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Why is Apple investing $1B in Chinese ridesharing giant Didi?

Didi in China It’s been a big year for breaking news on the clean mobility front, with General Motors investing a half billion in Lyft and Apple announcing last week that it’s investing $1 billion in Didi Chuxing Technology. Apple appears to be just as serious about investing in mobility services as is Silicon Valley neighbor Google and its self-driving car project.

Here’s my thoughts on what’s behind all of it:

Uber’s global domination: Didi is part of an international coalition announced in late 2015 with Lyft in the U.S., India’s Ola, and Southeast Asia’s GrabTaxi, to compete with ridesharing giant Uber. Uber has spent millions of dollars to grow its share of the Chinese market, but is far behind Didi with its larger fleet of cars. Uber has set a target of operating in 100 Chinese cities by the end of this year. The company said it’s able to invest in the China market because it’s making $1 billion in annual profit from its 30 largest global markets. Uber is facing pressure in other markets where cities like Austin, Texas have blocked it from competing with taxis; and a $100 million settlement with drivers in California over the “employee vs. independent contractor” job classification legal issue. China is still on the top of its list of priorities.
Didi is booming: Didi and its ridesharing platform serves more than 11 million rides a day and about 300 million users across China, according to the company. Apple’s investment brings Didi’s funding round to $3 billion to a startup company now valued at about $26 billion, according to people familiar with the matter. Didi already has backing from Alibaba Group Holding and Tencent Holdings, the country’s two largest Internet companies. Didi, formally known as Xiaoju Kuaizhi Inc., was created last year when separate apps backed by Tencent and Alibaba merged. Didi now serves 400 Chinese cities with 14 million registered drivers.
The future of Apple: Apple continues to lose share in the smartphone business, a segment the company propelled in 2007 when it launched the first iPhone. Google’s Android phone has taken the lion’s share of that market. China has been a very important market for Apple to focus upon, where it’s invested heavily in a manufacturing plant for its mobile devices. Billionaire investor Carl Icahn recently sold his position in Apple, largely due to the company’s lagging performance in China and that region overall. In its most recent earnings report, the company revealed its revenue in China fell by 26%. Apple has been looking at other technology services in recent years with mobility at the top of the list, which is behind its near-secret testing grounds for autonomous and electric vehicles. CEO Tim Cook has highlighted higher-margin services such as ride-hailing firm Didi as a growth area, and suggested he would use some of the company’s $200 billion-plus cash reserves for investments.
China is a very hot market: Automakers have joined ranks with other industries, such as mobile devices, in setting up manufacturing plants and marketing to consumers in China’s booming economy. Labor is cheap and skilled in China, and government incentives and low-cost leasing offers are plentiful for the largest automakers to come to China to set up factories. The audience is massive as well, with China hosting the world’s largest market for electric vehicles and internal combustion engine vehicles. Chinese consumers are buying their share of technology products and are tapping heavily into e-commerce and internet usage. It’s very typical to hear about internet companies like LeEco, led by billionaire founder and internet icon Jia Yueting, investing in Faraday Future and the recently revealed LeSEE electric concept car. Tesla Motors also sees growth in China as integral for its future profitability. China’s economy and vehicle sales have softened in the past year, but compared to other markets around the world, China is still considered to be the most important one to be established within.
Mobility pivotal in crowded cities: China has several cities seeing dramatic growth in population, vehicle traffic jams, and air pollution. Established cities like Beijing and Shanghai are congested with cars and trucks, creating serious air pollution hazards being addressed by the government. Beihai, China is predicted to be the world’s fastest growing city in the next few years with annual growth rates of 10.58% in population from 2006 through 2020. As U.S. cities such as San Francisco, New York City, and Los Angeles have discovered in recent years, area residents are clamoring for more mobility options like ride-hailing and ridesharing firms Didi, Uber, and Lyft; carsharing services such as Zipcar and Car2Go; improved rail and municipal transportation; protected bike lanes and racks; and creative options such as what Lyft and investor GM are testing out in short-term rental of electrified vehicles and gas-engine cars to Lyft drivers. Cities around the world are facing very similar conditions as Beijing and Los Angeles with congestion and pollution and are taking on measures to improve it – including Rio de Janeiro, London, and Mexico City. Didi has been a fast-growing mobility service in China as consumers demand to get from Point A to Point B for less cost and cleaner air.
Sustainability theme: Emily Castor, director of transportation policy at Lyft, spoke on a panel last week at ACT Expo on the future of clean mobility. Castor talked about how its ridesharing now makes up 40% of the rides in 15 U.S. cities testing out the Lyft Lanes ridesharing service. Castor also talked about a short-term lease program Lyft is trying out with General Motors offering Lyft drivers an opportunity to rent a Chevrolet Volt for rides. Sustainability has been built into Lyft’s strategy of providing mobility services in cities, Castor said. Didi and other Aboptions to reduce their stress and transportation cost, and to feel like they’re contributing something to their community’s improving air quality.
The sharing, on-demand economy is taking off: Ride-hailing and ridesharing services like Uber, Lyft, and Didi find mobility services to be highly profitable. They serve as a third-party company joining together consumers looking for rides with car-owner drivers looking to make additional income. They use the sharing platform invented and branded by Uber and competitors to gain access to fast, affordable, efficient rides. This model of the “sharing economy” or the “on-demand economy” is being used by AirBNB to match up homeowners who have an extra bedroom with travelers looking for good lodging deals. Amazon has been expanding its use of independent contractors nationwide to meet a promise to deliver its Prime Now orders within two hours of the order being placed. Amazon is competing with Google, Wal-Mart, and other retailers offering fast and cheap delivery services. Food delivery services like Postmates, GrubHub, and DoorDash are taking off in cities across the U.S. Their business model is nearly the same as Uber and Lyft – independent contractors driving their own cars and using the mobile app to deliver service and produce income.
How Didi could play into Apple’s autonomous vehicle technologies: Analysts have been speculating that Apple’s investment could be tied into its autonomous vehicle strategy. For one thing, Didi provides Apple with a rich data source for its self-driving vehicle push. Didi’s ride-hailing app is closely linked to payment services, such as Apple Pay. Didi ride transaction data can be the foundation for other mobile commerce transactions such as deliveries. Apple will gain extremely valuable date on driving patterns, rider habits, traffic data, and payment transactions. Apple, like Google, will be part of the technologies that shape the future of autonomous vehicles just as much as the self-driving car will provide.

Lyft and Uber testing grounds for autonomous vehicles

Lyft Express Drive Advanced mobility continues to look tangible and coming sooner to market than it appeared a couple years ago. Google’s unveiling of its small fleet of self-driving cars for road tests in the Spring of 2014 triggered a flurry of debate about the launch of road-worthy automated cars by 2035. That timeline may be shortening to 10 years or less, at least for automated driving technologies coming to market.

Ridesharing giant Uber’s investment in the Carnegie Mellon autonomous vehicle research center and General Motors’ half billion investment in Lyft with raised the ante. In the past week, more fascinating news was revealed………

Uber may have asked a few automakers for details on placing a large order for self-driving cars, an industry source told Reuters. Uber may have placed an order for at least 100,000 Mercedes S-class cars, but this isn’t being confirmed by Daimler or Uber. The executive sedan doesn’t year have fully automated features, nor do any other cars available on the market beyond road tests.

Uber needs to cut its largest cost – paying drivers – so self-driving cars are a logical step for the on-demand transportation company. Audi, Mercedes-Benz, BMW, and suppliers Bosch and Continental are working hard on advancing their technologies, as are several other OEMs and suppliers outside Germany.

Analysts at Exane BNP Paribas see a $25 billion market for automated driving technology by 2020. As for fully autonomous vehicles coming to roads, the brokerage firm sees that happening by 2025 or 2030, in part due to regulatory hurdles.

General Motors is following up its January investment of $500 million in the second largest ridesharing company, Lyft, with a symbolic step forward. GM and Lyft this month will launch a short-term rental program for Lyft drivers in Chicago with a fleet of 125 Chevrolet Equinoxes.

Similar to Uber offering car loans for drivers who don’t yet have their own car, Lyft drivers will be able to rental GM vehicles to do their work. The program, called Express Drive, will rent vehicles to Lyft drivers for one to eight weeks, including free maintenance and insurance. The companies said it will soon roll out to Boston, Washington, D.C., and Baltimore prior to a nationwide rollout.

Drivers will have an incentive for delivering riders more miles. Drivers who complete fewer than 40 rides a week will pay $99 a week and 20 cents a mile. For those driving between 40 and 64 rides, the mileage fee will be waived. Drivers who make 65 or more rides will have free access to the Equinox.

GM chose the Chevrolet crossover because it’s compact and it offers a comfortable interior and versatile storage, said Julia Steyn, GM’s vice president of urban mobility programs. Steyn also said Express Drive will build the infrastructure for an eventual fleet of on-demand autonomous vehicles, the long-term goal of the partnership.

Renting the vehicles and tracking driver contracts will be managed by Maven, the mobility subsidiary that GM created in January. GM is covering maintenance costs and is sharing the insurance cost with Lyft and Warranty work will be done at GM dealerships, Steyn said.

On-demand car service Uber announced this morning a new feature designed to make it easier for its customers to pay for rides for their friends and family: Family Profiles. The option was one of Uber’s most frequently requested features, the company notes, and will initially go live in a handful of markets, including Atlanta, Dallas and Phoenix, before rolling out elsewhere.

Though dubbed “Family Profiles,” the option to pay for others’ rides doesn’t only extend to those in your immediate family – you can choose to add anyone to this group in the app, including friends, co-workers, or anyone else. However, it makes the most sense for those who want to bill trips taken by others all to the same payment card – that means those who you add will need to be part of a fairly trusted group of people.

For example, parents could use the Family Profile setting with their kids in college – allowing them peace of mind that their child would always have a free ride home, when needed. You could also use it to help others you care about who may need the financial assistance.

Urban Mobility: Automakers join consortium for connected and autonomous vehicles, Crossing hurdles for autonomous vehicles

Consortium and funding for connected and autonomous vehicles: The federal government announced a consortium of global automakers and budgetary funding to better support advancements in connected and autonomous cars, V2V, vehicle safety, and protection from hackers. U.S. Transportation Secretary Anthony Foxx made the announcement last week surrounded by senior executives from 18 automakers joining the consortium. The first project will focus on cyber security, which is considered a critical issue for putting autonomous vehicles on roads. Foxx also discussed, during his visit last week to the Detroit Auto Show, the Obama administration making $3.9 billion in funding available for development of connected car technology and automated vehicles. That would fund a 10-year pilot program to test what is expected to become a nationwide vehicle-to-infrastructure network and to press forward with vehicle-to-vehicle communications technology, known in the industry as V2V and V2I. “We are on the cusp of a new era in automotive technology with enormous potential to save lives, reduce greenhouse gas emissions, and transform mobility for the American people,” Foxx said.
Continental AG’s president Jeff Klei believes strongly in autonomous vehicles coming to our roads, but a few hurdles must be crossed first. Continental is playing a large role in autonomous vehicle testing. Klei predicts there will be 54 million autonomous vehicles will be on roads by 2035. Data sharing between municipalities and automakers will be necessary. He said that for his forecast to be met, autonomous vehicles will need an accurate road map and reliable data from the infrastructure – such as stop lights, speed limits, lane closing, and road work – along with live traffic updates from other vehicles. Automakers will need the cooperation of municipalities, which may or may not have a centralized traffic control system.
Uber fine and Chinese investment: The California Public Utilities Commission followed a judge’s recommendation last week to fine Uber $7.6 million for failing to meet data reporting requirements in 2014. The PUC says driver data is necessary to determine whether or not Uber is serving all manner of passengers in any neighborhood. Taxis must also comply with those rules. Uber’s main ridesharing competitor, Lyft, has complied with regulators. In a separate story, Uber Technologies said that its Chinese division will receive an undisclosed amount of investment from Chinese firm and aviation and shipping conglomerate HNA Group. It’s part of Uber‘s strategy to break into China’s huge tourism industry. Services will include an array of transportation services to and from airports and for HNA flights, as well as online financing for the automotive sector.
Where consumers think cars are going: Check out, “Consumers, cars and the Internet of Things.” In this second IBM report from its Auto 2025 series is analysis of what more than 16,000 consumers worldwide said about the industry – particularly, how they personally expect to use automobiles in the next ten years.
Hybrid jet: NASA is experimenting with a hybrid airplane engine at its Glenn Research Center in Ohio to contribute to emissions reducing technologies for commercial aviation. The aircraft hybrid system would use electric motors working in concert with a jet turbine, like the ones used in today’s commercial airliners. Researchers think this hybrid propulsion system could reduce fuel consumption by up to 30% compared to traditional aircraft.
Toyota is trying out a data transfer system for connected cars that could go way beyond 5G technologies in mobile phones. Toyota is working with Kymeta Corp., a Washington State-based technology company that is developing a new type of satellite antenna that could deliver massive amounts to data to vehicles. The challenge will be mounting large satellite antennas on a car. Kymeta has designed a six-inch wide plate-like antenna that might fit. One test run has two Kymeta antennas in the roof of the Toyota Mirai fuel cell car.

This Week’s Top 10: GM and Lyft will offer ridesharing and autonomous vehicles, Justice department files civil suit against VW

by Jon LeSage, editor and publisher, Green Auto Market

Here’s my take on the 10 most significant and interesting occurrences during the past week…….

GM and Lyft forge alliance: General Motors is making its largest single investment ever in another company – $500 million will go to Lyft, Inc. to support advancement of autonomous vehicles and ridesharing. GM has been working on autonomous vehicle technology for several years, and plans to start testing autonomous Chevy Volts in 2016. The deal with Lyft, which is No. 2 in ridesharing services in the U.S. behind Uber, will leverage GM’s experience in autonomous technology and Lyft’s ridesharing service offerings. This deal was made not long after Ford Motor Co. and Google announced an alliance to develop autonomous vehicles. Google Ventures is a major investor in Uber, and that ridesharing company has been testing out driverless cars over the past year with the Carnegie Mellon University research center. Uber may be a channel for Ford vehicles and autonomous vehicle testing, as Lyft will be for GM. As part of the arrangement announced yesterday, GM will become a preferred provider of short-term use rental vehicles to Lyft drivers through rental hubs in various cities in the U.S. Lyft drivers and customers will have access to GM’s wide portfolio of cars and OnStar services, as well.
DOJ files VW suit: The Department of Justice filed a civil complaint yesterday against Volkswagen claiming that nearly 600,000 cars with diesel engines in the U.S. violate emissions laws – and that many were imported in violation of the Clean Air Act. The DOJ and U.S. Environmental Protection Agency may be putting pressure on VW to reach a deal on how to resolve recall issues. Talks haven’t been going very well so far, according to EPA Assistant Administrator Cynthia Giles. The suit was filed in Detroit on behalf of the EPA. VW says it is “working with EPA on developing remedies to bring the TDI vehicles into full compliance with regulations as soon as possible” and with government agencies investigating these matters.
Faraday Future EV supercar: The FFZero1 concept car has been unveiled at Consumer Electronics Show 2016. The Zero1 is a single-seat electric race car. The design is wild – sort of like the Batmobile meets Grand Prix racer. It’s called the “UFO Line” and will become a defining feature of all Faraday Future’s next supercars, the company says. Another news story coming from Las Vegas has been the company losing its chief battery architect ahead of introducing its concept vehicle at CES. Porter Harris lists his current employer as Lotus Research and Development LLC on his LinkedIn page. Harris was responsible for engineering and designing Faraday’s battery packs.
Ford investing in battery technology: Ford Motor Co. may be competing with another automaker, Tesla Motors, as a developer of its own hybrid and electric vehicle battery technologies. Ford will be investing $4.5 billion into electrification R&D, and is adding 13 new EV vehicle nameplates while expanding its electrified offerings into Taiwan, South Korea, and China. When Ford recently announced a range increase for its 2017 Focus Electric, company executives also shared information on battery chemistry research and developing its own battery cells for its future EVs.
Hyundai Ioniq competing with Prius: Hyundai Motor Co. will be rolling out its Ioniq model in U.S. this month, which comes in three electrified versions – a traditional hybrid, a plug-in hybrid, and an all-electric version. The company says that the Ioniq hybrid will deliver better highway fuel economy than the Toyota Prius.
Suggestion to CARB on VW scandal: A collaborative of 15 environmental, conservation, and health organizations issued a rebuttal to a letter submitted to the California Air Resources Board on the Volkswagen diesel scandal. The original letter, signed by Tesla CEO and others last month, requested CARB work to have VW bring zero emission vehicles to the state as a higher priority than fixing non-compliant diesels. That proposal doesn’t deal with the real health impacts, and offers no remedy to purchases of defective VW diesel cars, the letter said. This group is calling for a full investigation and prosecution to the fullest extent of the law.
California ending green stickers: If you’re thinking of buying a plug-in hybrid in California, keep in mind that the green carpool lane stickers for solo drivers will no longer be available. The state has issued all of the 85,000 green HOV lane stickers for plug-in hybrids, unless the state legislature authorizes more of them. They may be going away like the yellow stickers for hybrids went away a few years ago. There are still an unlimited number of “white stickers” for available for battery-electric cars, hydrogen fuel-cell cars, and compressed natural gas vehicles.
New Clean Cities site: The U.S. Department of Energy’s Clean Cities has just launched an all-new website designed around easier navigation and a fresh new look. According to the Clean Cities blog, there are five new features to explore that were designed around offering a bold new look and enhanced user experience.
Top sales mark for Tesla: Tesla Motors passed the 50,000 sales mark for 2015, its best-ever effort and slightly more than the maker had signaled it would deliver for the year. During the fourth quarter, Tesla delivered 17,400 of its cars, including a small number of the new Model X SUVs. That was 75% more than the same quarter in 2014, and a 48% increase over Tesla’s previous quarterly record. In other news, Tesla officials are investigating another Model S fire incident. A mysterious fire destroyed a Model S sedan Friday at one of the company’s Supercharger stations in Kristiansand, Norway, about 200 miles southwest of Oslo, the capital.
Home charger incentive: The South Coast Air Quality Management District is offering a residential electric vehicle charging incentive pilot program to offset Level 2 (240 volt) EV charger hardware costs. This program will be available to residents within the SCAQMD’s four-county jurisdiction on a first come, first served basis. The program provides up to $250 for the cost of hardware for Level 2 residential chargers; and an additional incentive of up to $250 will be available for low-income residents.

Green Auto Market’s guesstimate on what to expect in 2016

What’s next for VW: The first part of this new year will see details released on the Volkswagen recall by the U.S. Environmental Protection Agency and California Air Resources Board on a proposed fix for its diesel-engine cars. EPA and CARB will be making an announcement this month regarding solutions proposed by Volkswagen for about 482,000 cars equipped with EA 189 engines; some models will likely require hardware and software updates, while other may require only a software solution. The recall might be tied into the lawsuit the U.S. Justice Department filed in a civil complaint yesterday on behalf of the EPA (see news coverage above). Electric vehicle launches may be a channel for VW to tap into to restore its image as a responsible global corporation. On January 5 at the Consumer Electronics Show, Volkswagen’s new chairman, Herbert Diess, will make a keynote speech announcing VW’s “new era in electric mobility” that will broaden its pre-existing commitment to electrification along with a new all-electric concept car. It’s still unknown whether that new vehicle will be an electric version of its flagship next-generation Phaeton sedan, an electric Microbus, or something else.
Presidential election: The Obama administration has been supportive of U.S. Department of Energy grants for clean vehicles and tax incentives for electric vehicles and natural gas vehicles, among other supportive measures. As that president leaves office in a year, questions are coming up on what leading candidates think about environmental issues, clean energy, and alternative fuel vehicles. On the Republican party side, in the latest voter polls, Donald Trump, Ted Cruz, and Marco Rubio, have been the leading candidates. On the Democratic party side, Hilary Clinton is the obvious choice now that Bernie Sanders has stepped out of the race. Alternative fuel vehicles hasn’t been a topic of discussion at presidential debates, but the Obama administration’s Clean Power Plan, released in November, and the issue of climate change, have been. Cruz and Rubio strongly oppose CPP and all three Republican candidates think there’s no real proof climate change and global warming are really happening. Free market economics is a philosophy all three embrace. Cruz opposes the Renewable Fuel Standard as he doesn’t support subsidies and the federal government picking “winners and losers.” As speaker of the Florida House of Representatives, Rubio opposed executive orders limiting greenhouse-gas emissions and setting stricter limits for cars sold in Florida; he thought the state should instead embrace the free-market approach. Trump strongly supports the Keystone XL pipeline and hydraulic fracking. Clinton supports a goal of having at least 33% of the nation’s power generated by clean energy sources by 2027; believes climate change is an urgent challenge; and has been unclear on positions on Keystone XL or offshore oil drilling.
Clean transportation events: Calstart’s Clean Low-Carbon Fuels Summit will be in Sacramento, Calif., on February 23; Green Truck Summit will take place March 1-3 in Indianapolis; NAFA I&E with its Sustainable Fleet Accreditation Program will be April 19-22 in Austin, Texas; ACT Expo will be going back to Long Beach, Calif., on May 2-5; AltCarExpo will take place on September 16-17 in Santa Monica, Calif; and Automotive Fleet’s Fleet Technology Expo will be held October 17-19 in Schaumburg, Ill. And don’t forget Clean Cities coalition events throughout the year.
Fuel prices: Low gasoline and diesel prices have been deal breakers in the past year and a half for fleets investing in CNG and propane conversions and consumers backing away from hybrids and electric vehicles. The global oil supply is expected to eventually feel the effects of growing demand from developing nations; as for now the supply is high enough to keep fuel prices down into 2016.
Autonomous vehicles: Testing programs will continue to put miles on the road in states that have adopted autonomous vehicle road testing (with most of it still in California). Austin, Texas, is working on a test program with Google on its roads, and hopes to see the state of Texas get on board. Watch for automakers to continue rolling out connected car and semi-autonomous features this year. A good example of this trend is Toyota designing a system to improve and accelerate the mapping of U.S. roads needed to put autonomous vehicles on the roads. It will be debuted at CES 2016 for rollout in 2020.
Hydrogen infrastructure: Hydrogen fueling stations are slowly rolling out in California, with construction underway within a few states in the northeast. Check out the federal H2USA collaborative projects for updates on Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and California.
Crowdfunding capital: As described in Green Auto Market about a year ago, crowdfunding has gone way beyond a funding source for student film projects and startup rock bands. The Securities and Exchange Commission has released rules on the Jumpstart Our Business Startups Act of 2012 (JOBS Act) that will take effect in May 2016. That’s expected to bring in more investors who will provide more funding than has been the norm in cleantech crowdfunding projects in recent years.
Hybrid Terrafugia TF-X: For those of you fascinated with futuristic vehicles, check out the Terrafugia TF-X, which just received Federal Aviation Administration approval for test flights. This mid-size car has twin helicopter-style rotors at the tips of its wings that fold out of the car and lift the TF-X into the sky. Once it’s up in the air, electric engines teamed with a 300-horsepower engine provide power. The rotors fold back, and a ducted fan pushes the TF-X along. It has a cruising speed of about 200 mph, with a range of about 500 miles.
Infrastructure growth: During 2015, compressed natural gas fueling, electric vehicle charging, and E85 stations had the largest growth curve. CNG went up 98 stations in the U.S., EV charging went up 2,811 stations, and ethanol (E85) increased at 173 more gas stations.
Biofuels: Lux Research predicts that waste oils will dominate next-generation biofuels in upcoming year. Biodiesel made from novel feedstock, specifically waste oils, will lead novel fuels capacity in 2018. Cellulosic ethanol and renewable diesel follow with 19% and 18%, respectively.
The future of Uber: While ridesharing giant Uber is expected to add more investors and will consider going public on the stock market, a big legal question will have even more impact on its future. The question of whether it will be a transportation network linking car owners to riders or a company with employee drivers will be carefully watched by Lyft, Airbnb, and other “shared economy” startups. Boston-based attorney Shannon Liss-Riordan is representing Uber drivers in California who want to be considered employees (or at least have some of those financial benefits). Liss-Riordan thinks it’s a much bigger question with the on-demand, shared economy encouraging misclassification and mistreatment of its workers – and that includes food delivery startups. Liss-Riordan currently has a lawsuit against Postmates pending in federal court in California; and in California state court, she’s filed class-action complaints against DoorDash and GrubHub. The Uber class-action lawsuit, and these other suits, will take much longer than 2016 to see final court rulings, but analysts are paying a lot of attention to these cases. Uber management certainly cares about it as its business model is based entirely on independent contractors – and eventually with driverless cars being in its fleet.

Advanced Transportation & Urban Mobility: Lyft part of global alliance competing with Uber, Nissan partners with Scoot Networks on urban mobility cars

Global network competing with Uber: As other industries such as airlines have found, sometimes it’s necessary to build alliances with several international partners to create a strong global network. The ridesharing business is seeing this happen with Lyft in the U.S., Ola in India, Didi Kuaidi in China, and GrabTaxi in Southeast Asia, announcing a strategic global rideshare partnership. The joint partner ride products will start rolling out in the first quarter of 2016. For international travelers, this alliance will offer seamless ridesharing across multiple countries.
Nissan has partnered with a small San Francisco company, Scoot Networks, to test out urban mobility concept cars. There will be 10 Nissan “New Mobility Concepts” tried out with the Scoot Network Mobility Service in San Francisco. Scoot offers shared, zero-emission, smartphone-activated vehicles that one can ride, as for now only in San Francisco. The idea works similarly to a rental, but the vehicles are a much faster, easy to park way to get around town. Scoot had only offered classic electric scooters and cargo scooters. Nissan bring its all-electric, two-seater vehicle with a range of 40 miles.
Meeting of the Minds 2015 convened Oct. 20-22, 2015 in Berkeley and Richmond, Calif. Go to this page to view videos, photos and media coverage of the event. A final report will be released in early 2016; in the meantime you can view discussion of a wide range of leading-edge urban mobility issues.
Zipcar president Kaye Ceille thinks big changes are coming through autonomous vehicles. Like many observers, Ceille expects autonomous vehicles to make car ownership less appealing and open up bigger opportunities for Zipcar. While most carsharing and ridesharing companies are about five-years old or newer, Zipcar is a more seasoned veteran. Founded in 1999, the company has a few war stories to tell living through the original dot-com bubble and bringing an all-new transportation concept to North America and beyond.
Those following the Hyperloop project look forward to find out who will win a competition laid out earlier this year by Elon Musk. On Jan. 15, 2015, Musk announced plans to build a Hyperloop test track and hold a contest in summer 2016 at SpaceX headquarters in Hawthorne, Calif. The goal is creating a functioning, half-scale pod. Specs for the test track’s tube were released in October. A design weekend for finalists will be held at Texas A&M University on Jan. 13, 2016.
Self-driving car forecast: Britain’s Juniper Research forecasts that by 2025, self-driving vehicles will represent less than 1% of the vehicles in use around the world – but it’s not a small number. As many as 20 million of these vehicles likely will be operating on roads around the world by the middle of the next decade. Tesla Motors releasing its new Autopilot feature this fall has moved the technology forward faster than expected. Cadillac, Mercedes-Benz, BMW, and Nissan are among the makers planning similar autonomous features in the next few years. Nissan promises to have its first fully autonomous model in production sometime in 2020.
Ford is joining up with several competitors in offering Apple’s Siri voice command service. But unlike some of its competitors, Ford will allow owners of vehicles dating back as far as the 2011 model-year to add the popular feature to their cars. Ford vehicle owners can go online, download the update and then plug it into vehicles equipped with Sync and Ford’s MyFord Touch infotainment system.
Navigant Research has published two urban mobility reports. One study analyzes smart urban mobility infrastructure and services being offered in smart cities; topics covered include the market for carsharing and rideshare services; public EV charging equipment and services; smart parking systems; congestion charging schemes; and advanced intelligent transportation systems. The popular Internet of Things (IoT) concept is explored though a study on technology services for residential customers. Smart thermostats allow a user to remotely control household temperatures via a smartphone. Smart meters can connect to thermostats for demand response. According to the Navigant study, the residential IoT market is being driven by a desire to enable devices to communicate and share information for the purposes of greater efficiency, automation, security, and comfort in homes.

Why Uber is seeing hyper growth in rides delivered and is influencing the future of transportation

Earlier this month, Uber celebrated its five-year anniversary since startup. CEO Travis Kalanick spoke to an audience at the company’s hometown of San Francisco and said that Uber provides more than one million rides per day, and does business in more than 300 cities in 30 countries around the world. He paid tribute to Uber drivers delivering service to riders while driving their own cars. Kalanick also ticked off a list of Uber’s contributions: less traffic congestion, cleaner air, and more jobs.

The number of trips being completed each day, and the revenue coming from those trips, have been booming in growth rate this year. Uber forecasts that its net revenue, or the amount it keeps after paying out drivers, will be more than $2 billion this year. That would be five times its 2014 net revenue of about $400 million. There’s also been extremely high valuation for the company – $41 billion – placed by investors in a recent funding round. Along with competing directly with taxi and limousine services for rides, Uber is investing heavily in package and cargo delivery, food deliveries, and setting up a strong presence in China through a $1 billion investment.

The company, called Uber Technologies Inc., is finalizing a $2 billion credit line with seven banks (compared to Tesla Motors’ recent addition to have access to a $750 million credit line); that five-year facility for Uber, known as a revolver, would be priced a half-percentage point lower than already competitive rate initially discussed, sources said. Analysts are pondering whether securing that large credit line from Wall Street will lead to an initial public offering (IPO) on the stock market, which that type of financial arrangement usually precedes. Kalanick didn’t mention the possibility of taking the company public during his five-year anniversary speech, but it’s possible that could be in the works.

Uber also faces a huge challenge that could shape its future; that challenge comes from a California Labor Commission decision last week that an Uber worker was in fact an “employee” – and not an independent operator as Uber has argued. The ruling awarded just over $4,000 to the Uber driver who filed the case; it ties into a separate class-action lawsuit brought by Uber drivers, where a federal judge is asking the jury to decide whether Uber drivers are indeed employees. The question becomes whether Uber will be spending a lot of its investors’ money fighting these cases, or if the company will be adjusting its financial model to pay more to drivers.

Uber also continues to fight the taxi and limousine industries for access to airports, and the right to do business, in cities throughout Europe and the US. Uber is taking away more business all the time from these transportation institutions. The New York Times reported that US airports are becoming more willing to try out allowing Uber and other ridesharing companies to have access to the airports – as a fee revenue source and because consumers are demanding access for Uber to drop them off and pick them up at major airports. Taxi and livery companies have been fighting ridesharing companies from having access to their markets without paying medallion and trip fees that they’ve had to pay all these years. Analysts warn Uber and other ridesharing firms about the liability issues they’ll face if there are a few serious collisions caused by Uber drivers that lead to class-action lawsuits.

San Francisco has been a hotbed of new transportation technologies and business models. Two other ridesharing (or sometimes called “car-hailing”) service providers, Lyft and Sidecar, also started up in that city. Carsharing services have also taken off in that metro area, along with electric vehicle adoption. All of this seems to come from the influence of Silicon Valley, and from area residents who prefer BART rides and transportation alternatives over having to take taxi rides or driving their car into a city where it’s extremely difficult and expensive to park. Uber says that about half its trips in San Francisco are ridesharing transactions, where passengers can save money on the trip by sharing the ride with somebody they don’t even know. Drivers must be willing to have somebody riding in the passenger seat next to them, and have two-or-three people riding in the backseat.

Uber is yet another example of how a new business model shaped by a mobile technology can disrupt and transform a market at a rapid pace. As automakers, Tier 1 suppliers, and transportation companies such as car rental and delivery companies, make strategic plans for the next 10-to-20 years, here are some of the issues affecting their future:

Millennials (late teens to early 30s) are extremely pragmatic about transportation: They make up the vast majority of Uber’s customers. Unlike previous generations, Millennials are not as likely to get their driver’s license on or near their 16^th birthday, and are tending to move into cities for work and lifestyle choices. Millennials are much more interested in getting a ride from a friend; taking a bus or train ride; walking; riding their bike; or whatever may make the most sense at that time and place. Many of them like the ease of use and coolness of using Uber – it’s right there on your phone and picks you up in five-to-10 minutes.

Why ever take a taxi ride again?: Getting a ride with Uber is about half the price of a taxi ride. You can do it quickly on your mobile device rather than booking an hour or so ahead of pickup, which is typical for taxi rides. Uber is ready to pay the driver automatically, once the passenger has set up their Uber account. Taxi riders pay for the trip using a card swipe in the back seat, which adds to the process and asks the question of whether or not you want to tip the driver. Uber riders are reassured that tipping is not a requirement. Uber passengers tend to like Uber drivers more than taxi drivers. That’s likely why Uber, Lyft, and Sidecar all started in San Francisco – a city where residents want more cost-effective and efficient transportation options. It’s also a city that has taxi drivers known for being just as aggressive as they are in New York City, many times cutting across lanes to beat other cars through the traffic. Some Uber passengers may want to chat with their drivers, asking them what it’s like to drive for Uber and how to beat stalled-out traffic.

Job opportunities in a fast-changing economy: Uber is exploring entry into other market segments like a food-delivery service (UberEats) and package delivery (think FedEx and UPS) that would probably need employee drivers; or independent contractors working structured schedules very similar to what employee drivers are given. For now, Uber drivers (which they call “Uber partners”) are independent contractors driving passengers in their own cars and paying all the operating costs. That may be changing in the wake of the California Labor Commission ruling, but for now self-employed Uber drivers are doing the work. Uber drivers appreciate the opportunity to make side income, and sometimes full-time income, in a job market different than it was just a few years ago. Some of these drivers have been laid off jobs in recent years or had their job duties increased in a reorganized work environment. They appreciate the flexibility and choice they’re given driving for Uber. One of Uber’s recent cable TV commercials shows the benefits drivers can gain, such as a mom picking up kids after school or a musician gaining extra time to practice for that next gig.

Research firm Benenson Strategy Group released study findings in December on Uber drivers showing that the drivers’ major reason for working with Uber is because it allows them more autonomy. Nearly nine out of 10 Uber drivers report that “being their own boss” and being able to set their own schedule was a primary reason they’re driving for Uber. The study also showed that the drivers are in a different generation than their passengers. More Uber drivers are over 50 than are under 30. In today’s work environment, employees over 50 are finding that there’s more pressure to retire, or are facing layoffs to make room for younger employees costing the company much less in labor expenses. That’s been in the works for several years – driven by globalization of the economy, advanced technologies changing the very nature of the work environment, and a heightened demand being made for increased profitability and efficiency – as taxi drivers are experiencing while Uber takes more of their customers away.

Ubiquitous in media coverage and in conversations: In a tribute to retiring late night talk-show host David Letterman, TV star comedian Ray Romano said that without appearing on “The David Letterman Show” in the 1980s, he would have never made it. “Without that moment, I’d be your Uber driver today,” Romano wrote in The Hollywood Reporter. It’s very common to hear pithy and iconic references to Uber these days during conversations you might listen to at the next restaurant table. It’s becoming nearly as pervasive as references to Tesla CEO Elon Musk being the cutting-edge technology guru of the day. Uber represents seismic shifts in lifestyles and mobile apps – and for many users, there seems to be enthusiasm and pride in being part of a revolutionary transformation in transportation and what’s called the “sharing economy.” Uber passengers tend to know about related services like Airbnb, a digital platform allowing customers to stay at someone’s house for a cheap price instead of having to pay more to stay at some name-brand hotel location. Uber passengers get to save money on transportation during a time when many of them are questioning whether or not to own a car now that they live in the heart of the city.

Uber is public enemy No. 1 for taxis and other ground transportation companies

Taxi services, chauffeured transportation companies, and other players in ground transportation, are attempting to exorcise a demon: Uber. This San Francisco-based network company makes mobile applications that connect passengers with drivers of vehicles for hire and ridesharing services. Taxi drivers have protested recently in Los Angeles, London, and Milan, Italy; they’re furious that Uber drivers don’t have to pay the steep prices for taxi licenses that taxi drivers end up paying off over several years. Chauffeured transportation companies are upset that Uber is entering major metro markets without complying with long-standing regulations, which can allow for undercutting of prices while using substandard practices for passenger safety and customer service.

Ride-sharing mobile apps are becoming more popular through Uber, Lyft, and Sidecar. This is happening during a time when carsharing services provided by Zipcar, Car2Go, City CarShare, and DriveNow, are gaining traction and subscribers throughout the US and Europe. Ground transportation companies – taxis, limousines, livery, shuttles, and buses – would love to see these companies go away or have their market presence reduced. Uber represents a new business model that could steal business from traditional ground transportation options.

Using the mobile apps is taking off because it’s cheaper than taxi rides and you can do it all on your smartphone or tablet. It’s hot enough for Uber to recently have raised $1.2 billion in venture capital in a deal that valued the company at $18.2 billion.

Uber doesn’t own any cars and has no drivers as employees. It matches up a driver/car with a customer looking for a ride and takes a percentage of the trip fare. Uber says that its value comes from screening its drivers, its pricing/payment system where customers can choose their service level and vehicle (ranging from a car to an SUV), and convenience. Customers can track the car on their phone and get a good idea of when pickup will be taking place.

Taxi companies and other transportation providers would like to see governments address the issue of driver background checks and insurance coverage for their drivers. Not long ago, an Uber driver was arrested in Southern California on suspicion of kidnapping a woman and taking her to a Panorama City motel. Prosecutors ended up dropping the case, but Uber did ban the driver.

The North Carolina Limousine Association (NCLA) and several other chauffeured transportation associations, would like to see governments crack down on Uber and other ridesharing apps. Uber has showed up recently to compete for passenger transportation in the Raleigh/Durham area. NCLA members are concerned about “rogue apps” and drivers hurting their markets. Uber doesn’t have to comply with long-standing regulations, which can allow for undercutting of prices while using substandard practices for passenger safety, limousine operators say.

The solution would be regulatory agencies enforcing insurance coverage rules, says Mark Mazza of HUB International, a chauffeured transportation company. Several cities, including Seattle and Miami, have removed Uber and similar providers from their areas using this approach, Mazza said.