Six Transportation Trends That Will Change How We Move

Since the British pioneered “road locomotives” more than a century ago, people have traveled from point to point in largely the same way. That’s changing.

Six technologies are converging on the transportation industry, and investors have taken note. Venture investors put $5.7 billion into transportation businesses last year, more than twice the level of investment in the previous two years combined. Uber was the big winner, raising $3B. But other startups also raised significant funds, like GrabTaxi ($334 million), Lyft ($250 million), BlaBlaCar ($100 million), and INRIX ($65 million).

So what are these six technologies, and why are they so compelling? Let’s take a look.

Autonomous Vehicles

Hands-free and feet-free driving, with catchy names such as Tesla’s “Autopilot” and GM’s Cadillac “Super Cruise,” will soon be widely available. Experts believe that fully autonomous vehicles are not far behind, and momentum keeps picking up. Three years ago, for example, the specialized LiDAR laser sensors that Google uses on its autonomous vehicles cost more than $70,000. This year, the manufacturer released a miniaturized version that costs one-tenth the price. And with new technologies in the works that cost only a few hundred dollars, we should expect another huge decrease.

Having ridden in several fully autonomous concept vehicles, we are convinced that they will change the world. The elderly will regain mobility, traffic congestion will decline, safety and fuel efficiency will improve, on-demand services and deliveries will become commonplace, and cities can reclaim public spaces that they currently must devote to parking. And in a time when the median San Francisco resident commutes nearly an hour per day, drivers will save hundreds of hours per year.
Connected Vehicles

In the third quarter of 2014, AT&T added more car data subscribers (500K) than smartphone subscribers (466K) or tablet subscribers (342K). These data plans deliver software updates to the vehicle, traffic data to the navigation system, and Internet connectivity to the passenger. Connections with other vehicles and with infrastructure reduces congestion and vehicle fatalities. They also enable automakers to develop new tools for predictive and preventative maintenance.

We can already see the benefits of connectivity in commercial vehicle fleets. One of our portfolio companies Telogis uses location and vehicle data to plan fleet purchases and efficiently route, manage, and maintain vehicles. Another one called INRIX delivers traffic data to passenger vehicles to help with shorter and safer commutes. Connectivity will also transform the auto insurance market by enabling insurance firms to differentiate between safe and unsafe drivers. Usage-based auto insurance could become a quarter of the overall auto insurance market in the US by 2020.

Connectivity may also upset the manufacturer-customer relationship. Services like Apple’s Car Play and Google’s Android Auto are likely to transition the user’s attention and primary experience away from the car and onto the screen. Virtual assistant capabilities will provide direct feedback to the driver to improve the in-car experience, from calendar notifications informed by traffic updates to restaurant suggestions based on historical preferences. If iOS or Android becomes the best part of our car, where does that leave the manufacturer

Collaborative Consumption

Millennials own fewer cars than previous generations. We are already seeing “peak car” in some developed countries. Globally, the auto market is a $20 trillion asset class with just 4% to 5% utilization. We need to ask ourselves the big question: As two billion more drivers move into the middle class over the next decade, should we be adding another $20 trillion in assets, or should we strive to reach 10% utilization instead?

Services like Uber and ZipCar enable someone to have what they want (on-demand mobility) without having to purchase what they don’t need (a $30,000 piece of mostly unused metal). This reduces car sales while redefining the meaning of luxury in automobiles. The best seat in your car is no longer behind the wheel. It’s now in the back, where you don’t need to navigate traffic, worry about speeding tickets, find parking, charge or fuel the vehicle, or pay insurance.

Electric Drivetrain

An electric drivetrain is more powerful, compact, and efficient than the fossil-fueled alternative and produces zero local air emissions. For example, Tesla’s dual AC-induction motors on the Model SD produce 691 horsepower and 687 lb-ft of torque in a package that weighs less than 200 pounds and fits between the wheels – leaving enough room for both a trunk and jump seats in the back. Electric drive enables a unique combination of performance and efficiency, delivering well-to-wheels efficiency unmatched by internal combustion engines while producing maximum torque at any speed and capturing energy through regenerative braking.

Investments in battery technology, such as the planned Tesla Gigafactory, combined with disruptive innovations from emerging battery companies are dramatically reducing the cost of energy storage. Low-carbon electricity will continue to get more economical, while fossil fuels will get more expensive in the long run. As a result, more segments of the transportation sector will give up market share to electric drive.

Heavy-duty vehicle segments, such as transit buses and local delivery trucks, will lead the way in the electrification of transportation because the economics of electric drivetrains for heavy short-range vehicles are so compelling. Companies such as Proterra (in our portfolio) will provide cheap, quiet, and clean transportation that will help make bus transit more attractive. And companies such as ChargePoint (also in our portfolio) and utilities such as Constellation Energy and Southern California Edison are addressing the chicken-and-egg problem of ensuring that there are a rising number of charging stations to make EVs more viable.

Efficient Multimodal Network

Cars will integrate into an efficient intermodal network. The BMW iSeries is the first attempt by an OEM at incorporating public transit into the driving experience. Multiple companies, such as INRIX and Waze, have sprung up to improve our drive’s efficiency. Now, startups are working to improve transparency in public transportation and reduce friction through crowdsourcing transit data, moving ticketing to the smartphone, and calculating prices for multiple trip options.

The Caltrain, which runs from San Francisco to San Jose, is often the fastest way (and lowest cost) to travel between those cities because of traffic. However, long wait times and cumbersome schedules limit broad usage. By incorporating information from users’ calendars, locations, and travel preferences, mobile apps can now automatically plan the most efficient trip possible using real-time data. As we integrate this data with car sharing services – and other personal electric modes of transport, such as scooters or e-bikes – we can solve the “last mile” challenge of public transit.

New Materials (and the obligatory 3d printing reference)

In the near term, lightweighting will intensify over the next decade. Fuel efficiency standards mean that manufacturers are motivated to reduce weight: weight is now frequently a more important decision factor than cost in purchasing. Electrification drives lightweighting to the extent it increases range and reduces the battery size required – it’s no coincidence that BMW’s first production EV (the i3), also is a plastic-reinforced carbon fiber vehicle. The demands for lightweighting come at a time when the cost of carbon fiber parts are coming down dramatically.

In the medium to long term, new automotive manufacturing technologies, including 3d printing, will change the way vehicles are designed and assembled to enable higher performance, lighter weight, and novel design. As these trends collide, transportation is being upended. We can already see that a fleet of autonomous, shared vehicles – connected to the road infrastructure, to the Internet, and to a broader network of public transit options – will create incredible value.

Article Provided by: Forbes