Auto & Mobility
Trends
EMERGING TRENDS
2019
2
Table of Contents
CONTENTS
NExTT framework
3
NECESSARY
Mobility-as-a-Service
5
Electric vehicles
9
Telematics
13
Advanced driver assistance
16
Industrial robotics
19
Industrial sensors
22
EXPERIMENTAL
Auto e-commerce
24
Simulation
27
Wearables
29
Vehicle-to-everything technology
32
Blockchain verification
35
Driver monitoring
37
Flying robotaxis
39
THREATENING
Lidar
41
Flexible assembly lines
44
Online aftermarket parts
47
Fully autonomous vehicles
49
HD mapping
51
TRANSITORY
3D printing
54
Next generation infotainment
56
Digital dealerships
58
3
Emerging
auto and m
R&D and design
Material supply, part
assembly
Distribution, marketi
Aftermarket services
INDUSTRY ADOPTIONMARKET STRENGTH
High
Low
HighLowTRANSITORY
EXPERIMENTAL
THREATENING
NECESSARY
Digital
dealership
Lidar
Telematics
HD mapping
Radar
& cameras
Electric vehicles
Mobility-as-a-s
ervice
Industrial
sensors
Flexible
assembly lines
Flying
robotaxis
3D
printing
Online
aftermarket parts
Simulation
Vehicle-to-everyt
hing tech
Blockchain
verification
Advanced driver
assistance
Next gen
infotainment
Driver
monitoring
NExTT Framew
Industrial
robots
Auto
ecommerce
Wearables
Fully autonomous
vehicles
3
Emerging trends in
auto and mobility
R&D and design
Material supply, parts sourcing, and vehicle
assembly
Distribution, marketing & sales
Aftermarket services and vehicle use
H
High
THREATENING
NECESSARY
Lidar
Telematics
ng
Radar
& cameras
Electric vehicles
Mobility-as-a-s
ervice
rial
rs
Flexible
assembly lines
ne
ket parts
er
NExTT Framework
Industrial
robots
Fully autonomous
vehicles
Auto & Mobility Trends in 2019
NExTT FRAMEWORK
4
TRANSITORY
EXPERIMENTAL
THREATENING
NECESSARY
INDUSTRY ADOPTIONMARKET STRENGTH
High
Low
HighLowDigital
dealership
On-board
diagnostics
Industrial internet of
things (IIoT)
AV sensors &
sensor fusion
HD
mapping
Lithium-ion
batteries
Automobile
security
Telematics
Vehicle
connectivity
AI processor
chips & software
On-demand
access
Industrial
computer
vision
Flexible
assembly
lines
Vehicle
lightweighting
Online
aftermarket
parts
Virtual
showrooms
Decentralized
production
Predictive
maintenance
Wearables and
exoskeletons
Flying robotaxis
Alternative
powertrain
technology
Vehicle-to-everything
tech
Car vending
machines
Blockchain
verification
Advanced driver
assistance
Next gen
infotainment
Mobile
marketing
Additive
manufacturing
Usage-based
insurance
Driver
monitoring
D and design
aterial supply,
rts sourcing,
d vehicle
sembly
stribution,
arketing &
les
termarket
rvices and
hicle use
Title of NExTT Framework
TRANSITORY
Trends seeing adoption but
where there is uncertainty
about market opportunity.
As Transitory trends become
more broadly understood,
they may reveal additional
opportunities and markets.
NECESSARY
Trends which are seeing wide-
spread industry and customer
implementation / adoption and
where market and applications
are understood.
For these trends, incumbents
should have a clear, articulated
strategy and initiatives.
EXPERIMENTAL
Conceptual or early-stage
trends with few functional
products and which have not
seen widespread adoption.
Experimental trends are already
spurring early media interest
and proof-of-concepts.
THREATENING
Large addressable market
forecasts and notable
investment activity.
The trend has been embraced
by early adopters and may
be on the precipice of gaining
widespread industry or
customer adoption.
NExTT Trends
The NExTT framework's 2 dimensions:
INDUSTRY ADOPTION (y-axis)
Signals include:
momentum of startups
in the space
media attention
customer adoption
(partnerships, customer
licensing deals)
market sizing
forecasts
quality and
number of
investors & capital
investments
in R&D
earnings transcript
commentary
competitive
intensity
incumbent
deal making
MARKET STRENGTH (x-axis)
Signals include:
5
MOBILITY-AS-A-SERVICE
A growing number of companies are reshaping the way people move
themselves, offering mobility solutions as on-demand services to
cater to individual travel needs.
The rise of on-demand transportation services has transformed
transportation in urban and suburban regions. Originating with ride-
hailing and more recently expanding to bikes, scooters, and car-sharing,
mobility-as-a-service (MaaS) has emerged as a viable alternative to
personal vehicle ownership. In many cases, it's facilitating mobility
across cities with subpar public transportation options.
MaaS platforms make more optimal use of vehicles, given that personal
vehicles sit unused for 95% of the day. Shared mobility also allows users
to avoid the costs associated with ownership, including insurance, tax,
maintenance, and parking, while conveniently taking riders from point A
to point B.
Traditional auto OEMs such as General Motors and Ford recognize the
significance of MaaS, and are repositioning themselves as mobility
service companies rather than car makers.
Necessary
6
The rapid rise of ride-hailing and ride-sharing services has also shaken
up corporations in adjacent sectors, such as rental car companies
and parking management firms, as illustrated by the earnings call
analysis below.
BMW and Daimler merged their MaaS operations under a single umbrella
in early 2018, with each company taking a 50% stake in the joint venture.
The automakers have launched a number of services across the MaaS
space, including car-sharing (Car2Go and Drivenow), ride-hailing (myTaxi,
Chauffeur Priv, and Clever Taxi), parking (ParkNow and Parkmobile),
electric vehicle charging (ChargeNow and Digital Charging Solutions),
and on-demand mobility (moovel and ReachNow).
7
And MaaS isn't just about cars the new vision for mobility services
includes other modes of transport that cater to different lengths of
transport. For example, bikes and scooters more broadly referred
to as micromobility have seen a surge in investor interest following
rapid consumer adoption, as these light vehicles provide short-distance
transport solutions for urban dwellers.
Micromobility has driven unprecedented investor interest in 2018,
generating a number of new unicorns, including Bird and Lime.
Automakers are also taking notice, with Ford acquiring scooter-sharing
platform Spin in November.
On the private side, ride-hailing giants Uber and Lyft as well as Didi
Chuxing in China are looking to branch out into adjacent mobility
services such as bike-sharing, scooter-sharing, car-sharing, and public
transportation. In the US, Uber has partnered with public transportation
platform Masabi, and it acquired e-bike-sharing startup JUMP Bikes
in April 2018. Lyft has followed suit with its acquisition of Motivate in
July. In China, Didi Chuxing has been notably active in the micromobility
space, tapping into a number of startups operating bike- and scooter-
sharing services.
Source: Lime
8
Startups and automakers have also started to offer subscription services
as an alternative to buying or leasing vehicles. While leases lock owners
up for up to a few years at a time, these subscriptions allow users to
rotate cars multiple times per year. These services also bundle the
various costs associated with ownership, such as maintenance and
insurance, into one monthly payment.
While the services are still relatively nascent in terms of scale, the
flexibility associated with a subscription has resonated strongly across
the mobility ecosystem. A number of automakers, including BMW and
Volvo, and several startups have launched subscription options.
Questions around whether mobility services namely ride-hailing are
worsening traffic congestion and replacing public transportation use
are still looming, but many of these MaaS companies aim to reduce
congestion and ultimately replace personal car ownership.
9
ELECTRIC VEHICLES
Automakers view electrification as critical to the future of the
automotive space and are accelerating efforts to electrify their fleets.
Electric vehicles (EVs) currently make up a small fraction of total
automotive sales globally. However, they are expected to gain share
over the next several years as governments across the globe mainly in
China and Europe aggressively deploy incentives to spur EV adoption.
Simultaneously, the cost to produce a lithium-ion battery the most
commonly-used battery for electric vehicles is falling, driven by
advancements in manufacturing and scaled production of electric
vehicles. Lower battery costs ultimately help drive down the cost of
electric vehicles, which has been a major roadblock for consumer
adoption.
10
Automakers are heavily focused on vehicle electrification given this
backdrop. Chatter around electric vehicles has picked up substantially
on corporate earnings calls.
11
Most recently, Volkswagen announced in November that it's investing
roughly $50B in the pursuit of electric vehicles, among other disruptive
automotive technologies. The company plans to stop producing gas-
powered cars entirely by 2026. Almost every other automaker has at
least one fully electric model in development.
Tier-1 auto suppliers are also focused on vehicle electrification, as the
components going into an electric vehicle differ substantially from those
used in traditional internal combustion engines (ICEs). Mentions of
electrification on Tier-1 supplier earnings calls have far outpaced those
of autonomy and connectivity on an annual basis.
The broader investor ecosystem is also capitalizing on the favorable outlook
for electric vehicle adoption. Investors have already poured over $5.5B
into EV manufacturing startups this year, reaching a new annual peak.
12
Startups looking to improve battery technology and build out a charging
infrastructure for public and residential use have also seen notable
attention from investors and automakers. BMW and Daimler, for
example, have invested in charging infrastructure startup ChargePoint to
build out charging networks to support their EVs. Volvo also invested in
charging startup Freewire.
13
TELEMATICS
Connected vehicle technology that enables real-time fleet visibility
and data collection is opening up a number of new revenue
opportunities for automakers.
With advances in vehicle connectivity, it's now possible to track a
car's movements in real time. This technology, known more broadly
as telematics, is especially useful for fleet operators such as freight
companies, rental car firms, and ride-hailing services, as it provides them
with a live feed of their vehicle fleets.
A number of investors, including automakers and Tier-1 suppliers,
are placing bets in the telematics space. The technology provides
substantial cost saving opportunities for fleet managers, who can utilize
telematics technology to track location data, fuel levels, and driver
behavior. This allows them to optimize routes, minimize fuel costs, and
increase fleet safety.
14
Telematics also has notable implications in the insurance space. Insurers
can track driver behavior and charge more appropriate premiums
based on specific metrics such as miles driven, rapid acceleration, hard
braking, hard cornering, and airbag deployment. This approach, known
as telematics-based underwriting, has received attention from major
insurers, including Allstate, Progressive, and Kemper.
Telematics technology is resonating with corporates across industries,
as mentions of the technology on earnings calls have picked up
substantially over the past few years.
Perhaps most importantly, telematics will substantially impact the
business model of the traditional auto OEM.
Connected vehicles generate a massive amount of data that presents
a monetization opportunity for automakers, which is especially
important given that new car sales are slated to taper off with the shift
to shared mobility. Monetizing telematics data could generate $1.5T for
automakers by 2030, taking share of an automaker's revenue as new car
sales decline, according to McKinsey.
15
As a result, the majority of OEMs view connectivity as an integral
component in the vehicle of the future, and hope to have 100% of all new
vehicle fleets connected within the next few years.
Automakers have already started taking advantage of this data
opportunity, with GM and Volvo using connected car data to drive
more informed insurance plans. BMW's CarData platform currently
offers driver data to third-party services like insurance companies and
repair shops.
Source: McKinsey
16
ADVANCED DRIVER ASSISTANCE
Until full autonomy is achieved, automakers are enhancing driver
safety technology to work with the human driver and minimize errors.
Automakers and Tier-1 suppliers are prioritizing driver safety, as the
majority of road accidents are caused by human error. Until fully
autonomous vehicles become a reality, augmenting the capabilities
of the human driver is one of the only ways to combat accidents on
the roadway.
17
With advancements in sensor technology and developments in machine
vision software, auto OEMs have been able to develop advanced driver
assistance systems (ADAS) that enable semi-autonomous driving.
These systems feature new capabilities such as adaptive cruise control,
automatic braking, traffic and lane departure warnings, and other alerts
and automated responses to augment the driver's capabilities and assist
them in the case of distraction or fatigue.
On the hardware side, automotive sensors and their accompanying
software help vehicles detect and process their surroundings a critical
feature for driver assistance technology.
Source: Robotics and Automation News
18
Each sensor offers its own set of strengths. Cameras are most valuable
for detecting colors and fonts; radar is most useful for detecting
distance and speed; and lidar can create highly-accurate 3D renderings
of the vehicle's surroundings.
However, these sensors also have limitations, and cannot be used in
isolation given the detection accuracy needed for semi-autonomous and
fully autonomous vehicles. Sensor fusion software addresses this issue
by taking in and processing the data from all of the vehicle's sensors to
create a coherent view of the car's surroundings.
Interestingly, some automakers are prioritizing advanced driver
assistance rather than full autonomy. For instance, Toyota's goal is to
develop a vehicle that is "incapable of causing a crash," which suggests
a future that is not necessarily driverless.
The company's approach is to improve driver assistance systems to
monitor and augment the driver's capabilities, making the roads safer
without removing the human from behind the wheel.
19
INDUSTRIAL ROBOTICS
Robots remain crucial to automotive manufacturing as new vehicle
architectures will require higher levels of automation and flexibility.
The rate of widespread global adoption of industrial robots has
picked up notably in recent years, driven by a shift to high-mix, low-
volume production (manufacturing a large variety of products in small
quantities) and advancements in digital manufacturing technology.
The automotive sector is the largest driver of demand in industrial
robotics across industries, and it's forecasted to remain the largest
moving forward.
Source: IFR World Robotics
20
With the transition to autonomous and electric vehicles, vehicle
architectures are going to change drastically. The customization and
personalization required for new vehicle makeups will demand high
levels of flexibility on the manufacturing front.
Additionally, as automakers look to automate the final assembly line as
much as possible, industrial robots will be in high demand.
Innovations on the robotics front have made robots more useful in the
manufacturing process. Hardware improvements have enhanced robot
dexterity, and collaborative robots or cobots have the ability to work
alongside humans and augment human workflow.
GM has started using cobots in a number of its factories to operate
around human workers without relying on safety cages. These cobots
are helping workers aim headlights, calibrate radar for adaptive cruise
control, and stack spare tires, replacing previous technology that took up
much more floor space and drove up manufacturing costs.
Automated ground vehicles (AGVs) have seen a notable rise in adoption
to facilitate the flow of goods across the factory with little manpower
involved. Automakers such as BMW and GM are relying on AGVs in
their factories.
21
Tier-1 suppliers are also relying on AGVs to drive efficiencies on the
factory floor. Seating and exhaust systems supplier Faurecia has started
using AGVs and found that they helped to reduce inventory storage
space by 60%.
Source: Living Map
22
INDUSTRIAL SENSORS
As sensor prices continue to fall, the technology will remain central
to automotive manufacturing, allowing automakers to monitor the
assembly line, streamline operations, and predict costly outages
before they occur.
With connected factory equipment, manufacturers can monitor the
assembly line in real time, allowing them to improve productivity and
drive efficiencies in the production process.
The sensors that connect the factory equipment feed into a digital
ecosystem known as the Industrial Internet of Things (IIoT), which is
enabling advanced analytics and streamlining the manufacturing process.
Audi has built a "smart" factory in Mexico, where it uses radio frequency
identification devices (RFID) and smart logistics to enable coordination
throughout production. The company has started utilizing RFID solutions
in its Neckarsulm factory in Germany, which helps it to identify vehicles
at every step of the production process.
Source: Audi
23
Digital systems will also allow automakers to track components as
they move through the value chain, making it easier to identify where
quality issues arise in the production process.
BMW's Connected Supply Chain (CSC) initiative is designed around
tracking goods across the supply chain, allowing the automaker to
more quickly respond to delays and minimize costs associated with
a production slowdown.
24
AUTO E-COMMERCE
Car buying has remained a brick-and-mortar business for far longer
than the rest of retail, but advancements in imaging technology and
emerging distribution models could spark the transition to direct
online buying.
As with most other categories across retail, consumers are looking to
take the auto shopping process online. Early signs of this are already
showing up in China, the largest auto market in the world, where online
vehicle portals such as Yiche and Autohome are seeing strong demand
from consumers.
In 2014, Chinese consumers purchased and reserved 170,000 cars worth
$5B on Singles Day, the Chinese version of Cyber Monday. This number
was up substantially from 28,000 the year before. Online vehicle portals
are also working with dealerships to negotiate and contract leases.
Moving forward, the platforms are looking to get more heavily involved in
direct sales.
A number of automakers are also partnering with e-commerce sites such
as Alibaba to promote new models and launch virtual showrooms. Some
OEMs are even selling limited edition models on their websites or through
third parties such as WeChat.
In March, Ford and Alibaba unveiled a car vending machine for car
shoppers in Guangzhou. Using Alibaba's Tmall app, buyers can select a
Ford car and visit the vending machine to take the car on a three-day test
ride. Alibaba is also leveraging its user data by offering discounts and
incentives based on usage to its highly-active customers.
Experimental
25
Online-only used car dealer Carvana has pioneered the online car buying
process in the US. Users can shop, finance, and trade in cars through the
company's website, which includes 360-degree photos and virtual tours of
each vehicle. The website also features full reports and financing options
for users to browse. Users can either have their cars delivered to them, or
if they live in a city with a Carvana vending machine, they can drive the car
home from there.
Source: The Drive
26
Source: Carvana
In April, Carvana acquired Car360, a startup deploying 3D computer
vision, machine learning, and AR technology, to improve smartphone
images of cars. The acquisition was intended to help Carvana move
away from more expensive camera technology that it uses to capture
most of its images.
27
SIMULATION
Driving simulation platforms are helping autonomous vehicle
developers reduce the time and hassle associated with real-world
road testing.
Driver data or the data collected from videos recorded onboard
an autonomous car is critical in the race to develop self-driving
technology. The more data that self-driving software has to work with,
the more driving scenarios it can learn to handle, and the safer the
autonomous vehicle will be on the road.
Amassing this data is time-consuming and costly, and self-driving cars
realistically need at least several hundred million or even billions
of miles to validate their safety, according to the Rand Corporation.
This would take years to accomplish, and would hold back AV
development substantially.
A number of AV developers are increasingly relying on simulation
technology to gather additional miles that would be too time consuming
to collect on solely on public roads. Simulation is also helpful with training
autonomous vehicles for dangerous, less frequent situations, such as
blinding sun or a pedestrian jumping out from behind parked cars.
Chip manufacturer NVIDIA, which is currently supplying its GPU chip to
major automakers including Tesla, Volkswagen, Volvo, and Daimler, is on
the forefront of simulation technology.
28
NVIDIA has launched a cloud-based simulation platform called DRIVE
Constellation that runs on the company's GPUs and generates a stream
of sensor data for the autonomous systems to process. The technology
has the potential to generate billions of miles of customized scenarios
for training autonomous driving algorithms.
Other automakers are turning to startups for simulation technology.
For example, Audi signed a multi-year agreement with Israel-based
simulation platform Cognata to help speed up its autonomous vehicle
development with simulation. Cognata's platform creates virtual cities
with a range of testing scenarios to simulate real-world conditions.
Source: NVIDIA
Source: Cognata
29
WEARABLES
Given the limitations that come with complete factory automation,
automakers are testing wearable technology to augment the
capabilities of the human factory worker.
Automated technology that's improperly implemented can generate
excessive costs and quality issues. Tesla missed its Model 3 production
target in April due to excessive automation in the final stages of
assembly. Even the most advanced auto manufacturers in Germany and
Japan have scaled down automation in their factories.
Ultimately, humans provide the assembly line with a level of flexibility
and dexterity that's difficult to replicate with a machine.
Now a number of automakers are looking to enhance the capability of
human factory workers in an effort to minimize workplace injury and
increase productivity. One approach has been equipping factory workers
with wearable exoskeletons, or high-tech gear that mirrors a worker's
limbs and back to support the body during repetitive tasks.
While still relatively nascent, wearables are effectively preventing strains
and stresses for workers on the factory floor. This could ultimately help
automakers save on medical expenses, minimize sick days, and improve
productivity in their factories.
Ford is working with Ekso Bionics to test the company's upper body
suit, called the EksoVest, at 15 Ford plants. Ford ordered 75 suits for its
workers, which is the largest trial of exoskeleton technology by a single
company to-date.
30
BMW and Toyota have turned to Levitate Technologies, which has
developed an upper body exoskeleton that transfers the weight of the
arms from the shoulders, neck, and upper back to the body's core.
Source: Assembly Magazine
Source: ResearchGate
Beyond exoskeletons, automakers have started to deploy smart glasses
and smart watches on the factory floor, both of which can help train and
inform workers on the assembly line.
31
There is a notable opportunity in smart glasses, as the hardware can
be equipped with augmented reality to analyze complicated machine
environments. Glasses with computer vision software can map out a
machine's parts, similar to a real-time visual manual.
GM is currently testing the Google Glass to help train and inform workers
on the assembly line.
BMW is also utilizing data glasses and smart watches in a number of its
plants to help support its logistics staff.
Source: Google X
32
VEHICLE-TO-EVERYTHING (V2X) TECHNOLOGY
A new class of automotive sensors will allow the car to see beyond its
line of sight, a crucial capability for fully autonomous driving.
Cars rely on a vast array of sensors namely cameras, radar, and lidar
to understand their surroundings. These sensors have been critical
to developing advanced driver assistance systems (ADAS) and semi-
autonomous vehicles.
But the sensors can't detect objects outside of their line of sight.
Vehicle-to-everything (V2X) technology could solve this issue by enabling
cars to wirelessly communicate with connected devices on other cars,
pedestrians, and roadway infrastructure.
As long as the devices are connected to the same wireless network,
V2X allows cars to detect the movement of objects outside of its field of
vision, providing a layer of safety beyond traditional line of sight sensors.
Source: University of Minnesota, Duluth
33
V2X technology also encompasses vehicle-to-infrastructure (V2I)
communication, which allows cars to identify and process traffic light
signals and road signs.
Startups are using V2I communication to create software that reroutes
cars to roads with fewer traffic lights and adjusts traffic light times to
optimize traffic flow. This technology would help mitigate traffic and
minimize fuel costs for individual vehicles.
Source: Traffic Technology Today
34
Deployment of V2X is still in its very early stages. Only a small set of
corporates and startups are working on the technology, and even fewer
are starting to test it.
One of the corporates most heavily involved in the technology is
chipmaker Qualcomm. The company is working with a number of startups,
including Savari, to develop the necessary software and chipsets for
vehicles and points of infrastructure to enable V2X communication.
35
BLOCKCHAIN VERIFICATION
The lack of visibility in the automotive value chain has plagued
automakers for decades. Blockchain verification has the potential to
address this issue.
The automotive value chain is notably fragmented, as it involves
thousands of firms that are providing more than five thousand parts in
the car. The companies involved include everything from raw materials
suppliers to component makers to subassembly suppliers, with the parts
ultimately ending up at the automaker for vehicle assembly.
This fragmentation and the lack of a centralized communication system
limit end-to-end visibility for automakers, making it difficult to trace
quality issues or ensure the legitimacy of parts. This presents issues
when vehicle parts are faulty or counterfeit, as it puts the consumer's
safety at risk and can cost automakers billions of dollars associated
with recalls or other production disruptions. Counterfeit parts alone cost
automakers an estimated $45B a year.
Source: McGraw Hill
36
While still in its very early stages, automakers like Toyota are looking
to develop a blockchain verification system for the automotive supply
chain. Implementing a blockchain system would allow automakers to
prove authenticity on sourced parts and track faulty parts, which would
help prevent recalls.
A blockchain system would also create a centralized source that could
synchronize data and transactions across the thousands of companies
involved in the automotive supply chain without having to involve a
third party.
Source: Mobiliya
37
DRIVER MONITORING
Advances in computer vision and machine learning software are
enabling a new set of in-vehicle driver monitoring capabilities.
Human error causes roughly 95% of car accident fatalities in the US, and
while our future may be a driverless one, driver assistance is a priority
across the automotive space.
A number of startups and component suppliers are developing technology
that could help monitor driver behavior in real time. These companies are
deploying in-vehicle dashcams and sensors coupled with computer vision
software that can identify driver fatigue, boredom, and distraction by
analyzing the driver's eyes, head position, and upper body movements.
Source: eyeSight
38
Major automakers are investing in and partnering with driver monitoring
startups. Mack Trucks, a subsidiary of Volvo, has partnered with video
telematics startup Lytx to deploy the startup's drivecam in a number of
its models.
Hyundai has partnered with Netradyne, a computer vision startup that's
developed a driver monitoring device comprised of four cameras in the
interior and exterior of the vehicle.
Automakers are also developing their own in-vehicle sensor technology
to monitor driver behavior. BMW is now using an in-vehicle optical
camera that monitors driver eye movements in its semi-autonomous
crossover the X5.
Source: Lytx
39
FLYING ROBOTAXIS
While still a ways away from commercialization, flying taxis are set to
transform the mobility ecosystem.
Flying taxis, or vertical take-off and landing (VTOL) aircrafts, are
gaining traction as major players in aerospace and transportation are
collaborating and making aggressive bets on the technology.
Though the technology is still in its very early stages and adoption is low,
estimates suggest the market potential for autonomous electric VTOL
aircrafts could reach $1.5T by 2040, driven largely by passenger travel,
logistics, and fulfillment.
Boeing and Airbus have stepped up their activity in the space, with their
investment arms (HorizonX at Boeing and A3 at Airbus) focused on the
future of urban airspace mobility. Boeing also acquired autonomous
aviation company Aurora Flight Sciences in November 2017, and launched
a joint venture called SkyGrid with AI startup SparkCognition.
Airbus subsidiary Voom is currently testing its on-demand air taxi services
in Mexico City and Sao Paulo. Airbus is also testing an autonomous
electric flying taxi called Vahana in Silicon Valley. The company is working
with Audi on a flying taxi project in Ingolstadt, Germany, where Audi's
corporate headquarters are located.
40
In terms of commercial services, Uber's team Uber Elevate has been
vocal about UberAir, a flying taxi service that will feature a network of
electric VTOLs that can last up to 60 miles per charge cruising at up to
200 mph. The team plans to launch the service by 2020 in Dallas and Los
Angeles, and is looking to expand to another city internationally.
However, even as flying taxis gain ground, they still face a number of
roadblocks, mainly around regulation and limitations with the technology.
On the regulation front, air traffic management dedicated to flying taxis
is critical before commercial services can be offered. Boeing is currently
working with SparkCognition to design an air traffic system, though it
hasn't specified if the prototypes would be pilotless immediately.
Source: Airbus
41
Threatening
LIDAR
Once considered a costly impracticality, lidar technology is seeing
a number of improvements that are driving down costs and
increasing reliability.
One of the most advanced automotive sensors that's gained substantial
traction over the past few years is light detection and ranging (lidar),
which can render highly-accurate 3D visuals of a vehicle's surroundings.
Source: Velodyne
The technology sends pulses of laser light at a rapid rate to measure
the distance of surrounding objects, and can generate a highly-accurate
3D rendering of the car's environment. This is more advanced than
radar technology, which only detects distance and speed, and camera
technology, which is used mainly for color and font detection.
42
However, lidar's practicality has been heavily debated, as evidenced by
the surge in news mentions over the past few years.
The debate has largely been focused on cost, as some manufacturers
charge over $100,000 for a unit. Traditional lidar units contain a number
of spinning parts, designed to capture a 360 degree view of the vehicle's
surroundings; but the parts are expensive to develop, and tend to be less
reliable than stationary parts.
Adding fuel to the fire, Tesla CEO Elon Musk claimed that the technology
isn't necessary for autonomous driving technology. Musk believes that
with some modifications, radar, cameras, and ultrasonic sensors can be
designed to closely mimic the capabilities of lidar.
Still, major pioneers of autonomous driving, namely Google's Waymo, are
utilizing lidar sensors to power their self-driving systems.
A number of startups are working to improve the cost and performance
of the lidar unit with solid-state lidar, which has no moving parts, thereby
increasing reliability at a lower cost.
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Major automakers and Tier-1 suppliers such as BMW and Aptiv have
partnered with and invested in solid-state lidar startups. BMW announced
a partnership with solid-state lidar startup Innoviz in April. The startup is
also working with Tier-1 supplier Magna to deploy its lidar laser scanners
for BMW's self-driving cars.
A few auto incumbents are using lidar for advanced driver assistance systems.
On Aptiv's Q3'17 earnings call, CEO Kevin Clark stated, "Lidar is a critical
technology required for both advanced active safety and automated driving
solutions, and there's increased demand for solid-state lidar solutions as
customers seek to accelerate functionality while reducing costs."
Still, lidar technology faces a number of limitations other than cost.
Many lidar systems can be affected by inclement weather such as heavy
rain and low-hanging clouds, which obstruct light pulses.
As a result, the consensus around autonomous vehicle sensor
technology is to utilize lidar as a complement to cameras and radar. The
vehicle can then combine the data from each type of sensor together
through sensor fusion technology, or software that integrates the data
from all sensors to create one coherent view of the car's surroundings.
Source: Innoviz
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FLEXIBLE ASSEMBLY LINES
As automakers push for vehicle electrification and full autonomy, the
manufacturing process is expected to grow more complex, driving the
need for flexibility on the production line.
Autonomy, electrification, and shared mobility will require drastic
changes to a vehicle's design and component parts. Given the
uncertainty around how quickly these technologies reach commercial
scale, the most advanced automakers are aiming to have flexible
production capacity or in other words, have the capability to
manufacture different types of vehicles (e.g. internal combustion, hybrid,
and fully electric) on the same assembly line.
Automakers recognize the importance of a flexible assembly line, even
in the final stages of assembly. In a BCG survey, 90% of automakers said
that they expect a modular line setup will be relevant in final assembly
by 2030. This would involve a multidirectional assembly line layout with
smaller, more flexible lines, which would enable cost efficiencies even
with higher levels of output.
Toyota has spearheaded the flexible assembly line, developing a system
that allows it to produce different cars one after the other with no
downtime. This flexibility is critical with the next wave of automotive
manufacturing, as automakers will have to adapt quickly to new trends.
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Magna has also adopted a flexible assembly line, allowing it to produce
over 200,000 vehicles with various powertrains (i.e. conventional, hybrid,
and electric) on the same production line.
Automakers are also using automated guided vehicles (AGVs) to make
the assembly line more flexible. AGVs can replace conveyors, overhead
cranes, and other forms of built-in conveyance to facilitate adjustments
to production requirements. AGVs stand to transform the traditional
assembly line, as they can autonomously drive parts to certain work cells
as needed. They can also relay data to other vehicles.
Audi has invested in modular production startup Arculus to integrate
modular assembly into its factories. Arculus offers software and AGVs
for factory production, and is targeting car manufacturers. The company
is also working with Audi, Porsche, and Siemens.
Source: Toyota
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Source: Direct Industry
BMW has also outlined its plans for flexible production capabilities as
it plans to produce ICEs, hybrids, and electric vehicles all on the same
assembly line. Ultimately, the OEM could adapt production across the
powertrain types depending on the market.
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ONLINE AFTERMARKET
Facing disruption from e-commerce giants, aftermarket auto parts
retailers are increasingly bringing their parts offerings online.
Cars are lasting longer thanks to improvements in vehicle design.
The average age of passenger (light) vehicles in the US is gradually
ticking upward, driving demand for more frequent upkeep and more
replacement parts.
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As with the rest of retail, online aftermarket auto parts offerings are
gaining traction and taking share from brick-and-mortar parts retailers,
with the shift mainly driven by Amazon's entry to the market in January
2017. The online market for auto parts is projected to exceed $10B
within the next few years, and comprise roughly 10-15% of the overall
aftermarket in the US and in Europe by 2030.
Walmart partnered with aftermarket auto parts retailer Advance Auto
Parts in October 2018 to launch a specialty parts store on Walmart's
website, allowing Advance to leverage Walmart's store footprint and
logistics network.
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FULLY AUTONOMOUS VEHICLES
Despite a substantial market opportunity for autonomous vehicles, the
timeline for full autonomy is still unclear.
Fully autonomous vehicles are still years away from true commercial
adoption. Only a select few AV developers such as Waymo and Drive.ai
have launched commercial services, and even those services currently
still use a human backup driver.
Electrification, rather than autonomy, has become top-of-mind for
automakers in recent quarters, dominating the conversation on
earnings calls.
50
But even with hesitation surrounding the future of the technology,
automakers are still working towards full autonomy. The market is
projected to reach roughly $80B by 2025.
Investors remain confident in companies developing the full autonomous
driving stack, pouring hundreds of millions of dollars into GM's Cruise
($750M from Honda in October and $900M from SoftBank in May) and
Zoox ($500M in July).
Some applications could see earlier adoption of fully self-driving
vehicles, such as logistics and fulfillment.
Autonomous logistics specifically autonomous last-mile delivery is
top-of-mind for retailers and fulfillment companies. Self-driving vehicles
could help tackle the costly and arduous challenge of delivering goods
at the last mile, which can add up to nearly a third of the an item's total
delivery cost.
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HD MAPPING
Though still in its early stages, highly-precise digital mapping
technology will help autonomous vehicles localize themselves with
centimeter-level accuracy.
Self-driving vehicles rely on high-definition (HD) maps, which are more
precise than the digital maps used for smartphone navigation apps. HD
maps require a complete centimeter-accurate visualization of the roads,
including roadway information as specific as lane sizes, crosswalks, and
barriers all of which are critical for a self-driving vehicle to localize
itself as it moves.
Source: NVIDIA
Building such complex maps can be quite costly. The process requires
a fleet of sensor-equipped vehicles to capture roadway data, as well as
advanced infrastructure and processing capabilities.
52
A number of automakers are investing directly into mapping technology.
For example, Audi, BMW, Daimler, and Intel acquired mapping startup
HERE Maps in December 2015, with Tier-1 supplier Bosch joining in
2018. TomTom also partnered with Chinese tech giant Baidu in July
2017 to integrate its maps of the US and Western Europe with Baidu's
extensive maps of China.
Google is also making notable headway in the mapping space. Renault
secured a deal with Google in September 2018 despite being a
TomTom client. The switch was reportedly driven by Google Maps'
superior user experience. Google's self-driving arm Waymo is also
building its own HD maps using data collected by its vehicles on the road.
DeepMap has developed map-building software that it plans to license
out to automakers and AV-focused tech companies. Bosch invested in
the startup in August, joining prior investors Andreessen Horowitz and
Accel Partners.
53
Chinese search engine giant Baidu is building out HD maps for its self-
driving car software platform Apollo. The company sees an opportunity
to monetize the maps by selling them to automakers, and either charging
service fees or integrating the fees into the cost of the vehicle. Baidu
believes that its HD maps business will eventually be larger than its
search business, which is currently the largest in China.
Source: DeepMap
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Transitory
3D PRINTING
Additive manufacturing has simplified the automotive manufacturing
process for years, but deploying the technology for parts construction
or other more costly use cases will likely have limited applications.
Automakers such as Ford and BMW have been using 3D printing also
referred to as additive manufacturing for decades. The technology
has helped OEMs accelerate vehicle design and enhance quality through
rapid prototyping, allowing them to bypass the timely and costly process
of working through multiple iterations of a vehicle's design.
Accelerating product development has been the most common use case
for 3D printing, and is expected to remain the number one priority for
manufacturers for at least the next few years.
55
Connectivity, autonomy, and electrification are slated to upend traditional
vehicle design a challenge that 3D printing could help with, as it
provides automakers with the opportunity to quickly and efficiently
design, test, and validate new concepts.
3D printing is also allowing automotive companies to manufacture spare
parts, jigs, and interior elements, all of which reduce the reliance on
external vendors and can speed up the path to market.
Additive manufacturing also presents solutions for lightweighting, or using
lighter materials in an effort to maximize fuel efficiency. Lightweighting
has become a major concern for automakers as they prioritize fuel
efficiency and range length with the shift to fully electric vehicles.
Some automakers are already leveraging 3D printing technology to
print car parts, most often for luxury vehicles. BMW has been using
3D printing technology for over 25 years, and recently started utilizing
the technology to develop metal 3D-printed parts for its 2018 BMW i8
Roadster. Ford recently announced that it will be 3D printing brake parts
for its Mustang Shelby GT500.
BMW's 3D printed roof bracket for the i8 Roadster (Source: Additive Manufacturing Today)
56
NEXT GENERATION INFOTAINMENT
As automakers struggle to master the infotainment system,
companies are turning to startups and tech giants to tackle the
technology.
Advancements in in-vehicle connectivity have rendered the traditional
infotainment system obsolete. OEMs are now designing more functional
dashboards that provide more effective safety and navigation tools. With
these updates, the underlying software and hardware in the vehicle are
growing increasingly complex.
Visteon, a Tier-1 supplier of cockpit electronics, has doubled down on the
infotainment center, aiming to create a centralized platform that features
high-resolution displays and an open software platform.
Critical to the infotainment system moving forward will be the head-up
display (HUD). A future HUD could utilize augmented reality to display
driving directions for drivers, allowing them to keep their eyes on the road.
Porsche has invested in holographic AR dashboard startup WayRay,
which has developed AR software that projects images into a driver's
field of vision. WayRay is planning to bring its display technology to
market next year.
57
The infotainment market is also facing potential disruption from
Apple and Google. Many auto suppliers are choosing to partner on
infotainment systems and leverage the expertise of these tech giants,
rather than go up against them.
Both Apple and Google are offering their own in-vehicle software
systems (CarPlay for Apple and Android Auto for Google) that can
integrate their mobile interface into the infotainment system, adding
familiarity and ease to the user experience.
Because cockpit electronics suppliers such as Visteon and Faurecia
offer open source platforms, their systems are compatible with
any software, including CarPlay and Android Auto. This leaves the
compatibility decision to the automakers (i.e. whether or not to offer
Apple or Google's services).
Voice is another feature that could eventually be integral to the car's
future infotainment system. Some automakers are developing their own
voice assistants, such as BMW, while others are relying on Amazon,
Apple, and Google to deploy their voice assistants into the vehicle. A
number of OEMs have also invested in voice assistant startups: Daimler
and Hyundai invested in SoundHound; Volvo invested in Mobvoi; and
Jaguar Land Rover invested in Mycroft AI and Cloudcar.
Source: WayRay
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DIGITAL DEALERSHIPS
The car buyer's interaction with the dealership is changing as a
growing share of consumers start the buying process online.
The internet has changed the way people shop for cars. Buyers can
access extensive amounts of information about any car model from any
maker with the click of a button.
Social media, blogs, and forums are also playing an important role in the
car buyer's decision. This trend is driving fewer trips to the dealership.
When buyers do visit, they're substantially more informed than they
were in the past, and they are looking for technical experts rather than
salespeople to help them navigate options.
As a result, a number of OEMs are upgrading their dealerships with AR/VR
to provide prospective buyers with a realistic rendering of customized
vehicles and an opportunity to view their vehicles in 360 degrees. This
allows dealers to minimize the number of actual vehicles in their dealerships.
Audi and Cadillac are currently deploying virtual reality in the dealership,
allowing car buyers to view customized vehicles in 360 degrees with light
and sound effects, as well as visualizations during different conditions,
like time of day.
Cadillac's VR technology allows buyers to pick any Cadillac vehicle,
customize it, and experience a detailed walk-through in and around the
vehicle at various distances.
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AR/VR technology also enables auto OEMs to bring immersive reality
experiences to the consumer's living room, especially with the rise of
auto e-commerce.
Porsche's "Mission E Augmented Reality" app allows customers to view
the company's first electric sports car, the Porsche Mission E, and see
complex technical aspects of the new vehicle technology.
Source: VR Scout
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OEMs will also need to redesign their marketing strategies to handle
the shift to digital. Designing a mobile-oriented marketing approach is
critical, as mobile site traffic is increasingly taking share from desktop
searches. The proportion of time spent shopping for cars on mobile
devices continues to increase, reaching 33% in 2016, according to a
social media usage study by J.D. Power.
Source: Porsche
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