Conference Examines Commerce and Car Connectivity

PARIS – The invasion of the digital world into automobiles poses many questions about the future and one particularly critical one for participants at the biennial Conference on Automotive Electronics here: What business model should be pursued?

“The changing landscape of mobility…enables new business models in automotive and related industries,” says Franck Leveque, vice president-automotive and transportation for Frost & Sullivan.

Smartphones have changed car sharing, for example, from a pursuit of idealists 30 years ago to 3.5 million users today, and probably 25 million in 2020. “If you use Uber,” he says, “you don’t go back to a standard taxi service.”

For some automakers, the future might be a move toward providing mobility for customers, rather than cars. For example, Daimler has launched a European subsidiary called Moovel, for which the goal is to build a solution for door-to-door mobility, using car sharing, ride sharing, bike sharing, taxis and public transportation. Frost & Sullivan expects Moovel revenue to grow from €80 million ($98 million) now to €800 million ($985 million) by 2020.

“Auto companies have to transform themselves into a broader mobility supplier than they are today,” says Wolfgang Bernhart, a consultant with Roland Berger. “Otherwise they will be making basic commodities.”

But that view is not universal.

“In the U.S., Uber has captured the imagination,” says Richard Bishop, an independent American consultant leading a task force trying to develop platoons of over-the-road trucks. “As an OEM maybe you have to make sure Uber is using your cars.”

A century ago, the car changed the world, says Continental’s Ralf Lenninger, vice president-interior electronics. “Now the world is changing the car.”

Personal mobility brings economic growth, but 1.24 million people were killed in traffic accidents in 2010, and pollution and congestion are throttling cities.

“To optimize traffic, all cities are taking countermeasures, but the car can only help if it is connected,” Lenninger says.

Connecting cars to the Internet and each other can make cars better, he says. Just by knowing the roadway ahead, a car can adjust its energy consumption in ways that can improve fuel economy 3%. If the infrastructure collects information from all cars so that a wide map of congestion and flow can be built, controlled-traffic-flow savings could be 20%, he says.

But who will finance the connection?

“The customer doesn’t pay for that kind of thing,” says Jean-Claude Hanus, general manager of Move’o, a French group of suppliers, automakers and researchers. “He dreams of that, but he will not pay for it. We have to be very concentrated on the business model.”

In the American world of connected-car development, Bishop says, “we talked about how do you make that work, but the government has more or less said, ‘We will mandate it. You don’t need a business model.’”

NHTSA, working with the industry in a large-scale study in Ann Arbor, MI, found enough potential benefits of connected-car technology to make its decision, which could be implemented in 2019, although Cadillac already has announced it will adopt it for ’17-model cars.

“Only the radio will be mandated, not the applications,” Bishop says. “If industry does not implement applications, perhaps the government will come in.”

Bishop says the trucking industry could reduce fuel consumption 4% to 8% by having trucks drive close together in platoons of connected, automated vehicles, and he is chairing a task force on the subject for the American Trucking Assn.

Automating some driving tasks through Advanced Driver Assistance Systems is a widely accepted industry answer to challenges of safety, energy consumption and congestion.

“In Europe, by 2020 everyone is going to have something (autonomous), either low-speed or highway,” Renault engineer Gabriel Toffolo says. The automaker introduced its autonomous concept Next Two a year ago, and Renault-Nissan CEO Carlos Ghosn has become an advocate for autonomous driving, as he was earlier for electric vehicles.

Ghosn has promised an autonomous Renault by 2020, and Nissan probably will have one earlier.

Takeo Asami, Renault-Nissan Alliance global vice president-research and engineering, says Nissan will have a car that automatically follows the vehicle ahead on a highway in a single lane in 2016, a car that can change lanes to keep its course and desired speed in 2018 and a car that handles city traffic and intersections autonomously in 2020.

Of course, “autonomous” covers a lot of ground. The German industry has agreed to call vehicles partially automated if the driver remains responsible, and highly automated if the driver’s attention can be diverted by reading a newspaper or watching a movie.

While Asami offers no details of Nissan’s 2020 autonomous city car, most presenters here see a much longer lead time for cars being able to make judgments in cities.

Gereon Meyer, head of strategic projects at the German company VDI/VDE Innovation & Technik and a member of the strategy board of the industry association eNOVA, says the group’s roadmap for automation is seeing traffic-jam mitigation in 2020, a “highway chauffeur” in 2022, a “highway autopilot” in 2025 and automated city driving in 2030 or later.

“I don’t think machines can replace humans completely,” PSA electrical-electronic engineer El Khamis Kadiri says. He says the French automaker is unlikely to introduce real autonomous cars until it can do so in genuine mass production, “not for just 2% or 3% of our cars.”

City traffic is slower than on the highway, but far more complex. Machines may be 100 times faster than humans for understanding a situation and reacting, as Asami says, but they may not be up to the task of handling everything.

“We know that a roundabout has a lower accident rate than an intersection with signal lights,” says Ching-Yao Chan, a research engineer at the University of California at Berkeley. “The reason is that humans have to interact at a roundabout, have to be in control. We observe the movements of the car coming, we see the other driver. We know what to do, which is very hard for machines to do.

“The big challenge is, how do you take the things a human is good at and combine them with what   machines are good at? That will be a really good system.”

The business case for making automated cars profitable has two sides: revenue and cost.

Potential revenues will come from the Internet. People today spend about 933 million hours a day online, Continental’s Lenninger says. Connected cars would add about 1 billion hours of Internet connection every day, helping companies such as Google deliver ever more-precise marketing messages to individuals.

“A huge business is coming up, so each industry wants to participate in the revenue stream,” he says.

The automotive industry wants to remain the sole consumer interface, and Lenninger believes it should, but the IT and Internet industries want the same thing.

He argues automotive should win the debate on the issue of safety, and because the industry has to provide support for a car for at least 10 years he has found the IT industry reluctant to commit to projects that long.

On the cost side, companies are rapidly joining forces with each other in private and public groups to share the expense of developing the future.

Continental is collaborating with Cisco, IBM and developers of Nokia’s Here mapping application to form ideas for an infrastructure that can handle the imagined future.

“We think we need fair teaming,” Lenninger says, based on “cross-OEM collaboration” where the auto industry can work together on non-competitive elements.

With a single voice, he says: “We could enter into discussion with IT people better. The automotive industry needs to negotiate at eye level with the other industries” to end up with appropriate “revenue sharing on the revenues that are coming along.”

Adds Maria Belen Aranda Colas, a chassis system control engineer at German supplier Robert Bosch: “It is crucial to consider (advanced driver-assistance systems) globally, between OEMs and suppliers worldwide. Standards will be crucial for this technology.”