Auto Revolution July 2011
Automotive transportation is straining under a number of external forces. Environmental issues, changes in the economic climate, developments in automotive technologies, digital applications' entering cockpits, proceeding globalization, and demographic shifts are all driving changes shaping the economic landscape for transportation products and services.
Electric vehicles are almost a commercial reality, urbanization is changing the way we travel, Western tastes no longer dominate the design of vehicles, leasing and sharing schemes are becoming more popular, and the difference between cars and IT devices is growing smaller.
Electric cars, electric motorcycles, and electric delivery vehicles are starting to emerge as commercially viable forms of transport. Three of the largest global carmakers—General Motors (Detroit, Michigan), Nissan (Yokohama, Japan), and PSA Peugeot Citroën (Paris, France)—plan to produce volume electric vehicles (EVs) by the end of 2011. A previous Scan™ article, "Urbanization and Transportation," discusses how external stakeholders are already developing infrastructures and services for EVs. In June 2010, Madrid, Spain, started converting public phone booths into recharging points for electric cars, and London's citywide EV-charging network—Source London—is due for launch in 2011. Honda (Tokyo, Japan) has announced that it will lease electric scooters in Japan, targeting delivery services. In September 2010, automotive player Daimler (Stuttgart, Germany) also announced the development of an electric scooter. And commercial vehicles are changing too: In 2010, Modec (Coventry, England), a manufacturer of delivery EVs, entered into a joint venture with Navistar International (Chicago, Illinois), a large commercial-truck manufacturer, to produce vehicles for North American and South American markets.
Urbanization is changing the way we travel. "Urbanization and Transportation" also highlights increasing differences between the requirements of urban transport and those of extraurban transport. Urbanization is at the very epicenter of changes in mobility—as some of the above developments already highlight. In 2009, Renault (Boulogne-Billancourt, France) showcased a concept EV, the Twizy, and it plans to put a commercial version into production in 2012. Importantly, the Twizy appears to be entirely for city use, with convenience and performance seemingly acceptable in an urban-only environment. As cities become more populous, congestion is likely to become increasingly problematic, driving the adoption of some radical solutions in public transportation. In 2010, a Chinese designer proposed a novel bus design to tackle China's increasing transportation problems: The bus is as wide as two lanes of traffic, can straddle two lanes, and features an elevated passenger cabin, so that cars can still occupy the road beneath.
Transportation and electronic applications are merging. Another previous Scan article, "Transforming the Automotive Industry's Reach," notes how information technology (IT) has become substantially integrated in transportation solutions. Drivers can connect their mobile devices to their car, access Wi-Fi networks, and interact with new interface technologies. According to market-research firm iSuppli (El Segundo, California), approximately 25% of cars will connect to the internet in five years. Future developments could be even more radical: David Evans, resident futurist with Cisco Systems (San Jose, California), argues that "cars are just one of the smart and connected machines that people will use to navigate through a deluge of digital information and choices" (San Jose Mercury News, 14 August 2010). Nissan has an equally ambitious view of future automotive solutions, mixing the car as part of a transportation solution with aspects of appliances and IT. A previous Scan article, "Redefining Cars," notes Google (Mountain View, California) is working on autonomously driving cars and tested prototypes in the streets of California in late 2010. But threats do exist, and the integration of IT is becoming so pervasive that car manufacturers will have to become mindful of firmware and car-hacking threats. The previous Scan article, "From Carjacking to Car Hacking," highlights hackers' capability to attack cars now, similar to their hacking computers or laptops. Indeed, researchers from the University of California, San Diego, and the University of Washington in Seattle demonstrated hacking into a vehicle, preventing the car's brakes from working, sending false information to displays, and locking passengers in the car. In the future, a market for firewalls and antivirus software for cars could develop.
Emerging economies are changing transportation. "Transforming the Automotive Industry's Reach," mentions that Western tastes have traditionally dominated car design and features. One of the most prominent effects of China's eclipsing the United States as the world's largest market for cars is what Advertising Age refers to as the "Chinafication" of the global car market ("U.S. Automakers Embrace 'Chinafication' of Global Market," 2 May 2010). Premium car companies such as BMW (Munich, Germany) and Mercedes-Benz (a division of Daimler) have already adjusted their product lines to fit Chinese tastes.
The concept of vehicle ownership is changing. Some car companies are changing into service providers; the automobile industry has begun evolving from the twentieth-century business of just making and selling cars. Rental and car-sharing schemes are already becoming more popular. Market-research company Frost & Sullivan (San Antonio, Texas) predicts that the number of people using pay-as-you-go car-sharing services will reach 4.4 million in North America and 5.5 million in Europe by 2016. And several car manufacturers are already expanding their reach in the service industry. Peugeot aims to expand its European Mu pay-as-you-go car-hire scheme, currently up and running in Paris, France; Berlin, Germany; Madrid, Spain; and London, England. Daimler is in discussions with ten cities in Europe, the United States, and Canada about a similar scheme. And BMW may not make its upcoming MegaCity EV available for sale to consumers at all. According to Ian Robertson, head of BMW's sales and marketing, "We don't want to sell the car, but rather the use of the car" ("BMW May Only Make MegaCity EV Available via Lease," Automotive.com, 7 February 2011).
In summary, electric vehicles are almost a commercial reality, urbanization is changing the way we travel, Western tastes no longer dominate the design of vehicles, leasing and sharing schemes are becoming more popular, and the difference between cars and IT devices is growing smaller. Signs suggest that automotive transportation is entering a metaphorical tunnel, and it could emerge a very different beast. Welcome to the new world of transportation.