Baby, We Won’t Drive Our Cars: The Future Of Automotive Transportation

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Phil Carter

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Earlier this summer, Trinity had the pleasure of hosting a Transportation Tech dinner with some of the brightest minds in the space, including Uber’s lead data scientist, Lyft’s leader of operations strategy, RelayRides’ head of marketing, and the CEOs of ZIRX, MileIQ, Chariot, and Automatic.

While the conversation led to many interesting conclusions, the discussion can be summed up in large part by one unifying insight:

“Transportation tech is not only changing how we get from A to B, it’s fundamentally altering the underlying infrastructure of our cities.”

This observation led to several bold predictions on what the future of transportation holds in store.  Here’s a list of the Top 5:

  • Uber will eventually build a centrally-controlled, all-electric, autonomous vehicle fleet
  • New modes of transit with dynamic routing will reduce overall vehicle ownership and alter urban development patterns
  • Gas stations will disappear due to reduced vehicle ownership and electrification, forcing a restructuring of our gas distribution system
  • The commercial parking industry will consolidate and decline, disrupted by on-demand parking models like ZIRX that aggregate demand
  • Connected car startups will bring increasing amounts of vehicle data online leading to safer, cheaper, and more efficient transportation

Since the late 19th century, the invention of automobiles, airplanes, subways, and other new forms of transportation have profoundly shaped where and how we live.  Cars led to suburban flight by enabling longer commutes, while modern transit systems helped facilitate a more recent wave of urbanization.

This brings us to the 21st century, where the confluence of ridesharing, electrification, connected cars, and autonomous vehicles promise to give rise to an entirely new transportation paradigm.  Together, these factors are likely to reduce car ownership, consolidate fueling and parking infrastructure, and lead to a more dynamic, interconnected transit system capable of supporting increasingly dense populations in urban centers.  This transition will create opportunities for entrepreneurs with bright ideas for how to improve transportation on multiple dimensions.

Ridesharing

uber

Many in tech proclaimed 2014 “The Year of Uber.”  In 12 months, the ridesharing juggernaut expanded from 66 to 266 cities, from 29 to 53 countries, served 140 million rides, and raised $3 billion in new funding en route to a $40 billion valuation.  It also rolled out UberPool, making transportation even more affordable for users willing to share their ride.  Meanwhile, Lyft scaled to 60 cities and racked up $332.5 million, reaching a $1 billion valuation and slashing prices on its own Lyft Line carpooling service.

Uber’s meteoric rise has attracted international competitors, with Hailo, Didi Kuaidi, GrabTaxi,Gett, and EasyTaxi flooding into the European, Asian, South American, and African markets.  Despite ongoing regulatory disputes, Uber and its horde of fast followers are rapidly overturning the traditional taxi industry and expanding the market for point-to-point urban transportation in the process.  As these companies grow, more urban dwellers will forgo the high costs of owning and maintaining a car.

Meanwhile, declining vehicle ownership opens up possibilities for complimentary business models.  Companies like RelayRides expand vehicle access by letting people without cars rent from neighbors, while startups like Chariot and Via make commuting easier by offering busing and carpooling platforms that respond dynamically to commuter demand.  Another recent, Scoop, goes even further by matching employees commuting from the same neighborhood to the same office park, removing the need for on-demand drivers entirely.

While other services like Lyft’s precursor Zimride have failed to make this model work in the past, smartphones may have reached a point where true carpooling services can operate seamlessly in a way they never could before.  This is evidenced by the fact that Lyft Line now accounts for a majority of Lyft’s business in SF, with UberPool gaining share rapidly.

Electrification

tesla_model_s

There have been many entrants into the electric vehicle market over the last decade but few winners.  Efforts by large automotive incumbents like Nissan and GM to commercialize mass market electric cars have met with limited success, while a slew of startups including Fisker and Coda raised hundreds of millions of dollars only to fail spectacularly in the end.

Still, the success of Tesla proves there is demand for electric vehicles, at least at the high end of the market.  And while Tesla may be the first breakout company in the electric car business, it certainly won’t be the last.  In July, Faraday Future made headlines when it announced plans to challenge Tesla and bring its first electric vehicle to market by 2017.  Furthermore, as CEO Elon Musk continues to steer Tesla’s production line down market to attract a broader segment of the car buying population, the promise of more affordable mass market electric vehicles starts to seem more attainable.

This trend opens up the potential for startups specializing in low-end electric vehicles, particularly in markets like China and India that benefit from lower manufacturing costs.  Tesla’s success has also catalyzed development of regional charging infrastructure, which begins to solve the chicken-and-egg problem that has made electric transportation impractical in most parts of the country outside the Bay Area.

While Tesla is building a private charging network, startups like Chargepoint are capitalizing on a more democratic approach, building an open network to support other electric vehicle manufacturers like BMW and Volkswagen.

Connected Cars

2765757383_eb8abde26c_o

There is a lot of valuable data locked up in a car’s On-Board Diagnostic System, and clever startups are increasingly taking advantage of the OBD-II standard to extract this data and package it into commercial applications.  Automatic offers a device that provides a Smart Driving Assistant with tips to save money on gas and vehicle maintenance, MetroMile sells a device enabling pay-per-mile auto insurance, and MileIQ uses a smartphone’s GPS and accelerometer to help self-directed workers track mileage for tax reimbursement purposes without any onboard device at all.

In other parts of the emerging connected car ecosystem, Navdy recently pulled in a $20M Series A to launch commercial production of its Heads-Up Display (HUD), which syncs with a driver’s smartphone via Bluetooth and projects important information onto the driver’s windshield.  Yet another connected car startup, called Zubie, recently announced an open API called ZinC (Zubie for the Internet of Cars) that lets developers build on top of its platform, which connects to a car’s OBD-II port to gather data on vehicle diagnostics, location, trip activity, and driving behavior.

As all this vehicle data gets mined, aggregated, and brought online, new opportunities for innovations that make driving safer, friendlier, and more efficient continue to emerge.

Autonomous Vehicles

google car

Imagine stepping into your car after work and being shuttled home at the touch a button, without having to worry about rush hour traffic or aggressive drivers.  This will be the norm once cars can drive themselves.

There is no single trend playing out in transportation tech today with more potential to fundamentally disrupt how we get around than autonomous vehicles.  Many experts contend that we already have all the technology we need to support a national transportation system of self-driving cars.

Google’s program can be traced back to 2005, when Sebastian Thrun’s Stanford team won the 2005 DARPA Grand Challenge with its robotic vehicle.  Earlier this year, Uber announced its own self-driving car program, partnering with Carnegie Mellon and setting up the Uber Advanced Technologies Center in Pittsburgh.

Meanwhile, startups like YCombinator-backed Cruise, whose RP-1 device uses sensors, radars, and actuators to retrofit any car with automated steering, throttling, and braking, are also jumping into the market.

The real challenge in transitioning to driverless transportation is on the safety and regulatory front.  However, four states and Washington D.C. have already passed legislation allowing driverless cars in some capacity.

Autonomous transportation will impact everything from highway traffic patterns to inner city congestion to commercial parking infrastructure, with major implications for city planning requirements.

Self-driving cars also make commuting more convenient, which may help to ease overcrowding in big cities as more people opt to live in outlying neighborhoods.  As autonomous vehicles continue to evolve, new opportunities will emerge for entrepreneurs to innovate up and down the tech stack to ensure these vehicles operate safely and smoothly.

* * *

Innovations cluster around periods of revolutionary change.

Just as the combination of domestic horses drawing wheeled vehicles paved the way for increased trade during the Bronze Age and development of the steam engine and locomotive powered unprecedented economic growth during the Industrial Revolution; the confluence of ridesharing, electrification, connected cars, and autonomous vehicles will unlock a new transportation paradigm with innumerable benefits for human society, changing not just how we move but how we live.

As with any period of rapid change, this transition creates the opportunity for many new transportation tech startups with bright ideas for how to advance the state of the art in human mobility.

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