M:bility | Magazine – Q4 2019 by Automotive World

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Will electric pick-ups work? Ford's AI assistant will talk back Do AVs need digital wallets? Could MaaS kill the city bus?

â&#x20AC;&#x153;The car industry is not as revolutionary as it thinks - Alain Visser, CEO, Lynk & Co

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M:bility | Magazine - Q4 2019

Published in September 2019 by:

Welcome... …to the Q4 2019 issue of M:bility magazine. Serving the mass market with affordable electric vehicles (EVs) is the Holy Grail for automakers developing such technology. So far, that quest has seen small- and medium-sized vehicles well catered to, but there are other high volume segments to consider. Just as the Tesla Model X tapped into unrelenting demand for luxury SUVs, manufacturers old and new are now eyeing the opportunity to convert another North American cult figure: the pick-up. Detroit-based start-up Bollinger Motors plans to “build something that doesn’t exist” with its no-frills electric truck, the boxy B2 that is described as having a ‘mullet haircut’. It is due to be revealed in Detroit this September. Then there is Workhorse, which in May received a premature endorsement as the saviour of GM’s shuttered Lordstown assembly plant. In August, the Ohio-based start-up, which is developing electric pick-ups and parcel delivery vans, advised that it will license its W-15 platform through a new private company—Lordstown Motors. Another Detroit start-up, Rivian is perhaps the favourite of the bunch. The R1T electric pick-up is slated for production in 2020 as it stands. Incidentally, it is also working with Ford to develop scalable electrical architectures. Indeed, even the Ford FSeries, America’s best selling vehicles for more than three decades, are set to go battery electric in future. In July, a prototype F-150 towed 1.25 million pounds in a bid to win over EV sceptics. However, the challenge will not be pulling heavy objects, but dragging pick-up owners away from tried and trusted gasguzzlers. Will North America’s love affair with the traditional pick-up falter when new contenders enter the frame?

Automotive World est. 1992 Automotive World 1-3 Washington Buildings Stanwell Road, Penarth, CF64 2AD, UK www.automotiveworld.com T: +44 (0) 2920 707 021 support@automotiveworld.com ISSN: 2053 776X Registered number: 04242884 VAT number: GB 815 220 173 CEO & Managing Director: Gareth Davies Editor: Freddie Holmes Contributors Betti Hunter Freddie Holmes Jack Hunsley Megan Lampinen Paul P. Skoutelas Xavier Boucherat Production: Anmol Mothy

Freddie Holmes Editor, M:bility Magazine

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T h a t ’ sr i g h t . A A AMe mb e r sc a nr e q u e s to u rs e r v i c e s t h r o u g hs i mp l ev o i c ec o mma n d su s i n ga n y A ma z o nA l e x a , Go o g l eHo meo rGo o g l eA s s i s t a n td e v i c e . A tA A A , we ’ r eu s i n ga d v a n c e dt e c h n o l o g i e st op r o v i d e a no u t s t a n d i n gme mb e r s h i pe x p e r i e n c e .

FUTURE-PROOF STEEL FOR MOBILITY The smartest choice for both planet and business.

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M:bility | Magazine - Q4 2019

IN THIS ISSUE q4 2019

How can automakers make money from mobility?

Battery-powered beasts of burden: could the pick-up segment go electric?

Meet and greet: how Ford is sculpting the personality of the car

What is Mobility as a Service and how can automakers fit in?

How do public buses fit in with the future of mobility?

How will autonomous cars pay for things?

European Commission seeks to â&#x20AC;&#x2DC;grasp the realityâ&#x20AC;&#x2122; of future mobility

What do consumers want from the car of the future?

To improve urban mobility, think of the city as a system

AV testing must keep the public on side

Interview: Alain Visser, Chief Executive, Lynk & Co International

Scouting for start-ups: corporate venture capital is tactical due diligence

An Automotive World publication

M:bility | Magazine - Q4 2019

Battery-powered beasts of burden: could the pick-up segment go electric?

How do public buses ﬁt in with the future of mobility?

How can automakers make money from mobility?

38 European Commission seeks to ‘grasp the reality’ of future mobility

How will autonomous cars pay for things?

An Automotive World publication

Interview: Alain Visser, Chief Executive, Lynk & Co International

Scouting for start-ups: corporate venture capital is tactical due diligence

ÂŠ General Motors

M:bility | Magazine - Q4 2019

How can automakers make money from mobility? While bullish optimism remains, it is unclear as to whether Mobility as a Service is the right play for automakers. However, partnering with peers and targeting those with limited access to transportation could ensure such services are utilised. By Freddie Holmes

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M:bility | Magazine - Q4 2019

A handful of major services have either been scaled back or closed altogether, and partnerships between dire enemies suggest that MaaS should not be tackled alone; the mammoth tie up between BMW and Daimler would indicate that partnerships could be key to the survival of such operations. This article will not include the glorified leasing programmes run by many automakers, including the reincarnated Cadillac Book ‘subscription service’ that allows members to rent a suite of vehicles for a fee of around US$1,500 per month. From a universal mobility perspective, the question remains: how can automakers soothe the teething pains that have been felt in establishing mobility businesses, and ensure those lofty investments bring sizable returns?

obility as a Service (MaaS) has proven a tough beat for automakers so far. The challenge was once getting prospective buyers to put pen to paper on a new car; vehicle manufacturers are now tasked with putting bums on seats as part of shared mobility services.

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Micro-transit is a challenging space, and there have been multiple companies that have arisen and folded while others continue on

The wheels fall off Ford’s Chariot One of the largest scalps to date has been Chariot, a private bus company acquired by Ford in 2016 for US$65m. It spearheaded the brand’s push to become not only an automaker, but also a mobility provider. In January 2019, it was announced that the business would cease operations, with Chariot’s Chief Executive, Dan Grossman, noting that the service had proven ‘unsustainable’. The brand withdrew from ten US cities, as well as London, its only venture

outside of the US. It came as a surprise; in May 2018, Marcy Klevorn, President of Mobility at Ford Motor Company, noted she was “very confident about having the funding that we need to continue to progress and scale these businesses.” Modified transit vans with space for 14 passengers would operate on a fixed route, with riders able

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to reserve a spot via a smartphone app. Utilisation was patchy. One line in Denver reportedly served just 100 riders over the course of two and a half months—a service that the city had subsidised for US$250,000 to give locals free rides for six months. Part of the problem was that for many, a city bus was cheaper, served more routes and had safer drop-off points.

M:bility | Magazine - Q4 2019

in which owners can rent their cars out when not in use. Maven was pegged as the Detroit automaker’s first real foray into the hazy world of MaaS, an entry point for electric vehicle (EV) adoption and in the long run, a foundation for shared robo-taxis being developed with Cruise Automation.

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The maths is really hard in terms of creating an eﬃcient route with an optimised number of people

However, in May 2019 it was announced that Maven would shutter in several key cities as part of a ‘strategy shift.’ With demand dwindling in some (as yet unspecified) locations, operations are being slimmed down to focus on where demand is highest. Both the traditional car-sharing services and Maven Gig—which primarily serves delivery drivers as part of the ‘gig economy’—will be scaled back, according to an initial report by the Wall Street Journal. In total, services in eight of its 17 North American cities are reported to be closing. The news was unexpected. Maven’s user base appeared to be expanding: in November 2018, GM forecasted that Maven would hit 300,000 members in 2019—up from its 200,000 members at the time. It had garnered a reputation as being ‘the AirBnB for cars’, and there were even suggestions of an IPO in future. In January 2019, GM’s head of Maven and Urban Mobility, Julia Steyn, left the company.

Finding a niche “Micro-transit is a challenging space, and there have been multiple companies that have arisen and folded while others continue on,” Jessica Robinson, Executive Director of the Michigan Mobility Institute, told M:bility. Having previously worked at Ford’s Smart Mobility unit, Robinson believes success in this space will boil down to strategy and execution. “Chariot operated on a quasi-fixed route with stops met by passengers that click on the app, but the maths is really hard in

terms of creating an efficient route with an optimised number of people,” she explained.

Maven scales back In January 2016, General Motors launched a dedicated mobility service under the separate brand of Maven. Through a smartphone, users could access an empty Maven vehicle and pay by the hour before returning it to a designated spot. It also runs a peer-to-peer programme

Targeting users that already have access to affordable and convenient forms of transportation may not be the best approach. In contrast, those with limited access to mobility may find the launch of a new service— which caters to their specific needs— extremely appealing. Does MaaS need to find a niche within a niche? While Chariot got the chop, Ford’s other mobility ventures appear to remain in the picture. GoRide Health, the automaker’s

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M:bility | Magazine - Q4 2019

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While Chariot got the chop, Ford’s other mobility ventures appear to remain in the picture. GoRide Health, the automaker’s non-emergency private ambulance service, is being expanded

non-emergency private ambulance service, is being expanded, and is targeting ‘thousands’ of rides daily, across six cities, by the end of 2019. In 2020, the service will grow to include states such as North Carolina, Louisiana, Texas and California.

Others in the mobility game have launched similar services. In November 2018, Lyft hired its first Vice President of Healthcare to “reduce the healthcare transportation gap.” According to Lyft’s 2019 economic impact report, nearly a third of riders surveyed

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had used the app for nonemergency medical transportation. Uber has also introduced a healthcare-focused ride-sharing service. In June it announced partnerships with Carisk and Pack Health to help injured workers and those with chronic illnesses to make

M:bility | Magazine - Q4 2019

Bodo Uebbe, advised that joining forces with BMW had created a “global player” in sustainable mobility services, and cited a prospective customer base of around 66 million users worldwide.

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Why MaaS?

The development of ‘frenemies’ is way more than just a way to survive

medical appointments. Dan Trigub, Head of Uber Health, describes the business as an “easy, on-demand way for patients to get the care they need whenever they need it most.”

Share Now: a brand and a strategy While a mammoth deal in its own right, the merger between BMW and Daimler’s mobility units may illustrate the importance of collaboration. “The development of ‘frenemies’ is way more than just a way to survive,” observed Axel Schmidt, Managing Director and Global Automotive Lead at Accenture. “In every industry there are windows of opportunity, but they are getting smaller and smaller. You can either take this

“To realise the full potential of such a partnership, the partner should offer complementary abilities or, even better, a similar mobility service,” said Accenture’s Schmidt. “This is critical, given the fact that the future of mobility will serve customers who use different vehicles whenever and wherever they need them. Therefore, automakers must become brokers of mobility, rather than just car manufacturers.”

chance on your own—assuming you are strong enough—or team up with someone.” To the disappointment of many industry watchers, the joint venture did not come under the name of ‘Jurbey’ as expected, and instead created five separate services, including Reach Now (car-sharing), Share Now (free-floating carsharing) and Free Now (ride-hailing and chauffeur services). In doing so, the pair had created a ‘game changer’, according to BMW Chief Executive Harald Krüger. “In recent years, we have evolved from a manufacturer to a mobility provider,” he told analysts in March. “Going forward, we aim to be a leading tech company for premium mobility.” In April, Daimler’s Chief Financial Officer,

Mobility is clearly an attractive venture for automakers, but it is also a gamble. With hefty upfront investment come the additional fees associated with keeping fleets of cars clean and mechanically sound. Failure to comply with state and federal roadside inspections could lead to fines—or the service being hauled off the road. While press releases would indicate automakers are moving toward MaaS with glee, it is a shift that has been forced upon them from outside disruptors. “Carmakers feel they need to get into the area of MaaS because their traditional business model of producing cars to sell to individuals is being disrupted by ride-sharing and other alternatives,” said AnnaMarie Baisden, Head of Autos, Macro Research at Fitch Solutions. “It is out of their natural area of expertise though, so as well as factors such as ensuring there is demand—do they have the right demographic in their target markets, is public transport good enough to provide competition— they also have to look at new types of operational cost.”

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M:bility | Magazine - Q4 2019

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Automakers must become brokers of mobility, rather than just car manufacturers

Baisden believes rental firms with greater experience in managing fleets of shared vehicles will become necessary to ensure the service is looked after. It is not an easy job; the Paris-based EV carshare scheme Autolib was axed following chronic underutilisation and tales of cars being left with soiled interiors and smashed windows. “Waymo has already made this move by partnering with Avis because it appreciates it doesn’t have that experience,” Baisden noted. “We could see carmakers going down

the same route as they get more experience of what is required.”

Settle in for a bumpy ride Moving forward, automakers turned MaaS operators will need to carefully consider how their services integrate within existing transportation networks. If the service follows a similar route to a public bus, the chance of attracting and retaining new riders is slim. In

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contrast, catering to those that may have limited access to mobility could prove to be a profitable niche. So far, automaker-led MaaS services have largely struggled to tear consumers away from their cars or lure them from buses and trains. But for those that have long been unable to use either, new mobility services could prove attractive and lead to sustained demand. One thing is clear: if investments do not start to bring returns, automakers’ visions of shared mobility could come and go in a flash.

ÂŠ Rivian

M:bility | Magazine - Q4 2019

Battery-powered beasts of burden: could the pick-up segment go electric? The immense popularity of the pick-up combined with increasing pressures to electrify could be an opportunity for US automakersâ&#x20AC;&#x201D; but are batteries really up for the job? By Xavier Boucherat

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M:bility | Magazine - Q4 2019

orth America’s relationship with the pick-up truck runs so deep that the vehicle has become engrained in its culture, its appeal extending to audiences far beyond the workers and tradespeople who bought up early models. The figures still speak for themselves: in 2018, Ford’s F-Series, the main constituent of which is still the F-150, was the best selling vehicle for the 36th year running at over 900,000 units. Between the F-Series and its closest competitors—the Chevy Silverado and the RAM pick-up—sales totalled over two million. It’s therefore hardly surprising that automakers are eyeing up the segment for electrification, much like some have in the similarly popular SUV and crossover segments: such ventures could ramp up the attractiveness of electric vehicles (EVs), a highly desirable outcome for automakers looking down the barrel of more stringent emissions targets and increasing societal pressure to go green.

Pick-up trucks are a large, stable segment, and so it only seems natural that if manufacturers want to expand EV adoption and garner the emission and fuel economy credits they generate, why not build something that will cater to one of the largest and most proﬁtable segments in the industry?

Editor at Kelley Blue Book, “and so it only seems natural that if manufacturers want to expand EV adoption and garner the emission and fuel economy credits they generate, why not build

“Pick-up trucks are a large, stable segment,” agrees Matt DeLorenzo, Senior Managing

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All-Electric F-150 Prototype

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something that will cater to one of the largest and most profitable segments in the industry?” Ford is among the hopefuls, having announced that both a hybrid and an all-electric F-150 are in the offing. Test vehicles have already been sighted on roads, and at a recent demonstration a prototype was shown towing a 1.25 million pound-load: a train full of regular F-150s. Not to be left behind, GM’s Mary Barra has told investors that an electric pick-up is a part of the company’s plan moving forward, although it is yet to confirm details. FCA meanwhile has not made any pick-up announcements, but has this year pledged US$4.5bn for new production facilities in Michigan, where its will build Rams and, importantly, hybrid Jeeps. It would be in keeping with tradition for the automaker to follow its Detroit rivals’ lead after some delay.

M:bility | Magazine - Q4 2019

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It’s likely we’ll see an all-electric pick-up on the market within the next two years. Tesla has been optimistic in its timetables, and so I don’t expect to see it deliver ﬁrst. I believe the race is between Rivian and Bollinger, somewhere in the 2020 to 2021 timeframe R1T is close to production, and the company hopes to launch the vehicle in 2020. Bollinger too says it is aiming for a 2020 production start, but whether this will include its B2 off-road pick-up in addition to its B1 SUV is unclear. DeLorenzo agrees that the race to reach the US market first is a

Rivian R1T

younger company’s game. “It’s likely we’ll see an all-electric pickup on the market within the next two years,” he says, adding that in the past, “Tesla has been optimistic in its timetables, and so I don’t expect to see it deliver first. I believe the race is between Rivian and Bollinger, somewhere in the 2020 to 2021 timeframe.”

However, it seems likely that the Big Three could be beaten to the punch by newcomer Rivian. Together with Detroit-based Bollinger Motors and Tesla, the company represents efforts outside of the established industry to bring an electrified pick-up to market. But whereas Elon Musk has offered little but hints, Rivian’s

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M:bility | Magazine - Q4 2019

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Pick-up buyers need their vehicle for business. Range, the ability to carry and pull load, and allterrain capabilities are all areas where conventional engines excel over electric vehicles. Light commercial vehicles for local transportation are much better candidates for electriﬁcation

Meanwhile, in China… Strangely enough, it seems that both will be beaten in the global context: Nissan’s joint venture (JV) with Dongfeng will reportedly release its own Rich 6 EV this month. That China should birth the first is hardly a surprise, with a mature EV infrastructure, ambitious

electrification targets and strict emissions regulations in place. The company itself has remained tightlipped on the vehicle however, and there are no plans for export. China has another advantage: a market of buyers far more used to EVs on the road, with market share of plug-in vehicles on course to reach 7% of sales by the end of 2019. Compare this to the US, where the figure is less than 2%. Then there is

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the cultural legacy of the internal combustion engine (ICE), a reliable workhorse. Couple this with a segment where reliability is everything—many rely on pick-ups for a living, after all—and it seems only fair to ask, are Americans ready? Can batteries really deliver the same performance? For the major manufacturers, the prototypes may be out there, but they are no guarantee that electric

M:bility | Magazine - Q4 2019

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With fewer moving parts than a gas-powered vehicle, reliability is not an issue for electric vehicles, and with the range of an R1T exceeding 400 miles with our largest pack, many people understand that an EV is suitable for their daily needs

pick-ups will become a mainstay product. Xavier Mosquet, Senior Partner at the Boston Consulting Group, says that some evolution of the pick-up truck is likely: “The 48V RAM 1500 is an example,” he

says, “as this is a good and affordable way to gain fuel efficiency.” The Ford F-150 Hybrid is another, in part due to its offer of an on-board generator which can be used for work purposes.

However, battery suitability remains in doubt. “Pick-ups are likely to be the last segment to turn electric, as its applications are far more suited to diesel or gasoline powertrains,” he

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M:bility | Magazine - Q4 2019 suggests. “Pick-up buyers need their vehicle for business. Range, the ability to carry and pull load, and all-terrain capabilities are all areas where conventional engines excel over electric vehicles. Light commercial vehicles for local transportation are much better candidates for electrification.” None of this has stopped Rivian and Bollinger from pinning their hopes on fully electrified pick-ups. Bollinger has made a show of its off-road and towing capabilities, with a reported ground clearance of 15 inches (406mm) and towing capability of 7,500lbs (3,401kg). Rivian argues that from a technical perspective, electric pick-ups can in fact offer better reliability, and that current ranges should prove sufficient for everyday needs. “With fewer moving parts than a gas-powered vehicle, reliability is not an issue for electric vehicles,” the company told M:bility, “and with the range of an R1T exceeding 400 miles with our largest pack, many people understand that an EV is suitable for their daily needs.” A larger platform on which to build the vehicle also brings with it one advantage: the ability to package more batteries, on what Rivian—and many others within the industry—terms a ‘skateboard platform’. Suitability for rough working conditions means that

electrical systems are fully waterproofed, allowing vehicles to wade up to a metre in the water. A ballistic shield is fitted to the vehicle’s underside for further protection. The suggestion is that if there’s a problem with electric pick-ups, it’s an issue of the heart, and not of the head. “We do understand our role will also involve educating people on the new technology,” added the Rivian spokesperson. “Third parties such as charging station companies will also play a significant role here.” DeLorenzo believes the changing cultural tides in the US mean an electric pick-up would be by no means written off by customers. “There is a certain novelty factor involved in an electric pick-up, which I see as an initial impetus to bring these vehicles to market,” he suggests. “It’s interesting that Rivian is positioning its pick-ups, as well as its SUVs, more as recreational vehicles than work vehicles.” EV pick-ups could also have a certain appeal for the fleet markets in urban settings, he adds, particularly for return-tobase operations working in delivery or construction who can rely on regular charging. On the issue of

heavy towing jobs, the practically instantaneous torque provided by an electric motor will be of note, but “this advantage is offset by the weight of the batteries, which compromises payload and towing capability.” “I see a role for electrification of trucks more among the lines of hybrids and plug-in hybrids, complementing traditional gas and diesel power,” DeLorenzo adds. Clearly, the full electrification of America’s favourite auto is something Rivian and Bollinger are taking seriously, but any volume they produce will be, at first, limited. Whether major manufacturers such as Ford have plans to roll out an all-battery F150 in any meaningful numbers is unclear: could it be mere sabrerattling in a world where automakers are mobilising to electrify, perturbed by the likes of Tesla? Or could tomorrow’s pickups really go zero-emission? Either way, the fact that such an embedded institution is being talked about as fair game for electrification speaks to the ongoing technical progress in the world of EVs.

n ivia ©R

The battery is situated between the front and rear axles as part of a ‘skateboard’ platform

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M:bility | Magazine - Q4 2019

Meet and greet: how Ford is sculpting the personality of the car As physical control of a vehicle becomes shared between man and machine, voice recognition could dominate the user experience. By Freddie Holmes

he concept of future mobility has seen a range of unassuming job roles open up at the world’s major automakers. General Motors appointed its first ever Chief Product Cybersecurity Officer back in 2014, for example, and as Conversational Interaction Designer, Shyamala Prayaga also holds an intriguing position at Ford Motor Company.

Interaction designers are tasked with sculpting the relationship between consumer and product and have long influenced the design of vehicle cockpits. The role has become increasingly important since the introduction of in-vehicle touchscreens, with designers considering everything from what happens when a button is pressed, to where those

buttons are located. As the title would suggest, it is about optimising that interaction. A conversational interaction designer is no different, but instead works with voice interaction specifically. “We look at how the conversation flows,” explained Prayaga—previously a UX evangelist with Amazon—during an interview

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M:bility | Magazine - Q4 2019 with M:bility in Detroit. “When the user has said something, how should the system respond; and if it did not understand what the user said, what should the response be? What happens if I say, ‘call Tom’, but the car hears ‘mom’. We look at how the system responds in those scenarios.”

A two-way conversation Early stage voice control was fairly rudimentary, often mimicking a fractured conversation with an automated telephone system. The technology has become increasingly intuitive, however, and in some cases can recognise commands such as ‘I need fuel’ and direct the driver to a nearby filling station. However, for many in the industry the end goal is to launch a fully-fledged AI assistant that can respond to, and initiate, free-flowing conversation. With this in mind, Ford is crafting the next generation of its conversational systems in-house. This team takes a holistic approach to the user experience, Prayaga explained, but the task of satisfying users has become ever more challenging. Outside of the car, speech recognition systems have proliferated in the consumer electronics space. Consumers have become familiar with the likes of Apple’s Siri, Amazon Alexa and Google Home, which are able to interpret casual speech. Inside the car, the environment of the cockpit brings new challenges. With acoustics interrupted by chatter from other passengers, along with tyre and engine roar, voice recognition technology must be able to filter out background

It may seem a tenuous link, but conversational interaction is expected to play a pivotal role in the car of the future.

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With acoustics interrupted by chatter from other passengers, tyre and engine roar, voice recognition technology must be able to ﬁlter out background noise

noise. In the golden age for distracted driving, there is also the element of safety to consider. “People have become used to these high-performance digital assistants, which have set the bar for us within automotive,” said Prayaga. “We now need to make sure our user experience continues to be best in class—it must be perfect.” With today’s digital assistants already building a rapport with consumers, the automotive industry faces an uphill climb in building trust with its own in-

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house assistants. Automakers have two clear options: integrate the likes of Alexa, Siri or Cortana within the vehicle, or introduce their own. “The automotive industry needs to set the bar by thinking about what it wants,” said Prayaga. “Do we want to create our own assistants, or complement the existing ones?”

I choose you Today, vehicle purchases typically revolve around factors such as fuel economy, acceleration and

M:bility | Magazine - Q4 2019

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If drivers no longer need to press buttons or swipe screens but simply speak their mind, the bond between man and machine could grow stronger than ever

emissions. Digital cockpits are also high up on the list, increasingly so with younger buyers with a thirst to remain connected. While demand for voice recognition technology remains relatively low today—J.D. Power found in 2018 that it had been the number one complaint from drivers for six years running— the general expectation is that driverless vehicles could do away with physical buttons entirely.

opportunity to another provider,” said Prayaga. “As we get into the shared and autonomous mobility space, this is where trust is the most important thing. Service operators have to create their own assistant.”

Being human

If voice control can reach a point of reliability where drivers no longer need to press buttons or swipe screens but simply speak their mind, the bond between man and machine could grow stronger than ever. “With voice control taking over, we should consider removing clutter,” said Prayaga. “When we do that, voice could well become your main form of interaction with the car.”

Digital assistants are typically personified—consider Amazon Alexa, Apple Siri, Microsoft Cortana (a name derived from the videogame Halo) and Nokia Viki. Google has bucked the trend with Google Now and Google Home, but generally speaking, it is easier to build a relationship with a product once it has been personified. Some drivers give their car a human name for that reason, and at CES 2017, Nvidia Chief Executive, Jensun Huang, even suggested that the car would become a ‘partner’ in future.

Consumers may eventually choose a car based on the perceived performance of the AI assistant, particularly for a shared vehicle that simply facilitates a trip from A to B. “This is where the opportunity is to strengthen the trust with our nextgen voice system and capabilities, but if we use a third-party assistant we are simply giving away that

But for any relationship to blossom, the other party needs to be likeable. “These assistants need to have a strong personality; people refer to Alexa as ‘she’, not ‘it’,” observed Prayaga. “But who says that about today’s in-car assistants? No one. The auto industry is lagging, but we need to get to that point as well where our in-car assistants become

the best in class. Personality is so important because there is a trust and loyalty factor in it which strengthens the brand.” Choosing an assistant’s character and accent can be tricky, as there is no single personality to suit all markets around the world. “Ford as a brand is global, so no matter where you go, the traits you would associate with Ford will remain the same. From there, we can add additional traits,” said Prayaga. “Germans are very direct when they speak, for example, so would they like someone who is too conversational? In China, people are so tech-savvy and they want everything in the car—I doubt consumers would have an issue if two eyes pop out of the car as the assistant introduces itself.” She explained that the strategy in creating a digital assistant begins by defining how the system will improve the UX, before adding in certain underlying traits—appearing friendly and intelligent, for example. “Every time you say ‘good morning’, it could say ‘good morning’ back, but with some extra information,” Prayaga suggested. “If you say good night, the assistant could be friendly and a little

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M:bility | Magazine - Q4 2019

In-vehicle HMI has changed dramatically over time sarcastic, saying ‘don’t let the bed bugs bite’ for example. It may gel well in the US, but not in other regions, so you need to have a region-specific personality and not just a voice assistant that listens and responds back.”

Digital assistants can build trust Garnering trust is particularly important when considering the move toward autonomous vehicles. Timelines aside, the deployment of a vehicle with no option for human control means conversational interaction becomes vital. Riders still need to feel in relative control, however. In future, any digital assistant may need to comfort concerned riders mid-journey or greet new riders upon entry of the vehicle. The car may also need to advise passengers that a deviation is necessary due to traffic up ahead—something as simple as ‘there’s been an accident, so I’m taking another route’, for example. “It will be essential that

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In future, any digital assistant may need to comfort concerned riders mid-journey or greet new riders upon entry of the vehicle

the AI-based assistant is highly reliable, even when dealing with mundane tasks, to instil trust in the driver,” says Nils Lenke, Senior Director of Innovation Management at Nuance. And while voice recognition continues to improve, the technology remains at a relatively early stage of development. “I’m often frustrated by speaking with

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chat bot technologies, where I ask it something and it just falls apart,” noted Alyssa Simpson Rochwerger, Vice President of Product at Figure Eight. Players across the industry will continue to hone their systems and investigate new applications moving forward, but it is clear that conversation will play a growing role in the cockpit.

M:bility | Magazine - Q4 2019

What is Mobility as a Service and how can automakers fit in? Mobility as a Service is exciting many established industry players, but profitability is far from a certainty. Automakers in particular are entering the landscape with caution, writes Betti Hunter

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M:bility | Magazine - Q4 2019

obility as a Service (MaaS) is one of the transportation industry’s latest buzzwords, and it follows a trend toward continuous revenue streams as opposed to one-off purchases. The rise of the smartphone has changed how people traverse urban areas, with apps now plugging the gap left by traditional transit modes. Ridehailing providers such as Uber and Lyft have exploded in popularity thanks to the low-cost, on-demand and easy to use services they offer. Players in the car rental and sharing sphere have branched out from the standard return to base model, instead offering free-floating fleets that can be accessed anywhere with a couple of taps on a smartphone. Technology companies old and new have also entered the fold, offering platforms designed to create seamless multi-modal mobility services that encompass public transport, ride-hailing and sharing, micro-mobility and active transport. “To put it broadly, MaaS is the transformation of a product into a service,” said Professor Dr Malte Ackermann, Professor of Mobility as a Service at Nürtingen-Geislingen University. The role, which was created within the last three years, is the first of its kind in Europe and focuses on digital transformation and innovation management. “MaaS is being driven forward by a number of factors,” he continued. “Digitisation has had a huge role to play. Equally important is that people are now demanding more flexibility, especially when it comes to their work life, and are quickly adopting these new lifestyle patterns. As soon as smart phones and digitisation began presenting MaaS, people started buying into it.”

“

The technology industry realises that the entire mobility landscape is no longer dominated by automotive companies

Ackermann believes Uber in particular is a strong example of a new MaaS entity shaking up the transit industry. “Uber was an instant replacement of the old and painful process of hailing a taxi,” he told M:bility. “It was a two sided development; people were demanding a better service, and the industry was pushing towards new services. It is difficult to pinpoint which driving force came first, though— it is not a straightforward chicken and egg scenario.”

A holistic perspective According to Ackermann, the transportation industry as a whole is dedicated to pushing MaaS forward due to the new demand and growth opportunities that such services present—especially for the automotive industry. “But the technology industry also realises that the entire mobility landscape is no longer dominated by automotive companies,” he continues. “In the near future, mobility and logistics will merge together into one big market. Technology start-ups are

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moving in and many established players are keeping a close eye on developments.” One of the biggest trends currently capturing the attention of players across the new mobility landscape is the increasing size of urban populations. As two thirds of the world’s population are expected to live in cities by 2050, drastic steps will need to be taken in order to reduce congestion and air pollution—two blights that city lawmakers today are desperately trying to address. Personal car ownership already causes major issues on urban roads the world over, and growing the number of cars proportionately to a rise in city populations will almost certainly spell chaos. “It is not reasonable that everyone has their own private car in a city,” said Ackermann. “MaaS brings the potential to consider mobility holistically from a city perspective, and therefore the opportunity to reduce pollution and congestion. Automakers have paid attention to these developments and many are now acting.” If legislators in the world’s major cities manage to effectively discourage car purchase and ownership among

M:bility | Magazine - Q4 2019

“

Right now noone knows how the future will pan out and which mobility service will come out on top, so companies are acting with caution. Everyone is putting lots of eggs in different baskets

their populations, automakers need to be prepared with a reliable new revenue stream. They must also be prepared to radically reimagine their entire business structures. “Many are questioning how to run what they call a two-speed organisation,” continued Ackermann. “The old vehicle sales business model was very stable, often selling not to a customer directly but through a retail outlet.” Now, however,

“

automakers branching out to explore MaaS projects must learn how to interact with customers at a very high frequency. As a result, Ackermann explained, traditional automotive industry players are tending to run their fledgling MaaS offerings almost as a separate entity. “Volkswagen has done so with MOIA, General Motors created Maven, and Toyota and Daimler are doing the same,” he said.

Many believe that customers will end up spending far less on mobility in the future, despite being more mobile

“They set up these services outside of their established operations so they can have the flexibility and freedom to run differently. They need to find new ways to meet customer demands.” This, Ackermann believes, is the most effective way forward as companies across the industry attempt to navigate this as-yet uncertain new mobility landscape. “The challenges and marketplace are very different,” he added. “BMW and Toyota, for instance, are well established industry-wise from a business perspective and are not moving as fast as the mobility sector. There have been so many new entrants to the market and so much has changed already.”

The Wild West In the long run, automakers would be wise to consider a more integrated approach, which is no easy task. “It is tough to connect an outside entity with the core business,” explained Ackermann. “Right now noone knows how the future will pan out and which mobility service will come out on top, so companies are acting with caution. Everyone is putting lots of eggs in different baskets.” In

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M:bility | Magazine - Q4 2019 mobility in the future, despite being more mobile. Prices will continue to be pushed down as more options arise. It is a great benefit to consumers, but the industry might find it tough to earn a buck.” Ackermann points to the rise of urban e-scooter models like Lime and Bird as an example. “They have taken over in Europe and North America, but their value proposition will only remain if they are cheaper, or develop niche solutions. If it is an open race with three or more operators in one city, it will always come down to margins.”

“

Prices will continue to be pushed down as more options arise. It’s a great beneﬁt to consumers, but the industry might ﬁnd it tough to earn a buck

addition to managing their internal operations prudently, some automakers are opting for safety in numbers. “Collaborative partnerships are becoming a trend. For example, Daimler and BMW recently merged their mobility services,” he continued. But this extends further than the automotive industry. “Volkswagen has partnered with LG and Amazon, and Microsoft is reaching out to automakers. Many start-ups and Chinese companies are entering the market, too. It’s a total industry

transformation and it currently looks a bit like the Wild West.” As industry boundaries are blurred and new players enter the game, the big picture is slowly being painted. However, it is one thing to build a new, innovative industry from the ground up. Making sure said industry is profitable is a harder nut to crack. “There is a great deal of competition and a huge range of mobility options,” said Ackermann. “But many believe that customers will end up spending far less on

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Savvy service operators, Ackermann says, will find their profits by creating a kind of digital monopoly. “Profit margins will likely be lower for MaaS providers, but they can offset this to a degree by building ecosystems of their own, just like Apple and Google have in the tech world.” However, MaaS is likely to be a tricky market to navigate for some time to come, particularly for automakers. “Vehicle manufacturers, especially premium brands like BMW and Toyota, make a great deal of money from selling individual cars. However, they may struggle to adapt their models and find the same margins in this new mobility field.” As MaaS developments heat up, more positions such as Ackermann’s are likely to arise to respond to the growing need to understand rapidly progressing mobility trends. For example, in January 2019 January 2019 the Michigan Mobility Institute appointed Jessica Robinson as its new executive director, who immediately announced plans to launch a Masters of Mobility degree directly informed by industry trends. It makes sense— expert knowledge will be required to navigate such a complex new sector effectively, and tame the Wild West.

ÂŠ American Public Transportation Association (APTA)

M:bility | Magazine - Q4 2019

How do public buses fit in with the future of mobility? Despite growing interest in on-demand transportation systems, public transit bus services will continue to play a vital role in the rapidly evolving mobility landscape. By Paul P. Skoutelas, President and Chief Executive of the American Public Transportation Association

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M:bility | Magazine - Q4 2019

ransportation is being transformed by everything from artificial intelligence and advanced propulsion technologies to evolving travel patterns and innovative business models. As a result, some may be tempted to perceive buses as the large, lumbering, soon-to-beextinct dinosaurs of the public transit world.

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Some may be tempted to perceive buses as the large, lumbering, soon-to-be-extinct dinosaurs of the public transit world. By contrast, most of the industry’s global thought leaders predict the opposite

By contrast, most of the industry’s global thought leaders predict the opposite: buses, which account for half of all public transit trips, will remain the backbone of a multimodal, interconnected lifestyle. In cities across the US and around the world, the future of transit bus service isn’t just viable; along with rail, it is the essential connective tissue that will ensure communities are thriving without driving.

What do buses bring to big cities and small towns? Take a stroll through Dallas, Texas, Portland, Oregon, Lawrenceville, Georgia or St. Cloud, Minnesota, and you’ll experience a uniquely American desire to rethink, reimagine, and reinvent mobility from the perspective of the customer, with modern buses playing a central role today—and for tomorrow. Redesigned bus networks are providing a new foundation for mobility in today’s metroeconomies, with more frequent, connecting, and efficient service. More rapid bus service—in a variety of forms including bus rapid transit (BRT)—is helping to maintain and even increase ridership by adding station amenities, improving route frequency and capacity, and in some cases providing dedicated lanes for buses to avoid traffic.

Microtransit, an on-demand service for all, offers flexible routes and schedules as an alternative to conventional fixedroute bus service. It matches demand and supply, thereby extending transit’s efficiency and accessibility, particularly in lowdensity areas, during late night hours, and for special needs customers. In addition, both vehicles and stations embody cutting edge technologies. For passenger convenience, there is Wi-Fi, mobile fare payment, bike racks, and real-time signage and trip planning data that tell customers the best travel route and mode. To advance safety, there are onboard cameras and collision avoidance systems. Increased use of low- or zeroemissions buses, predictive maintenance systems, and connected/automated features are helping public transit agencies to deliver greater efficiency and more benefits to the communities they serve. One example is the dramatic shift in bus fleets: in 2018, more than 21% of US transit buses were powered

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by electric or hybrid engines (compared to less than 2% of automobiles). A decade earlier, only about 4% of buses were hybrid or electric.

A key element of the solution Partnerships will be increasingly important moving forward. Today, public transit systems are stronger as a result of their alliances with ride-share and bike-share services that better connect customers with transit, or in some cases, provide affordable mobility where transit is not available. That trend will continue. So too will the world’s fascination with automation, which some predict will lead to a common set of standards, policies, and vocabulary for public transit agencies, other types of mobility service providers, and automakers. They all need to share the same roads. In fact, Mobility as a Service (MaaS) is

M:bility | Magazine - Q4 2019 today), and more than 22% of those individuals will be age 65 or older (up from 15% today).

Buses and other modes of public transit are the only feasible solution to the challenges presented by population growth and demographic changes. There is simply no more cost-efficient or time-efficient way to serve all citizens, regardless of their socioeconomic standing in society, and to move large numbers of people through densely-populated areas.

“

Buses and other modes of public transit are the only feasible solution to the challenges presented by population growth and demographic changes.

being embraced—both as a concept and a business model—by automakers and public transit systems alike. Both sectors are looking for new ways to gain or retain customers and increase revenue through MaaS, and this could present an opportunity for greater collaboration between the traditionally separated bus and car worlds. There is an abundance of creativity and inventive experimentation underway in

public transportation in the US and around the world. From subscription travel services and the bundling of public and private modes, to apps that cover the entire passenger experience from planning to payment, the focus is on today’s customer. Why is this so critical? Because the number of people inhabiting the world’s major urban centers will expand dramatically; in the next 30 years, the US population is projected to reach nearly 440 million (up from 328 million

And as shared, self-navigating, autonomous minibus and bus services become more widespread in the coming years, the cost of travel is expected to decrease and the benefits to riders, the environment, and public health and safety will grow. We’re already seeing this kind of potential in pilot programmes that carry riders to specific work locations or health care facilities. Of course, to write the next chapter for the future of bus service, the public transportation sector needs adequate resources from the local, state/provincial, and national levels, and in some cases, the private sector. It is why advocates for new mobility solutions are educating public officials and legislators about the critical need for investment in modern infrastructure, technology, skills training, and greater experimentation.

The ‘new’ shared mobility As an industry, public transportation must always be eager to learn from other sectors around the world. Toward that end, APTA created a public-facing Mobility Innovation Hub to serve as a clearinghouse for the best practices by large and small

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M:bility | Magazine - Q4 2019

“

As shared, self-navigating, autonomous minibus and bus services become more widespread in the coming years, the cost of travel is expected to decrease and the beneﬁts to riders, the environment, and public health and safety will grow

public transportation agencies around the globe. There’s a great deal to celebrate already—and more to come. The public transportation industry is expanding access to mobility choices to help people connect to the things they need, love, and

aspire to achieve. Changes in transit bus services, strategies and infrastructure are reducing energy use, pollution, operating costs, headway times, and even barriers for many passengers. Operators, designers, manufacturers, and technicians are demonstrating

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a willingness every day to try new approaches, model a spirit of continuous improvement, and invent ways to delight their customers. That’s the way to be essential and future-ready. Welcome to the new shared mobility, courtesy of your local transit bus system.

ÂŠ ZF

M:bility | Magazine - Q4 2019

How will autonomous cars pay for things? A new technology known as eWallet is designed to improve the driving experience today, and to enable the fully autonomous capabilities promised for the future. By Megan Lampinen

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M:bility | Magazine - Q4 2019

riverless cars need to be able to carry out all the tasks currently handled by humans. That doesn’t just mean shifting gears, accelerating, braking, steering and observing the environment. It also means conducting the sort of financial transactions that are part and parcel of motoring—paying for tolls, parking, fuel, etc. Enter Car eWallet, a subsidiary of German technology pioneer ZF. “While ZF has been busy developing the technology to enable autonomous driving, the idea behind eWallet is that it is not enough just to equip a vehicle with the ability to travel from point A to B,” said Thorsten Weber, Chief Executive of Car eWallet. “To make it truly autonomous, it must also have the ability to interact with its environment and with infrastructure.” This gap is what eWallet has targeted. The aim is to create the largest open marketplace based on blockchain technology, with the ability to pay for anything that human drivers now pay for easily and safely. Two separate use cases are currently under development.

“

It is not enough just to equip a vehicle with the ability to travel from A to B. To make it truly autonomous, it must also have the ability to interact with its environment and with infrastructure

Long-term vs nearterm approaches

nobody sitting inside the vehicle with a credit card,” clarified Weber. “We are giving the car machine-to-machine capability.”

The long-term business plan is designed for a future ecosystem dominated by fleets of shared, autonomous vehicles (AVs). After one of these AVs drops off a passenger, it may sense that it is low on fuel. It can then navigate to a fuelling station, request the right type of fuel, pay for it, and then return to its base. “There is

However, full autonomy still remains in the testing phase for most applications. In the meantime, many of the same assumptions made for AVs can also be applied for fleets. “With fleets, the vehicle driver is not necessarily the owner,” said Weber. Fleets such as rental car companies or car-share operators could represent an early stage customer for eWallet. “Fuelling and parking today is not really fun,” said Weber. “You have to get out of the car to fuel and then often you have to queue to pay at the cashier. It's not a great experience. We want to provide deeper integration for a much better experience.”

The offering

Weber provided a demonstration of the eWallet in action at the ZF Global Technology Day near Dresden in July this year. The demo used a volunteer human

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M:bility | Magazine - Q4 2019

“

As we have a digital business model, the speed we need to bring this into the market is much higher than that required for industrial products

driver and a regular production vehicle fitted with eWallet. When the driver pulled the vehicle up next to a fuelling point, the car could sense that it approached a 'point of interest' and the screen popped up with an offer to fuel. The driver simply clicked on ‘start process’ and eWallet began to communicate with the service provider. No special infrastructure needed to be installed at the fuelling station. The eWallet

simply sends a signal to the service provider to ‘unlock pump’. After fuelling, the user clicked ‘end process’ and the car communicated how many litres of fuel it received. The system matched that with the fuelling station information. After confirmation of payment the driver was good to go. The approach would be the same for an electric vehicle (EV) charging station.

Fleets generally want to connect to mobile services like parking, road tolls, fuelling or charging, and many of these providers do offer digital ways to do that. Some require the fleet operator or the vehicle owner to download an app, though the hassle is having to download a separate app for each and every service. Others may require users to carry a piece of hardware in the vehicle or display something in the car.

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M:bility | Magazine - Q4 2019

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We are not an automaker, ﬂeet operator or service provider. We are ideally situated to be the kind of neutral player required to run this digital marketplace

Weber’s team takes the connected experience to the next level, making it possible for fleets to gain access to numerous layers with one transaction to the Car eWallet. “We are a transaction layer,” he told M:bility. Based on blockchain technology from IBM, the eWallet platform makes it possible to synchronise the information from each participant in the network. Importantly, this is done so in a reliable way and leaves an unchangeable record. Users are only granted access to information they are cleared to see and use.

Well positioned The eWallet technology began as an idea several years ago within the ZF IoT Lab, the supplier’s internal incubator. “This is the place where ZF breeds ideas that are not necessarily part of the core business,” explained Weber. After presenting the concept at the 2016 CES, a working prototype was unveiled at the International Automobilausstellung (IAA) the following year. Here, the public was shown use cases for parking, charging and toll payments. In 2018, the ZF board decided to make it a business, and it was spun it off as a separate entity in September that year. “As we have a digital business model, the speed we need to bring this into the market is much

higher than that required for industrial products,” said Weber. “This is an example of an industrial conglomerate operating at two speeds.” The eWallet team today consists of a mix of software engineers, traditional automotive experts, designers and business development professionals. All of their strengths will be needed as the company refines its go-to-market approach and scales. “We are not an automaker, fleet operator or service provider,” the Chief Executive observed. “We are ideally situated to be the kind of neutral player required to run this digital marketplace. It is all about seamless service consumption.” But one critical ingredient for success with a platform like this is growth. As the number of partners builds, so does the value of the platform. Providers like fuelling stations need to sign up to eWallet, which Weber believes represents an additional sales channel for them: “We are paid a specific amount per car by the fleets to access the network. The service providers pay a yearly fee to be a part of that.” Notably, service providers retain full control of their service offering, exactly as they do now; eWallet simply provides them with the platform to settle transactions from customers in a fully

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transparent, automated and fraud-proof manner. To attract as many members as possible, the team wants to make it simple and straightforward for partners and fleets to connect. “An easy interface makes it easy to connect with the platform, which allows us to scale it,” Weber said. It also helps that eWallet is system agnostic. “Whatever system is used in the back end of the service provider or the fleet, we can connect,” he added. It also works across all sorts of vehicles. “A single fleet may contain numerous cars across different brands and of widely different ages. We have different technology to integrate the system into the car or we can use a retrofit solution. We are independent of the user interface,” clarified Weber. “You do not need to download another app to your smartphone. We will integrate into whatever is present.” eWallet recently signed up its first platform partner, the German fuelling station owner BayWa, following a successful smart fuelling pilot. Over the next few months, thesecapabilities will be rolled out across the entire BayWa station network. Weber says they are currently in talks with other service providers and fleets at the moment.

M:bility | Magazine - Q4 2019

European Commission seeks to ‘grasp the reality’ of future mobility Automakers may be lobbying for electric robotaxis, but with the final say in the hands of the regulators, they too must be closely involved in the discussions. By Freddie Holmes

onnected, autonomous, shared and electric (CASE) vehicles all form part of a collective push to improve the quality of life for people around the world. However, while the automotive industry continues to make progress in developing these technologies, a broad range of regulatory bodies will ultimately decide what makes

the cut. Automakers and suppliers will certainly play a key part in those discussions, but governments will have the final say. With this in mind, those tasked with overseeing the deployment of innovative technologies on public roads are not sitting idly by. With Europe one of the front runners in

the so-called ‘future mobility race’, the European Commission-Joint Research Centre (EC-JRC) is immersed in its own research activities to better understand what should be deployed, and the most efficient way of doing so. In June 2019, it published a report on the future of road transport to help inform policy debate in the

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M:bility | Magazine - Q4 2019 European Union. Within its findings is the suggestion that a ‘perfect storm’ of technologies and business models is set to shape how goods and people move.

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We need really to consult with industries in order to grasp the reality of the situation… Public bodies cannot simply make a decision on their own

An open conversation From the report’s findings, the ECJRC urges policymakers to ensure that new technology makes future transportation systems cleaner and ‘more equitable’, with a nod to today’s ‘car-centric’ society. In short, it wants to ensure that technology is only ever deployed where it can make a real difference.

encouraging citizens to consider giving up their cars is relatively new territory.

improvements to the efficiency of combustion engines, improving road safety standards and managing traffic congestion through traditional means. Today, talk of removing drivers, replacing engines with electric motors and

The conversation around future mobility is something of a step change for organisations such as the EC-JRC, which have long been tasked with making incremental

THE FUTURE OF ROAD TRANSPORT IMPLICATIONS OF AUTOMATED, CONNECTED, LOW-CARBON AND SHARED MOBILITY

Monica Grosso is Transport Economist at the European Commission’s Joint Research

CHALLENGES FACED IN ROAD TRANSPORT CONGESTION

SAFETY 1+ million accidents

on European roads

Traffic is safer in

cities

reduce traffic fatalities by 50 %

road fatalities

26 + thousand deaths

an average commuter spends

By 2020, the EU aims to

with injuries

5.1 per 100 000 inhabitants

2010

2015

and

101

hours in congestion

Paris

than in the countryside

resulting in productivity losses of about 1-2% of the EU’s GDP

between

2020

per year

London

but the target will be missed

in the top 15 most-congested European cities

URBANISATION

HARMFUL EFFECTS ON THE ENVIRONMENT In the EU

In 2050

Now WORLD

54 %

68 %

of the population

the share is expected

lives in cities

to increase

74 %

84 %

In larger cities ,

road transport is responsible for

car ownership is lower

more than 70 % of emissions

of all transport emissions

Nicosia

Car use is lower in capital cities

70 % Paris

10 %

but the rate varies significantly from one city to another

ROAD TRANSPORT

852.3 million tonnes of CO 2

RESIDENTIAL SECTOR

air-pollution-related deaths and illnesses

DEMOGRAPHIC STRUCTURE In 2050

Now

WORLD

13 %

21 %

In cities, housing accounts for

+40 % of disposable income

increased daily commuting time EU

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up to 30% of small particulate emissions*

* the main cause of

377.4 million tonnes of CO 2

COMMUTING TIME Housing in cities is expensive

Road transport is a major contributor to air pollution

of the population

the share is bound

is aged 60+

to increase

25 %

The transport system needs to be more accessible to an elderly population with limited mobility

35 %

M:bility | Magazine - Q4 2019 Centre, and is closely involved in researching the socio-economic impact of future mobility solutions. In order to inform the decision-making process, EC-JRC team is carefully considering the potential benefits and negatives of the technologies being proposed. This requires crossindustry conversations, she explains. “Organisations, public bodies and member states definitely have a say, but we need to consult with industries to grasp the reality of the situation,” she told M:bility. “Otherwise, we could just produce something out of the blue that does not meet the needs of the people. It must be an interactional process—public bodies cannot simply make a decision on their own.”

EVs and AVs

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One of the major beneﬁts of CASE is energy consumption. Electric vehicles (EVs) or other types of alternative propulsion are deﬁnitely positive in this sense

With many of the CASE technologies in limited production runs and others only in early R&D phases, deciding what should come into public hands in the coming years will be a challenging task. As it stands, electrification is arguably one of the more advanced elements of the CASE acronym, and thus the benefits are easier to envision. “One of the major benefits of CASE is reducing energy consumption,” said Grosso. “Electric vehicles (EVs) or other types of alternative propulsion are definitely positive in this sense.” By comparison, fully autonomous vehicles (AVs) are some way off, and should not be confused with the semi-autonomous ‘driver assistance’ features on the market today. “It is more difficult to grasp the benefits of the full deployment of an AV,” she continued, “because it has not happened yet. But considering the number of accidents that are caused by human error—above 90%— I can imagine that there

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M:bility | Magazine - Q4 2019

“

These governing bodies are under no obligation to approve all solutions, but the need to curb the high frequency of traﬃc fatalities and rising vehicle emissions does mean the pressure is on

will be a major benefit to introducing cars that rely on a system that is much safer.” Consumer trust can also be tough to gauge; many will only be familiar with the concept of a driverless vehicle, or robotaxi, from mainstream media reports. “We really need to take stock of what society thinks, and how it is approaching these new technologies,” said Grosso. “The industry can go as far as it wants with the technology, but if no one trusts the system no one will use AVs. We really need to take all these elements into consideration.”

All together now Calculating the benefits of each technology in isolation may prove too challenging, and certainly at this early stage. But look at the big picture—safer vehicles on demand, designed for all potential riders and with zero emissions—and it all starts to make sense. The sharing aspect could prove particularly important in avoiding a scenario where access to robotaxis simply makes things worse. “Combining all of these different technologies and business models is important, including shared

mobility. If you take an AV or an EV on its own, the possibility of reducing traffic congestion is not as clear,” explained Grosso. “Looking at the whole picture together could really bring the expected benefits.” Since the mid-1970s, the European Commission has carried out studies to gauge the sentiment of particular social groups towards a given subject or concept. Past surveys have looked at anything from climate change and inter-generational mobility trends to passenger rail services and autonomous systems. In 2014, a report on the perceived quality of transport (422a: ‘Quality of Transport’) found that mobility plays a “fundamental role” in daily life and business, with the estimated annual transport budget of the average EU household said to be €4,530 (US$5,036) at the time. Somewhat unsurprisingly, convenience and speed were found to be by far the most important considerations behind transport decisions. In addition, frequent service, better coverage and cheaper ticket options were the most likely to encourage Europeans to use public

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transport more often. While the report is five years old, it does provide useful context to what Europeans want, and how mobility services need to play their cards. Upcoming barometers will look at how European citizens view the impact of AV technologies, advised Grosso. “We will be launching a survey on AVs as we want to know a bit more about peoples’ current expectations,” she said. “This will give us a much broader view of the overall European sentiment toward AVs.” The regulator’s role in deploying technologies that automakers have already invested billions into cannot be overstated. These governing bodies are under no obligation to approve all solutions, but the need to curb the high frequency of traffic fatalities and rising vehicle emissions does mean the pressure is on. As the 2019 EC-JRC ‘Future of Road Transport’ study warns: “Today, uncoordinated competition among service providers and a lack of leadership by transport authorities are leading to more traffic problems […] Left unmanaged, such changes may widen the gaps in our societies.”

M:bility | Magazine - Q4 2019

What do consumers want from the car of the future? Stakeholders explore how the industry can best adapt to changing customer requirements. By Megan Lampinen

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M:bility | Magazine - Q4 2019

utomotive industry product cycle times are growing shorter, but they are still long compared to other industries. That means companies need to start thinking today about what the customer will want several years down the line. The rapid development and spread of CASE (connected, autonomous, shared and electric) technologies makes that prediction process even more challenging.

“In the end, transport is about getting from A to B safely and reliably,” observed Jens Haas, Managing Director, Munich at AlixPartners. “That's a given and will continue to be a given. However, there is growing relevance in different aspects.”

CASE The arrival of CASE is starting to challenge the traditional feature of the auto industry. Questions around the vehicle's performance—‘is it fun to drive?’—are being replaced by questions around ownership—‘do we really need to own a car at all?’ As Haas explained: “When it comes to getting and using mobility, consumers are becoming more impatient and want instant availability. At the same time, they want more flexibility, individuality and personalisation.” Convenience and productivity benefits are driving growing connectivity and the rise of automation, but at the same time, these trends are prompting new concerns around cyber crime, the loss of privacy and misuse of data.

But it’s not impossible. The key is to home in on the main themes in customer expectations. These expectations, and the various customer bases from which they spring, were some of the key topics explored by industry stakeholders at the recent M:bility | Europe event in Stuttgart.

“

We need to convert from the outlook that rewards salespeople for pushing sales to giving people a sense of experience

“We are seeing the emergence of different degrees of driving on the autonomous spectrum,” observed Morgan Holt, Chief Strategy Officer, Fitch. Eventually, he suggests, there will be a complete shift from driver to rider as the car takes over more driving tasks. This could mean a whole new set of consumer priorities. At the same time, the rise of electrification has many shoppers questioning range capabilities and

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charging infrastructure. But with electric vehicles (EVs) the levels of concern, and interest, vary widely. A recent survey from AlixPartners found that nearly 50% of respondents in China were considering an EV for their next purchase. Interest levels in most of the other regions polled was about 25%, which though half of China's level is still notable. “The purchase plans revealed in the survey are completely mismatched with the market share of EVs we see today,

M:bility | Magazine - Q4 2019

There are a number of steps that industry players can do to generate greater consumer trust in CASE solutions. In almost every instance, improved familiarity with the technology is expected to go far. “The industry needs to talk more about EVs and AVs,” said Holt. They can do this both at the dealership and via an online presence. Consumers are increasingly using the Internet in their shopping journey, particularly for initial research, offering more touchpoints for brands to reach out. “With the whole omni-channel experience, automakers can become more involved in this,” he added. Benjamin Moncrieffe, Head of Auto+ at ‘customer-focussed’ consultancy C Space, anticipates an evolution of the traditional car dealership away from sales towards experience. A great deal of brands are experimenting with experience centres, many of which aim to educate consumers about the brand in a no-pressure environment. “There is great potential to look at automotive retail from an experiential angle,” he suggested. “I think we need to convert from the outlook that rewards salespeople for pushing sales to giving people a sense of experience, allowing them to trial a product and build familiarity.”

Co-create with customers One of the most important actions that stakeholders can take to meet the changing demands of consumers is to work with them collaboratively. Moncrieffe suggested that automakers and

and with what's expected over the next few years,” said Haas. Notably, the willingness to pay a premium for EVs is relatively limited, with China showing the greatest level of willingness.

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Once consumers are familiar with connected services, they generally like them. And once they use them they are more likely to buy them again

mobility providers alike treat their customers as consultants and work with them to jointly develop solutions. “By designing together, rather than assuming you know the future, you de-risk your strategy,” he pointed out. Robert Schroeder, Deputy Managing Director for Kantar TNS's automotive business in Germany, seconded the suggestion, emphasising that this is the strategy that his team deploys. “Automakers need to avoid disappointments and misunderstandings,” he stated.

Kantar studies have uncovered some concerning disconnects in what car owners and automakers expect. “While today's car is connected, the consumer is disconnected,” Schroeder asserted. For example, many respondents in Kantar's survey did not even know they had certain connected features in their vehicle, and therefore weren't using them. Part of the problem is linked to the handover, during which the salesperson does not always fully explain the potential of the vehicle. Automakers and retailers

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There is huge potential for automakers to deconstruct the features that the car oﬀers and to create services that can be marketed and sold

need to address this, and quickly. Schroeder suggested that retailers encourage new owners to return to the dealership after a week or two, during which time they can explain what features they have been using and discover which ones they may have overlooked. “Once consumers are familiar with connected services, they generally like them. And once they use them they are more likely to buy them again,” he added.

Retail and the customer relationship Above all, automakers will want to preserve their relationship with the consumer moving forward. “I know the automakers are worried they will lose the interaction with the customer,” said Moncrieffe. “It is too big an opportunity to miss.” That relationship may not be easy to maintain in this evolving ecosystem where services could dominate product, and may require creative approaches. “There is huge potential for automakers to deconstruct the features that the car offers and to create services that can be marketed and sold,” said Schroeder. “They can charge prices for these services based on their value.”

As Holt pointed out, automakers need to think about exactly what it is they will be selling—a product, a service or a combination of both. “We have seen plenty of tinkering around the edges with new partnerships,” he said. “The industry is entering a relatively unusual time where there are three competitive groupings all jostling for the same space.” There are the automakers, whose primary agenda is to sell a product, along with the tech companies and the mobility providers. While numerous new partnerships are springing up among these groups, Holt urged caution: “Automakers need to be cautious about partnering up with these players. The tech companies tend to see hardware as another platform. They see the car as just another device. Their agenda is very different.”

A sense of freedom Despite the many changes emerging, Schroeder believes the car itself will remain at the centre of the mobility revolution. “The good news for automakers is that the car is highly appreciated now and will remain so in the future,” he said. “People are telling us they like the freedom and independence of using vehicles as and when they want. The alternatives available today and in

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the coming decades, in the form of public transport, will not make them switch from car usage to public transport usage.” Because of this trend, Schroeder believes automakers are likely to have “a major impact on the solutions of the future.” Moncrieffe suggested that many consumers today feel constricted in the way they currently travel. “Freedom is a very lofty ambition and a desirable thing to want from a car,” he commented. “The idea that technology, particularly automation, electrification and shared mobility, will create a sense of freedom is a huge paradigm shift. However, there is the danger that consumers may come to see it as a utopia.” Fitch’s Holt agreed with this concern, but highlighted a potential generational difference: “There is a danger that we see freedom through the lens of a car. For most of us, from my generation, getting a driving license was a rite of passage. But freedom for many younger people is not necessarily unlocked by driving a car.” The challenge now is to figure out exactly how to provide this sense of freedom for everyone—whether that be a 60-year-old farmer in the US or a young professional in Beijing—in a profitable and sustainable way.

ÂŠ HERE

M:bility | Magazine - Q4 2019

To improve urban mobility, think of the city as a system A new index has compared the quality of mobility across nearly 40 cities worldwide. Freddie Holmes takes a deeper look at some of the trends that arise, and how new technologies may hope to fit in

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M:bility | Magazine - Q4 2019

obility may be the buzzword of the moment, but it does not describe a new problem. Cities have long had to adapt to the demands of urbanisation, and rural areas have always been widely underserved. It is also well understood that urban mobility varies from city to city, and new research has highlighted just how significant those differences are.

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Location intelligence specialist HERE Technologies—perhaps best known for its mapping services— recently launched the Urban Mobility Index, a deep dive into the factors that contribute to the mobility of nearly 40 cities worldwide. The idea was not only to compare the quality of mobility across different cities, but also to develop more of a quantitative definition for ‘mobility’ as a concept. “We wanted to get a more systematic grip on defining mobility,” says Christof Hellmis, Head of Services, Strategy and Innovation at HERE. “It’s such a broad term.”

affordability, sustainability and innovation. The majority of cities in the study are in Europe and North America, accounting for 31 altogether. The remaining seven cities are in Asia Pacific and South America, including Melbourne, Mumbai, Singapore, Buenos Aires and Sao Paulo.

Since the study’s release, HERE has engaged with the stakeholders involved—governments, city authorities, tech developers and automotive players—to see how the results may inform city planning. The company believes that location data can improve the decisionmaking process on a number of fronts, be it the way traffic is routed around a city or the scheduling of public transit services. Staying mobile, the index says, will be “crucial to a city’s liveability and economic prosperity. The smart cities of the future will be those who use location intelligent data to achieve this.” Ideally, location data will indicate how a city may need to invest for the future mobility needs of its citizens. Four key performance indicators for urban mobility have been identified: connectivity,

We wanted to get a more systematic grip on deﬁning mobility. It’s such a broad term

As can be expected, the quality of mobility differs greatly from city to city. Distinct regional trends are also apparent. “A key takeaway is that, based on their geography and culture, different cities operate in a different context,” Hellmis explains. “Western European countries are becoming more conscious of alternative mobility solutions, whereas in North America cities gravitate more towards the car—it’s all about the infrastructure.”

The cost of mobility The index investigated how expensive it is to run a car or pay for public transport on a monthly basis, relative to the average wages for that city. The US cities—San Francisco, Washington, D.C., New York City, Dallas, Houston, Chicago, Seattle and Los Angeles—all sit in the top ten highest monthly fuel expenses. In short, drivers in these cities

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spend a significant portion of their earnings on fuel each month. “It’s clear to see that some cities are ‘car cities’,” said Hellmis. San Francisco, the city with the highest relative monthly fuel expense, also has the third lowest public transport expense (1.66% of monthly income). Even where public transport is less expensive, it seems that many will happily pay more to drive a car. The two Brazilian cities studied are well known for traffic jams. Rio de Janeiro, the city with the lowest monthly fuel expenses, has the second highest public transit expenses (11.65% of monthly income). Sao Paulo, the leader in this respect (13.77%) also has the second lowest relative fuel cost. Cheap fuel and high public transit costs are doing little to dissuade locals from driving in the city. Compared to the other 37 cities studied, Mumbai is somewhat unique: the cost of monthly public transportation is exceptionally low—just 0.9% of monthly earnings—but monthly fuel expenses are also the fourth lowest. While train and bus tickets may come cheap, this does not necessarily equate to a high quality of mobility. Public transport is hugely overcrowded

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Western European countries are becoming more conscious of alternative mobility solutions, whereas in North America cities gravitate more towards the car—it’s all about the infrastructure

and leads many locals to hitch a ride with a friend, walk or not travel at all. Drivers may have cheap fuel, but chronic traffic congestion is the price to pay.

EV charging As urbanisation continues, existing measures to manage the travel patterns and requirements of a city may no longer cut it. With this in mind, HERE investigated how new technologies and business models are being adopted. The metrics

include EV charging station density per million citizens, the level of automated rail networks, and the number of ‘docked’ city bicycles per 1000 people. Amsterdam has built an almost unassailable lead from an emobility standpoint, with a staggering 1629 EV charging stations. The next closest, Paris, has just 554 by comparison. Of the North American cities studied, San Francisco and Seattle lead with 314 and 310 stations respectively; Toronto and New York City lag

with just 44 and 43 stations per million citizens. Sao Paulo and Mexico City both have zero charging stations per million people, but that does not tell the full story: stations are dotted sporadically, and it is this lack of density that leaves most locals underserved. The main highway that connects Sao Paulo with Rio de Janeiro, in particular, was recently kitted out with a handful of charge points, so progress is being made.

Bikes and trains

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Even where public transport is less expensive, it seems that many will happily pay more to drive a car

Somewhat surprisingly, Amsterdam sits mid-table in terms of the number of docked city bicycles per 1000 people (1.98 bikes), although this may be influenced by that fact that many residents own their own. Brussels leads with 4.17 docked bikes available per 1000 residents, with Singapore lagging with zero docked bikes per 1000 residents. While Amsterdam may lead in two cornerstones to the future mobility campaign, it sits toward the bottom of the table from an automated metro rail perspective. Interestingly, there is no discernable trend here: other cities adjudged to have 0% rail automation include San Francisco,

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M:bility | Magazine - Q4 2019 Rio de Janeiro, Mumbai, Dallas, Moscow, Madrid and Chicago to name but a few.

The city as a system The research generates some fairly simple conclusions. Today, certain cities are predisposed as car-centric, while others show a clear preference for public transportation. In addition, it is clear to see how highly e-mobility ranks on a city’s interests, so too with automated public transport and shared cycling schemes. “We now have a better understanding of how these cities operate, and that they all have certain characteristics,” said Hellmis. “In general, cities with a high level of mobility offer a good mix of different elements; cities like Amsterdam have great public transit, yet they also favour electric mobility with a high density of charging stations.” What is less clear is how connected, autonomous, shared and electric (CASE) technologies may make a difference. For example, can it be assumed that a city which has spent years developing a fully automated metro system will also favour fleets of automated road

At the other end of the leader board, Vancouver and Copenhagen both boast 100% metro rail automation. Vancouver’s SkyTrain is a 50-mile network of both underground and elevated tracks, and is the world’s longest single automated rapid transit system; the Copenhagen Metro is around 13 miles long and operates 24 hours a day. In combination, Singapore has a greater length of automated metro rail—51 miles—but as a proportion of its entire metro network the city sits in second place with 55% overall automation.

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Cities with a high level of mobility oﬀer a good mix of diﬀerent elements; cities like Amsterdam have great public transit, yet they also favour electric mobility

vehicles? If the public transportation network is efficient and cheap, will cities see any need to offer shared mobility schemes? And if bans are in place for diesel and gasoline vehicles, should the city invest in EV charging infrastructure or simply encourage the use of shared bicycles, e-scooters and other micro-mobility alternatives?

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Ultimately, suggests Hellmis, cities need to take a holistic approach and move away from being pigeonholed to one category. “Solving mobility is ultimately a system task,” he explains. “There should not be one single solution that dominates, so we need to address all of them in a proper way to come out strong in the advancement of mobility.”

M:bility | Magazine - Q4 2019

AV testing must keep the public on side In order for AV testing to remain a practical process, public support will be key, writes Jack Hunsely

n the past, testing a vehicle was a fairly affair. Once a vehicle had proven it could handle the strains and stresses of the more extreme elements of daily driving, it was largely good to go. Outside of yearly check-ups and product recalls there was little reason to bring the examiner back in. However, in the world of autonomy, that approach does not fly. In contrast to traditional vehicles, autonomous vehicles (AVs) are an ever-changing product. With each test run the vehicle's artificial intelligence (AI) evolves, spotting things it never spotted before and highlighting new edge cases to be

addressed. After decades of stability, ensuring these state of the art vehicles are tested productively is a huge challenge. However, it is not a challenge that is deterring the industry; the Holy Grail of Level 4 and 5 autonomy is proving too big a prize to ignore. How the industry can design its testing procedures to reach these heights, though, is a tough question. “Testing has fundamentally changed in the transportation ecosystem,” said Jeremy Bennington, Solutions and Technical Strategy Lead at Spirent

Communications. Speaking at M:bility | Europe, a two-day conference hosted by Automotive World, Bennington observed: “Once the vehicle design was complete we did not really have to test after we’d manufactured. Now the car is a living, breathing, changing beast.”

Simulation The inherent safety risks of autonomy, especially at its early maturity level, create a much higher burden of proof. While traditional test results are used to determine whether a vehicle will

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M:bility | Magazine - Q4 2019

“Testing is now moving into the virtual environment which is safer, and there seems to be a consensus that simulation will play a fundamental role in all of this,” added Henning Lategahn, Managing Director at HD mapping company Atalec. “I do not know if this will be enough, however. It's fair to say that we simply do not know how to truly validate an autonomous system.” While this uncertainty remains, the industry is combining simulation and real-world testing. For instance, should an AV discover an edge case it cannot address in the real world, these scenarios can be recreated virtually by collecting positional and driving data. This reactive approach allows players to paper over the cracks in their systems as they appear. “If we create digital twins then we can have continuous improvement of our simulation models and then roll out the features to the operation vehicle,” added Lategahn. “Simulation is not just a development tool.”

Testing framework While testing practices are evolving, there remains a call for a testing framework which players can follow. Just as how human drivers are forced to undergo a well-defined test to determine whether they are capable of driving a car, many experts

remain structurally safe over its entire product lifecycle, for the AV these tests are used to prove the competency of ever-changing computer code over millions of test miles. To tick this box, the industry has increasingly leaned on simulation. “We as an industry have to move to a developed, secure offering. Every time you’re adding a feature you have to simulate it,” said Bennington.

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Once the vehicle design was complete we did not really have to test after we’d manufactured. Now the car is a living, breathing, changing beast

believe that a similar framework is needed to ensure continued practical AV development. For instance, MCity, the University of Michigan’s private AV testing facility, has put together its own AV driving test concept. The ABC test includes three factors: ‘A’ refers accelerated evaluation, essentially testing with a ‘quality over quantity’ mindset when it comes to collecting test miles. ‘B’ stands for behaviour competency,

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where a fixed set of scenarios is assigned to an AV to determine its base competency level. ‘C’ covers corner cases, where an AV platform needs to show it can think on its feet when presented with an entirely new scenario. As Huei Peng, the head of MCity, explained to Automotive World, the hope is that the ABC concept can lay the groundwork for future test cycles. “When you go to a typical test facility the focus is on

M:bility | Magazine - Q4 2019 platforms could not. We need to be careful what we test for as it could be an edge case for one AI but not another.”

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We need to be careful what we test for as it could be an edge case for one AI but not another

Public safety dilemma

Another element to consider is that of public safety. While autonomy remains a core tenet of Vision Zero, achieving this goal will not be an incident-free process. The simple fact is that these early prototypes, while impressive feats of technology, are imperfect. Like it or not, crashes will happen. Ensuring that the public keep faith with autonomy in the wake of these incidents could be make or break.

elements such as high-speed cornering, durability and how well a vehicle can go up and down a hill,” he said. “When we test we want to make sure that it is not only about the car but also the relative motion between the car and other road users.” While this is a new way of thinking, Peng holds a firm belief that AV testing will quickly move down this route. “It will only be a matter of time before we say, ‘if you pass this test 50 times then we think you have demonstrated enough competence.’ It will not guarantee a crash-free environment because a crash is a two-party tango, but having this kind of testing in a safe place first is a must.” While the approach makes plenty of sense on paper, some fear that the

automotive industry may restrict itself by treating an AV like a human driver. “Very often we talk about these edge cases, but in certain situations these scenarios are edge cases for one system but not for another,” said Lategahn. “When the General Motors rearend crashes started happening—in the first ten months of 2017 GM test vehicles were involved in 13 crashes in California, none of which were determined to be the automaker’s fault—there were so many companies out there saying that their AI system would have been able to handle that situation. I believe that this is probably true, but also that in other cases GM’s system would be able to tackle things that those critics’

“We cannot aim for perfection as it is just not possible,” said Lategahn. “There’s a bit of a dilemma because once we deploy these self-driving systems I would expect them to be safer, but there is likely to come a time when a self-driving car hits and kills a child. If that happens, we as an industry will have to try to explain to the parents that these vehicles are still good for society.” Experience shows that this is likely to be a tough sell. For example, Waymo, which continued testing in Arizona following the 2018 Uber crash, reported 21 separate incidents where members of the public threatened or attacked its test vehicles—even though it had not been involved in the incident in question. These attacks ranged from tyres being slashed while the vehicles were parked to one man waving a .22 calibre revolver at a Waymo safety driver. The wife of an Arizona resident, whose husband had been issued a police warning for attempting to ram Waymo’s vehicles off the road multiple times, told the New York Times that her husband “found it

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Once we deploy these self-driving systems I would expect them to be safer, but there is likely to come a time when a self-driving car hits and kills a child. If that happens, we as an industry will have to try to explain to the parents that these vehicles are still good for society

entertaining to brake hard” in front of a self-driving test vehicle. Worryingly she seemed to empathise with her husband’s mission—“they did not ask us to be part of their safety test,” she told the publication. If autonomy is to continue enjoying practical development, the industry desperately needs to address this ‘us versus them’ mentality. “Part of it is about how we respond to human incidents, just like when an aeroplane crashes; it makes the news because a bunch of people

die even though just as many people die from car accidents per day,” said Bennington. “We cannot predict what society is going to do but we can see the data and say that we can reduce not only the number of deaths but also injuries. We owe it to society to get these systems out as soon as we can.” “In the automotive industry we are working towards Vision Zero, but it shouldn’t be Vision Zero it should be Mission Zero,” added Ahmed Yousif, Software Design Engineer at Valeo. “We need to

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save as many lives as possible but when we deploy a system we cannot guarantee that there will not be an incident. We need to provide as perfect a system as possible to achieve that mission.” Certainly, autonomy appears on the cusp of great progress. With the easy wins now under the industry’s belt, huge steps could be taken over the next decade towards achieving Level 3, 4 and maybe even Level 5 autonomy. Making sure it keeps on track, however, will require more than just technical proficiency.

M:bility | Magazine - Q4 2019

Interview: Alain Visser, Chief Executive, Lynk & Co International Freddie Holmes visits Lynk & Coâ&#x20AC;&#x2122;s Gothenburg headquarters to learn more about the Geely-backed mobility start-up, which has its eyes on becoming the Airbnb for cars

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M:bility | Magazine - Q4 2019

he design of an office is usually a good indicator of how a company likes to operate. Many traditional corporate offices resemble the waiting area of a dental practice—clean, traditional and often due a revamp. Despite its business in manufacturing vehicles, Geely subsidiary Lynk & Co is adamant that it is not like the other automakers, and instead operates as a start-up. From a Nintendo 64 in the foyer, the gentle beat of ambient house music and an e-scooter in the corridor, to the ‘mustard room’—a meeting area decked out almost entirely in yellow velour—it certainly feels that way.

Lynk & Co launched in 2016 and sits between Volvo Cars and performance electric brand Polestar. The start-up leverages existing Volvo Cars platforms and technology, namely the XC40 compact SUV, but styles and develops “all visible elements” inhouse. It currently manufactures and sells exclusively in China, but sees itself as a global brand, with near-term plans to launch in Europe and ambitions to tap the US market. It has also made a splash of the fact that rather than selling cars, it sells a subscription à la Netflix or Amazon Prime.

Alain Visser, Chief Executive, Lynk & Co International

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As a company that wanted to completely diﬀerentiate itself from the traditional brands, why would we want to copy a name? We are pretty cheeky, but not that cheeky

Early conflict If Lynk & Co’s business model did not grab the industry’s attention, the name certainly did. When pronounced in English, ‘Lynk &’ is a homophone of ‘Lincoln’, Ford’s luxury subsidiary. Initially threatened with a lawsuit over trademark infringement, Lynk & Co argued it was an unintentional coincidence. Things soon cooled down between the ChineseSwedish manufacturer and the Detroit automaker, but suspicions remained that this was just another provocative start-up trying to create a stir.

“The situation escalated, which surprised us, but it never became a real problem,” Alain Visser, Chief Executive of Lynk & Co, told M:bility from the company’s Gothenburg headquarters. “As a company that wanted to stir up the car industry and completely differentiate itself from the

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traditional brands, why would we want to copy a name? We are pretty cheeky, but not that cheeky.” In fact, the name derived from a casual conversation between executives in a taxi. It had to suit a global market, they agreed, and

M:bility | Magazine - Q4 2019

Rather than selling cars, it sells a subscription à la Netﬂix or Amazon Prime

signal that this was something other than a car brand. Drawing inspiration from fashion labels such as Pull & Bear and Abercrombie & Fitch, they eventually settled on an internal product code—Lynk. The brand was formalised within just three days.

Don’t forget to like and subscribe Visser is a long-standing automotive executive with 17 years at Ford, nine years with General Motors and four years with Volvo Cars under his belt. The Belgian has been with Lynk & Co since the brand’s inception, but his experience with the traditional automakers may not have a direct carry over to his current position. The car as a product may have evolved significantly following

the introduction of new safety, convenience and entertainment features, but the business of running a car company has seen little change. “Over the last 15 years I have been shocked by how this industry keeps saying it is so revolutionary,” he remarked. “I think it isn’t. The industry today is about designing and engineering cars, making them in big factories and shipping them to dealers who sell and repair them. That’s how it started 120 years ago, and that is and how it still is today.” By his reckoning, this could be the downfall of the incumbent manufacturers: the need to own a car is fading, and that has significant ramifications for the traditional business model. He acknowledged a line from Bill Ford’s 2011 Ted Talk—“what happens if we only sell more cars and trucks”—as a case in point.

“The customer of today has nothing to do with the customer of ten years ago—let alone 100 years ago,” he continued. “If the car industry isn’t careful, there is a risk that automakers will become a supplier to the service industry. If that happens, the business model of the automakers will be broken, because the service provider will just look to buy the cheapest cars.” Rather than relying solely on vehicles sold, Lynk & Co will gauge success on the number of subscribers and the level of vehicle utilisation. Privately owned vehicles sit unused for more than 90% of the time, and by offering what it calls a ‘car subscription service’, Lynk & Co aims to shake up the concept of owning a vehicle. By signing up, users pay a fixed amount each month—like a traditional lease— but with a minimum one-month

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M:bility | Magazine - Q4 2019

Over the last 15 years I have been shocked by how this industry keeps saying it is so revolutionary… I think it isn’t

contract. That money pays for access to the car as usual, but with a twist: the car can be rented out to other Lynk & Co members.

The business of sharing

there are more than enough customers out there who want something different, and that’s what we want to offer.”

The original ‘owner’ of the vehicle charges a set rate, and helps to offset the monthly subscription fee. In theory, Lynk & Co subscribers could even rent out their car to the point where they make a profit. It is why the company sees the likes of Turo and Uber as competitors, rather than other car brands. The monthly subscription cost is largely in-line with what would be expected of a premium SUV lease, but it comes with perks such as discounts for ‘lifestyle’ activities like festivals, gyms, cinemas and restaurants. Importantly, it differs from other subscription programmes run by automakers that charge a significantly higher monthly fee—sometimes as much as US$1,500—for access to a range of premium vehicles.

Lynk & Co aims to tap into the ‘millennial mind-set’, which has seen a growing faction of consumers subscribing to services as opposed to owning products outright. Consider the rise of Amazon Prime, Apple Music and even Nike’s shoe subscription service, Adventure Club, as evidence.

Judging by current activities, it will not be easy to crack the carsharing market, even with a model that allows users to make money off a vehicle they do not own. Indeed, the mobility sector as a whole has already proven challenging for seemingly wellpositioned players; Ford’s Chariot service crumbled earlier this year, GM’s Maven is scaling back and the BMW-Daimler partnership indicates the clout required to build a successful mobility business.

“Customers today have a different view on ownership; it’s not a coincidence that suddenly people share bikes and even their houses. Sharing cars will grow as well,” said Visser. “We look at millennials as the benchmark, but there are people 70 years of age with the same mind-set. Admittedly, many people still want to buy cars, but I think

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With vehicle manufacturing typically low-margin and highly capital intensive, how can Lynk & Co ensure it thrives? “It’s a tough space… Our data shows that the profitability of the sharing

M:bility | Magazine - Q4 2019

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business today is horrible,” said Visser. “But our business is made by the subscription, not by the sharing aspect. I would almost say our model is much closer to Netflix and Spotify. It’s about the number of members, and how much each car is used.” If Lynk & Co cars are idle for say 40% of the time, he suggested, returning a profit could be tricky. In 2018, the brand’s first full year on the market, sales totalled 120,414 units. “Over the last 30 years, my number one key performance indicator (KPI) has always been volume—how many cars do we sell,” Visser continued. “While we will, of course, measure volume, it is not going to be the driver of success.”

Customers today have a diﬀerent view on ownership; it’s not a coincidence that suddenly people share bikes and even their houses. Sharing cars will grow as well

Down with the dealership Returning a profit will be helped by the fact that Lynk & Co will sell directly to consumers. Visser estimated that the dealership distribution model accounts for 25% of an automaker’s revenue. Instead, Lynk & Co sets up retail outlets in high footfall locations, often neighbouring with cafes, restaurants, bars and cinemas. Retail experts estimate that large shopping centres can attract around 50 million visitors each year. Various automakers including Hyundai, Opel, Infiniti and Mitsubishi have trialled the approach alongside conventional dealerships.

“The only reason our offering is affordable is because our distribution model is so extremely lean,” explained Visser. “It means that we can offer a very good, well-equipped car at a price that others cannot. That’s what allows us to offer premium mobility in an affordable way—it’s the only way to do it.” Another reason is the fact that Lynk & Co vehicles will only come in a handful of build combinations, slashing complexity and making life far easier on the factory floor. “The manufacturing guys love it,” noted Visser. Lynk & Co’s research shows that some mainstream models on sale today have around five billion different build combinations—taking into account everything from the powertrain

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M:bility | Magazine - Q4 2019 and exterior paint to all the other optional extras. “We’re probably going to have just six combinations in Europe,” he advised.

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Our data shows that the proﬁtability of the sharing business today is horrible… But our business is made by the subscription, not by the sharing aspect

‘Damn good’ cars Lynk & Co may see itself as a mobility start-up, but with Geely as a parent company and Volvo Cars as a minority stakeholder, it is an automaker at heart. To put bums on seats, its cars must also be compelling products. Today, it sells the 01, a compact SUV, the 02 crossover and the 03, a compact performance sedan.

But while the car itself must be desirable, Visser recognises that the element of performance is becoming less important, and particularly for mobility subscribers. “We in the industry sometimes escape from what is customerrelevant,” he explained. “No customer ever drives a car under track circumstances, so my belief is that our cars just need to be damn good, with no compromises on quality, safety or equipment. Connectivity and the humanmachine interface (HMI) are also key differentiators, and vital ingredients that ‘new consumers’ want in a car.”

CASE Connected, automated, shared and electric (CASE) has become a cornerstone to the automotive industry’s ambitions for nextgeneration mobility. It is a collection

The automaker has the benefit of leveraging existing platforms from Volvo Cars, but also its own skilled test drivers—“they’re maniacs on the track”—to ensure that driving dynamics are up there with the competition. A modified version of the four-door front-wheel drive 03 sedan recently set two lap records on the Nürburgring racetrack.

of buzzwords that are gradually becoming the new normal, and vehicle manufacturers are adjusting their operations to ensure that each element is catered to. At a very basic level, Volvo Cars ticks the box for ‘automation’, Polestar ‘electrification’ and Lynk & Co ‘connected and shared’. With its trendy Gothenburg start-up preparing for a global rollout, Geely now appears to have all bases covered. China will remain the primary manufacturing hub for now, but the hunt for a European location continues. Volvo Cars’ existing facility in Belgium was down to begin manufacturing Lynk

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& Co vehicles by the end of 2019, but that plan was put on hold back in November 2018. Ghent is still an option, advised Visser, and the delay was a result of soaring demand for the Volvo XC40. “Sales are going so well that the volume Volvo could have offered us in Ghent was not enough. We said that Volvo should enjoy the success of the XC40 and we will just import from China,” he explained. “The intention is that in the medium term we will have manufacturing capabilities in Europe, and once we launch in the US, we will have also have manufacturing capabilities in the US.”

ÂŠ Continental

M:bility | Magazine - Q4 2019

Scouting for start-ups: corporate venture capital is tactical due diligence By working with start-ups that have been put through their paces on in-house programmes, Continental can create partnerships with confidence. By Freddie Holmes

An Automotive World publication

M:bility | Magazine - Q4 2019

From the big bucks deals—General Motors’ acquisition of Cruise Automation, Ford’s US$1bn investment in Argo AI—to smallscale partnerships like MercedesBenz and what3words, start-ups are proving valuable assets for automakers. However, it is the Tier 1s which have been most active in this field, given they provide most of the technology that goes into a new vehicle. These businesses have been built on specialising in particular fields, but the onset of CASE mobility has meant that business as normal no longer cuts it. In short, technology companies such as Continental have had to shake up their portfolio and continue scouting new technologies and business models. This can be a challenging task, and has led to the creation of a dedicated in-house start-up organisation: co-pace. The programme consists of three pillars, ranging from a simple observation period right through to big money investment. Firstly, the incubator is an internal programme where internal concepts are developed and employees get a chance to work in a start-up environment and develop their own concepts. It is an approach that allows ideas to flow from within the organisation itself, tapping the expertise of other departments that may otherwise go to waste. The second pillar is known as the co-operation programme, where the primary task is to connect the

he role of the start-up economy in shaping today’s automotive industry cannot be overstated. No matter how established the incumbent automakers and suppliers may be, the injection of innovation from a nimble start-up can mean the difference between falling behind the competition, and pushing the limits of technology.

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We give a lot to the start-up: our expertise, our eco-system and our know-how. You could say it is tactical due diligence for a later investment

start-up ecosystem with Continental. Here, the co-pace team analyse certain topics that show promise, and scout out relevant start-ups. Once a match has been found, that start-up may end up being connected with the relevant department within Continental—an EV start-up may find itself working with the powertrain division, for example. A LiDAR start-up may find itself

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working with Continental’s active safety engineers. From there, proof-of-concepts begin. “These are short projects that run for three to six months, where we apply the technology of the startup into our applications, be it a test car, simulation, sensor or a piece of software,” explained Jürgen Bilo, Managing Director at co-pace GmbH. “We also send the

M:bility | Magazine - Q4 2019

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The key for start-ups is to prove their solution in a relevant application in the industry. That’s what a VC cannot oﬀer—but we can

start-up to where the highest level of technical competency is globally.” Indeed, a fledgling startup could find itself working with teams in China, the US or elsewhere in Europe. A start-up that specialises in ultrasonic sensors or LiDAR would likely be

brought to Lindau in Germany, for example, where the bulk of Continental’s sensor expertise lies. “If we are convinced by the startup—we achieve the goal that was set out in the beginning, or feel the technological solution has strong potential—we then have to decide

whether to partner with them, establish a supplier relationship, or invest.” This leads on to the third operational pillar of the start-up programme. Continental is not the only big name in automotive

An Automotive World publication

M:bility | Magazine - Q4 2019

At this point, things start to get serious. Venture capital can be the first round of investment that moves a simple idea or product into a tangible business. In most cases it is not just an injection of cash, but also an opportunity to make use of the firm’s experience in the industry—and when the investor has direct ties to a global Tier 1 supplier, that can be just as useful as the money itself. Working with start-ups through a corporate start-up programme also means that for the supplier, there is less risk. The cooperation programme essentially vets the company, its ideas and its leadership team over a prolonged period. This means that money only exchanges hands once the supplier has a good idea of how the start-up may bring either a return on investment, or an entry point into a new market. For the start-up, it is an opportunity to embed itself directly in the industry as opposed to taking the cash and figuring out where to go next. “When a start-up is good, it receives money from the venture capitalists. However, the key for start-ups is to prove their solution in a relevant application

to have such a set up. As part of Continental Finance, co-pace has a different set-up to a conventional VC firm. In October 2016, Tier 1 supplier ZF formed Zukunft Ventures, a wholly owned corporate private equity unit; Robert Bosch Venture Capital was formed in 2007, and Qualcomm Ventures earlier in 2000. Jaguar Land Rover’s corporate venture capital unit, In-Motion Ventures, opened in 2016; Scania Growth Capital was set up in February 2017, and the Renault-Nissan-Mitsubishi Alliance launched Alliance Ventures in 2018.

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If we get a good feeling from the start-up, we then have to decide whether to partner with them, establish a supplier relationship, or invest

in the industry. That’s what a VC cannot offer—but we can,” explained Bilo. While it is the start-up’s job to prove its worth, it is also in Continental’s interests to nurture it through the incubation period. “We give a lot to the start-up too: our expertise, our environment

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and our know-how. As a result, we get something back from the start-up in return because this is potentially a solution that we can use in our portfolio,” continued Bilo. This could be an AV stack, a sensor or simulation tool, for example. “You could say it is tactical due diligence for a later investment.”