Greentech Annual Report - Advanced Mobility - Duncan Williams

Year in Review - 2017


Advanced Mobility


The breakneck speed of EV and AV technology development has captivated the attention of everyone, from traditional automobile manufacturers and suppliers, to capital markets and consumers.

It is evident that whoever collects and analyzes the data most efficiently or provides that data to other participants in a valuable format will win.

Mobility-as-a-Service (“MaaS”), an emerging and accelerating trend, presents a highly visible market opportunity which many players are only beginning to understand. In its most basic sense, MaaS is a shift away from traditional personal transportation – buying a car to get from point A to point B – to a shared services ecosystem where you only pay for what you consume. The opportunity for users of services, whether consumers, enterprises or public entities to request services on an on-demand basis in the same way as they have been recently using ride-sharing services, like Uber and Lyft, is having a dramatic shift on how we buy those services, our brand loyalty and our expectations. Companies across sectors ranging from energy, telecom, and industrials, as well as automobile and transportation, recognize the need to change and, in many cases, completely reinvent their business models. Participants in the mobility market are most directly impacted in the near term. Funding of innovation in the Advanced Mobility sector clearly reflects market understanding that providing services will be the key battleground.

Global venture funding grew 49% from $110 billion in 2016 to $164 billion in 2017, with VC funding for advanced mobility companies nearly quadrupling from $6 billion to $23 billion. Notably, software and services focused mobility companies received ~75% of the $23 billion. While ride-hailing startups like Didi Chuxing, Grab, Lyft, and Via received the bulk of this capital, there is an exciting wave of new companies supporting the back-end infrastructure of new Mobility. The reason this proposition is so compelling, for such a wide variety of industries, is that the end goal is one where shared transportation services fill the majority of the transportation needs for individuals and not the minority as it currently does. In the U.S. alone, there are over 3 trillion person vehicle miles driven annually and approximately 2.3 billion long-distance trips. Currently, owning a car costs anywhere from 50 to 80 cents per mile. As autonomous MaaS services pick up and vehicle costs per mile drop to below 50 cents (some projections anticipate it dropping to 10-15 cents), the total addressable market for MaaS will skyrocket to $7 trillion dollars by 2050. This market will be highly concentrated, especially at the outset, in Tier 1 cities which have the scale and resources to be early movers. With this need for scale, one of the key factors that will drive down the cost per mile of vehicle travel is increasing utilization of the vehicles themselves, which are only available in the largest, densely populated urban environments.

While technologies are available to support Level 4 AV, Greentech believes there are three key factors which, alongside regulatory and safety considerations, will drive the timing and success of actual mass AV roll out. Firstly, the operational details of how AV infrastructure will work on a practical day-to-day basis is currently being assessed. Finding a solution to both the anticipation and optimization of the timing for vehicle maintenance (e.g. predicting a flat before it happens, opportunistically charging, and having a network of car detailing providers) is a highly complex logistical algorithm. This is the “messy middle” of the infrastructure system.

Secondly, we believe that “data is the new oil”, given the economic moat and competitive advantage companies can wield by having the best data. AVs need to be fed a continuous stream of accurate, rich, real-time information regarding traffic, weather, pedestrians, and other vehicles to properly adapt to constantly evolving conditions. In November 2017, Waymo reported that it had logged 4 million self-driven miles in the real world. Yet that pales in comparison to the ~10 million virtual miles Waymo simulations log each day. There are a lot of established companies which have significantly more data from their long operating history (as OEMs, fleet management companies, and insurers) but the key will be to gather this data and provide actionable intelligence to the various participants in the ecosystem.

While AVs are new, a lot of these data collection engines have been in place for decades. Intelligent Transport Systems (“ITS”) have been providing traffic and congestion information to transportation departments, and Telematics companies have been assisting in fleet optimization and driver safety for decades. Both of these historic “old school” players in the auto industry have found new life – and competition – as their decades of data and millions of tracked vehicle miles become an invaluable data set for the development of AVs. It is evident that whoever collects and analyzes the data most efficiently or provides that data to other participants in a valuable format will win.

Thirdly, fleet management and maintenance of these future AVs will be key. One cannot expect all 250 million+ cars and trucks in the U.S. to exit consumer ownership and enter the hands of fleet managers, but there will still need to be companies that manage the tens of millions of vehicles that will be added to the road for autonomous MaaS providers. Absent human presence in the vehicle, a different system and infrastructure for ensuring the safety of these vehicles on the road, and thereby maximizing utilization, will need to be developed and implemented. Existing infrastructure (car parks, gasoline stations, garages) can be repurposed.

Perhaps the most exciting and globally impactful outcome of mass EV/AV adoption is the energy efficiency and sustainability benefits that will come with it. Currently, only 12 – 30% of the energy in fuel is utilized to actually move the vehicle. The rest powers accessories and is lost to engine and drivetrain inefficiencies. Cars are parked more than 90% of the time and there are over 3 parking spaces per vehicle in the U.S. alone. The internal combustion engine is going to become obsolete, street parking will become largely unnecessary, and gas stations will become charging points / maintenance stops, and electric engines will use their “fuel” more efficiently. The Advanced Mobility age is here and with it comes a reimagining of our cities and entire transportation infrastructure.


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