Sustainable Heroes III
Larry Burns is a transportation & mobility expert, former General Motors Corporate Vice President of Research & Development and Planning, Waymo Advisor, and author of Autonomy: The Quest to Build the Driverless Car and How it Will Reshape Our World.
You have traversed from the upper echelons of a global icon like General Motors (“GM”), where you worked from 1978 to 2009, to been involved with leading advanced mobility companies like Waymo. What do you think about the disruption occurring in transportation?
I think it is very exciting and inevitable. For the first time since Karl Benz invented the automobile in 1886, we’ve seen a convergence of technology and business models that promise better mobility experiences with radically lower consumer and societal cost. Autonomous electric vehicles used in transportation services give rise to the “age of automobility”. This once-in-a-century transformation will eliminate over 90% of roadway fatalities, provide better access to people who cannot otherwise drive, improve the walkability of cities, and lead to sustainable mobility. The biggest risk lies in not realizing its full potential as soon as possible.
Incumbent auto OEMs are playing catch-up on driverless car technologies to compete with Waymo, on EVs to compete with Tesla, and on transportation services to compete with Uber. Many have increased investment in innovation and industry partnerships. Do you think they’re equipped to succeed?
Auto companies face some big challenges. They have to generate enough cash to keep their legacy businesses vibrant and also position for a future based on driverless electric vehicles used in transportation services. This future is very different from developing, manufacturing and selling human driven combustion vehicles through dealer networks. It requires new capabilities that are not core to traditional auto companies and obsoletes much of their installed base. The vehicle itself will be commoditized and the value creating experience will be in the autonomous driving system and the capabilities of the transportation service companies.
Autonomy focuses on the “quest” to build the driverless car, not the “race”. A quest is a long and arduous journey. Transitioning to the “age of automobility” is like running a marathon, not a sprint, and we are still far from the finish line. So, it’s hard to predict which auto companies will have the ability to stay in the quest. With that said, new mobility players like Alphabet, Apple and Amazon have market caps approaching $1tn whereas the market caps of auto companies range from $50bn to $200bn. And, the tech companies do not have legacy costs tied to the historical auto industry. Auto companies simply don’t have the same fire- power as the new players.
How will the “age of automobility” impact auto jobs?
Shedding unnecessary plants and resources will be necessary to stay in the game. GM’s recent announced plant idlings and staff reductions are the mere tip of the iceberg. Within five years, all the forces that spell the demise of the auto industry as we know it today could converge and start to scale rapidly. Many more thousands of existing auto job cuts could result.
New transportation service companies will focus on minimizing their fleet vehicles’ operating cost per mile. Trading human drivers for autonomous software reduces operating costs. Similarly, electric vehicles are cheaper to operate than their gas-powered counterparts. And because 80% of the car trips Americans make have only one or two occupants, the vehicles can be tailored to be much smaller and lighter. All of these factors together mean transportation service vehicles will have far fewer parts and be much simpler to develop and build. Consequently, the OEMs will require far fewer salaried and hourly workers, and plants. The jobs impact is further compounded by the fact that transportation service vehicles will likely last twice as long (in miles) as today’s vehicles, reducing the number required to serve America’s travel needs.
How would you explain the success of Tesla?
Tesla has done a great job using new technology and design innovation to create a compelling experience for its targeted customers. The Model S is an outstanding premium car in terms of technology, styling and interior packaging. And Tesla owners love the experience they have with the brand. Tesla truly hit the sweet spot with the Model S for luxury buyers who are passionate about the environment and have the means to act on this passion. Tesla’s success will continue if it can translate this formula to the Model 3 sedan at a much lower price point in a market that has trended toward crossover SUVs. Elon Musk’s unmatched marketing prowess also helps a lot.
Are the OEMs all-in on electrification, or are they managing investors?
Both. OEMs must be strongly committed to an EV future and several are committing significant resources to EV platforms and portfolios. But, to say auto OEMs are all-in on electrification is unrealistic.
Fundamentally, an electric vehicle (EV) is just easier to design and engineer. That’s what is driving this tipping point. One might like to believe that the auto companies are committing to EVs because of their concern about climate change, oil dependence and air pollution. While there may be some truth to this, it is becoming easier to design, engineer and manufacture EVs than combustion vehicles with mechanical drive, exhaust systems and transmissions. Einstein said “the best design is the simplest one that works”, and that is what we’ve landed on now that batteries and fuel cells are becoming commercially viable for automobiles.
The profit driver of the U.S. auto industry has been large pick-ups and SUVs. To convince yourself that these vehicles will all be electric is still a bit of a stretch, despite Rivian’s, a Michigan-based electric pick-up company, impressive concept. It’s really hard to displace a combustion engine when it comes to the duty cycle of these larger vehicles.
Bloomberg New Energy Finance (BNEF) predicts half of global auto sales will be EVs within 20 years. Will one technology rule, or do you still see life in the parallel development of alternative propulsion sources, such as hydrogen fuel cells?
“Fuel cell” makes people think of something quite different than a battery. In fact, it’s just a hydrogen battery. Yes, it requires a different supply system than electricity, but the internal workings of the vehicle are very similar. In addition, hydrogen can be made from electricity and vice versa, so they are synergistic energy carriers. Germany is now running trains on hydrogen using fuel cells and Anheuser-Busch has placed an order for 800 hydrogen-powered semi-trucks for beer delivery. I’ll drink to that!
Hydrogen will play well when you need much longer range or much faster refueling, and it can be made from several different sources, many of them renewable.
What is driving consumer interest in EVs?
The experience. It’s no secret that they’re fun to drive (instantaneous torque), quiet and allow better overall vehicle design.
When you marry EVs with autonomous vehicles (AVs) in transportation services, the negatives of owning and operating a car can be eliminated. For over a century, the auto industry has assumed people are willing to shop for a car, purchase financing and insurance, spend their time driving, look for parking, stop to pump and buy gas and maintain their car. Why would I put up with all of these hassles if there was a better and more affordable way to get from Point A to Point B, and I could use my time as I please when I’m in the vehicle?
What is China doing, and who’s ahead in autonomous network technology?
Given the rate at which China’s economy is growing and the corresponding urbanization, air pollution, and mixing of cars with pedestrians and bicycles, China should lead the mobility revolution, and they are positioning to do just that. By the nature of their government, they can set targets and drive the transformation in a much more top-down way.
The last vehicle concept I worked on in China, the EN-V, was featured at the World Expo in Shanghai in 2010. Our analysis found that if things continued the way they had for the previous 10 years, 80% of the land in Shanghai would wind up covered in cars by 2030.
Right now, the U.S. leads with AV and EV technology. But China definitely could sprint ahead with deployment.
The fundamentals of car design remain the same in current EVs, except for the drivetrain. Are they the endgame or merely a step in the right direction?
When you get to a world of autonomous electric vehicles and you’re providing a transportation service, you can tailor-design the vehicle around the trips people make. On one extreme, vehicles can be much smaller and lighter for typical everyday trips. On another extreme, vehicles could become driverless hotel rooms that takes us between cities at night for a business meeting the next day.
We’ll see a wide range of design innovation. It won’t be cars as we know them, just with a different propulsion system. Tesla took an important step by using a “skateboard” platform.
There has never been a more exciting time for experience designers focused on the “age of automobility”.
In your book, you portray these bold innovators. Yet, small-scale commercial launches of autonomous cars are just beginning in a handful of markets, and driving is such a deeply ingrained habit. How do you see the challenges being resolved?
Autonomous driving will have big impacts on a lot of people in industries closely related to the conventional roadway system. I wrote Autonomy for a mainstream audience to create collective will which comes from common understanding. If we can get to the end goal even one day sooner, we can save 3,000 lives. The biggest risk in my mind is not getting there soon enough.
One of the biggest challenges is people reaching premature judgment about the technology. When you get a chance to ride in in an autonomous vehicle, your whole view changes.
I also worry about the players who have a strong vested interest in the century-old transportation system. The wealth of some nations, like Saudi Arabia, will depend a lot on the long-term price of a barrel of oil. They’ll find a way to push back. It could also come from unions, trying to push back on jobs. However, there are enormous societal and consumer benefits and business opportunities tied to the “age of automobility”. Hopefully the pushback from vested interests won’t slow us down much, because the benefits and opportunities are so profound.
Will ridesharing come first, since the driver is the biggest cost factor in this business model and the profitability of these companies is low to nonexistent as it is?
Two things my parents taught me growing up were don’t play with matches and never get in a car with a stranger. The Uber business model is based on the latter. If Uber and Lyft truly have a pathway to the world’s best autonomous driving systems, they will do very well in an autonomous future. However, it will take a while to get to every market in the U.S., so AVs at first will be codependent on other methods of transportation.
A decade ago, you were among GM’s top executives. Now you’re an author, thought-leader, board member and consultant. What advice do you have for other senior executives embarking on becoming a part of the sustainable transition?
I was 58 years old when GM went bankrupt. I still had a lot of energy and wanted to continue to work. But, I was very concerned that I would be branded with a scarlet letter “B” for bankrupt executive. This proved not to be the case. In fact, one of the first people to proactively reach out to me was Jeff from Greentech. John Hess, CEO of energy company Hess Corporation, also reached out, as did Columbia University, the University of Michigan and Google Self-Driving Cars. Within a year I had eight retainer-based jobs.
Play to your strengths and commit yourself to things you’re really interested in. There are great opportunities out there.
Once you clearly envision a sustainable future, you can see appalling waste in the historical roadway system: wasted lives, wasted material, wasted parts, wasted labor, wasted driver time, wasted land and wasted energy. It’s unquestionably unsustainable. Fortunately, the “age of automobility” offers a sustainable and exciting mobility future…one we can scale based on natural market forces not subsidies.
What do you see coming in the “last mile”?
Autonomous vehicles are synergistic with e-commerce. They will reduce the cost of delivering packages to your door. In fact, this could be one of the first major markets for AVs. Packages usually weigh less than a few pounds so we can tailor the design the vehicle to the size of pack- ages. Also, delivery routes with an autonomous vehicle no longer have to be the fastest ones, as we don’t have to account for labor costs. We can hence avoid driving in certain areas, like school zones.
Who is your sustainable hero and why?
Jeff Sachs, economist, public policy analyst, and former director of the Earth Institute at Columbia University, where he holds the title of University Professor, the highest rank Columbia bestows on its faculty. Through the Earth Institute and United Nations, Jeff has worked tirelessly to help create a sustainable future. He was the catalyst for my 2010-2013 Earth Institute research on sustainable mobility and the results of this program were instrumental in framing the “age of automobility”.
About Sustainable Heroes
Join us on a journey into the hearts and minds of some of today’s greatest heroes, who have dedicated themselves to positively impact tomorrow’s world. We invite you to explore with us what makes these heroes tick, what drives them to overcome arduous trials and immense challenges, known and unknown.
In this issue, we pay homage to a leaders in renewable energy, a transportation and mobility expert, a sustainable nonprofit director and an open seas explorer – all of whom share the goal of creating a sustainable world that is more resilient as well as financially stable.
We encourage you on your own quest for ways to innovate, embrace sustainability and do the right thing. Become a heroine or hero to others and help us together solve the problems threatening our very survival. To each of you heroes and heroines, there is a brighter, more sustainable future that we can build together for future generations.
We welcome nominations for people you’d like to see featured in future editions. Please send your nominations and other comments to anikolausson@ greentechcapital.com.