With the support of Silicon Valley Bank and Wilson Sonsini Goodrich & Rosati, CTG convened our most recent Power Breakfast last
week in San Francisco. More than fifty individuals representing major corporations, investors, start-ups, and other transportation industry stakeholders made their way to WSGR’s One Market offices – which overlook the daily traffic nightmare that is the Bay Bridge morning commute – under the following banner:
When electric vehicles are producing half the emissions of internal combustion engine (ICE) vehicles on highways where eighty percent of seats remain empty, in an era when more people live in cities than in rural areas for the first time in history, and at a time when ownership models are giving way to the sharing economy, is the trend of digitization in the transportation industry going to bring us greater efficiency, lower emissions, and better quality of life?
While we maintain a policy of not attributing any quotes or information to any of our conversation starters or attendees of Power Breakfasts, we wanted to share some paraphrased remarks and themes discussed for the benefit of our broader network:
“ACES” and the transportation-electricity grid nexus
The “ACES” (autonomous, connected, electric, and shared) concept for vehicles, originally introduced by Dr. Stefan Heck of Stanford University and co-founder of the start-up Nauto, sits squarely in our conversation of digitization and the potential gains it could bring.
In the future envisioned by the ACES transformation, fewer lower-emission vehicles could serve the needs of growing urban populations – and the key is that these forces are complementary. For instance, “autonomous” plays well with “electric” because both lend themselves to localized fleet applications. Further, the internal combustion engine is not well suited to autonomy. And finally, because autonomy takes the labor cost out of the equation, it makes for a lower cost to adopt. (Editor’s note: the labor implications were discussed in more depth – read on below.)
The prospect of vehicle-to-grid energy storage benefits (V2G) are also reinvigorated by the ACES transformation. The Tesla perspective in 2005-2006 of a half-million cars by 2010 did not materialize and, ultimately, scale matters for V2G. That scale is now catching up with wider EV adoption, generally, but the flame is really fanned by the prospect of autonomous, electric fleets, which would present a great, more predictable aggregate resource to utilities. More serious conversations about V2G make sense, particularly in light of broader acceptance in the utility industry of distributed energy resources (DERs).
For a good contrarian perspective regarding scale, however, focus more closely on the demand. Some within the industry – who are equally champions of this transformation – believe that current forecasted EV adoption curves are outlandish. They’re likely to be ‘up-and-to-the-right,’ sure, but the demand isn’t as strong as forecast and fluctuates with the oil price. SUVs are coming back.
Finally, the grid needs significant updating in order to accommodate V2G, yet is constrained by regulated market pricing. That unwillingness to invest is not likely to change as the pain point just isn’t there – the grid [in the United States] works. But a big infrastructure plan in the US, particularly with borrowing rates at historic lows, should be in the cards.
Digitization: Unbending force for good, or dubious trend?
V2G ended up being a great example within a broader ‘resiliency’ concept discussed at length during the session:
Optimization and efficiency don’t always bring the gains we expect. By innovating around efficiency, are we making transportation systems less resilient? Uber – autonomous or not – doesn’t change the physics. We can reduce the mode from ten-thousand people in ten-thousand cars to 5 trains… it’s still a challenging equation and one that does not lend itself easily to resilient solutions. So, any optimization or more efficient solution we’re trying to implement needs to start with resiliency. Similarly, with V2G, we could make the grid very resilient, or more fragile with V2G.
Accommodation of new technology vs. Accommodation of existing infrastructure and urban life
Many innovators seem to be asking how cities are going to change to accommodate the autonomous vehicle, but should the question be turned around? Is the vehicle is going to accommodate cities?
It’s about confidence and convenience. Can I be confident that my mobility path is going to be what was promised to me? I don’t want to get caught/stuck/encounter hiccups. As soon as that happens 2-3 times… potential efficiency/emissions gains won’t matter. Most critically, consumers need to be able to have confidence in time accuracy and having flexible options.
Designers need to think more in terms of necessary time vs. optional time, a framework common to the urban design industry. ‘Necessary time’ is time spent doing things we must do, whereas ‘optional time’ is time spent at our discretion. A key difference-maker in quality of life in Denmark versus the US was more optional time – and less time spent commuting can optimize for that.
In some cases the sharing economy can displace existing mass transit, whereas in some cases it can complement. Lyft is having these conversations with cities today. Mass transit is likely to stick around and be a big part of the portfolio.
Autonomy and jobs
Vehicle autonomy, whether it’s exhibited in long-haul trucks or urban ride-share fleets, brings up the question of human labor that is eventually meant to be displaced:
There’s always been obsolescence brought by technology in the last millennium. From a public policy standpoint, retraining is appropriate and it’s incumbent on us to make sure that it’s happening. This is an important societal and ethical question. It is generally not a company’s problem – they are and should be answerable to their shareholders. Rather, it’s a societal and ethical question.
In the 1980s a good UAW (United Auto Workers – an influential US labor union) job was ushering cars into position on the manufacturing line. Now all of that is automated. Meanwhile, there are several open CNC machinist positions, but people need to be trained for those. The question, ultimately, should be: Are truck driving or Uber-driving the jobs of tomorrow or most fulfilling? Probably not.
A big thank you to our three conversation starters, who helped us get discussions going, but to whom, again, none of the above is attributed:
Beaudry Kock is the Director for Smart Infrastructure Planning with Ford Smart Mobility where he leads product research and development on a variety of multimodal transportation technologies and services. Prior to Ford Beaudry worked with start-ups including RideScout and PlugShare. Among other degrees, he holds a PhD in urban and regional planning.
Dave Lyons was an alumnus of Tesla & Ideo by the time he co-founded Peloton Technology, a start-up developing DSRC radio systems that put long haul trucks into communication with one another, enabling degrees of vehicle autonomy. Its first target is improved safety, while fuel savings from platooning (basically a form of drafting like that employed by racecar drivers, enabled by cooperative cruise control) are a great tandem benefit.
Chris Thomas is a founding partner with Fontinalis Partners, a Detroit-based venture capital firm focused exclusively on the transportation and mobility sector. Chris, an alumnus of Ford Motor Company, serves on the boards of Fontinalis portfolio companies including nuTonomy and Karamba Security. He’s also a member of our Global Cleantech 100 Expert Panel.
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