Ride Hailing and Autonomous Taxis – The world of Billions

Interesting headlines crossed the wire today and most belonged to the intersection of ride hailing, autonomous taxis and importantly auto OEMs investments in these areas. From Toyota’s investment into Uber and a lease agreement to Volkswagen pumping in $300 million in Gett (Uber rival) to autonomous taxi start up nuTonomy raising $16 million and GM’s car sharing service Maven crossing a million miles, the story is all about new mobility products and how concepts like automated driving is impacting these new business models and partnerships.

Three things are fast becoming a reality

• Autonomous taxis despite no real evidence in terms of consumer acceptance might appear first before actual fully self-driving cars. The driving environment that these taxi startups are targeting and cities are tough to ascertain but nuTonomy, Zoox and even Google might be the early starters on this market. One finding from a consumer survey we did in the US very recently is that over 48% of customers across age groups in the US are averse to an idea of self-driving taxis and that opinion is largely driven by women customers. nuTonomy has an aggressive timeline of introducing a self-driving taxi by 2018 but given the investment from Singapore and the overall approach from the government there it might even be the first recipient of these taxi schemes. GM also announced a similar initiative with Lyft and spy pictures of a Bolt EV being tested by Lyft folks in San Francisco is already doing the rounds in internet.
• Despite the nascent development of alternative mobility schemes, auto OEMs are very hard at work promoting the smaller victories. Toyota’s strategic investment into Uber could be seen as an alternative market that Toyota sells into (instead of selling into the rental space that many OEMs are cutting down in the US) and ultimately apply technology or enable Uber to ramp up its technology efforts around autonomous driving given Toyota research institute’s AI research in this area. It is a win-win for both companies and the clear threat I see from all of this is the future of the classic car rental space (maybe Austin will save this market). GM is taking its Maven two way car sharing service beyond New York and Ann Arbor Michigan into Chicago, Boston and Washington DC and already claims that members have driven over a million miles. Interesting points include over 1500 members in Ann Arbor Michigan (founding location), Volt being the most popular vehicle (music to GM ears with the Bolt coming in with a much higher driving range) and growing popularity of the Express Drive program with Lyft. Ford is also rumored to have launched the exciting FordPass solution. The big takeaway here is the scale of stuff GM is trying to pull off which seems much bigger than what anyone else is trying to do. There is also a p2p car sharing pilot running in Warren campus of GM and a campus car sharing service in Brazil HQ.
• Ride hailing despite all the legal hurdles is becoming the battle ground for investments and expansions. Austin took a medieval step by banning Uber and now a nonprofit RideAustin service has emerged operating only in the city. Elsewhere Uber and Didi are continually engaged in a cash war to conquer the Chinese market and Gett the Israeli Uber competitor has gotten $300 million funding from VW that is desperately trying to move on from the dieselgate scandal and establish itself as a mobility leader. Ultimately the winner in this space will be the one with the widest city operations and a multitude of business models and offerings but with the way things are going on between Lyft and US’s biggest volume OEM GM, Lyft might end up leading the second phase of this market that might be dominated by autonomous capabilities.

And elsewhere Google also made some interesting and important announcements last week at its I/O conference. One smart move from Google at the I/O this year was the announcement that Android Auto will now be available as an App. The key difference is that previously Android Auto was dependent on the car model (loaded with the API for Android Auto) and a compatible Android phone. This caused confusion for a lot of OEMs in terms of what version of Android would support and how powerful that phone needed to be in order to make it a seamless experience in the car head unit. With the announcement of bringing Android Auto as an app that still has the same UI and voice-dependent operation to keep it non-distractive Google has played it smart.

The other big element is the growing number of apps there and most importantly the Waze app integration that was announced. Waze was acquired by Google a couple of years ago for a Billion dollars and this is the first time we have seen them directly integrate it in their platform. Waze is a hugely popular app in US, Brazil and many key markets for the speed camera, traffic alert function and the way it collects crowdsourced information which is deemed almost real-time and far more accurate. This should be interesting.

Details on whether the app will be a paid one and what handsets it will support are yet to emerge but the negative to this is would OEMs still want to focus on this from a head unit perspective since the effort just started from 2015. Our forecasts were to see about 40 or more models in 2016 supporting Android Auto and I guess that will go as per plan but given that a few OEMs like Porsche and Toyota have rejected Android Auto because of Google's data requirements and the new mobile app experience might allow OEMs to just improve that embedded connected navigation experience. So in effect a key takeaway could be that this is the chance for OEMs to improve the native system in the vehicle and make that experience far more contextual. Given that Apple has also been slow to innovate on Carplay and they are not showing signs of adding TomTom Traffic data, etc. these two solutions for smartphone integration might become very basic stuff allowing OEMs to push the pedal on embedded nav experience.

The major missing element was around their self-driving car project where nothing concrete was mentioned. But a few days after the I/O Google has been very vocal in saying that FCA might not be their first commercial customer and the Pacifica project is just a pilot and they are not sharing their full technology on that vehicle. Google still maintains that they will not build their own cars and look for OEM partnerships. One key conclusion here is that some of the slower OEMs (who have not invested much in Autonomous research like FCA, Mazda) could go after Google as a partner because of the readymade end to end solution that they offer. But the added cost and where it fits in their overall product plan is still to be uncovered.

I hate to finish the blog on this note but in reality the automotive space that was dominated by car and engine announcements a few years back is now increasingly dominated by announcements from technology companies in not-so traditional battlegrounds. Interesting times indeed!