A key criterion of success in business is to anticipate trends, catch waves and ride them. Change is inevitable and we all want to change our business practices and models in line with the changing world, to be ready for or ahead of the change rather than lagging behind. But what will the future of the automotive industry look like, and are the rules of the game about to change?
Market predictions are a standard fare of industry publications and conferences such as CTI. Impressive presentations predict with great precision (often to less than 1% of market share) the share of ICE/HEV/EV some 10, 15, 20 years hence.
One feature of these predictions is also that the volume of global passenger car sales will continue to grow – 60, 80, 120 million cars per annum. It goes without saying that these predictions are based very much on ‘business as usual’, i.e. passenger cars being purchased by private individuals who drive them for business and leisure, but which sit idly for most of each day. After 7-10 years, a moderate number of miles are accumulated, the outdated-looking vehicle is deemed unworthy of maintenance once a major system needs replacing, and the vehicle is scrapped, along with all the other (still functioning) systems. It is replaced by a re-styled version of the previous vehicle, whose cost, appearance and performance are optimised at the point of sale.
This is the business model on which all our plans are based. Requirements are cascaded from this to inform the design of future vehicles, systems and components, with engineers across the world diligently looking for ways to make improvements within this framework.
But what if the future does not look like this? What if the rules of the game are about to change?
In his report, “Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the ICE Vehicle and Oil Industries”, Stanford economist Tony Seba argues that a number of different trends will come together to substantially reduce the proportion of car ownership and hence the number of cars being manufactured.
Seba predicts a scenario with Transport as a Service (Taas) (also referred to as Mobility as a Service – Maas) being available through the approval of autonomous vehicles (AVs), which will be electrified as opposed to ICE-driven and result in a 10x increase in the distance per vehicle over its lifetime, most likely to 1m miles. These vehicles will see much higher utilisation than the current fleet that spend most of their time in car parks or on drives. Car ownership and hence vehicle production will plummet.
Seba goes beyond qualitative predictions to make some startling quantitative predictions.
He predicts that the cost per mile of this new mode of transport will be much less than that for car ownership – four to ten times cheaper per mile than buying a new car, and two to four times cheaper than operating an existing vehicle in 2021.
His prediction is that TaaS will provide 95% of the passenger miles travelled within 10 years of the widespread regulatory approval of AVs. By 2030, individually owned ICE vehicles will still represent 40% of the vehicles in the U.S. vehicle fleet, but they will provide just 5% of passenger miles.
American roads will drop from 247 million to 44 million, opening vast tracts of land for other, more productive uses. Demand for new vehicles will plummet: 70% fewer passenger cars and trucks will be manufactured each year.
It goes without saying that this paints a very different picture from other reports. A 70% drop in production indicates 30 million cars per annum in 2030 as opposed to 120 million. As engineers, we often accept tolerances and variances, but this is something different!
Now, there are clearly obstacles to such a scenario becoming reality, not least the full development of truly dependable autonomous vehicles. However, the automotive industry is developing CAVs on the basis that it is a case of ‘when’ and not ‘if’ this is achieved. Are the foundations of our current business models as firm as those of, say, Kodak, who dismissed out of hand the idea of digital photography when it was presented to them in 1975?
It is on this basis that Romax Technology decided to set up a research project to investigate the possibility that the business model of personal transport will change.
It proposes the hypothesis that in the future instead of private cars, taxis and buses, personal transport within a given city is provided as a service by small, autonomous electric vehicles. These vehicles will have high utilisation (~80%) and thus potentially acquire high mileages (~1m miles) within a few years. It will make sense to have the vehicle engineered to a higher level of durability, such that a single passenger car should be able to cover approximately 1m miles, engineered with a similar level of integrity to commercial trucks.
The combination of no driver, high vehicle mileage and high utilisation makes the total cost of ownership and operation attractive, both economically and environmentally. This means that it is a viable business model which will compete with and displace conventional urban modes of transport.
The project RUBICON (ultRa-dUraBle electrIC pOwertraiNs) was set up to investigate whether this scenario is viable. Whereas Tony Seba concentrated on the economics, this project would expand on the engineering challenges and the environmental benefits.
The project, started in November 2020, is funded by Innovate-UK and led by Romax Technology, with Cenex and Empel Systems joining the collaboration. It starts with the assumption that autonomous vehicles (will) work because, as stated, the automotive industry is working on the basis of ‘when’ and not ‘if’, and this subject is studied extensively within its own field.
RUBICON goes on to study the economic and environmental impact of operating a fleet of autonomous taxis in and around a major city. Finally, it considered aspects around making the vehicles substantially more durable than the current designs. Rather than studying the whole vehicle, it focusses on the powertrain and considers what would be needed to raise the durability of the vehicle to a level suitable for its increased life, and what would be the economic and environmental benefits.
The project therefore has a multi-faceted approach – engineering, economics, environmental. It is not possible to answer all the questions in full detail on all three areas, but the project has aimed to cover the major points in all these areas to a reasonable degree of detail. This is akin to the ‘concept design’ of a gearbox – not all the details and tolerances are defined, but the killer questions should have been answered.
The key learnings to date will be presented at CTI US by Barry James, Head of Research and Innovation at Romax Technology, part of Hexagon’s Manufacturing Intelligence division. The nature of the audience means that the key focus will be on the engineering, but headlines concerning the environmental and economic analysis will also be presented.
The key measures are the total lifetime (accounting for both manufacturing and operation) cost and CO2 per passenger mile. Feeding into this analysis are the investigations into the cost/benefit/feasibility of making various powertrain components substantially more durable, plus an illustration of the sort of fleet size, number of journeys and variation in journey distance, taking recorded data from London as inputs.
The hypothesis is that private car ownership will be replaced (in cities at least) by transport-as-a-service being provided by autonomous taxis, supported by details which assess whether this could be valid. Many attending CTI US will be ‘petrol-heads’, emotionally attached to the idea of a private car being a public expression of someone’s personality. However, putting aside personal preferences, if such a model is economically viable, feasible from an engineering point of view and environmentally less damaging, then it is a potential future scenario for the automotive market that needs to be taken seriously.
Hexagon is a global leader in sensor, software, and autonomous solutions. We are putting data to work to boost efficiency, productivity, and quality across industrial, manufacturing, infrastructure, safety, and mobility applications. Our technologies are shaping urban and production ecosystems to become increasingly connected and autonomous – ensuring a scalable, sustainable future.
Romax, part of Hexagon’s Manufacturing Intelligence division, provides world-leading solutions for the design, analysis, testing and manufacture of gearboxes, drivetrains, and bearings. Learn more at romaxtech.com