Narrative: Tech Disrupts Transportation
Each narrative page (like this) has a page describing and evaluating the narrative, followed by all the posts on the site tagged with that narrative. Scroll down beyond the introduction to see the posts.
Narrative: Tech Disrupts Transportation (Jan 28, 2017)
Updated: April 28, 2017
This narrative was the subject of the Weekly Narrative Video for the week of April 24-28, 2017. “Tech Disrupts Transportation” has also become the most used narrative tag on the site – this is an incredibly busy segment of the tech industry right now. You can see the video on YouTube here or embedded at the bottom of this essay.
There are three major shifts underway in transportation: electrification of the powertrain in vehicles, increasingly autonomous vehicles, and a move away from ownership and towards sharing and other models. It’s fair to say that none of these shifts has been primarily driven by the traditional players and stakeholders in the market, while all three have been driven by tech companies coming from outside the industry.
Though traditional car companies have pursued partial electrification through hybrids for years, it has really been Tesla which has lit a fire under the automakers with regards to fully electric vehicles – it’s almost impossible to imagine the Chevy Bolt without Tesla’s influence in recent years. The pace of adoption of electrification has increased dramatically as a result of this pressure from outside the traditional bastions of car making.
Similarly, when it comes to autonomous driving, it’s been Google (now Waymo) and companies like Uber and Tesla once again which have really pushed the envelope in terms of aggressively pursuing autonomy. and which have in turn put pressure on the traditional carmakers to move faster here.
And in sharing and other new models for urban transportation, it’s Uber and Lyft and their equivalents in various markets around the world which have begun to suggest a world in which many people who previously owned cars won’t do so, and will instead use a combination of ride hailing, ride sharing, car sharing, and other models to get to and from work and elsewhere.
Having said all that, the major carmakers have now embraced each of these three major shifts and are working hard to catch up where necessary, or even to build on existing leads in certain areas. I mentioned the Chevy Bolt, but we’re seeing an increasing number of pure EVs as well as more plug-in hybrids, and experimentation with other fuel sources such as hydrogen fuel cells. Autonomous driving is a major focus at most of the big carmakers, and I spent considerable time talking with them about the efforts being made at the North American International Auto Show earlier this month. And when it comes to urban mobility and other new models for car usage, the carmakers are again investing in both proprietary and agnostic models for ride sharing on at least an experimental basis, and in some cases by investing in existing large scale services (such as GM’s investment in Lyft).
The big question is how all this will come together over the next few years – Tesla is very much plowing its own furrow when it comes to its major initiatives, with few partnerships with other entities, while Waymo is partnering with Fiat Chrysler and potentially others around autonomous driving, Uber is working with Volvo on the same topic, and I already mentioned GM’s investment in Lyft. And I haven’t even mentioned the chipmakers like Nvidia, Qualcomm, Intel, and others and the multitude of other suppliers to the car industry like Mobileye who will need to come together to make this technology work in practice. Where will the dividing lines be between the various domains these companies will occupy? Will it continue to be the tech companies from outside the industry who shake things up and drive the greatest change, or will the existing scale and scope of operations of the big automakers allow them to catch up and begin driving this change? I think there are far more questions than answers here at this point, but I’m loath to accept the idea that it’s the tech companies and not the automakers who will drive all the disruption in transpiration in the next few years.
Lyft Announces 500m Total Rides, 100m in Past Three Months (Oct 11, 2017)
Lyft has announced that its service has provided 500 million cumulative rides since its inception, 100 million of which were in the last three months alone. It also says it’s providing over 1 million rides every day at this point, which gels with that 100m number. The chart in Lyft’s blog post looks like an exponential growth rate, and is a testament to the fact that the ride sharing category overall is still growing very rapidly even in a relatively mature market like the US, with Lyft’s share growing a little over the past year. As I’ve said before, while it’s tempting to ascribe that to Uber’s troubles, it’s actually mostly about Lyft’s rapid expansion into new markets during the course of this year in particular. But it’s good to see another competitor offering a serious alternative to Uber in its home market and keeping up the pressure, which should ensure that both companies continue to innovate and improve experiences for drivers and riders.
The California DMV has approved rules to go into effect next year which will allow companies testing autonomous vehicles on its roads to do so without human drivers or traditional human driving hardware in cars. That’s a change to the existing rules, which had explicitly prohibited such testing and required human drivers. This appears to be at least in part a response to the increasing popularity of Arizona as a testing location for driverless cars due to its looser regulations, something which has presumably irked companies based in California which would rather test their technology closer to home. All of this could eventually be superseded by federal regulation being contemplated, which would override all state-level rules on this topic, but that’s still some way off and it makes sense for states with an existing commitment to allowing such testing to move forward in the meantime. As before, companies will have to register and report details of both their testing and any disengagements (human interventions) and accidents involving their cars.
via The Verge
Indian ride sharing service Ola, which is the main rival to Uber in that market, is in the process of a large fundraising round, with backing from Tencent, SoftBank, and a variety of others. Ola arguably needed additional funding to be able to compete on more level terms with Uber, while Tencent and SoftBank have invested previously in India and the international ride sharing space respectively, their interests merging in Ola. The biggest risk for Uber in India is another failure and ultimate concession of the market to a stronger local competitor along the lines of what’s happened in China and Russia over the past eighteen months, so it’s clearly not about to give up there. But the two have been battling for supremacy for some time now without an obvious winner, in what’s one of the fastest-growing and potentially one of the largest ride sharing markets in the world.
Nvidia has announced Pegasus, a mini-computer which it claims is powerful enough to operate all the functions of a self-driving car while having roughly the footprint of a license plate, and which will become available in the second half of 2018. One of the key challenges with self-driving cars is that the computing power to run them is often so large and power-intensive that the unit often takes up much of the trunk of the car (see this Google search) and requires significant fuel over and above that required by the engine. Miniaturizing that processing power and making it more efficient is key to making autonomous driving a reality, albeit only one of several big challenges that must be overcome before that happens. Nvidia is arguably the current leader in providing the GPUs and related technology for these cars today, while others have taken the lead in sensors or connectivity relating to the cars, and this leadership has been a huge boon to Nvidia’s overall prospects and performance.
GM’s Cruise Automation unit has acquired Strobe, a startup which has been working on “chip-scale” LIDAR technology for use in self-driving cars. LIDAR is one of the big bottlenecks in autonomous tech development, both expensive and low-volume at present, with Velodyne currently the dominant supplier. As this Recode piece points out, GM is a bit more deeply invested in autonomous driving than most other legacy carmakers, having acquired Cruise itself as the “brain” of the system and also running various experiments of ride sharing and other services through Cruise and the GM Maven brand, and this acquisition extends that integration. My guess is that the technology was at a fairly early stage – the company seems to have just 11 employees – and it’s therefore unproven, though GM had an existing investment and may know something other potential acquirers didn’t, allowing it to swoop in at an opportune moment to take it off the market. Waymo and Uber, of course, are battling in court over the latter’s attempts to make its own in the image (or otherwise) of Waymo’s.
Alphabet’s Waymo subsidiary and chipmaker Intel have launched separate campaigns to promote autonomous driving technology. While Intel seems to be going it alone and focusing on TV ads with celebrities like LeBron James, Waymo has partnered with several safety and advocacy groups for its campaign, which seems more aimed at starting a conversation using the hashtag #letstalkselfdriving than pushing out its message via ads, at least for now. Waymo is an obvious company to be pushing the technology given that autonomy is its raison d’être and it has its own cars on the street in various markets, while Intel is clearly aiming for the same kind of indirect approach it took to its famous “Intel Inside” campaigns back in the day. These are, after all, mostly awareness campaigns at this point – there’s nothing any consumer could buy after seeing the efforts from either campaign, and most consumers aren’t even aware of regulatory efforts in this area yet either. But both campaigns are clearly aware of broad skepticism shown in recent surveys about autonomous driving and want to start the education process early. Waymo’s campaign is particularly focused on the accessibility and safety benefits and its partners – which include an organization serving the blind and another serving seniors. That gels well with the NHTSA stats I shared earlier today, which demonstrated again the potential safety benefits of a computer not prone to alcohol use, speeding, or distraction driving a car.
The US Department of Transportation and National Highway Traffic Safety Administration have released data on fatal motor vehicle crashes during 2016 (a fuller report is available here while the link below is to a summary press release). The total number of fatalities (which includes drivers and passengers in vehicles as well as pedestrians, motorcyclists, and cyclists) was 37,461, up 5.6% after a larger rise in 2015, but following a long decline in overall fatality rates from the 1960s onwards. As in prior years, what the NHTSA describes as “human choices” such as not using seatbelts, driving while drunk, sleepy, or distracted, or speeding, continued to be a major cause. Remarkably, nearly half of in-vehicle fatalities were among people not wearing seatbelts, and nearly a third of fatalities occurred where the driver was under the influence of alcohol.
One of the rallying cries of the autonomous driving movement is always that it should dramatically reduce these fatalities, which are arguably already very low at just over one fatality per 100 million miles. Given the contribution of human choices like alcohol use, speeding, and distraction to the totals, that seems likely to be true if autonomous technology can at least match the performance of human drivers on the fundamentals of driving. On the other hand, given that the vast majority of cars on the road will still be human-driven even once autonomous cars start arriving, things like increased seatbelt use (currently at around 90% of vehicle occupants) would make a much bigger difference in the near term.
The Wall Street Journal, which this article acknowledges has had a somewhat adversarial relationship with Elon Musk and Tesla, reports that at least some Model 3 cars being produced in the company’s factory last month were still being assembled by hand rather than on the automated production line built for that purpose. That’s indicative of problems finalizing the automated line, which may be what Elon Musk’s comments about production bottlenecks referred to earlier this week in reporting low Model 3 production and deliveries. That, in turn, is indicative of the rush to get the Model 3 out the door at Tesla to meet overly ambitious targets. One of the reasons Musk has criticized the Journal is arguably that it’s one of the few publications that has regularly called out his failure to meet targets even as others fawn over Musk and Tesla’s notable achievements. Tesla refused to respond to the specific reporting in the article, and certainly didn’t deny its core assertions, suggesting that it’s likely accurate. I continue to be very skeptical that Tesla will get anywhere near its target production for the Model 3 anytime soon. Meanwhile, Elon Musk has been tweeting about various other things, including scheduling the Tesla Semi launch event for November 16th, and sending batteries to Puerto Rico.
Bloomberg has dug out official financial statements for Uber’s London and European operations for last year, and found that the London operation recorded revenue of around $50 million, while the broader European operation had $1.6 billion in revenues. That London figure is a little funny because it appears to be a sort of net revenue after commissions paid to drivers – something made clear in a fuller version of the financials I saw posted to Twitter, which showed gross profits as identical to revenues. That revenue figure, though, would be a tiny fraction of Uber’s global revenue, but the strategic value of a presence in a major city like London goes well beyond the direct financial benefits. Interestingly, the London revenue figure was up just 59% year on year, while the European figure more than tripled, reflecting the relative maturity of the London operation relative to operations in much of the rest of the continent.