Autonomous cars, car sharing and electric vehicles – A connected ecosystem that could propel adoption September 2015 www.pwc.com Dr. Anand S. Rao Partner, Innovation in Analytics, PwC
Autonomous cars, car sharing and electric vehicles – A connected ecosystem that could propel adoption
September 2015
www.pwc.com
Dr. Anand S. Rao
Partner, Innovation in Analytics, PwC
PwC
Agenda
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Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Executive Summary
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Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
Mobility sharing within a household and general public will drive autonomous adoption
• Increased sharing within households (owing to lack of trip overlap) and car sharing as an alternative transportation optionswill help propel autonomous vehicles in order to realize the desired efficiencies
• As car sharing takes off, autonomous vehicles will become attractive to service providers that must maximize vehicle utilization to increase profits
Autonomous technology will enable car sharing providers to cover more demand with fewer vehicles over
• Autonomous vehicles will be able to service more daily consumer trips within a sharing economy (i.e. every autonomous vehiclewill displace 9 traditional vehicles in a sharing fleet), and this will allow service providers to increase service convenience and attractiveness at equivalent costs
Increased vehicle usage will make electric vehicles more cost effective
• Electric vehicle adoption could benefit from the synergy between decline in car ownership and increased adoption of car sharing through reduced range anxiety and increased affordability
• Autonomous technology will introduce efficiencies that will enhance the attractiveness and value proposition of electric vehicles,including lower cost electric component configuration, reduced range anxiety, and faster payback periods
Small regulatory steps changes can lead to a major impact on trips served
• Only 4 states have passed legislation to addresses autonomous vehicles while 16 are considering, and 9 have failed to pass measures1
• Even a minor policy change to allow autonomous vehicles to service short, low speed trips can result in a significant adoption
Autonomous vehicles will shift driving behaviors, enabling car sharing and electric vehicle adoption
• Access to autonomous vehicles would stimulate demand from previously mobility-impaired individuals and could lead to urban sprawl and associated increases in annual miles traveled, increasing the rate at which autonomous vehicles are scrapped
• Widespread autonomous vehicle adoption will have lasting implications on the automotive value chain and dependent industries, requiring business models to adapt
PwC
Driven by digitalization, preference for access-on-demand and the rising cost of ownership, the global market for car sharing is expected to grow at 30% per annum
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
Like auto sharing because of better pricing
Participated in Car Sharing
Providers aged 18 to 44 years
Less expensive to share than own
Sharing makes life more affordable
Like auto sharing because of more convenient access
Participated as Car Sharing providers
Providers have household income
of $25K to $75K
Owning feels like a burden
Sharing makes life more convenient and efficient
44% of US
adults are familiar with the “sharing
economy” and
19% have
participated in it
86% 83%
81% 43%
62% 40%
8% 1%
56% 28%
Efficiency
Ownership
Provider Demographic
Car Sharing Participation
Car Sharing Preference
Sources: PwC Analysis, Roland Berger (2014)
The five key sharing sectors, including Car Sharing, P2P Finance, Online Staffing, P2P Accommodation, and Music/Video Streaming have the potential to increase global revenues from $15billion now to $335 billion by 2025
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PwC
Urbanization, rising cost of car ownership, and lack of interest from millennials are driving an emerging mobility sharing market
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What is mobility sharing?
• Variations
─ Ride sharing (car owners drive others),
─ Peer to peer lending (car owners loan to others),
─ Car pooling (sharing with a pool of consumers),
─ Short term rentals (renting a street parked vehicle)
• Contracts directly with other consumers, intermediaries/brokers, or third parties that offer services
How will autonomous vehicles drive adoption?
• Better demand-supply matching
• Lower costs (no need for a ‘driver’)
• More convenience (e.g., get-off where you want to)
Car Sharing Attractiveness
Technology
Ownership CostsUrbanization
Convenience
Penetration of mobile devices and mobile coverage, and improved sensor adoption and security have created a foundation for reliable and convenient sharing
Congestion and higher car ownership costsare exposing potential owners to viable alternatives to car ownership
City congestion, traffic, limited parking, and minimal vehicle use make car ownership less convenient than public transit and other alternatives
Rising fuel prices, insurance, and parking fees in congested urban centers are making car ownership impracticalfor most urban dwellers
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
The ability to share vehicles in a pool or in a household while maintaining transportation convenience levels will make autonomous vehicles an attractive option for households and car sharing services
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Car Parc Projections for Autonomous Vehicles
Years after Introduction of Fully Autonomous Cars
Car Parc without Autonomous Adoption
Car Parc with Autonomous Adoption
What form will autonomous vehicles Take?
• Traditional cars
• Family (Luxury) Autonomous Vehicles
• Shared Autonomous Vehicles
• Pooled Shared Autonomous Vehicles
How will autonomous vehicles impact the car parc?
• On average, vehicles are only used 56 minutes (4% utilization) a day, and 83.7% of family trips do not overlap making family autonomous vehicles very attractive
• As fully autonomous vehicles reach 100% penetration, the number of cars owned per household will be reduced by nearly 50% and the total car parc will reduce by the same amount
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
http://www.driverlesstransportation.com/wp-content/uploads/2015/02/UMTRI-2015-3.pdfhttp://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/Brian_Johnson_DisruptiveMobility.072015.pdfDisruptive Mobility, Barclays Report, May 2015
PwC
Mobility sharing will increase vehicle utilization, and while the total number of vehicles in the parc will decline, sales of autonomous vehicles can recover to levels of their traditional counterparts due to higher scrap rates
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Annual Vehicles Sales Under Autonomous Vehicle Adoption
Years after Introduction of Fully Autonomous Cars
Car Without Autonomous Adoption Sales with Autonomous
and 6 year replacementSales with Autonomous and 12 year replacement
With the introduction of autonomous vehicles, car sales will drop by more than 50% upon full penetration
Increased usage per vehicle (2x the number of miles per year) will increase the scrap rate. At a 6 year scrap rate, vehicle sales can recover after full penetration
If vehicle replacement rates remain consistent with current rates (12 years), reduced sales levels will remain
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Autonomous vehicles increase the efficiency of the car share car parc, leading to lower service costs through higher utilization and increased attractiveness through higher availability
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Car Share Attractiveness
Car Share Replacement
Rate
Car Share Cost/
Convenience
Car Share Parc
Car Share Habit
Personal Car Attractiveness
Car Share Usage
Share of Tips
Car Share Car Utilization
Supply Demand
Imbalance
Car Share Availability
Autonomous Car Attractiveness
Autonomous Car TCO
Resale Values
Autonomous Tech Costs
Autonomous Car Ratio
Autonomous Perception
As more efficient cars are added to the system, car sharing services will become more convenient and attractive
Autonomous vehicles will add scale to car sharing by servicing more trips with fewer cars
Autonomous increases total utilization per car, adding minimal amount of mileage waste while increasing profitability
Autonomous sharing will cover a larger area without a tradeoff of convenience or utilization, reducing the need for a personal car
Autonomous technology will increase the viability of car sharing for most transportation needs, reducing the attractiveness of personal car ownership
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
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PwC
Autonomous vehicles are better able to match demand for vehicle usage, offer convenience that is on par with personal car ownership and making car sharing an attractive transportation alternative
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Car Sharing Share of Vehicle Trips
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Without autonomous vehicles, car sharing sees a total penetration of 1% of all vehicle trips (3 to 4 trips per month) at the end of a 30 year period
When autonomous cars are introduced, we see adoptionreach up to 25%-30% due to the increasing convenience and service attractiveness
Note: The model introduces basic assumptions regarding average vehicle cost, cost curve for autonomous technology, tradeoffs between price and convenience for transportation choice, autonomous car
efficiencies, and consumer vehicle usage behaviors. The model is calibrated to an average annual vehicle trips and miles traveled and projected monthly trips taken using traditional car sharing services of 3 to 4 trips
per month (a metric that is commonly seen in car sharing markets and through other market penetration studies)
0%
5%
10%
15%
20%
25%
30%
35%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
Traditional Car Share
Autonomous Car Share Autonomous Car Share Perception Constraint
Reducing the consumer acceptance rate by 50% significantly slows autonomous adoption, postponing car sharing adoption growth by 10 years
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Autonomous automobile adoption will help fuel the rise of car sharing adoption, generating traffic efficiencies and travel behaviors that will make alternative fuel vehicles more economically attractive
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Autonomous Car Adoption
Car Sharing Emergence
Electric Vehicle Adoption
Demand for autonomous vehicles to expand sharing
business
Improved coverage and efficiency, increasing
attractiveness
Autonomous Car and Car Sharing Synergies
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Electric Vehicle Adoption – Autonomous technology will make electric vehicles more affordable and useable, increasing attractiveness for personal car and car sharing parc replacement
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Car Share Attractiveness
Car Share Usage
Car Replacement
Rate
Car Share Convenience
Car Share Park
Car Share Habit
Range Anxiety
Increased Range
Autonomous Tech
Larger Batteries
Total Cost of Ownership
Resale Price
Personal Electric Car
ParkElectric
Attractiveness
Fully autonomous car sharing will help eliminate range anxiety as consumers will always have a fully charged car available Transportation needs can
be satisfied through a combination of personal electric cars for local trips and fully autonomous car sharing for longer trips
Electric car sharing vehicles are currently not cost effective, and range anxiety limits sharing to specific types of trips
Lower operating costs and increased utilization will introduce a shift to electric vehicles for car sharing
Autonomous technology will increase vehicle usage and introduce faster payback periods through increased usage
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
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PwC
Larger initial investments lead to higher total cost of ownership; however, autonomous technology can help speed up the payback period for electric vehicles and bring the cost per mile in line with traditional engines
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Usage
Lifetime Operating Costs
Purchase Price
Vehicle Cost
Tax Credits
Depreciation
Fuel CostInsurance Costs
Maintenance
Miles Traveled
Charging Equipment
Price Per Mile
Autonomous technology will allow cars to have smaller batteries to achieve the same rangeand may eliminate the need for in home charging, relying on shared infrastructure through autonomous charging trips instead
The payback period for higher electric vehicle costs will be reduced through the increased usage, and lower fuel and maintenance costs
Faster depreciation due to higher use can be recouped through lower fuel costs and car sharing revenue
Autonomous tech will increase the mileage per vehicle by minimizing range anxiety and increasing the number of trips taken with the car through sharing
As the price per mile decreases for electric vehicles, the attractiveness will increase
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Despite the availability of technology, declining costs, and projected efficiencies, social and legal change will present adoption barriers
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Investment Costs
Regulation
Public Trust and Perception
Reduced Transportation
Costs
Convenience and Safety
Transportation and service Efficiencies
1http://cyberlaw.stanford.edu/wiki/index.php/Automated_Driving:_Legislative_and_Regulatory_Action2http://www.nerdwallet.com/blog/insurance/2015/06/09/survey-consumer-fears-self-driving-cars/3http://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/Nov2013MORGAN-STANLEY-BLUE-PAPER-AUTONOMOUS-CARS%EF%BC%9A-SELF-DRIVING-THE-NEW-AUTO-INDUSTRY-PARADIGM.pdf
Only 4 states have passed legislation to address
autonomous vehicles; 16 are considering, and 9 have failed to pass measures1
Autonomous technology is projected to add $10,0002 to
the cost of the car; this is expected to decline to
$3,000 by 2035
46% of consumers feel that autonomous cars will not be
safe and 28% believe that they will never own one3
Autonomous cars will remove variability and
improve driving conditions
Commute times will drop due to decreasing
congestion; public transit and car sharing will cover
larger areas, increasing availability and reducing
wait times
Autonomous adoption can reduce transportation
costs of car ownership through alternative
transportation solutionsMinor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Small regulatory steps towards introduction of autonomous vehicles to roads can satisfy significant transportation demand
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Trips completed above and below 35 MPH in the US
Tr
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1 Trips under 35 MPH were assumed to be trips where the distance was less than 15 miles (NHTS). 2 Excluded trips: (a) Trips that are not part of a Metropolitan Statistical Area (MSA) in the survey data (less than 1% of miles and trips), (b) Trips to a person’s home (as these trips could not be tied to a specific trip purpose and transportation mode, they overshadow the analysis because they represent almost 40% of trips); Source: NHTS (2009).
Trips over 35MPHTrips below 35MPH
Google announced that Mountain View, CA will allow it to operate fully autonomous vehicles in 35 MPH speed zones
Applying the same to all North American cities would account for ~47% (1.75 Billion) of trips and ~28% (6.4 Billion) of miles traveled2
~50% of short trips taken around a person’s home (e.g. errands and school/daycare) are all completed with average speeds under 35 MPH1
The types of trips are ideal for shared transportation services and can significantly reduce congestion if AVs are utilized
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Autonomous vehicles will lead to increased vehicle utilization, shifting driving behaviors, cost efficiencies, and reduced road congestion that will enable car sharing and electric vehicle adoption
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Reduced car ownership
Household car ownership will fall by 43%, from 2.1 to 1.2 vehicles per household
More miles driven
Each household car will travel 76% more miles due to fall in car ownership, and shared vehicles can travel 174 miles a day to fill a greater volume of trips
Greater utilization
Shared vehicles will average 26 trips a day over 8 hours, versus 3 trips a day over 1 hour for conventional vehicles, and each family vehicle could see a 75% increase in annual trips
Shorter wait times
A fleet of shared vehicles could serve most trips within the city, with average wait time of 1 minute and no more than 4 minutes
Smaller car parc
Each shared vehicle can replace 9.3 conventional vehicles1), and one family vehicle can replace 2 conventional vehicles
Falling cost per mile
Shared vehicles can cut cost of the average tripfrom $7.80 to $1 due to automation of labor
Lower cost of ownership for electric cars
Fewer household cars, increased utilization and car sharing adoption and a low 3 cents/milecost of charging will pave the way for electric vehicles; an 8% increase in empty vehicle trips will enable cars to charge their batteries when not in use, eliminating range anxiety
1) Assuming all household trips within the city are replaced by shared vehicles; Sources: UMITRI (2015), NHTS (2009), Fagnant and Kockelman (2015), Burns et al. (2013)
Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
PwC
Widespread adoption of autonomous vehicles will have implications across the automotive value chain, on city planning and regulation
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Minor regulatory changes can drive significant adoption
Fundamental disruption in Mobility Ecosystem
Sharing economy will drive AV adoption
AVs will make car sharing more attractive
Adoption of Electric Vehicles will increase
• 40% fewer annual sales with shorter replacement cycles owing to increased utilization• Increase in vehicle configurations to cater to different mobility requirements (eg.
Family vehicles, single passenger vehicles etc.) • Shift towards supplemental revenue-generating activities, such as in-house Mobility
Sharing services, Data-driven vehicle prognostics etc.
• Shift from personal ownership to business ownership owing to decrease in family car ownership and increased adoption of shared mobility services
• Plunging cost of insurance owing to a 90% decrease in crashes• Emergence of new forms of usage-based insurance such as Pay-As-You-Drive (PAYD) and
Pay-How-You-Drive (PHYD) insurance, with coverage based on distance, mileage, and trip purpose (own versus shared ride)
• Replacement of up to 6 million professional driving jobs with autonomous driving technology
• Fully autonomous fleet and lower costs for rental car companies and Car for Hire providers such as Uber
• Increased road capacity owing to less congestion and shorter travel times • Replacement of traditional forms of public transit by autonomous vans over time • Increase in multi-modal trips • Increase in suburban sprawl due to decreased range anxiety
• Legalizing use of autonomous driving technology in46 states and updating current laws• Tracking the evolution of autonomous technology and legislating accordingly while
maintaining technology neutrality
Auto Manufacturers
Insurance
Mobility Service Providers
City Planning
Regulators
Auto Sales and Distribution
Industry Implication
For additional information contact
Dr. Anand S RaoEmail: [email protected]: AnandSRao
Dr. Anand S Rao [email protected]
Dr. Mark [email protected]
Joseph D [email protected]
Aparajita [email protected]
Authors