazic is confident that the system will powertrain works. With different
injection (DI) systems, including
help FEV’s customers achieve essential vehicle requirements, and varying
lowering the exhaust gas
gains in fuel economy, as well as consumer preferences, “The
temperatures. “This could allow us to
emissions reductions. “There are other diversification of technologies will be
apply variable geometry turbines,
potential benefits,” he added. “For huge. It's a trend that will be visible
giving us even more flexibility in terms
example, we can also increase the low across the vehicle, including the
of low end torque and peak power.”
end torque of the system depending on powertrain."

Automotive Megatrends Magazine Q3 2016

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Gill Pratt,

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