Automotive Megatrends Magazine - Q3 2016 by Automotive World

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Welcome... ...to the Q3 2016 issue of Automotive Megatrends Magazine.

In hiring Dr Gill Pratt, Toyota laid bare its ambitions in AI and autonomy. In appointing David Strickland, the SelfDriving Coalition made clear the urgency with which the ﬁve founding stakeholders want to usher in autonomous cars.

This issue of Megatrends includes exclusive interviews with Pratt and Strickland, as well as an exciting mix of expert insight into future mobility, future business models, future manufacturing, future regulations, and even the future of products and brands themselves.

Martin Kahl, Editor

Welcome

Automotive Megatrends Magazine ISSN: 2053 776X Publisher: Automotive Megatrends Ltd 1-3 Washington Buildings Stanwell Road, Penarth CF64 2AD, UK www.automotivemegatrends.com T: +44 (0) 2920 707 021 megatrends@automotiveworld.com Registered number: 08000516 VAT number: GB 171 5423 23 Managing Director: Gareth Davies Editor: Martin Kahl Contributors: Frank Pietras Freddie Holmes Ian C. Graig Jeﬀry Jacob Megan Lampinen Michael Nash Norbert Dressler Richard Harrington Shwetha Surender Søren Bernt Lindegaard Wilfried Aulbur Xavier Boucherat Production: Michael Franklin Anmol Mothy

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Contents

ArtiďŹ cial intelligence, real opportunities: exclusive interview with Toyota's Gill Pratt

Product and brand under threat in the auto industry of the future

DeďŹ ning moment as regulators question 'driver' of self-driving car

David Strickland on the urgent need for self-driving cars

A platform strategy for the connected car

New megacities inspire smart mobility solutions

33 40

In the factory of the future, your colleague will be a robot

Automotive Megatrends Magazine

Contents

Premium concern: insuring the success of the autonomous car

Is the auto industry ready for the Outcome Economy?

The game is on: automotive product development in a new virtual world

Connectivity is transforming Indian logistics (but thereâ&#x20AC;&#x2122;s plenty of room for growth)

50 58

54 62

Planet M - Michigan's bid for mobility leadership

Need a lift? The business of sharing a ride

Under the inďŹ&#x201A;uence: future mobility, shaped by global megatrends

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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, 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 in a partnership with the Massachusetts Institute of Technology (MIT) and Stanford University for the same reason. Dubbed TRI (the Toyota Research Institute), the Silicon Valleyheadquartered company is a sizeable supplement to Toyota’s efforts in 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

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Through deep learning, robots can classify diﬀerent objects roughly as well as a human being. They still don't really understand what things mean Automotive Megatrends Magazine

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Artiﬁcial intelligence

Eventually, autonomous cars will drive better than people in most circumstances

throw away from Mcity, a 32-acre autonomous vehicle proving ground. In August 2016, TRI invested US$22m into the University of Michigan’s efforts in AI, robotics and autonomous driving. The primary focus for TRI is to accelerate the development of technology that can operate a car more effectively than a human driver – hardly surprising given that its parent company is the largest vehicle manufacturer in the world. A particular focus is also placed on allowing those that cannot drive the opportunity to make use of a car. Outside of driverless cars, TRI will also investigate ways of improving total mobility, moving people “across the room, across town and across the country.” Assuming the role of Chief Executive at TRI is Dr Gill Pratt, ex-Director of the DARPA Robotics Challenge, which arguably catalysed the development of autonomous cars. Pratt’s interest in robotics dates back to his childhood where he was ‘enthralled’ with robots, and in 1979 he joined MIT. After 21 years, he joined Franklin W. Olin College to work on its automation and robotics programme, before moving on to the Defence Advanced Research Projects Agency (DARPA). He was then headhunted by Toyota. Speaking exclusively to Megatrends, Pratt explains how robotics and AI are likely to become commonplace not only within the automotive industry, but also across many aspects of modern life.

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AI makes smart cars smarter Alongside AI, industry stakeholders may also be familiar with the terms machine learning (ML) and deep learning (DL). AI describes anything that acts in an intelligent manner that is not controlled by a natural system, i.e. an animal or a human. ML is a form of AI that can adapt and learn from experiences. DL is a refined form of ML that uses deep neural networks – layers of algorithms that are designed to recognise patterns. The question is, how can these technologies help the automotive industry in its pursuit of cars that can drive themselves? Can AI both drive and think like a human? “Eventually, autonomous cars will drive better than people in most circumstances,” says Pratt, “but I don't think there's a person on earth right now that knows when that will happen.” AI, he continues, is an absolutely vital component to the fully autonomous car, but it needs further refinement. “Through DL, robots can classify different objects roughly as well as a human being can. They can understand the difference between a book and a train, for example, but turning that perception into cognition is still very hard to do,” he admits. “They still don't really understand what things mean.”

For example, if a parent is holding a child's hand on the pavement, the chance that the child is about to run across the street is different to a teenager riding a bicycle. As humans, we have the ability to draw realistic conclusions from certain situations, but robots do not share the same ability just yet. “We have all kinds of information that we bring to bear when we see one of those scenes,” says Pratt. “There is this incredible human ability to generalise and think: ‘Well, if I were that parent or child, how would I act?’ Presently, AI systems – even DL ones – are very good at perception, but not at cognition. I think we still have a long way to go with this.” If autonomy is to be trusted, it must drive in a substantially safer way than humans, he affirms.

Rewriting unwritten rules

In the 1950s, Isaac Asimov’s series of science fiction novels I, Robot (which were later adapted into the film under the same name in 2004) defines three laws of robotics. Firstly, a robot must not injure a human or allow them to come to harm. A robot must also obey orders from human beings, except where such orders would conflict with the first law. In addition, a robot must protect its own existence – again, as long this does not conflict with the first or second law.

Artiﬁcial intelligence 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 manufacturers and pedestrians.”

Are robots our friends?

A common theme has developed among robotics companies; many robots share common characteristics with natural – living and breathing – things.

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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 simulation’, and has developed a series of robots to assist the US armed forces. Videos posted online depict the robotic

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Autonomous cars could be safer if they were good enough, but autonomous driving where the car drives by itself is not the only way to get there

‘Big Dog’ bounding around the woods surrounding its development centre, and the near six-foot tall ‘Atlas humanoid’ strolling alongside an engineer.

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

Pratt explains that there are “emotional reasons” why robots are commonly designed to mimic natural 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 ourselves, so building a robot that looks like us makes it a natural fit.” If robots are being developed to appear familiar, should the interaction also feel familiar? Pratt thinks so. “There's a very well-known effect in psychology and computer science where people will anthropomorphise a machine,” he observes. “We've seen this in the car business for 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.”

Automotive Megatrends Magazine

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Artiﬁcial intelligence

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 DARPA robotics challenge, he notes that people “bonded tremendously with the robots,” and when the machine encountered difficulty or fell down, the audience gasped. “When it was successful – even at the simple tasks – there were incredible cheers,” he added. If consumers eventually form an emotional bond with their robot counterparts, be it their car or an automated home droid, Pratt believes it is “very likely” that AI will become a necessity in the same way that the smartphone has. “I think that will be good,” he affirms. “There are many better things to do in life than spend all your time doing dull dangerous tasks. It would be neat for us to use the technology we have on earth to do things that are more worthwhile.” In addition, AI could have a meaningful impact at the dealership. Cars are often an emotional purchase for many drivers, with driving performance and exterior styling the primary attraction. Over time, the interest has shifted slightly toward a desire for premium qualities inside the vehicle – luxury materials, driver assistance technologies and connectivity services. There have been suggestions that the car will become less of a personal device and more of just a means of getting from A to B, but Pratt believes that a robotic personality could help to ensure the

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car does not simply become a domestic appliance. “With the rise of the smart phone and the Internet, there is a tendency for young people to express their personality through information that is online, rather than in a piece of hardware sitting in the driveway,” he observes. “Once we have machines in our homes that are helping us in a variety of ways, I think we'll see more of that bond between people and particular machines.” This could be welcome news for dealerships looking to maintain new car sales in a world where mobility as a service is increasingly popular, he suggests.

The trillion-mile problem

The conversation around autonomous cars has grown from a hushed discussion to a collective roar, but it is worth pointing out that the underlying technology has been around for a long time. For example, an autonomous vehicle developed by Stanford University and Volkswagen won the DARPA Grand Challenge more than a decade ago. Since then, various OEMs have released timelines that outline when to expect an autonomous vehicle from their brand, and government investments around the world are

providing a welcome boost to R&D initiatives. Why, then, is a future involving automated driving still up for debate? The short answer is that autonomous cars need to prove their worth, and that takes testing. And plenty of it. “We tend to call this the trillion mile problem,” says Pratt. Globally, Toyota produces around ten million vehicles a year (10.08 million in 2015), which last around ten years, each travelling roughly 10,000 miles each year, he explains. “Multiply all that out and together, they travel a trillion miles a year. The most advanced of the autonomous car software makers – Google – has tested close to two million miles since its driverless car programme started in 2009. There's a big difference between two million and one trillion.” He explains that this makes it very difficult to build an autonomous car that is error-free in all of those miles, and consumers will not tolerate any mistakes. Pratt addresses the suggestion that autonomous cars are ultimately an expensive and time consuming answer to an issue that could ultimately be solved by wearing a seatbelt and not driving when drunk or distracted. He agrees, but counters the argument, suggesting that “some kind of technology that can make an evasive manoeuvre to avoid a crash” is also a solid ﬁx.

Artiﬁcial intelligence

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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 different approaches to autonomous driving – dubbed ‘chauffeur’ and ‘guardian’ mode. The former can collect a consumer and take him or her home. They could even fall asleep, suggests Pratt. Guardian mode effectively observes the human driver and is ready to step in if required. This, says Pratt, is not what most people would call an autonomous car. “It's rather a car that has a tremendous number of safety features to prevent it – no matter what – from causing an accident,” he explains. Autonomous cars can be safer than human drivers if the technology is developed enough, but a car that drives by itself is not the only way to improve road safety, he affirms.

An existential issue

Early in 2015, a paper published by the Association for the Advancement of Artificial Intelligence, titled

‘Research Priorities for Robust and Beneficial Artificial Intelligence,’ investigated the future impact that AI could have on human life. It notes that the growing capabilities of AI “are leading to an increased potential for impact on human society,” and that “it is the duty of AI researchers to ensure that the future impact is beneficial.” This would suggest that AI could potentially have negative, if not unsafe implications. An open letter signed by more than 8,000 experts in the field – including Professor Stephen Hawking and Tesla Chief Executive, Elon Musk – called for researchers to not create something that cannot be controlled. In 2014, Professor Hawking had warned that success in creating AI could not only be the ‘biggest’ event in human history, but also the last. “The development of full AI could spell the end of the human race,” he told the BBC.

Pratt agrees that as with any technology, there are associated beneﬁts and dangers. Luckily for the automotive industry, he does not believe AI presents a danger. Instead, he believes the risk is in quality control. “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,” he says. “I don't think that the ethical, scary AI issues are something we need to worry about beyond this mind-set of quality control.” At the 2016 Consumer Electronics Show, (CES), Pratt remarked that most of the easy work had been done in autonomous driving, but the hard work is still waiting to be done. AI will be an important aid here, he says, but assures Megatrends that the automotive industry, its stakeholders and the public can sleep easy: the world is not about to be overtaken by out-ofcontrol robot cars.

Automotive Megatrends Magazine

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 forces with Google, Lyft and Uber to form the Self-Driving Coalition for Safer Streets. The latter three may be comparatively new players in the automotive industry, but they are deemed to possess the skills required to make self-driving vehicles a reality.

Fronted by David Strickland, the former Administrator of the US National Highway Traffic Safety Administration (NHTSA), the Coalition is under the direction of a seasoned vehicle and road safety advocate. Speciﬁcally, he will serve as the Coalition’s Counsel and spokesperson, responding on a moment-by-moment basis to the challenges of deploying autonomous vehicles in the US and beyond.

“The long-term goal is to have a regulatory environment to allow the full deployment of self-driving vehicles where there is no expectation for the driver to intervene in the driving task,” he tells Megatrends. For Strickland, there is no time to lose.

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For the ﬁrst time in a very long time, road fatalities in the US have increased year-on-year. According to NHTSA, the number of road deaths in 2015 rose 7.7% to 35,200, compared with 32,675 in 2014; NHTSA data also shows that 94% of all road collisions are a result of human error.

“We have been fighting this war against crashes and fatalities for

decades, and we have been generally successful,” he says. “However, our reductions have not been as significant as those in developed countries in Europe and Asia.” The US has work to do in Strickland’s eyes, and the Coalition’s efforts could prove instrumental in encouraging change. Automated driving technology is not only expected to drastically improve road safety by eliminating driver distraction and poor decision making, but also provide those with limited mobility the access to ondemand transportation. As Strickland puts its, driverless cars are “the new Holy Grail” for the automotive industry.

The expectation that a self-driving car will never make an error, ever, is ludicrous

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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 First on the list of duties is to address the regulatory framework surrounding automated vehicle technology; namely how, where and when it can be tested and eventually released on public roads. The Coalition – along with most stakeholders – is pushing for a national regulation that carries across borders to allow the free-ﬂow of autonomous vehicles from one state to another. A patchwork of regulations would make smooth national deployment of autonomous vehicles difficult; a single blanket regulation cut from the same cloth is the objective, he explains.

“The goal is to try to get it right at the first cut so that we can unleash innovation in the most efficient way, but always keep our eye on the fact that uniformity doesn’t mean a weakened or a lesser standard,” he says. “It shouldn’t be the Wild Wild West out there. There should be some notion of uniformity to make sure that everybody – once the rules are established – has an even playing field on which to deploy and compete.” He observes that there may eventually be small differences as certain states have varying police, traffic safety and enforcement laws. In addition, not every locality in America allows cars to turn right on

a red light, for example. “There’s going to have to be some recognition of differences at certain levels,” says Strickland, and suggests that it would be simpler to tweak a group of variations than to have firm limitations depending on where a driver is in America. “If you have a self-driving vehicle that is licensed for testing in California and want to bring the vehicle over to Nevada, you drive it to the California line, change over to Nevada plates and then go across. That’s the only way to be legal,” he explains. “If that’s how individual states treat self-driving vehicles, it’s going to be really hard to be able to get the full benefit.”

Uber is one of the five founding members of the Self-Driving Coalition for Safer Streets, along with Google, Lyft, Ford and Volvo Car

Automotive Megatrends Magazine

Self-driving cars

Five cohorts The five partners of the Coalition are all firmly involved in autonomous driving in some form. Ford has been carrying out extensive testing at Mcity, a mock-up town in Michigan used to replicate various driving situations. The OEM has also been testing its self-driving technology in winter conditions and in absolute darkness. Google began the development of its self-driving technology in 2009, and has since racked up just under 1.8 million miles of autonomous driving on public roads. Ride share platform Lyft recently partnered with GM with the aim of deploying autonomous fleets in the next couple of years. Volvo is gearing up to launch the public aspect of its Drive Me initiative; 100 vehicles equipped with self-driving technology will be driven by members of the public in Gothenburg, Sweden in 2017. In May, Uber announced it would launch a hybrid Ford Fusion test car in Pittsburgh to test self-driving technology and gather mapping data, and in August it unveiled plans to work with Volvo on autonomous vehicles, including a fully autonomous car that Uber intends to use in its alternative taxi fleet. That announcement came shortly after Ford committed to launching a high-volume, fully autonomous SAE level 4-capable vehicle by 2021.

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Ride-sharing, or private ownership? While the inclusion of two ride share companies would suggest the Coalition is pushing for autonomous taxis, Strickland explains that this is not the only application with a promising future. “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,” explains Strickland. However, he suggests that autonomous ride-sharing will likely arrive ﬁrst in meaningful volumes. “[Private ownership] will be further out in the future than a ride share application in a congested megacity.” He suggested that, similar to Google’s test cars, there will be a ﬂeet of self-driving vehicles that can go no faster than the internal speed limit of 25mph (40kph) in a downtown area: “That’s probably going to be one of the earliest applications for people to be exposed to self-driving cars in a consumer environment, and then it will grow from there.” In the long-term, Strickland believes automation will be available through a number of applications, from ridesharing to private vehicles that can drive independently in all areas and weather conditions. The latter is “ultimately what folks are aiming for,” he muses.

A fatal incident On 7 May 2016, the first death linked to automated vehicle technology occurred in Florida when a Tesla Model S in Autopilot mode collided with an 18-wheel truck. It was reported that the semi-autonomous system could not distinguish between the white paint of the truck and a bright skyline, and as such did not slow down or try to avoid the collision. While safety advocates have called for the system to be renamed and deactivated until deemed ‘safe’, others believe this was an incident waiting to happen. It is worth noting that this was not the first time autonomous vehicle technology has been involved in a collision on public roads. An autonomous Google car was involved in a low-speed collision with a bus in February 2016, and according to the US Department of Motor Vehicles (DMV), a Nissan Leaf fitted with Cruise Automation technology had crashed into a parked car in San Francisco a month earlier. Speaking at the Autonomous Car Detroit conference in March 2016, Strickland’s successor and current NHTSA Administrator, Dr Mark Rosekind, spoke of not letting the pursuit of ‘perfect’ autonomous driving technology get in the way of deploying ‘good’ technology that can still save

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

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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 Autopilot incident, Rosekind received a letter from four safety advocates, including another former NHTSA Administrator, Joan Claybrook, that called this ideology a “false dichotomy”.

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“No technology can deliver on a promise of safety if it is rushed into vehicles with known deadly defects,” the letter reads. However, Strickland is unconvinced that the event in Florida will change how regulators look at the deployment of autonomous drive technology.

He adds that although it was not a question of if, but when such an incident would occur, “it probably came earlier than we all would have thought.”

Sooner rather than later

Ultimately, Strickland agrees that given the rising number of road deaths in the US and the fact that nearly all can be attributed to human error, the deployment of autonomous

we have seen that in the multivariable notion of chaos, unintended things happen and you have to address that,” he explains. “The expectation that a self-driving car will never make an error, ever, is ludicrous.” That is not to say that ‘near perfect’ is unattainable. Six Sigma is a datadriven methodology that aims to eliminate defects in any given process. Strickland expects that through this approach, the industry 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 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,” he says. “As a former Administrator myself, my perspective is that there was always going to be a situation where an advanced driver assistance system (ADAS) or selfdriving system was involved in a crash that led to a fatality.”

driving technology should continue without delay. “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,” he affirms, but notes discomfort with the concept of ‘perfect’ autonomy. “No vehicle system ever created is 100% safe. You can build countermeasures, but in the history of automotive safety

vehicle systems that are 99.99% effective. “You want to make sure of that, just like any good automotive manufacturer would do with any safety system… But you can’t tell consumers that anything is 100% safe because it is just not true,” he admits. Sitting and waiting for ten to 15 years for a bullet-proof system is foolhardy, he concludes. “Doing so would leave beneﬁts at the table. We can help keep people safe faster with this technology being deployed.”

Automotive Megatrends Magazine

Automotive retail revolution

Product and brand under threat in the auto industry of the future

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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 changing rapidly with the impact of digitisation and the rise of the sharing economy. What are vehicle manufacturers and dealers doing on a sales and marketing side to move themselves towards this new mobility? Not enough, warns mobility futurist James Carter. Also Principal Consultant at Vision Mobility, Carter raises red flags for those retailers that fail to reinvent themselves in light of changing preferences.

"The direction of new mobility, the 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 big threat for both OEMs on a sales and marketing level and dealerships."

Change is coming, and soon

Carter believes that the coming 15 years will see some of the most significant industry changes. After that will come a period of more

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What happens 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, which essentially takes away dealer business?

gradual change, in which the industry model is refined. "To me, the most interesting things are going to happen between now and 2030," he forecast. He expects the rise of the connected car to take place in the 2019-2021 timeframe, followed by the emergence of mobility as a service between 2022 and 2025. After that autonomous vehicles should arrive. By 2026 and onwards, a fully developed and more mature new mobility paradigm will establish itself.

For dealers, the question is how to survive the revolution. "How do they not become Kodak? How do they become FujiďŹ lm instead, which completely branched out into other areas away from its main ďŹ lm line? It pivoted into digital cameras and things like selling optical equipment, which Kodak wasn't able to do," he observed. "That's the question in my mind. Also, what is the leadership that OEMs need to show their dealer body to make dealers relevant in new mobility?"

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Automotive retail revolution

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 Carter points to numerous factors that will significantly impact car ownership, the first of which is a dislike of the current dealership experience. "People hate buying cars. They hate the sales process that happens now. Studies have shown that more than 80% of people dislike the current sales process, and 90% of people hate bargaining. They dislike the lack of transparency that comes with the purchase process for a vehicle," he said. "This really opens up the world for retail disruption on the automotive side. That's one

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reason that people will no longer want to buy a vehicle." At the same time, the cost of using a mobility service, such as calling a vehicle on demand or a pay per use arrangement, is expected to fall. By 2030, Carter anticipates a “signiﬁcant” drop in costs for these types of schemes. "It is much more an ondemand style that will reduce the cost of ownership," he emphasised. Then there are the Millennials and their waning interest in obtaining a driving licence. "Over the last 15 years we have seen a real decline of new people wanting to obtain their licence," he noted.

When people get in a train or in a bus or in a taxi, they don't care what brand of vehicle it is. Although it will not be that extreme with autonomous cars, current interaction and brand awareness is going to be much reduced

Urbanisation is also eating away at the traditional ownership model. Cities make convenient locations for car and ride-sharing services like Zipcar and Uber. OEMs have been increasingly active on this front, launching their own programmes, taking stakes in these start-up companies or even acquiring them outright. "The question I keep asking, and one on which people have been very silent, is what happens 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, which essentially takes away dealer 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 observed.

Dealer revenue sources

Today, most retailers have three main sources of revenue: new and used car sales, parts and service. New mobility will impact all of these. "Parts will be impacted because vehicles are going to crash much less frequently," forecast Carter. "Dealers make a considerable amount of money selling crash parts to body shops and repairers. With a 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,

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Automotive retail revolution Carter expects EVs to account for 20-30% of the entire car parc and 50% of new vehicle sales. By 2045, he predicts that all new vehicles sold will be electric.

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EVs require much less maintenance than traditional gasoline or dieselpowered vehicles, and with no need for the regular oil change, services could be restricted to such areas as tyres and brakes. "Instead of being every 5,000 or 10,000 kilometres, the service intervals are going to be 30,000 or 40,000 kilometres," he predicted. "People won't be going into dealerships."

is not getting through to the distributors about what they need to be planning in the future. I've been talking mostly about a 15-year window. If you start thinking about what could happen in the next 15 years and applying it to their thinking, it really worries me," he confessed. As an example, he points to a dealership investing in a new multimillion dollar facility. "How do you amortise such a large spend over 15 or 20 years, a typical mortgage, when the transportation world is going to change so dramatically?"

people interact with their vehicle by an action, i.e., they drive. They're able to feel the roads, the steering, the engine performance. It's very much a part of the car sales process and a very interactive part of how the car makes you feel," he explained. "All of those things are taken away when you interact with autonomous vehicles. OEMs can no longer distinguish themselves by the way the car makes you feel when you're driving in it." Becoming simply a passenger changes everything. "When people 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 sales, Carter expects volumes to decline with the rise of car and ridesharing. As a result, GM, Ford, Toyota and Volkswagen – to name but a few – are aligning themselves to new mobility. “With their investment, they are almost saying that the sales opportunities are in this ride-sharing, car-sharing field and not with dealers. It is pretty easy to project a decline in retail sales," he commented. This will become only more pronounced as autonomous vehicles start to come out in volumes and an individual can call up a selfdriving vehicle whenever required.

Everyone on the same page

While many OEMs have picked up on these megatrends, awareness isn't always making its way through to the retail side of things. "While you might have head office thinking about autonomous vehicles, the message

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Overall, Carter suggests that OEMs need to get all aspects of their organisation thinking and preparing along the same lines. "There may be small pockets within the company that concentrate on aspects of these trends, but as a whole, the entire organisation is not necessarily moving in that direction. And incumbents do tend to be slower, and they tend to think much more about their legacy systems. Dealers could easily end up being a legacy for them if they are not able to reinvent themselves into a mobility provider," he warned. "It's an attitude and a focus on what might happen. If they don't get their heads around it, it could be a challenge."

Branding under threat

In Carter's view, the rise of autonomous vehicles represents a death knell to automotive brand loyalty and it all boils down to how we interact with the vehicle. "Right now,

they don't care what brand of vehicle it is," he pointed out. Although it will not be that extreme with autonomous cars, current interaction and brand awareness is going to be much reduced." What users could be loyal to, however, is their in-car digital assistant. "Your interaction will not be necessarily with the car or the brand but with the digital assistant, commanding it to do what you want to do. This isn't necessarily the brand of the car or the manufacturer of the car," he elaborated. The role of this digital assistant of the future is also likely to extend beyond the vehicle, such as arranging grocery deliveries or bringing up online content while you ride in the vehicle. For those players in the automotive industry unprepared for new and future business models, Carter’s conclusion is an ominous one: "The advent of the digital assistant will be a much greater part of our lives than 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 central to the growth strategy of many vehicle manufacturers, and as with any component or system, cost efficiency is an important factor. With the rise of global platforms and expanding model lines, OEMs are looking to their suppliers for connected solutions that are scalable.

development. Headquartered in Alameda, California, the software developer believes it can simplify the development of connected cars. Just as a rolling metal chassis is now commonly shared across various vehicles in a brand’s portfolio, the supplier believes it can deliver a similar strategy through its Helix platform.

McCammon, General Manager of Wind River, explains to Megatrends. “Many vehicle manufacturers try to ﬁnd ways to reuse common components between vehicles so that they can maximise their cost efficiency and speed up their time to market, and then focus differentiation on places that drive the most direct value to the consumer.”

In 2009, Intel acquired Wind River for the better part of US$884m, signiﬁcantly expanding Wind River’s pool of resources for technology

The term ‘chassis’ has been adopted “because it mirrors a strategy that OEMs use internally when it comes to building the overall vehicle,” Marques

For example, an OEM may build a compact car and use the same chassis for its compact SUV model. This allows common components to

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be reused, meaning additional investments are only made when absolutely necessary. “We have been able to prove that we can do the same thing with software,” says McCammon. Building the software ‘stack’ up or down describes the addition or subtraction of features, and can help OEMs tailor individual connected car strategies depending on the vehicle in question. “If we develop the core elements that need to be reused frequently and create easy interfaces for that core software, we can provide that same kind of ﬂexibility and speed to market,” he says.

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Differentiate to penetrate the market The parallels between new vehicles and electronic consumer devices are

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becoming increasingly clear as new connectivity features continue to ﬁnd their way into the car. In fact, consumers no longer view the car as a connectivity blackspot, and have developed an expectation for continued access to the Internet, navigation and entertainment inside the vehicle. As McCammon observes: “The centre console on the car is becoming a hub of communication and entertainment.” Just as OEMs set themselves apart in terms of engine performance and exterior design, connectivity is also becoming an important differentiator for many brands. As much as 60% of the value of a luxury car may stem from the inclusion of “unique connected features,” says McCammon.

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He believes that this is a wake up call for OEMs to invest where necessary. “I would really like to see OEMs spend the majority of their money on the features that are going to make them feel most differentiated from their competition, or enhance their relationship with their consumer,” says McCammon. Helix Chassis allows an OEM to do just that, as opposed to redeveloping the skeletal parts of the connected system for each model. Add in the promise of autonomous driving, and the value proposition of connected technology becomes even sweeter. As more driving scenarios become automated, the opportunity for the driver to disengage from the 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

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Connected car software

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 is expected to eventually become an additional living space, allowing all passengers the freedom to carry out tasks safe in the knowledge that the driverless system is in control of the vehicle. McCammon muses that this will open up a wealth of new opportunities inside the car.

have their mobile phone, a smart watch, a tablet and a laptop. The consumer trend is about ﬁnding more ways of media engagement. As the consumer looks to become more engaged with media and communications on a continuous basis, the notion of interfacing with the automotive experience is logical,” he says.

“I foresee an instance where I have a screen where I could potentially make notes; I can draft professional communications, catch up on texts and emails, and maybe for the children there will be more entertainment interfaces,” he suggests. “I also see passengers being able to catch up on the news in multimedia as opposed to purely audio today. Those experiences coming into the cabin will become much more commonplace.”

“OEMs are looking at the way consumers act – such as the fact that there's a rise of texting while driving and more often than not consumers are either connected or on a phone,” he adds. “We’re looking to try to satisfy the behaviours that we see in the consumer, so the drive is a convergence of consumer behaviour and the OEMs' desire to make the experience of the car more desirable.”

Who wants to get connected?

To the casual observer, the conversation around connected cars has exploded in recent years. These vehicles are no longer a concept, and consumers can already purchase highly connected vehicles in most dealerships. However, what has remained slightly ambiguous is why connected cars have come to the fore. McCammon explains that a convergence of megatrends has created the perfect storm for both consumers and the automotive industry. “It's not uncommon for a single individual boarding an aeroplane to

In a future where every device, machine and building is harnessing and producing data, the connected car may be one of the strongest examples of the Internet of Things (IoT). Enabling the car to interact with all the other aspects of a consumer’s connected lifestyle is not simply a logical step, but a natural progression, concludes McCammon: “Most people won't ever come into contact with a robot at an assembly plant or interact with a logistics system, but they do get into their car at home and move through traffic to another location to perform some function – grocery shopping or picking up the dry cleaning – and then go to work. Think of all the benefits you could have if those things all knew each other.”

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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 autonomous vehicle technologies, with their far-reaching implications for highway safety, is posing myriad challenges for government safety regulators. One of the most daunting of these challenges goes to the very heart of regulators’ mission to ensure that the next generations of vehicles are safe: how should regulators define who or what is the ‘driver’ of a self-driving vehicle?

the US move toward that safer future by encouraging the development and deployment of V2X technologies. At the same time, however, those officials recognise that a safe transition to a more self-driving future requires a regulatory structure that can meet the challenges raised by the development of autonomous vehicle technology – challenges that were unimaginable when many current safety rules were written.

Advances in vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2X) technologies, which could eventually lead to the development of fully autonomous vehicles, offer the hope of a future with far fewer crashes and less traffic congestion. Officials at the US Department of Transportation and its National Highway Traffic Safety Administration (NHTSA) hope to help

Deﬁning who or what is driving a selfdriving vehicle is vitally important to building that regulatory structure. 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, operating the steering and brakes and monitoring the gauges and other indicators – a notion that was largely

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self-evident until autonomous vehicles started to move from science ﬁction to the highways. Take away the human driver, and many of the regulations that have long helped ensure that vehicles are safe become inapplicable, outmoded, or simply irrelevant. The same holds true for the procedures used to test whether vehicles comply with those safety regulations. The regulatory structure also must help ensure a safe transition during a time in which vehicles driven by humans may interact on the highways with wholly or partly selfdriving vehicles. Concerns about those transitional challenges have grown more intense as vehicle manufacturers (most recently Ford) announce plans to begin deploying some fully autonomous vehicles on US highways within the 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

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Self-driving car regulation

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An exchange between NHTSA and Google’s SelfDriving 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 traditional driver controls like a steering wheel and brakes, but others may not. This issue is particularly vexing in the US, where vehicle manufacturers themselves ‘self-certify’ that their vehicles meet applicable federal motor vehicle safety standards (FMVSS). Without a clear deﬁnition of who or what is driving, vehicle manufacturers will face a major challenge certifying that a self-driving car complies with safety regulations that are premised on the presence of a human driver. This lack of clarity could raise liability concerns, while potentially slowing the deployment of autonomous vehicle technologies. An exchange earlier this year 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. Google’s selfdriving cars do not have any conventional driver controls or

interfaces (steering wheel, brake pedal, etc.) but rather are driven entirely by the vehicle’s computer-based self-driving system (SDS). Ford has said that its vehicles will also be completely autonomous, lacking controls and interfaces that would allow a human to wrestle control from the vehicle’s SDS. In contrast, the Tesla Model S involved in a widely reported fatal crash earlier this year while its Autopilot system was engaged and essentially driving the car still featured conventional controls and interfaces that could allow the human driver to take control. In a letter that addressed questions earlier raised by Google, NHTSA said it would interpret the Google car’s selfdriving system itself, rather than any of the vehicle’s occupants, as the “driver” for purposes of answering Google’s questions about federal safety standards. Using this interpretation as a “foundational starting point,” NHTSA went on to explore “whether and how” Google could certify that such a selfdriving vehicle meets standards “developed and designed to apply to a

vehicle with a human driver.” The letter addresses over 50 speciﬁc instances in which federal motor vehicle safety standards could be affected by not having a human “driver,” including rules related to the steering wheel, pedals, mirrors, etc. – driver controls and interfaces that would notably be lacking in Google’s self-driving car. Some media reports portrayed this as a ruling by NHTSA that a computerbased SDS can be considered a car’s “driver” under federal standards. But the letter does not go that far. Instead, it merely states that it would be “reasonable” for purposes of discussion to interpret the SDS as the driver of the Google vehicle, since the vehicle lacks the conventional controls that would allow a human to drive it. The letter explicitly notes that NHTSA cannot use such an interpretation to make substantive changes in existing statutes and regulations, however. In this case, those statutes and regulations deﬁne a vehicle’s “driver” as the human occupant seated immediately behind the steering wheel.

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Self-driving car regulation

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 Google illustrates the process through which regulators and both traditional and non-traditional vehicle manufacturers are exploring how vehicle safety regulations are affected or challenged by autonomous or semiautonomous vehicle technology. NHTSA stated in its letter that many of the questions raised by Google presented issues “beyond the scope and limitations of interpretations,” and that such issues could only be addressed through “other regulatory tools or approaches.”

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Such approaches could include a rulemaking to write new safety standards using a formal “notice and comment” process. Such a process can take years, however, and autonomous vehicle technology is moving forward at a much faster pace. Many V2X

technologies are already appearing on vehicles sold in the US, particularly on luxury models. Indeed, concerns have been raised about whether self-driving features are being pushed into the market at a pace more typical of information technology products than automobiles. The rapid development of V2X technologies is leading NHTSA to address the associated regulatory challenges using a mix of traditional regulatory mandates, informal guidance, interpretations of existing regulations, and voluntary agreements with vehicle manufacturers. While only regulations written through a formal rulemaking process have legal statutory authority, more informal approaches can address some issues on at least an interim basis. NHTSA is expected to release guidelines soon that will begin

Deﬁning who or what is driving a self-driving vehicle is an essential step in the ongoing transformation of the automobile and of the statutes and regulations designed to ensure highway safety

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to address some of the regulatory issues associated with safely deploying self-driving vehicles on public highways, for example. A formal rulemaking might be required to change the regulatory definition of “driver” in light of the ongoing development of self-driving vehicles, however, as NHTSA indicated in its letter to Google. NHTSA also warned that even defining the SDS as the “driver” of a self-driving car would merely be a starting point, and would not answer all the questions associated with certifying such a car’s compliance with federal safety regulations. A further complication is the role of the US states in this debate, as each state defines who can obtain a license to drive a vehicle within its borders. The state of California, for example, is developing rules that would require a licensed driver to be present and able to take control at all times in a self-driving car. Defining who or what is driving a selfdriving vehicle is an essential step in the ongoing transformation of the automobile and of the statutes and regulations designed to ensure highway safety. As NHTSA noted in its letter to Google, however, arriving at a new definition of “driver” hardly answers all the regulatory questions raised by autonomous vehicle technology. Such questions in fact seem to arise almost as quickly as 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 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 the world’s population currently resides in urban areas, but expects this ﬁgure to rise dramatically as people are drawn to megacities through employment and various other social factors. The rise of the megacity poses numerous challenges, both for city planners that aim to predict the way that mobility will change to suit increasingly dense populations and, in the automotive industry, OEMs that are developing low and zero emission transportation solutions, including highly connected autonomous vehicles.

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There will be many more megacities in the near future. The housing in these places is becoming denser, space is at a premium, and people still want to travel from A to B and make good use of their time while doing so - Matt Jones, Moovel Group Automotive Megatrends Magazine

Megacities and smart mobility

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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 Several OEM executives have recently described the current rate of change across the automotive industry as unprecedented. The industry sentiment was summed up by Carlos Ghosn, Chairman and Chief Executive of the Renault-Nissan Alliance, at the 2016 New York International Auto Show: “There has been a lot of talk about disruption, about new competitors who promise a new approach to what a car can be. Much of this unease over potential disruption has resulted from the rapid emergence of new technologies and so-called mobility services, all of which are competing to establish a new vision of our industry’s future.” The same views are held by the service providers, who are gearing up for a sharp spike in demand for innovative transportation solutions and new business models. Speaking to Megatrends, Matt Jones, Chief Product Officer at Moovel Group in North America, echoed this statement; OEMs and Tier 1s are working “tirelessly” to produce the latest innovative products, he said, intensifying and accelerating this rate of change.

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One of the key trends governing the development of these products is the growing number of megacities in the world, added Jones, who recently left Jaguar Land Rover to join Daimler’s mobility services subsidiary. “We can already see urban populations growing in places like Seoul, Tokyo, Shanghai, Mumbai, Paris and London, to name a few,” he noted. “There will be many more megacities in the near future. The housing in these places is becoming denser, space is at a premium, and people still want to travel from A to B and make good use of their time while doing so.” Challenges for OEMs and suppliers Jones described the way consumer behaviour has changed to suit these conditions, with an increasing focus and reliance on being constantly connected. “Previous generations might have thought that using a phone to text or call someone was a distraction to driving. It’s the other way round with Millennials – they want to be able to connect to social media or order lunch while on the move.”

automotive industry as a whole, said Jones, is faced with the challenge of seamlessly connecting these consumers with vehicles that they don’t own, making them personalised and efficient. According to Kate Roberts, Director of Global Partnerships at Zipcar, “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.” Car-sharing services, such as Uber, Lyft and Zipcar, will compete for customers, and will therefore naturally seek to differentiate themselves from the competition. This exclusivity “just doesn’t make sense when we consider seamless connectivity in daily lives,” believes Jones. “Instead, we need open standards and active collaboration between many partners to effectively integrate and connect people in mobility.”

Ben Foulser, Associate Director, Millennials also know that they don’t Transport Technology at KPMG, have to procure their own vehicle, and agrees with this idea. “Each company Zipcar can use car-sharing instead. The - Kate willRoberts, naturally work to get one over on

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Megacities and smart mobility the other company, so that their business model thrives,” he told Megatrends. This is where authorities will play a vital role.

Challenges for authorities

“If you leave the development of technologies and services such as car-sharing down to the OEMs and suppliers, they will all come up with conﬂicting solutions,” Foulser noted. “There is a big risk that the best outcome for mobility in the megacity will be lost as a result. Authorities must ensure that the best interest of the city and its inhabitants is at the heart of mobility.”

Widespread use of autonomous driving, especially in the case of a mobility on demand service, would inﬂuence city planning as less parking space would be required, and even less road space as driverless cars can drive closer to each other - James Fu, nuTonomy

The simultaneous rise of the megacity and the connected car also poses problems for city planners. They must consider the evolution of vehicle-toinfrastructure (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 technological capability that makes seamless V2I communication a 15year pipedream. It’s the practicalities of funding it from a government and local authority perspective. In my opinion, all authorities are struggling with investing in these ideas and finding an optimum balance in market investment and a solid business case.” Foulser thinks that authorities have conflicting interests when it comes to investment in megacities, just as OEMs do with connected car technology. However, James Fu, Director of Singapore Operations at nuTonomy – a company that develops self-driving tech for vehicles and recently started testing the world’s first driverless taxi service in Singapore – believes that costly investment in infrastructure for vehicles is unnecessary.

“The right approach towards developing autonomous driving should not require any infrastructure,” he suggested. “However, widespread use of autonomous driving, especially in the case of a mobility on demand service, would inﬂuence city planning as less parking space would be required, and even less road space as driverless cars can drive closer to each other while maintaining the throughput.” Singapore, said Fu, could become a ﬂagship for smart, connected mobility in megacities. He believes that the adoption of autonomous vehicles in any megacity could also enable “integrated use of land where cars and people can coexist as driverless vehicles are inherently safer,” which is another possibility that must be taken into account by city planners.

From megacity to smart city Innovation is rife not only in megacity development, but also among smaller cities seeking to capitalise on the being smart. In the Finnish capital of Helsinki, plans are under way to eliminate the need for private car ownership within a decade, by combining innovative transportation solutions with app-based services and new business models. Melander Pihla, Transportation Engineer at the City of Helsinki, believes there are several challenges facing both OEMs and city planners as more megacities develop. “The main challenges are related to how to serve all the needs

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Megacities and smart mobility we have in the city, which often have conflicting interests,” she said. “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.”

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Pihla revealed that Helsinki’s city planners ﬁrst consider the needs of pedestrians when planning traffic and transportation systems, before thinking of cyclists, public transportation, goods transport and ﬁnally private cars. “The main aim is to increase the share of sustainable transport modes, even if only 30% of trips are currently done by private car,” she added.

multi-modal transport system that will be optimised in megacities to make everyday movement as efficient as possible. “People will be able to jump on a bike before grabbing a subway across town, and then an on-demand car for the ﬁnal stretch of the journey to the office. This type of model will be a true test for megacities – authorities, OEMs and transport providers will all have to collaborate and use data so that they know exactly when they need to provide a service.” This prediction is echoed by Daniela Rus, Principal Investigator of the Future Urban Mobility and Interdisciplinary Research Group, Singapore-MIT Alliance for Research and Technology (SMART). “Public

vehicles using alternative sources of energy will increase, while the role of public transport and especially the light-rail system will grow. Cycling and the use of light, motorised vehicles will become more popular too.” Rus thinks that the transportation network as a whole will become increasingly connected to the IT infrastructure, providing a system that ensures mobility on demand. She also expects residents of the megacity to be able to travel efficiently “using real-time and historical transportation data to determine the routes and location of stops on an hourly basis. Mobility on 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 What will mobility look like in megacities from 2030 and beyond? Like many experts, Moovel’s Jones thinks that vehicles will undoubtedly be smarter, more connected and even autonomous. These autonomous vehicles will still need to operate alongside non-autonomous vehicles, and even those that are not connected. The development of vehicles must also compliment other transport systems, noted Jones, describing a

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transportation will become a utility, available anywhere, anytime,” she noted. “It will consist of a network of vehicles providing backbone transportation for many people over long distances. There will also be fleets of transportation pods that will cover the transportation needs of individuals for short hops and for the first and last mile part of their long journeys.” Helsinki’s city planners envisage a dramatic increase in car-sharing, which “will get a big boost from the rise of self-driving cars,” Pilha asserted. “Also, the number of

state-of-the-art technologies for selfdriving vehicles. Taking a driverless car for a ride will be as easy as using a smartphone.” Much is set to change, but one thing is certain: the megacity of tomorrow will need innovation in transportation. People may not want what they see as the inconvenience of vehicle ownership, but they will always want to get from A to B, and they will want to do it with all of the benefits, convenience and relative luxury of a nice vehicle. The role of the car may evolve – but it will continue to have a role to play.

Factory of the future

In the factory of the future, your colleague will be a robot

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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 future - that the way things are currently produced can be improved through process and technology - is far from new. Thanks, however, to rapid advances in digital and electronic technology, consultancies, technology giants, suppliers and vehicle manufacturers all now see the factory of the future as a very real aspect of their business strategy.

As automation increases, the Utopian (dystopian?) notion that a vast factory of robots could be overseen by one or two human operatives is now a very real one. Dig 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. Vehicle manufacturing concepts are changing, and as such, it’s an exciting time to be making robots. That’s the conclusion of Maurizio Cremonini, Head of Marketing at robotics manufacturer Comau. Trends that will come to deﬁne the vehicle factory of the future, such as human-robot collaboration and connected manufacturing, have already received plenty of attention from OEMs and suppliers. But according to Cremonini,

Deﬁning human-robot collaboration isn’t easy, because within the automotive industry, we have always clearly separated where robots and machines work from areas where human workers operate

this is only the beginning, and suppliers like Comau will need to move carefully. Human-robot collaboration is a case in point. “We began to look at the potential for this a year ago, to see what technology can support the concept, which is at a very early stage,” he says. “Every day we see new developments, new applications and new interpretations of the human-robot collaboration concept.” At this early stage, it’s worth

questioning whether human-robot collaboration is simply a stepping stone on the path to total automation, or a long-term solution. As a supplier of robots, Cremonini is unsurprisingly in no doubt that the automated factory is possible; for OEMs, however, it is more a question of whether such as concept is even desirable. “From a purely conceptual standpoint, I think everything can be done with robots,” he asserts. “We see so many

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Factory of the future

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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 nano-robots to the biggest robots capable of moving a complete car. If we’re talking about accuracy and precision, these could be done by a robot, but I think human control and intervention is always going to be absolutely mandatory when it comes to the most critical tasks. So 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.” The goal is not to replace workers for robots, and thus cut costs for OEMs, but rather to make the work safer and lighter for human factory workers. In fact, he suggests, human-robot collaboration may lead to some jobs within automotive manufacturing being ‘re-possessed’ by workers. Comau is forecasting a future where

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humans and robots will collaborate in sectors that are completely automated today. Some tasks, suggests Cremonini, could be done more efficiently with human involvement, particularly where high levels of accuracy, precision and attention to detail are required. But it will take time before the real potential becomes clear, and specific applications for human-robot collaboration are defined. Again, Cremonini stresses the need to carefully assess the concept of human-robot collaboration and its purpose. “Defining human-robot collaboration isn’t easy,” he explains, “because within the automotive industry, we have always clearly separated where robots and machines work from areas where human workers operate.” Machines

in the latter area, he says, are no more than tools – very sophisticated tools, but managed completely by a human. “What we are doing today is sorting final assembly tasks into segments and sub-segments, and measuring every task that can be supported or improved through human-robot collaboration,” he continues. “The reason we’re working so precisely and methodically is we are not sure that collaboration solutions and associated technology can be applied immediately.” Introducing the technology might require modifications to other parts of the manufacturing process, or the way the car is built in the body shop before it arrives in the final assembly area. Equally, there may be opportunities for collaboration technology to perform multiple tasks at once, lending it added value. It will be

Factory of the future

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 identify these requirements and opportunities.

Finishing touches

These new applications are most likely to be found in the ﬁnal assembly area, where many of the required tasks can be delicate and tricky. “Having robots work together with human beings will not imply any kind of reduction in the accuracy and care that human beings give,” says Cremonini. “There are areas where you have workers suffering from fatigue due to heavy lifting, or ergonomic positioning, and human-robot collaboration can improve that. We think this is one of the main drivers supporting the concept of collaboration.” Basic applications could include mounting batteries and other heavy components. As the technology advances, and robots learn to work at a speed compatible with humans, they could begin to collaborate on trickier tasks requiring precision. For example, says Cremonini, a robot arm could work inside a car to move a dashboard whilst a worker applies

screws, or ﬁxes problems in the dashboard installation. Seat installation is another possibility.

The factory of the future - now

Some examples of human-robot collaboration are already in operation. At Audi’s Ingolstadt facility, which produces the A4, A5 and Q5, workers are handed parts by a robotic ‘Part4you’ arm equipped with sensors that can identify the right part in a box. At Ford’s plant in Cologne, a robotic arm can lift shock absorbers with ease, allowing the worker to ﬁt faster and more safely. Meanwhile, robotics supplier Dürr has developed a collaboration cell for gluing components to the vehicle body, whilst Kuka has worked with Mercedes-Benz on machines that can assist workers with tiring overhead work. But safety remains a signiﬁcant barrier. Making industrial robots safe for human workers to be around is no mean feat, and without the correct combination of sensor technology the risk of a heavy, fast-moving robot hitting a worker is high. There are numerous options, including laser scanners, which monitor

the area around the cell, proximity sensors that can monitor the area directly around the robot, and then touch and force sensors so that, in the case of contact, the machine knows it needs to stop moving. “The approach will not be to provide each of these every time,” says Cremonini, “but they will be options each time we face a new application, a new environment, or a new kind of interaction between human beings and robots. If humans are working with a robot, you cannot really avoid a situation in which the human worker could interfere in the robot’s action area.”

Elsewhere in the factory

Beyond human-robot collaboration, Comau is look at other developments. A big part of what drives innovation in the field of robotics and manufacturing is helping OEMs and suppliers to work more efficiently and productively with the space they have, both in greenfield and in brownfield situations. New ideas are now beginning to take a more definite shape. In late 2015, Groupe

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Factory of the future PSA (formerly PSA Peugeot Citroen) unveiled its own thoughts on how automotive manufacturing plants may evolve over the long-term. Among the numerous, radical suggestions set out by the OEM was the idea of an entirely flexible plant, in which no robots are fixed to the ground, and manufacturers are free to configure production lines as they wish. So how realistic is the prospect of an automotive plant with no fixed robots? For Comau, says Cremonini, it’s becoming more likely by the day. The company has been developing concepts around moveable cells for years. These will allow manufacturers to adapt a manufacturing process to the floor space available. The idea can be taken even further. Some newcomers, says Cremonini, are considering the idea of a moveable factory, which would allow them to produce cars in one area before dismantling the system and moving to another area, whether to meet excess demand in different markets, or to take advantage of manufacturing conditions. “This might sound very strange if you consider traditional car manufacturing, which involves a variety of welding

activities, and harmonises numerous tasks,” admits Cremonini. “But if you look at the new products on the market, such as very small electric cars, these are basically modular concepts using pieces of steel, welded or mounted together, and here we think the concept becomes feasible.” One concept from Comau involves the use of robots that can be hung from cell ceilings, as opposed to factory ceilings. If necessary, the cell can then be moved. Then, instead of using conveyor belts, vehicles under construction can be moved from one production station to another using automated guided vehicles (AGVs). This allows for even space-productivity optimisation. “We suspect this will become feasible,” says Cremonini, “and maybe in the future we will see some speciﬁc examples.” Further predictions from Comau include the integration of small AGVs and small robots, particularly in manufacturing logistics. “Perhaps in the future,” suggests Cremonini, “we will have small robots mounted on AGVs which can travel to a depot, pick pieces and drop them into trailers which can then serve the line.” These developments will depend on the power, cost and

availability of batteries, and the autonomous capabilities of AGVs, but with batteries becoming lighter and smaller, everything appears to be moving in the right direction, says Cremonini. Finally, controls architecture is also likely to simplify. A modern day welding line uses multiple programmable logic controllers (PLC), and each robot has a single control. In the future, Cremonini says, PLC suppliers such as Rockwell, Siemens and Schneider will work together with controls provided by robot producers, thus integrating electronic control of the robots. Currently, each robot producer designs within its own architecture and operating system, with its own proprietary electronics and software. “Every time you have to integrate a robot into the welding line, you end up with at least three levels of control,” he says. “You get one big brain controlling the line, another controlling the station, and then one for each robot.” A single PLC, he concludes, would mean being able to work with a number of robots with the same software and interface. A more streamlined system would lead to fewer errors, and allow workers to make 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

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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, reading a book, when all of a sudden, you have a front row seat in a car crash scene – literally. Your car, which you’d put into selfdrive mode, has just been hit by another vehicle. Or maybe your car hit the other vehicle. The other car’s driver claims you were at fault. You have no idea – you weren’t even looking.

Who is responsible for the crash? You? Your car? The other driver? How should the situation be resolved? This, and many more complex questions about liability and insurance are right at the top of the long list of questions to be addressed by stakeholders in the development of autonomous drive technology. In May 2016, Swiss Re and HERE published the findings of their joint research study into the impact of autonomous driving on the insurance industry. ‘The future of motor insurance – How in-car connectivity and ADAS are impacting the market’, (Swiss Re/HERE, 2016) found that autonomous drive (AD) technologies could reduce insurance premiums globally by US$20bn by 2020. The research noted that motor insurance is the largest source of premiums globally, generating 42% of all ‘nonlife gross premiums’. According to Finaccord, the combined global value of car insurance premiums in 2014 stood at US$671.3bn, with that value representing a CAGR of 5.2% since 2010.

It is hardly an exaggeration to suggest that the automotive insurance industry could be dealt a massive blow by the rise of selfdriving car technology and the growing acceptance of business models involving shared vehicles. Not only do self-driving vehicles promise tremendous safety improvements, they also no longer require a human driver to be in control at all times at the wheel. "Basically, everything is predicting fewer road accidents going forward," David Williams, Technical Director at AXA Insurance, told Megatrends. Great news for consumers; not so good for the current insurance industry, which will suffer from falling premiums and falling insurance claims. "The future of mobility looks poised to upend that [traditional] model and change nearly everything about auto insurance: who the customers are, what products they demand, and how to market to them," write the authors of Deloitte's paper, 'Insuring the future of mobility'. They suggest that "insurers may have to rethink their role in the mobility ecosystem and their relationship to drivers, owners, and vehicles."

Early days

Future mobility involves a shift towards shared as well as autonomous vehicles, and both mean big challenges for insurers. "As

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we move to shared ownership of vehicles, it becomes the operator that has to insure the vehicles as opposed to the users," suggested Phil Harrold, Partner at PwC. "As we move to different taxi systems, there's a need for the providers to ensure adequate insurance is in place, otherwise the industry could potentially start to lose confidence. 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 engaged in a number of test cases in the early days, which will then lead to some changes." Insurance providers are well aware of the changes under way, and they have started to respond. AXA Insurance, for instance, has begun to incorporate safety benefits from increasingly autonomous technology into its pricing calculations. "We look at individual elements of things that are going to be part of the driverless cars of the future, and we already see the impact they can have," observed Williams. According to AXA estimates, automated emergency braking systems reduce the number of collisions by 15% and injuries by 18%. "We are already building those into our pricing models when they are fitted as standard," he added.

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James Carter, Principal Consultant at Vision Mobility and a passionate mobility futurist, suggests that even with safety improvements there will still be a need for some form of insurance. "I think the type of insurance may be split, with areas like security and autonomous driving performance probably falling on the

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Insuring driverless cars

We look at individual elements of things that are going to be part of the driverless cars of the future, and we already see the impact they can have - David Williams, AXA Insurance

OEMs. Things like maintenance and personal liability-type insurance would probably fall more on the fleet operator," he predicted. "But insurance companies will have to change their models, that's for sure."

Ethics and the liability minefield

Even with autonomous vehicles, things can go wrong and collisions could happen. The big question is, who, from an insurance perspective, will be responsible? Some suggest the vehicle manufacturer, others say the software provider. Then again, if it is some sort of shared ﬂeet, perhaps it will be the service provider, suggested automotive futurist Antonio Ferreira. "It raises numerous questions from a responsibility perspective. I don't think there's a clear answer. We have to see how the market develops, and certain rules and regulations have to be put in place," he told Megatrends.

As we move to shared ownership of vehicles, it becomes the operator that has to insure the vehicles as opposed to the users - Phil Harrold, PwC

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Beyond the insurance aspect of liability lie the intertwined issues of corporate liability, corporate responsibility and corporate reputation. It is an area approached cautiously by the industry, and in differing ways by the OEMs. In October 2015, Google and MercedesBenz told a CBS 60 Minutes investigation, off camera, that they would accept responsibility and liability if their technology was at fault once it becomes commercially available. In May 2016, at an event in London organised jointly by Volvo Car and Thatcham to explore the future of the insurance industry, Volvo Cars’ President and Chief Executive Hakan Samuelsson said: “Liability is crucial. We don't believe it's very bold to say that, when the car is in driven in automatic mode, it is a product liability issue. If that system malfunctions, it is our responsibility. If you are not prepared to make this statement, you really have no product to offer. Who wants to buy an auto pilot that you have to supervise? Either you do this, or you shouldn't be in this business.” Later that same month, the driver of a Tesla Model S was killed when his vehicle – operating in Autopilot mode – crashed into a heavy duty truck, raising questions about liability and bringing the issue into the public domain. Much of the liability challenge stems from ethical dilemmas in crash situations, such as an incident where a vehicle must decide between hitting a child and protecting the vehicle occupants, or avoiding the child and endangering the occupants. Nobody wants to take on the responsibility for programming such a decision into an autonomous vehicle, yet as Ferreira continued, somebody will ultimately be

Insuring driverless cars responsible for doing just that. We know that we have the software and hardware to deliver autonomous cars, he said – what remains open is the question of right and wrong. “How are we going to accomplish that, and how are consumers going to react?" Were something to go wrong and a child were to be killed by an autonomous vehicle, he noted, there would be a severe negative impact on the public perception of autonomous vehicles. "There needs to be robust legislation and regulation, and in-depth talks with insurers. It's a step-by-step situation." AXA's Williams concedes that insurers are in a good position to participate in these talks. He sees the OEMs taking 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 manufacturer under a product liability style scenario, but not in the form that we're currently writing it," he predicted. That, in his view, would be "madness".

Claims handling

One of the main concerns regarding claims in the future is how quickly they are settled. "If your car is bumped into or you are injured by another vehicle currently, you want your claim to be resolved quickly and efficiently. You want that same situation to be the case when it's an autonomous vehicle. Who is going to be best placed to deal with those claims and what will the route be?" asks Williams. Today, if someone is involved in an incident and believes it was the fault of the car and the manufacturer, theoretically they could sue them for a recovery.

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I think the type of insurance may be split, with areas like security and autonomous driving performance probably falling on the OEMs. Things like maintenance and personal liability-type insurance would probably fall more on the ﬂeet operator - James Carter, Vision Mobility

However, Williams estimates this would take three years and require considerable legal fees. "I have spoken to government officials who have talked about moving to a ﬁrst party model so that the claim is dealt with. Then, behind the scenes, we can spend the three years on clever lawyers and all that sort of thing. I see claims being passed around, moved to their ﬁnal place of responsibility after the person that's involved in the accident is sorted," said Williams.

Diversifying

Overall, improvements in vehicle safety due to advances in active safety technology are expected to dramatically reduce, if not eliminate, most of today's insurance premiums. For insurance providers, the key to surviving the

Certainly, we see motor insurance forming a smaller proportion of our business, just because the roads are going to be safer

- David Williams, AXA Insurance

revolution could be diversiﬁcation. AXA is already onto this. "We are in a quite good position because we don't just write motor insurance," said Williams. "Certainly, we see motor insurance forming a smaller proportion of our business, just because the roads are going to be safer. That said, we also think that what will happen in the future could go a number of different ways." To start with, human-driven cars are not expected to disappear any time soon. Once these do start to drop out of the market, it will take some time to replace the entire car parc. "It is not an immediate concern. Also it is not the end of the world and it shouldn't be the end of the world for our staff either. If you have good trained staff dealing with road accidents, maybe we'll move them on to travel or home insurance or something like that. As a large composite, we have those opportunities," he said. However the insurance situation resolves itself, AXA’s Williams expects to see some thinning of the ranks. "There is too much capacity in the insurance market currently. If some of us were thinned out, that wouldn't be bad for the consumer," he suggested. 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 because the roads are safer, then they're probably going to disappear," he concluded.

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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 industry created? Some industry observers see a transition taking place, as value moves from the vehicles themselves to the results they produce for drivers (i.e. the ability to move from one place to another). This Outcome Economy approach is playing out across the industry in several ways.

Manifestations

"People are all of a sudden starting to look at what automotive means. It is a form of transport in an environment in which people want to travel, as opposed to the ownership per se of a physical asset in the form of the vehicle," believes Phil Harrold, Partner at PwC. "It has started to manifest itself in the rise of services like Uber, which offer more or less instant access to a kind of taxi system, albeit on a much wider basis than the oldfashioned Hackney Carriage type setup." This paradigm is playing out in the emergence of numerous car share schemes, which are all about providing people with access to a vehicle. This means people do not need to take on the full cost of ownership, says Harrold – they simply use the car as and when they need to.

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"Sharing is the new buying,” notes Anil Valsan, Global Analyst, Automotive & Transportation at EY. “That pretty much summarises what we believe is the manifestation of this Outcome Economy in the automotive industry. The whole concept of shared mobility, where consumers are moving away from owning vehicles and becoming focused on the outcome, which is about getting from A to B, is a reﬂection of how the Outcome Economy is shaping the auto industry." Harrold also sees it playing out in autonomous vehicle development: "This area is all about looking at what people want out of a car. That is to get from A to B in reasonable comfort with ﬂexible access to the vehicle." These changes raise many questions about the future of the traditional ownership models in general, and the future of the vehicle manufacturers themselves. "We are already seeing some changes, such as link-ups between OEMs and the providers of either the sharing schemes or the instant taxi services," observes Harrold. "The OEMs are trying to work out how they will be relevant in the future and where their vehicle volumes will come from. They are entering into some of these arrangements now to enable them to have a stake in the future."

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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 forefront of this change and is actively working to transition itself car manufacturer to mobility services provider. "The way that people access our traditional products is changing fundamentally," says Mansukh (Mike) Nakrani, Director, Business Associations and Ford of Europe SMART Mobility. Ford ﬁrst observed the trend about six years ago and saw considerable disruption coming with the rise of the likes of Airbnb, Uber, Gett, DriveNow and many others. "We call

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that a Swiss Army lifestyle - you get what you need when you need it rather than necessarily having to own it."

Generational, technological

Part of the emergence of this change could be generational. Nakrani suggests that this may be linked to the fact that the younger generation are more willing to try new things: "There is more willingness to take some level of

Sharing is the new buying. The whole concept of shared mobility, where consumers are moving away from owning vehicles and becoming focused on the outcome, which is about getting from A to B, is a reﬂection of how the Outcome Economy is shaping the auto industry - Anil Valsan, EY

risk, to try something new." He goes on to note that his nephew doesn't even have a driver's licence: "He works in London. He loves cars, but he doesn't really want a car. He says, 'I can get a taxi, I can get the Tube, I can get a bus. I don't see the need for a car.'" When presented with the choice between a new car and a new smartphone, the smartphone wins – no question. Harrold shares similar observations. "In part, it's about generational change and 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 and they have a different view on life. Now, that may be partly economic, but it's also partly that they expect to rent. They don't expect to own, which again plays to the notion of the Outcome Economy. That's true of the automotive industry. The younger generation will see cars as a means to an end rather than as an end in itself," he tells Megatrends. Technology advances also play a supporting role in these developments. "Connected and digital technology is essential to be able to do what you want to do on the go," says Nakrani. Valsan echoes the sentiment, underlining the importance of connected digital technology to enabling the Outcome Economy. “It is important to separate out connecting to the vehicle versus the connected consumer. Ideally, the vehicle is fully connected and offers

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The Outcome Economy consumers a seamless connected experience, from the time they book the vehicle on their mobile to stepping inside the vehicle, to having all the settings completely personalised to their preferences." However, Harrold suggests the level of technology required to support an Outcome Economy is minimal. Pointing to Uber, he notes, "As long as you have a mobile phone you can get a car. For the consumer that's a fairly low tech option, but from the operating model side, the infrastructure required to connect all these drivers at different times and deliver the service is considerable. Technology has a major role to play, particularly when it comes to driverless vehicles, but at the very basic end – namely access to transport – there are some relatively low tech solutions out there."

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piece is about intellectual capital, having the best capabilities to build technology applications that fit together well with what consumers want."

Regional developments

Considerable regional differences are evident in the emergence of the Outcome Economy. "It is changing so quickly on a daily basis and each region is driving it in a different way," commented Valsan. "In Europe, perhaps you are substituting a family vehicle with some of these ridesharing services. However, if you take an emerging market, the services are becoming a fundamental primary source of mobility for a number of consumers."

problems tends to be much more direct and in a number of cases, there will be mandates for different types of vehicles, which will be introduced much more quickly than they would in the West." Not only is disruption coming from new corners of the globe but also new industries. "Much of this disruption is being driven by companies outside the auto industry," said Valsan. "Not only have the adoption of car share and ride share services grown significantly, but because these models have very low entry barriers, we are seeing a significant number of new entrants, all very quickly. We see new business models tested almost every few weeks. The Outcome Economy is transforming the auto industry but it has opened significant 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 been moving quickly. Just five years ago, the industry debate was about the issue of mobile versus desktop. "What consumers have shown us is that mobile wins hands down," notes Nakrani. "People do everything on a mobile that they would do on a tablet - from watching television and booking tickets for the theatre to finding out where to go and scanning into airlines. Now that those core tenets are there, the next critical

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Harrold ﬂags North America and the UK in particular as technological leaders in the trend, but cautions that both will face regulatory and legal challenges. The lead, he believes, will come from China. "The Chinese economy takes a very different approach. China's big cities are congested and very heavily polluted, and there's an urgency to move to more efficient vehicles and allow fewer vehicles into the cities. The Chinese government's approach to solving

those who are disrupting the incumbents are being disrupted by further new entrants." There is no clarity at the moment on where these changes will happen or which companies facilitate them, but they are clearly under way. "Need is the mother of invention," concludes Nakrani. "There are many very enthusiastic and smart people who really want to change the world for the better in this respect."

Virtual reality design

The game is on: automotive product development in a new virtual world

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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 manufacturers have adopted real-time visualisation or rendering technology to some extent, in either 2D or 3D guise depending on application. Computer generated imagery has been dominant in marketing materials and the latest digital conﬁgurators provide a virtual realism in the sales process that was unavailable even just a few years ago.

The next big step forward, though, will be made much earlier in the vehicle lifecycle – at the very beginning of the 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. As long ago as 2010, a Jaguar Land Rover advanced engineering

The digital car is now crucial. Using this technology, OEMs can develop and evaluate more conﬁgurations in less time and greatly reduce the number of physical prototypes, which are costly and slow to build and update

- Simon Jones, Director, Unreal Engine Enterprise

New technology providing 3D, virtual representations of single parts through to complete vehicles will be a game-changer in vehicle design Automotive Megatrends Magazine

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Virtual reality design

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 why digital development was becoming so important: “While the time taken to develop a car is still about three years, the greater complexity of vehicles has signiﬁcantly increased the amount of work required,” explained Ian Anderton. “The virtual reality system helps us to ensure that we still deliver the highest quality products because we are using our time in a much more efficient way.”

Time for real-time

That was then. Now – and still more importantly in the decades to come – it is time, or more speciﬁcally, the beneﬁts gained from saving it, that is the reason why automotive design and PD functions are becoming so engaged with real-time visualisation technologies. Underpinning a development programme with CAVE (Computer Aided Virtual Environment) engineering is now taken as read, with every OEM able to call on the technology. The only boast worth making is how cuttingedge it is: Renault partnered with technology provider Mechdyne in 2014 to install a facility in its Paris headquarters that included a PowerWall boasting a head node with 18 rendering nodes (each with an NVIDIA GPU, the industry standard for computer graphics processors)

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and ﬁve sides of Sony 4K projectors scalable to 16K – the ﬁrst environment to have with that capability and heralded at the time as having the highest resolution ever realised in a VR environment. Other OEMs may well have something more advanced by now and are simply keeping quiet about it; what is certain is that we are entering a new stage in the integration of VR processes into the product development discipline, with the rise of even more advanced technologies that have their roots in the video games industry. Not only are these new systems more capable, they are also substantially more affordable, allowing for greater access throughout an organisation. One of the companies that will enable more OEMs to embrace real-time digital modelling – and with it augmented, virtual and mixed reality – is Epic Games. Epic’s well established real-time development tool, Unreal Engine, has been around for more than 20 years and is behind some of the best-selling video games in history. The company’s decision in 2015 to make it free to games developers and creative agencies wanting to use the technology saw an explosion in its adoption, not only in video gaming but from companies wanting to use

the platform for projects across automotive, aviation, architecture and consumer electronics.

The digital car

As a result, Epic, which is headquartered in the US state of North Carolina, this year set up a bespoke division to engage with – and satisfy – demanding corporate customers like vehicle manufacturers who were wanting to use Unreal Engine for automotive development. The latest iteration of Unreal Engine, designated 4.12, is the first to integrate features that have been requested specifically by enterprise customers. “Vehicle manufacturers are well-served by very sophisticated packages and pipelines so our role is to add value beyond this,” comments Simon Jones, director of Epic Games’ Unreal Engine Enterprise division. “Some of the biggest names in the auto industry are actively evaluating how they can expand their capabilities by revolutionising some of their processes”. Jones continues: “The digital car is now crucial. Using this technology, OEMs can develop and evaluate more configurations in less time and greatly reduce the number of physical prototypes, which are costly and slow to build and update.

Virtual reality design “Unreal Engine empowers vehicle manufacturers to use this technology in their internal teams, unlocking the imagination of their designers and engineers by enabling them to do things they haven’t been able to before and, just as importantly, allowing them to do more of it, a vital capability given the proliferation of model lines, derivatives and customer personalisation.” Two of the latest vehicle manufacturers to confirm the importance of real-time visualisation and VR-based technologies are in the upper echelon of reputation for product design rigour and advanced engineering delivery. A ‘Real-Time Rendered Future’ digital presentation of a McLaren 570S, using real CAD data supplied by McLaren Automotive and produced using Epic Games’ Unreal Engine, was revealed at the annual Game Developers Conference in San Francisco in March, positioning the British supercar manufacturer firmly within the vanguard of the new digital space. A month later in April, BMW announced that it had become the first car manufacturer to introduce a mixed reality system devised entirely using components from the video games industry into vehicle development. These systems are strong indicators of approaches that are ground-breaking

“

today, but which in the coming years will be universal.

Photo-realistic

BMW has acknowledged that it has been employing VR in its development process since the 1990s but with the new system it was “…reaffirming its pioneering status by systematically implementing technology from a sector which has not previously been the focal point of industrial applications” – namely video gaming. Citing the shorter innovation cycles of consumer electronics as enabling a much wider scope of functionality and lower costs for the hardware it needs, BMW has taken advantage of technical and human expertise from the computer games industry to immerse PD engineers and designers in a virtual world where a burgeoning number of vehicle functions can be translated into a VR model in an increasingly realistic fashion. Incorporating Vive VR headsets from mobile computing manufacturer HTC, the BMW system allows vehicle functions and interior designs to be rapidly modelled with the aid of 3D visual experiences. The headsets consist of two high-resolution screens and a laser-based HTC Vive ‘Lighthouse’ tracking system that

covers an area of 5 x 5 metres in the BMW application. The real-time graphical output is computed by the same Unreal Engine software platform used by McLaren. With stable rendering at a rate of 90 frames per second and photo-realistic quality, the BMW system enables ultra-precise tracking of every body movement, allowing the wearer to move around in the virtual environment with zero interference – essential for creating realistic spatial impression and also for making it easy to become accustomed to wearing the VR headset.

VR and 3D in PD

The mixed reality system optimises interaction between individual devices and components, such as the realtime model, VR headset and tracking. To move the experience beyond merely visual sensations, BMW employs a reusable interior assembly produced using rapid prototyping to enhance perception and integrates precise acoustic inputs – for example the sound of an engine – to further intensify the immersive experience. A development engineer has the impression of sitting in a real car in a real driving situation and can assess features accordingly: all-round 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

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Virtual reality design

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 of a display depending on the viewing angle or seat position. Developers worldwide will ultimately be able to take part in the design decision-making process from their own individual offices and it is also possible to scale the system to many different developer workstations, the initial vehicle designs being approved using the 3D headsets prior to physical build and testing. BMW notes in an understated fashion that, “the system already makes it possible to save a great deal of time and effort, especially during the early stages of development”. The impact on future processes and practices will be much greater though, as the company explains: “VR investigations could previously only be conducted at costly specialised facilities. By incorporating consumer electronics, the developers gain an unprecedented degree of flexibility, because any modifications can be implemented and tested very quickly.” McLaren has spoken more about its relationship with the enterprise division of Epic Games in a jointlyproduced film, and also outlines the possibilities for the use of advanced VR and mixed reality tools in the product development process. “Our current design process is probably much like any other supercar manufacturer,” explains McLaren

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Automotive Design Operations Manager, Mark Roberts. “We use a PowerWall throughout, and we can show the car at full-size on the deck at the correct ride height so we can get a very realistic understanding of what it is going to look like on the road. Make believe “The next stage is to turn the digital models into a physical model – we usually do 40% scale models to start with before scaling up to full-size when we have chosen the single theme. The key for me is believability. If we believe in what we see, we can make the right decision and the high-ﬁdelity, real-time rendering ability of Unreal Engine is giving us that believability.” McLaren Automotive Chief Designer, Robert Melville, is also enthusiastic about both the current and future role of VR in McLaren’s design processes: “VR enables you to look at the execution of detail areas without having to make separate desktop models. You can check the gap and ﬂush and size of radiuses,” he says. “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.” The advantage that VR brings goes beyond simply being able to validate structure and feature position and on to a much more fundamental level, as Melville acknowledges: “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.” And as vehicle manufacturers realise the advantages that real-time and VR technologies will bring, it is they that are accelerating the pace of change, not the technology providers. “The use of real-time and VR technologies is being driven by the auto industry,” says Jones. “The likes of BMW and McLaren are now using Unreal Engine and it’s becoming a crucial part of their design validation. The features that we are adding to the platform are driven by the vehicle manufacturers - they are deﬁning the parameters.” One certainty is that the parameters will continue to change, with the ambition of vehicle manufacturers in this technological arena limited only by their ability to embrace the opportunities offered by an allencompassing digital development process. For its part, Epic sees Unreal Engine as an enabling technology and its Enterprise division as the problem-solving partner for BMW, McLaren and others with similarly demanding approaches to uncompromised product delivery to market. “How far they want to go – and how fast – is really up to them,” 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

Holding on to existing customers has become the OEMs’ new mantra. Total lifecycle customer approaches are key, with customer retention a major focus. To achieve the same, OEMs are looking actively at extending the value they generate for their customers by extending services and creating new tailored solutions to optimise total cost of ownership (TCO).

So far, OEMs, beyond selling the truck itself, have focused on offering vehiclecentric products and services, with OEM activities and strategies to date built around ﬁnancial services, rental solutions, spare parts sales, service and repair solutions, and ﬂeet management. Now, however, strategies are being developed around the generation of additional revenue streams, such as driver training and maintenance contracts. Increased data capture and simulation tools allow for cost savings in the development process, for example in the areas of vehicle testing and warranty. Efforts to understand driver behaviour and demand and to leverage these for either further vehicle optimisation or the development of new services are mostly in their infancy. Integrated and connected solutions (e.g. locationbased services) that are based on a systematic mining of the automotive industry's "new gold" – namely, data – are even less prevalent.

ompetition and disruption have become the new normal in the global trucking industry. Already faced with market volatility, companies and their associated value chains must also understand and define their positioning in the face of a range of new, disruptive technologies – a range that includes autonomous driving, connected vehicles, the sharing economy, the rise of e-commerce, automated manufacturing and Industry 4.0, workforce skilling and requirements, and the emergence of non-traditional competitors. The range and dynamism of these new factors is straining corporate resources and challenging management teams.

An aggressive and pro-active leverage of truck connectivity allows, in principle, extended value chain coverage for the OEMs. Solutions around vehicle management, load monitoring, driver management, operations/logistics management and time/legal management have a transformative effect on global trucking as well as on the way truck OEMs access proﬁt pools. Vehicle management solutions currently centre around activities such as remote diagnostics, maintenance planning, break down calls and vehicle protection. Load monitoring solutions include temperature management, a factor of key relevance in particular in countries such as India, where cold chains are notoriously weak. Load detection and monitoring allows the matching of capacity and demand and ad hoc load optimisation. Driver management focuses on performance analysis, emergency call and driver entertainment; operations/logistics management focuses on order management, trip recording and reporting, as well as smart navigation; and time management applications

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Connected trucks in India

Figure1

Telematics installations have been growing at 19% p.a., mainly led by after-market segment and entry level solutions Telematics penetration in India Split of installed base

Telematics installed base ['000 units']

Type of fitment OEM

+19%

Type of solution

High end 1% Mid tier 31%

16% 293

68%

84%

Entry level

After-market Split by industry

144

TourismOthers Retail

11% 3% 27% 12%

Split by region West

Cold Chain

13%

North 32%

East 27% 21%

2011

2015

Pharma

26%

Courier

28% South

Source: Secondary Research

currently focus on speed management. Truck connectivity solutions are driven by customer demand, especially in developed countries where operators need to protect margins. In addition, as sensors have become cheap and ubiquitous, as high-bandwidth communication technologies, Cloudbased services and new data analytics approaches have become available, technology has ceased to be a limiting factor. Machine-tomachine (M2M) communication has reached a signiﬁcant level of operating maturity, with dedicated short range communications (DSRC) used for time-sensitive and mission-critical functions and commercial wireless technologies deployed for non-safety applications. Body area networks can even connect bio-sensors implanted into drivers to provide driver health monitoring.

The value of connectivity

Vehicle connectivity is also driven by legal initiatives. For example, estimates put the macroeconomic beneﬁts of telematics in Europe at about €4.4bn (US$4.9bn) due to the avoidance of

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traffic congestion, at €3.5bn due to increased logistics efficiency, and at €2.0bn due to the sale of additional apps and services. Integrated and connected traffic systems, inter-vehicle communication and intelligent traffic warning systems simply make life easier, safer and more environmentally friendly. They also make a positive economic impact which will motivate regulators to drive enforcement. Furthermore, OEMs are slowly recognising the value of data. The realisation that their business models may be at risk not due to traditional competitors but due to the innovative power of Google, Facebook, Uber, and other non-traditional competitors is driving signiﬁcant investments and activity around data-based business models and approaches.

India - signiﬁcant room for growth

India's telematics landscape offers signiﬁcant room for growth. Historically, India has shown a low acceptance for telematics, which has kept market penetration low. Price sensitivity among operators whose

margins are constantly squeezed, and a lack of low cost solutions, are behind this low penetration. So too are challenges in terms of infrastructure, such as data networks, and the level of connectivity of local authorities and business partners. India's transportation sector is also still largely driven by small fleet owners who operate fewer than five trucks and account for about 68% of the total fleet (2012 data). Medium fleet owners (520 trucks) and large fleet owners (>20 trucks) account for a modest 20% and 12%, respectively. While medium and large fleet owners have become more important in the overall mix (small fleet owners accounted for 84% of all trucks in 1994), their volumes are too low to result in significant telematics penetration. Awareness of and interest in telematics solutions has increased significantly for medium and large fleet owners. According to Roland Berger research, Indian MHCV owners in these categories focus on three main features of telematics solutions: productivity, efficiency and cost savings/TCO optimisation. Security solutions are important, but not as critical as cost and margin related aspects.

Connected trucks in India

Figure2

There are ~20 players in the domestic market, top 3 account for 60% of the market Competitive landscape Comments

CV Telematics marketshare [India, 2014]

> >

Others 17%

Trimble 30%

Mahindra 4%

Ashok Leyland Telematics 5% Dhanus Technologies7% 10% e-Logistics

16% 11%

CMC Technology

Arya Omnitalk

The Indian telematics market is highly competitive The competitive environment is further expected to intensify with increasing product extensions, more advanced offerings, technological innovations and M&A Trimble is the market leader with 30% market share. The top 3 participants (Trimble, Arya Omnitalk and CMC Technology) account for ~60% of the total market To remain competitive in the market, vendors not only have to develop new technologies but also keep abreast of global developments and emerging technologies that could impact their product portfolio

Source: Secondary Research

In addition, the globalisation of supply chains and demands by global customers for higher service levels is forcing a professionalisation of Indian fleet operators. Cost escalations put pressure on margins and drive fleet owners to focus on TCO optimisation rather than the initial price of telematics solutions. Government efforts, e.g. the initiative to enforce the use of GPS in staterun buses, also increase the awareness and penetration of telematics solutions. Lastly, India has a number of aftermarket players that offer relatively low-cost solutions. Combined with the need to optimise cost in light of thin margins, such solutions drive adoption. These trends have translated into a rapid growth of telematics installations as shown in Figure 1. With a CAGR of 19%, the installed base has increased from 144k units in 2011 to 293k units in 2015. Entry level solutions - such as basic fleet tracking, monitoring of fleet utilisation, fuel efficiency and productivity - dominate the field with

68% of all installed applications, followed by mid-tier applications (31%). High-end solutions that can be found pre-dominantly in Western markets are hardly relevant, with a fitment rate of about 1%. Most of the fitments (84%) are aftermarket fitments rather than OEM fitments. While all Indian OEMs offer telematics solutions, these services have not found too many takers. This is a very different scenario from that of Europe where truck OEMs such as Daimler, MAN, Scania and Volvo are among the leading providers of telematics solutions. In India, suppliers such as Trimble, Arya Omnitalk, CMC Technology and eLogistics (see Figure 2) seem to be more efficient in offering entry and mid-range solutions to fleet owners. As a consequence, significant current and future profit pools are not accessed by Indian OEMs. This is an area of concern, as India's OEMs may not be able to harness customer data. While competition in the segment is fierce and driven by price as well as technology adoption, the presence of Indian OEMs is desirable and indeed crucial in the mid- to long-term.

OEMs have much to gain in India â&#x20AC;&#x201C; and much to do Innovative, technology-based approaches exist in India and are gaining visibility. Take Rivigo as an example: Rivigo is a startup that introduced the "relay model" in the Indian logistics space. The company operates a fleet of over 800 trucks (which is constantly growing) as well as 40 pit-stops across India. The basic idea is to switch trucks at pit-stops, i.e. a truck that is supposed to go from Delhi to Chennai is driven, for example, as far as Jaipur. In Jaipur, the truck driver hands the truck over to another driver who made the journey with a truck from a pit-stop further south up to Jaipur. The Delhi truck continues on its journey south, while another Delhi-bound truck is driven by the Delhi driver back to the city. Rivigo claims that operating the relay model allows trucks to run up to 800 km (500 miles) per day rather than the typical 280 km per day which reduces transit times by 50-70%. In addition, the driversâ&#x20AC;&#x2122; quality of life is dramatically improved as they are normally back home after 24 hours. Clearly, for this

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Connected trucks in India

Figure 3

Each stakeholder group with individual competency profile – OEMs benefit from close customer/vehicle access Data-based truck business – Competency profiles Ensure access Vehicle access 1)

Stakeholder I

OEM

Specialized supplier

III

Device manufacturer

Network operators

"Over-the-top"

Global IT leader

VII

IT service provider

VIII

Others (e.g. insurance, authorities etc.) High competence

Exploit data Customer access 2)

Data handling3)

Provision of services Data processing4)

Innovation strength5)

Business flexibility6)

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 company has invested heavily in telematics and advanced data analytics to optimise logistics ﬂows. Sophisticated built-in intelligence modules help Rivigo to plan vehicles, have real time vehicle visibility, optimise routes, incorporate information about tolls/borders, driver behaviour, performance history, etc. The road ahead for OEMs is interesting. OEMs can choose between different business models. On the one hand, they can limit themselves to generating data via their telematics solutions. Key requirements of vehicle access and user trust as far as data protection is concerned are typically given for truck manufacturers. On the other hand, truck OEMs can and should look at opportunities that arise out of data analytics, i.e. they should structure data and analyse it using appropriate algorithms (using the Big Data approach). Besides domain knowledge about vehicles and use cases, this requires OEMs to build up capabilities in analysing structured and unstructured data sets. Subsequently, OEMs have a unique chance to improve existing services (e.g. ﬂeet management) or to offer new

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services (e.g. sell anonymised truck driver proﬁles to retail outlets along truck routes, etc.). Entering this element of the value chain not only requires detailed customer understanding, it also requires organisational changes to ensure that these ideas can be driven successfully and with the necessary sense of urgency. Lastly, OEMs have the option of a spin-off, i.e. set up a new business that provides information-enabled activities to the OEM, its competitors and other companies that can leverage customer insights. The last two steps will require changes in the way OEMs do business. They need to move away from "perfect plan" to "fail early, fail cheap". A possible way to incubate these types of businesses successfully is to leverage services such as the Roland Berger ‘Startup Factory’. Trying to start these businesses within the framework of an established organisation will prove to be difficult and cumbersome. The opportunities offered by telematics are exciting and attractive. However, OEMs cannot take success for granted. A qualitative comparison

of OEMs with competitors across various parameters such as ensuring data access, exploiting data, and providing services (see Figure 3) highlights OEM weaknesses in the crucial last two categories. ‘Over-thetop’ providers such as Google and Apple, global IT leaders (IBM, Microsoft, Oracle, etc.) and potential IT service providers such as Deutsche Telekom have substantial assets that are relevant for telematics and can provide solid competition in this space. And as India's example has shown, aftermarket players are not to be forgotten either. OEMs globally and in India need to take seriously the new telematicsbased products and services on offer or being developed. They need to identify where they want to play in terms of range of functions and geographies; they need to understand implications for pricing, system characteristics and application scope; and they need to close critical knowledge gaps quickly, either internally, via acquisition or via partnering, e.g. in the context of startup factories. Technology is changing global trucking, and it is 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 evolving fast. Legislative requirements for vehicle safety, fuel economy and emissions are playing a huge role, while consumer demand is spurring unprecedented investment in, and the rapid development of, connected car technologies.

OEMs and Tier 1 suppliers, as well as tech companies, are bombarded with a growing list of challenges as the rise of the connected car reaches new heights. Safety is a primary concern, as recent reports highlight the vulnerability of connected cars to hackers. Writing recently for Automotive World, Shanmugasundaram M., Associate Director of Product Engineering at Happiest Minds, suggested that the threat of cyber attacks is “only set to worsen as more connected cars hit the road.” However, the connected car also offers many opportunities, not just for OEMs and Tier 1s, but for academia, authorities and entire states and countries.

Smart Corridor extension

Planet M is an initiative set up by the Michigan Department of Transportation (MDOT) to represent the collective efforts of OEMs, suppliers, academia and authorities that are transforming mobility across

the US state. It has adopted a vision for the connected car’s role in transportation, with an increasingly strong link between the vehicle and the surrounding environment. As a result, Planet M is playing an integral role in the development of Michigan’s Smart Corridor – a stretch of freeway that runs straight through the heart of Michigan’s automotive and technology development area, where many OEMs and Tier 1 suppliers are based. It links this to a number of other areas that are important for the development of connected car technology, like MDOT’s test bed in Oakland County and the Ann Arbor Connected Vehicle Test Environment. “In 2014, we made a commitment as part of a consortium to develop 125 miles of Smart Corridor,” Kirk Steudle, Director of MDOT, told Megatrends. “During the summer of 2016, we agreed to expand this to 350 miles by the end of 2018. This means we need to continue to work with manufacturers and suppliers to carefully and strategically identify locations for the construction of roadside units and Smart Corridor technology.” MDOT carried out the ﬁrst phase of freeway equipment installation in 2015 as part of a consortium with General Motors, Ford and the University of Michigan. This involved installing 17 sensors, cameras and wireless devices across a 32km (20 mile) stretch of freeway, which will help

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

V2I and V2V opportunity

One of the main beneﬁts of creating a Smart Corridor in Michigan is the development of technologies thanks to real-world tests. Steudle said that OEMs are eager to trial their new connected vehicle technologies on public roads, as tests on private roads 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.

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Michigan’s Planet M initiative

From a deployment standpoint, connected automation has to be rolled out all over the country and all over the world, so that we can continue this collective knowledge that helps fuel progression

“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 that are approaching an intersection, one of which is about to run a red 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 we’ve already proven it’s possible with tests.”

The Holy Grail

In December 2013, Michigan became the fourth US state to allow self-driving cars on public roads. This gave OEMs

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“In 2014, we made a commitment to develop 125 miles of Smart Corridor. During the summer of 2016, we agreed to expand this to 350 miles by the end of 2018" - Kirk Steudle, MDOT a free pass for testing autonomous vehicle technology in real-world conditions. Looking to the future, Steudle discussed the potential use of autonomous vehicles along the Smart Corridor. “The Holy Grail is connected automation, with autonomous cars

becoming much smarter through connectivity with other autonomous cars. Society encourages people to talk to each other, because if somebody is very smart but doesn’t speak, the body of knowledge is limited, but when smart people talk, the body of knowledge and the level of information increases,” he mused.

Michigan’s Planet M initiative

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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, Steudle affirmed. Like many experts, he believes that transport will become safer with the introduction of autonomous vehicle technology. “However, I don't think we will achieve a truly safe environment until that autonomous vehicle is connected, not only to other autonomous vehicles but to the Internet of Things.”

The entire ecosystem

Planet M is not just about helping to construct smart roads and infrastructure, Steudle emphasised: “It’s also about leveraging assets across the whole ecosystem of private industry, academia and government bodies in Southeast Michigan. There are 376 companies, including OEMs and suppliers, involved in automotive R&D in the area, which represents around 75% of global automotive companies.” On the academic side, the University of Michigan and Michigan State University play a key role in Planet M. These are carrying out research in connected automated vehicles that

will be “vital” for the future of the industry. Even the state’s schools are educating students as young as 14 in the connected car area, Steudle revealed. “Then there are the test facilities that are very important,” he remarked. “One is Mcity – an autonomous village at the University of Michigan that has been wildly successful and is oversubscribed with activity. OEMs use it to test and carry out research for autonomous vehicle technologies.” Another is the American Center for Mobility, which is being built in Ypsilanti Township, near Ann Arbor, on the site of a former General Motors transmission factory. This factory was decommissioned in 2009, and is now a 300-acre car park. The new facility will be a “much larger, more detailed version of Mcity,” Steudle explained, where OEMs will have the ability to conduct highspeed autonomous vehicle testing in both rural and urban areas, certifying and validating technologies before taking them to market.

Former glory The fact that the American Centre for Mobility is being built on the same site that housed GM’s transmission factory is perhaps testament to the state’s endurance as a powerhouse for the automotive industry. Several OEMs, including GM, have also recently made investments in plants across Michigan. “There is no doubt that the American auto industry was on its knees in the midst of the recession,” Steudle recalled. “But it's picked itself up, just like all of us here in Michigan knew it would, thanks to the determination of people that wanted to make sure it would recover and once again begin to thrive. Personally, I think it is now stronger than ever.” In the hope of promoting further growth and expansion in the automotive industry, Steudle said that Planet M would work to ensure “even greater collaboration between businesses, governments and academia.” He also suggested that

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“

Michigan’s Planet M initiative

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 between Michigan and other US states, as well as other countries. Authorities in Texas, for example, are establishing a similar activity, and Michigan has agreed to collaborate and help set it up. Steudle also revealed that MDOT has agreed to work alongside authorities in Ohio and Pennsylvania on the deployment of connected automation. Partnering with neighbouring states, he added, is one of Planet M’s goals, as it would permit the development of Smart Corridors that connect these locations in a new way.

Like Michigan, Nevada is also positioning itself as a hub for the development of autonomous vehicle technology. Several OEMs, including Hyundai, Kia and Mercedes-Benz have received permits to test autonomous vehicle technologies on public roads across the state. Steudle would not reveal if Nevada could be a potential partner for MDOT, but he did suggest that connected automation must become a global phenomenon: “From a deployment standpoint, connected automation must gain traction all over the world. It would be neat if it succeeds in Southeast

Michigan, but that’s not ubiquitous. It has to be rolled out all over the country and all over the world, so that we can continue this collective knowledge that helps fuel progression.” However, despite the possibility of working alongside others, Steudle concluded: “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. Over the next ﬁve to ten years, you will see Michigan out in front, leading the way.”

Michigan must overcome some very real obstacles on the way to becoming a world leader in vehicle connectivity and automation

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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 change the current automotive business model: ride-sharing, ride-sourcing and car-sharing.

In order for these trends to develop into viable business opportunities, however, it is a prerequisite that those involved make full use of all available digital technology. Applying easy-to-use technology to car-sharing solutions will 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

Ride-sharing is a classic form of transportation, one that goes back many years. Indeed, it is commonplace to drive together to work, to the cinema or to visit friends or family. However, as

Ultimately, the days of the car as a personal possession are numbered; rising motoring costs will put private ownership out of most people’s reach, and the car will revert to being a status symbol

the years have progressed, ride-sharing has become an even more common form of transportation. People used to share a ride only with people they already knew, or as part of a regular agreement with a colleague about sharing a lift to work. However, ubiquitous Wi-Fi and smartphones in

Who’s doing what? Examples of current operators Service type

Examples of current operators

Ride-sharing

Ridesharing.com GoMore.dk Blablacar

Car-sharing (‘free ﬂoat’ concept)

Autolib (Paris) car2go (29 cities) DriveNow (Copenhagen, Munich, Berlin, Stockholm etc.) Green Mobility (Copenhagen)

Car-sharing (central point concept)

TADAA! LetsGo

Ride-sourcing

Lyft Uber

Autonomous driving

Tesla, Volvo Car, Google

our pockets mean we can now easily go wherever we desire, whenever we desire. Furthermore, there is a trend amongst ride-sharing operators towards leasing private cars to customers, provided that the customer agrees to make his or her leased car available to other users. As an example, GoMore today has 1,000 of its own cars on the road and aims to have at least 100,000 cars on the road in 2020. By leasing private cars, the ride-sharing operators are less dependent on their customers’ willingness to share cars; at the same time, they are successfully expanding their business model. Consumers have the ability to lease a car at a more favourable price than that offered by a regular car leasing company - the only catch being that users agree to make their cars available to others. Ride-sourcing is an extension of ridesharing. Besides sharing a ride, car owners now make money from transporting people around. Now it is

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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 ridesourcing, 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 ‘freefloating’ 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 establish a large parking lot with its fleet typically near the town centre. Car-sharing concepts can be established in many shapes and forms. TADAA! provides very small communities with an economic foundation for starting a profitable carsharing business, while DriveNow operates at the other end of the scale, taking an extensive customer base to create a business that is both profitable and user-friendly. The different car-sharing concepts can easily supplement each other. As an operator, DriveNow is better suited for bigger cities, whereas TADAA! is also well suited for smaller communities.

Self-driving cars take car-sharing to the next level

All the different types of car-sharing services have a bright future, especially when factoring in new self-driving car technology. In the future, ride-sharing, ride-sourcing and car-sharing will look ever more alike.

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Ubiquitous Wi-Fi and smartphones in our pockets mean we can now easily go wherever we desire, whenever we desire Ride-sharing, for example, will become more structured. As the concept evolves, users will no longer need to decide whether they have room for a passenger, what price range they prefer and so on. With pre-configured comfort settings, the cars themselves will define the extent to which ridesharing can be optimised. However, there will still be an owner present in the car. Car-sharing will become even more common; the cars will be able to find their way back and forth in the cities, enabling even stationary concepts to become more agile. Users can get a ride to wherever they need to go, and until they need the car again, it can service other users as a taxi or return to its point of departure, from where it can be of service to other users. Ride-sourcing will be fully automated, and the taxi business will be without drivers. An element of ride-sharing will

still be present as the users would be able to allow other users to join some or all of the trip. These trends will have a significant impact on the ownership structure of the operators as car-sharing will be mainly driven by large fleet owners. The same will be the case for ridesourcing operators, even though there will still be a place for privately-owned cars, which will be administrated by a third party. The model will also apply for ride-sharing, where private car ownership will be administrated by a third party, and many of the large operators in the market will have built up large fleets, very much like the GoMore business model. Ultimately, the days of the car as a personal possession are numbered; rising motoring costs will put private ownership out of most people’s reach, and the car will revert to being 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 economy; the sector contributes over US$5.4trn annually to the global economy, and provides essential infrastructure that drives economic growth and enables the movement of goods, services, and people. The automotive and transportation landscape is undergoing a revolution, heavily inﬂuenced by a few key trends.

Urbanisation

premature deaths annually are linked to air pollution. As the demand for mobility increases and new car registrations rise from 90 million in 2015 to over 125 million by 2025, the negative externalities associated with these issues are expected to rise exponentially.

Connectivity

In 2010, 50% of the world’s population was living in cities. By 2030, the world’s urban population is expected to rise to 60% and by 2050 to 70%. The level of investment in global transportation infrastructure, on the other hand, is expected to grow at a slower pace of around 5% CAGR over the next decade. This is likely to lead to challenges such as increased congestion and rising pollution unless there is better utilisation of the existing infrastructure.

Frost and Sullivan's research identifies connectivity as a major trend that serves as the under bed required for all future digital services. More smartphones are now sold in a year than there are cars on the planet, and the number of gadgets available is multiplying five times faster than people. The connected device universe is expected to explode from less than five billion to 80 billion by 2025. This technology boom will facilitate the development of connected car communication as well as underpin the evolution of smart mobility services.

Congestion is already a serious challenge in many urban conglomerates. The damage associated with congestion, right from wasted fuel costs to loss of productive time, are estimated to cost economies anywhere between 2% to 4% of their GDP today. Air quality has emerged as another serious concern. The World Health Organization (WHO) estimates that over 7 million

The second key trend is an evolution of artificial intelligence. In a world of cognitive artificial intelligence, machines will be able to make their own decisions simply because there will be more insightful real-time data, this will give them the context to make sense of it and react just like a human would.

The cognitive era

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Future mobility

Supporting Services Parking

Fi i l Financial Services H ili T eHailing Taxi (OnDemand)

Cost & Convenience

Integrated Mobility: Plan, Book, Pay

One Way Carsharing

â&#x20AC;&#x153;

C t l Car R Rental Round Trip Carsharing

Carpooling (Dynamic.Corporate)

Bikesharing

Micro-mobility

In future, cars will be cognitive; not only will they recognise voices and be able to optimise the journey; they will also incorporate other cognitive technologies of AI such as computer vision and machine learning. This will change the future of cars, challenge traditional business models and create immense potential for innovation. The first step in this journey is the automation of cars. There is still 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 automated vehicles will enter the market in the next ten years. Fully automated cars are expected to be commercialised by 2030, which is valued as a US$60bn per annum market opportunity. Once the commercialisation of autonomous driving kicks in, it will have far reaching impacts. For instance, in the US commercial trucking market, around 300,000 truck drivers could lose their jobs. The entire landscape, as well as the future of cities, will change as a result of this technology shift.

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P2P Carsharing

Carpooling (Fixed) Dynamic Shuttle (On-Demand)

Distance Travelled

Public Transit

Source: Frost & Sullivan

With European car occupancy at just 1.6 people, there is a tremendous opportunity to reduce private vehicle trips, cost, and emissions through sharing journeys with others

Social trends The next key trend is the change in the mindset of the future customer; by 2025, 50% of the global working population will be made up of Millennials. One of the biggest trends in this demographic is the reduction in the level of driving, with people expected to drive around 18% less per day in the US by that time. Since 1980, driverâ&#x20AC;&#x2122;s license ownership among 20-25 year olds has dropped 20% in the US. Research has shown that 9% of Millennials do not want to drive because they are worried about

the environmental implications. These changing attitudes will drive the growth of shared mobility business models as well as greater utilisation of existing infrastructure in cities as more people turn to public transport. We are also seeing a shift in attitudes where people are prioritising access over ownership making more sustainable decisions. In response, there is an emergence of a wide range of platforms to enable collaborative consumption like peer-to-peer platforms for car-sharing and ride-sharing as well as shared marketplaces.

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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 The next trend involves the evolution of the concept of ‘smart’ in various industries. In the future, cars are just part of the equation. In a truly smart city, cars will communicate with each other as well as with roads, crosswalks, toll ways and parking structures. Vehicles will know they need to keep a safe distance from each other, crosswalks will tell the car to slow down if there is a pedestrian approaching. Cars will update each other on real time traffic. Technology underpins this movement toward smart, be it smart cities or smart mobility within those cities.

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An example of the ﬁrst step toward smart mobility is a pilot project in Manila. The city is collaborating with the World Bank and Grab taxi to analyse Grab taxis’ GPS traffic data and provide accurate, real-time information for initiatives that can help reduce traffic congestion and improve road safety.

The emerging urban mobility landscape

Within the traditional concept of mobility, urban mobility, in particular, is undergoing a revolution, heavily inﬂuenced by these trends. There is a gap emerging in the urban mobility landscape between solutions

Global car sales are estimated at around US$2.3trn, but the market opportunity for bringing together all forms of mobility is valued at around US$5.4trn

that cover longer distances at lower costs and services available on demand, often at a higher price. For instance, public transit, whilst cheap, is typically limited in service scope by the availability of infrastructure and routes. On the other hand, services such as taxis and other on-demand door-to-door models are more convenient but traditionally have been the most expensive. In-between the two ends of the scale, new models are evolving, such as ﬁrst and last mile solutions like bike sharing, micro mobility as well as long distance solutions like car-pooling services that are available at a very cheap cost per distance travelled. These services are gaining traction in the market because they are starting to solve some of the core challenges we face in our cities and in other areas.

Rise of car-sharing

This need for more efficient and effective mobility has underpinned the growth of the car-sharing market. Frost & Sullivan's research has found that the global car-sharing market is expected to grow from 7 million members in 2015 to reach 35 million members by 2025. The landscape is rapidly changing as well; on one hand, private investment into carsharing 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

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Future mobility market is beginning to consolidate with the exit of some of the start-ups in Europe, such as Cite car and Twist and Hertz 24/7 shutting down its US operations.

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Apart from urbanisation, other mega trends such as connectivity and digitisation have had an inﬂuence on this market. Advances in vehicle sharing technology have emerged as one of the biggest drivers for carsharing and connectivity plays a big role in making the service more accessible and convenient for customers. Data analytics is used to predict where demand will arise and ensure more effective rebalancing of the ﬂeet.

The European market for ride-sharing alone had over 30 million members in 2016. Over the last year, there has been increased investment into ridesharing leading to a spree of mergers and acquisitions; for instance, BlaBla car acquired Carpooling.com and AutoHop in Europe, and expanded into emerging markets such as India, Russia, and Turkey. Transport Network Companies (eHail models) such as Lyft and Uber are merging with ride-sharing through the launch of services such as Lyftline and Uber pool, where passengers share the cost of their journeys. The delineation of the business models is beginning to

Advances in vehicle sharing technology have emerged as one of the biggest drivers for car-sharing and connectivity plays a big role in making the service more accessible and convenient for customers

In the mid- to long-term, autonomous driving will have a signiﬁcant impact on the model. In the mid-term, automated parking will make the customer experience more seamless, but the real impact will be realised when vehicles become fully automated; at that point, car-sharing will start merging with other business models.

Ride-sharing – the next hot social transportation trend

With European car occupancy at just 1.6 people, there is a tremendous opportunity to reduce private vehicle trips, cost, and emissions through sharing journeys with others. Frost & Sullivan’s deﬁnition of ride-sharing is when a driver is making a trip and is looking to monetise the spare three or four seats in the vehicle.

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blur and this is expected to become more pronounced as autonomous driving comes into the picture. Proliferation of the ride-hailing concept This market had the relatively highest growth and media exposure in 2015 and is facing a backlash from licensed taxi drivers and regulators alike. It has attracted signiﬁcant recent investment; in 2016 alone, to date over US$9bn has been invested in ride-hailing apps. Increasingly, the traditional taxi market is getting connected to a tech platform. Apps such as Hailo, Gett, Curb and Arrow have emerged, and their business model involves connecting traditional taxis with customers. Another trend is the expansion of the business model; the market is no longer limited to taxi and private hire services but is also moving to logistics

and bringing in different service providers through that platform. Amongst the mega trends, autonomous driving in conjunction with an intelligent transport ecosystem is likely to have the biggest impact on the taxi and eHail market. It would increase the utilisation of each vehicle and remove the driver cost from the equation, leading to a drop in customer fares. It could also lead to a shift away from asset light platforms to an asset-heavy model, as the need to invest in an autonomous ﬂeet might arise.

Roadmap towards mobility of the future

Global car sales are estimated at around US$2.3trn, but the market opportunity for bringing together all forms of mobility is valued at around US$5.4trn. Integrated mobility has a role in bringing some of these solutions together on a platform and linking them to the existing infrastructure. Start-ups and B2C apps such as Citymapper, Moovit and Moovel are targeting the high growth B2C opportunity. However, for growth to really take off, there is a need for behavioural changes, increased 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 long term, the lines between different services will blur, and with the commercialisation of autonomous driving, there will cease to be a distinction between a ‘drive yourself’ model, such as car-sharing and a ‘be driven’ model such as taxis. As autonomous technology causes a fall in the price point of new mobility services, these business models will also begin competing with public transport and the entire transportation landscape will see a paradigm shift with convergence across the board. In the long term, the key trends will lead to a convergence between transportation, connectivity and autonomous, which will unearth the true potential of mobility. Those stakeholders who embrace all three pillars together are the ones likely to 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 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

“There is considerable development ongoing in engines and powertrain technology in general,” Dean Tomazic, Executive Vice President and Chief Technology Officer, FEV North America, told Megatrends. The supplier has long specialised in the design and development of powertrain components and concepts, and has a number of technologies currently in development that will soon be launched. One of these, said Tomazic, is variable compression ratio (VCR). “Today’s combustion engines have a dedicated compression ratio,” he explained. “The engine is under low load operation when driving through cities or busy traffic, making it suitable for high compression ratios, because the higher the compression

FEV's variable compression ratio (VCR) technology could be introduced as early as 2017 ratio the better the thermal efficiency. But when you approach high loads, then knocking becomes an issue. This can be mitigated by spark retardation or enrichment, but neither is beneficial for fuel consumption.” Tomazic said there needs to be a “reasonable middle ground” in terms of compression ratio selection, whereby fuel efficiency and peak torque requirements are both met. FEV has been working on VCR prototypes for more than two decades. Tomazic said that the technology “allows you to change the compression ratio depending on where you are in your operating map

as a function of speed and load, providing far more flexibility.” He is confident that FEV’s latest solution “boasts the best of both worlds – good fuel consumption at low loads, and a lower compression ratio at higher loads, lowering the need for spark retardation or enrichment.” The VCR technology can be used in both diesel and gasoline engines, but the primary market would be the latter. This, said Tomazic, is due to the fact that “the biggest bang for your buck is on the gasoline side.” There are also numerous advantages exclusive to diesels, he added, but the gasoline market is the target for VCR.

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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 So how does it work, and why hasn’t it been done before? The VCR mechanism is incorporated into the connecting rod, which is in turn connected to the piston through the wrist pin to the crankshaft – a completely new connecting rod design. “The beauty of the design is that it is a two-step system, so it can run at either high or low compression ratio.” The quick transitional period when switching between the ratios is a feat that is particularly important to downsized and turbocharged gasoline engines. “When you think about the acceleration process in these engines, there is a time requirement to build up sufficient boost pressure,” he noted. “In most applications this takes more time than switching between compression ratios.” He added that the design of the system allows gas and mass forces to move the piston relative to the connecting rod. It also includes a shuttle valve that is located at the lower end of the connecting rod, which “tells the connecting rod when it needs to shift from high to low compression ratios or vice versa. It’s a very simple mechanism that only needs a small electric motor to power it.” Tomazic is conﬁdent that the system will help FEV’s customers achieve essential gains in fuel economy, as well as emissions reductions. “There are other potential beneﬁts,” he added. “For example, we can also increase the low end torque of the system depending on

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how much we are willing to compromise on fuel consumption. This means that we can drastically increase the power output of the engine.” Given the numerous beneﬁts, it might be difficult to understand why VCR has not already been brought to market – and Tomazic concurs. “The answer lies in the fact that fuel has been cheap, particularly across the US. And from a regulatory perspective, there hasn’t yet been any need to introduce VCR. But both those factors are changing, and the low-hanging fruit for CO2 reduction and fuel efficiency improvement has gone, but we still have to comply with much more stringent requirements. This means that the time is ripe for VCR,” he remarked. FEV has a number of customers that are already testing its VCR technology, incorporating it into their vehicles and running ﬂeets on public roads for validation. The technology could therefore be introduced as early as 2017.

The vast array

VCR isn’t the only technology that FEV is examining. The company is also looking at new variable valve train technology that Tomazic says could offer many advantages in combination with conventional direct injection (DI) systems, including lowering the exhaust gas temperatures. “This could allow us to apply variable geometry turbines, giving us even more ﬂexibility in terms of low end torque and peak power.”

Tomazic also highlighted developments in exhaust gas recirculation (EGR) technology. “This will play a big role because it allows us to de-throttle the engine and increase thermal efficiency,” he explained. “This compliments the benefits that we can get from using VCR.” Other areas of interest and development include minimising thermal losses,friction reduction – as reducing parasitic losses can lead to big improvements in fuel efficiency – and electrification. “We are working heavily on 12-volt systems as well as 48-volt applications. With the latter, echargers can be incorporated into the system to ramp up vehicle performance. We can even run the air conditioning off the system, which could significantly improve fuel consumption and decrease CO2 emissions.” While he thinks the low-hanging fruit has been plucked, Tomazic is confident that there is a wide array of technologies yet to reach the market. “The key is to pick the right combination, because they have to complement each other to get the best outcome,” he noted. Looking ahead to 2025 and beyond, Tomazic noted that the connected car is certain to change the way that the powertrain works. With different vehicle requirements, and varying consumer preferences, “The diversification of technologies will be huge. It's a trend that will be visible across the vehicle, including the powertrain."