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

Didi in ChinaIt’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.

Personal mobility and advanced vehicle technologies moving beyond theory into reality

There have been a few news breaks in recent weeks about automakers expanding technology offerings and acquiring new partners. They reinforce the idea that OEMs are moving beyond building and selling cars to offering a wide range of transportation services.

  • Faraday Future FFZERO1Faraday Future: This Chinese startup has been getting a lot of attention in the past few months, with that culminating at the Consumer Electronics Show in Las Vegas. The company is backed by Chinese billionaire Jia Yueting and plans to build a 900-acre, $1 billion factory in Nevada in the near future. Faraday Future unveiled the Batmobile-like FFZERO1 in Las Vegas, which has four electric motors (one at each wheel) combined that deliver more than 1,000 horsepower, enough to send the car from 0 to 60 mph in under three seconds and to a top speed of 200 mph. What’s been most interesting about Faraday is the platform architecture that it’s built on. It’s very flexible – Faraday can add or remove batteries, shorten or extend the chassis depending on the body that will be attached, or other applications. It’s a much faster process than what traditional OEMs go through – new vehicles can be production ready in 18 to 24 months, the company said. There’s talk about Faraday Future vehicles being deployed in Uber-like ridesharing services and as autonomous vehicles. Wherever this new startup is heading, it gained a wave of buzz and news coverage at CES and the Detroit Auto Show.
  • Maven: General Motors Co. has raised eyebrows in the auto industry since the beginning of this year with its $500 million investment in ridesharing company Lyft and acquisition of the assets of Sidecar, the third largest ridesharing company in the U.S. after Uber and Lyft. The story is getting even better. GM has just launched Maven, a carsharing service allowing users to access a Chevrolet vehicle on the new Maven mobile app for as little as $6 per hour, similar to what Zipcar offers. Services will start up in Ann Arbor, Mich., and will expand over to New York City, Chicago, and a peer-to-peer sharing program in Germany, serving residents of Frankfurt and Berlin. This will be in addition to ridesharing services (and eventually autonomous vehicles) through its relationships with Lyft and Sidecar. GM expects 25 million customers to use ride-sharing services globally by 2020, up from between five and six million today.
  • Ford: CEO Mark Fields described Ford’s continued commitment to urban mobility during a keynote speech at CES and at the Detroit Auto Show – and now there’s also FordPass. Fields thinks that transportation services are the biggest area of potential growth for automakers following a year of sales the industry may never surpass (and that will eventually shrink). Ford Motor Co. just launched a new app-based platform called FordPass. It lets users access a variety of transportation services including paying for downtown parking or sharing their vehicle. The app has four main service categories: a marketplace for mobility services; “FordGuides,” who are accessible through texts or phone calls for guidance and needed information; “FordHubs,” which are actual buildings across the globe where customers can experience Ford technology; and a loyalty program in which app users can earn points and rewards. These services are being carried out through partnerships with mobility companies and Silicon Valley-based startups. Last year, Ford tested a carsharing program in six U.S. cities; this may be one of the FordPass services announced in the future.
  • Daimler: In September 2014, Daimler acquired ridesharing apps RideScout and myTaxi. It was part of Daimler’s continued push beyond car manufacturing and into developing technology for urban mobility. Along with its major carsharing division, Car2go, Daimler has been looking into a wide spectrum of personal mobility services to offer in global markets. Complications have come up for Daimler with a German court ruling this month that heavily discounted fares offered to customers who paid electronically via the myTaxi app were illegal. The case was file by German taxi operator group Taxi Deutschland, which offers a competing app. MyTaxi operates in 40 European cities, including in Germany, Austria, Italy, Poland, Spain, and Switzerland. The app has more than 10 million registered users, the company says.
  • Tesla Motors has been tweaking safety features on its Autopilot connected car/autonomous vehicle service. Tesla CEO Elon Musk said the car will now reduce its speed in anticipation of curves on the highway, but added he was not aware of any accidents caused by the earlier version of the software. The function will now be restricted on residential roads or roads without a center divider, so that the Model S or Model X can’t drive faster than the speed limit maximum plus five miles per hour. There have been several videos on YouTube in recent months showing near-misses on roads with Autopilot, which has pushed Tesla into addressing safety features. Musk said Autopilot was “probably better than human at this point in highway driving,” able to keep to its lane using cameras, radar, and mapping.


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

  • UberGlobal 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.

Green Auto Market adding new department on advanced transportation and urban mobility

Urban mobilityAs I discussed last month during a workshop in Sacramento with colleagues, the “urbanization” trend with traffic congestion and air pollution is driving policy changes and increased use of transportation alternatives such as carsharing and ridesharing. Starting in this week’s Green Auto Market, a new department will join the Top 10 clean transportation stories: Advanced Transportation & Urban Mobility. Along with following companies such as Lyft, Uber, Zipcar, and Car2go, other topics that will be tracked and analyzed will include: autonomous vehicles, smart transportation, advanced vehicle technologies, Hyperloop and bullet trains, intelligent transportation systems, and connected cars. Here are some interesting advanced transportation developments over the past week………

  • The global electric vehicle racing event, Formula E, will be adding an autonomous electric car race next year. RoboRace will launch one-hour races designed to test artificial intelligence. These races will have 10 teams and 20 cars competing, and will take place on the same day and racing circuits as the Formula E championship. Kinetik, the company that will build all the cars for RoboRace, is “trying to make them better than humans. So it means we expect the cars will have high acceleration and high speeds,” said Denis Sverdlov of Kinetik.
  • Amazon CEO Jeff Bezos is taking on SpaceX and Tesla Motors CEO Elon Musk. Blue Origin, based in Kent, Wash., and founded by Bezos, launched a rocket into space and landed it back on earth vertically on Monday of last week. While SpaceX was able to vertically land a rocket two years ago, that rocket hadn’t gone out into space. Blue Origin’s New Shepard rocket reached 329,839 feet before returning to touch down on its Van Horn, Texas concrete landing pad. That rocket can be reused and may increase the frequency of launches; Bezos would like to carry tourists as well as cargo payloads into space. SpaceX does have an edge over Blue Origin on carrying payload. Blue Origin hasn’t been used yet for carrying a payload while SpaceX’s rockets have been used for commercial, military, and NASA payload launches since 2012. SpaceX will be taking its first human transport mission to the International Space Station in late 2017.
  • Uber is moving forward in navigation technology through agreements with TomTom and Microsoft. Uber will use TomTom’s maps and traffic data for its ridesharing service. Uber also acquired Microsoft’s mapping technology and the key personnel that came with it. Earlier this year, Uber also acquired veteran location industry company deCarta. Mapping data is expected to be key in Uber’s strategy to be a major player in autonomous vehicle technology.
  • The number if people using carsharing services is expected to mushroom over the next five years. Berg Insight predicts that the number of people around the world using carsharing services will grow from 6.5 million this year to 26 million in 2020. The number of vehicles used in carsharing is expected to grow from 123,000 cars today to 450,000 by the end of 2020. Technologies such as telematics systems and smartphones will support this growth, along with expansion of one-way carsharing that enables users to return the car to any station operated by the carsharing firm. Carsharing growth will also come through new markets accessed by major and local carsharing services; and through car-based mobility services from car rental, carpooling, ridesharing, taxi, and ridesourcing services.
  • Daimler’s carsharing service, Car2Go, is testing out a promotion to grow its membership. From now through Dec. 6, Car2Go is reducing its sign-up fee for new members from $35 to $5, and adding 60 minutes of free travel time. In addition, existing members will see the per-minute fee for signing out a car drop from 41 cents to 19 cents. Paul DeLong, the carsharing service’s CEO and president, sees the program as a way to both recruit new members and inspire existing members to use the service more regularly – and to compete with ridesharing services Uber and Lyft, which have been taking away market share. It should also help improve community relations in its home market of Austin; Car2Go had downsized its presence in the market, which received criticism from users who found their home or office suddenly cut out of the service area.


Snapshot of clean, smart transportation: We’re living in a very interesting time

Urban mobilityAre clean, advanced technology vehicles going away because of low gasoline prices and car shoppers turning their attention elsewhere? Do transportation alternatives like ridesharing, carsharing, and self-driving cars stand a chance of surviving and thriving? Read on for interesting market trends……….

Navigant Research expects global light-duty vehicle (LDV) sales growth to continue over the next 20 years – from 88.8 million vehicles this year to 122.6 million sold in 2035. Navigant Research sees changes driven primarily by the adoption of vehicles with various levels of drivetrain electrification and vehicles that run entirely on alternative fuels. New transportation business models for LDVs such as carsharing programs alongside increased urbanization is likely to put downward pressure on vehicle sales in the long term, Navigant Research says. As for the 20-year forecast, change is being driven by government-led initiatives to improve fuel economy and market demand for alternative transportation options and alternative fuel vehicles. “LDVs primarily fueled by gasoline are expected to fall as a percentage of the overall global fleet from 82% in 2015 to less than 71% in 2035, particularly as diesel, electricity, and other alternative fuels become more price competitive and their respective infrastructure becomes more available,” says Scott Shepard, research analyst with Navigant Research.

While gasoline prices have been hurting hybrid and electric vehicle (EV) sales in the U.S., other countries are seeing growth in EV sales. The U.S. share of the market is expected to drop as sales stall out here but grow in other countries. Global EV sales in 2015 through May came in at more than 160,000 units, of which the U.S. saw only 39,000 deliveries. In Norway, a third of its new vehicle sales were EVs in the first quarter of this year, and the Netherlands saw it become 5.7% of its share during that time (compared to about 0.8% of new vehicles sales in the U.S.). For this year, U.S. sales are expected to stay flat, but are likely surge next year and in 2017 with higher production and new entries from several high-volume makers. The 2016 Chevrolet Volt and an all-new Nissan Leaf released in 2017 or 2018 are expected to make a difference. The Tesla Model X, which is expected to double Tesla’s annual sales, is slated to show up in China in the first half of next year after being introduced in the U.S. sometime this quarter.

Automotive media and market analysts have decided that green vehicle sales are being trashed by low gasoline prices and affordable fuel efficient cars. That being said, they can’t stop dwelling on (obsessing over?) the topic. LA Times’ veteran automotive reporter Jerry Hirsch wrote two features about it, published within a day of each other last week. Hirsch is up there with USA Today’s Chris Woodyard as an expert reporter on green vehicles for a major media source. In “Setting the record straight on five common green car misconceptions,” Hirsch educates readers on topics such as range anxiety, hybrid battery cost, and the myth that EVs cause just as much pollution as gasoline-engine vehicles. In “What kind of car is the most green, fuel efficient and budget friendly?”, Hirsch worked with the Union of Concerned Scientists to examine seven powertrain options, analyzing their greenhouse gas emissions — including the power plant pollution required to produce electricity — along with their relative fuel efficiency and cost of operation. They found that battery electric vehicles are the cleanest and least expensive to operate. Richard Truett of Automotive News cares enough about the topic to have written a detailed report on gas prices and automaker product planning last week. For the federal mandate on fuel efficient vehicles, Truett thinks that, “If automakers can’t make money or at least break even on electrified and fuel-efficient vehicles, all bets are off. There are already rumblings around Detroit of asking the government to push the 54.5 mpg requirement out past 2025.”

One of the largest airports in the U.S. has allowed ridesharing leaders Uber and Lyft to begin picking up passengers. Despite protests by taxi drivers, Los Angeles (LAX) airport officials agreed Thursday to permit ridesharing/ride-hailing companies such as Uber and Lyft to pick up, and not just drop off, their passengers. That could begin as early as late August, subject to final approvals by airport officials and the city attorney. For the 2,361 licensed taxis serving that airport, many of them see LAX as their last remaining stronghold as ride-hailing eats away at their fares. Orange County’s John Wayne Airport began allowing ride-hailing services to pick up at the airport earlier this year. Uber revenue is expected to skyrocket this year – from $400 million to $2 billion, as consumers (primarily members of the 18-35 year old Millennial generation) choose Uber over taxis and other transportation sources.

Google continues to test its self-driving cars, and has seen injuries from one of the collisions for the first time. During the 14th accident from one of these test vehicles, a Google autonomous vehicle was rear-ended on July 1 near the company’s corporate campus in Mountain View, Calif. Three Google employees were taken to a hospital to receive treatment for “minor” whiplash. The driver of the other vehicle who hit the Google test car also suffered some minor injuries. Google’s test program generated headlines earlier in 2015 when it was revealed that more than a dozen crashes have occurred and the other drivers have been blamed. With the latest crash, the Google vehicles have been rear-ended in 11 of the 14 incidents. The test program has been using Google’s own driverless cars, and initially used modified Toyota and Lexus vehicles; the test project so far has driven over 1.9 million miles.

U.S. consumers are still concerned about losing control of their vehicles to self-driving cars, according to a recent survey by University of Michigan’s Michael Sivak and Brandon Schoettle of the Transportation Research Institute. The survey polled 505 people and found that 43.8% didn’t want any form of autonomous technology in their vehicles while 40.6% were comfortable with some level of self-driving tech. There was a nearly unanimous response to one question that doesn’t bode well for Google and its vehicles: 96.2% of respondents want a steering wheel, brake and gas pedal in their vehicle no matter the level of autonomy. Perhaps they will need to remain semi-autonomous vehicles? Along with Transportation Research Institute’s study, the university announced last week that it will be opening a new testing site for connected and driverless cars. The 32-acre testing grounds, called Mcity, are designed to simulate urban and suburban roads with a network of controlled intersections, traffic signals, streetlights, sidewalks, construction obstacles, and more. The test track is operated by the university’s Mobility Transformation Center and is an extension of a federally funded pilot program to study connected vehicle technologies at the university. Three years ago, the Transportation Research Institute launched a safety pilot program; that test program includes the deployment of about 9,000 vehicles – cars, commercial vans, buses, and motorcycles equipped with transmitters and data-logging devices to track position, acceleration, and velocity of vehicles and infrastructure.

Carsharing continues to see much interest as a transportation alternative in cities like Paris, San Francisco and Boston. Automakers and car rental companies continue to acquire or partner with carsharing startups like Zipcar, Car2Go, Getaround, and City CarShare. More than 1.5 million people are already using these services in the Americas, according to new research from UC Berkeley. As automakers and car rental companies expand their offerings, the business model is based on efficiency and easing congestion in crowded urban environments where carsharing makes a lot of sense. “This allows flexibility for the operator to serve more people with a single car,” said Susan Shaheen, director of Innovative Mobility Research at the University of California, Berkeley’s Transportation Sustainability Research Center.

Carsharing and ridesharing services gaining more interest from major automakers

UberAutomakers may follow Daimler’s lead in carsharing and ridesharing services. Daimler’s Car2Go carsharing service has been opening new locations in North America and Europe this year – and now Toyota and Ford are investing more in these alternative transportation services.


Toyota’s i-Road is a small three-wheel car that’s being tested out in a carsharing program in Tokyo designed to support public transport. It’s also being used as part of a carsharing program in the French city of Grenoble. Toyota’s concept is tied into commuting workers in cities who may choose to switch from their car to trains while going to and from work.


The Toyota i-Road is small enough to cut through traffic and may help alleviate congestion in cities. It’s being tested out for now with carsharing service Park2 and is being marketed to corporate clients and individual members.


Ford is also funding a test project that could bring a ridesharing service to the market that would compete with Uber. Ford is working on its own ridesharing mobile device application and a vehicle that would provide the transportation. Ford’s ridesharing shuttle may be tested out on the streets of London staring later this year.


There are no details on the vehicle yet, but it will be a “dynamic social shuttle,” that’s part of about 25 experiments Ford has taken on. It’s part of Ford’s game plan to focus less on vehicle manufacturing and more on mobility.


Automakers are closely following the growing interest in ridesharing services like Uber and carsharing services such as Car2Go and Zipcar. They’re following the demographic trends of more people moving into major urban environments, and younger potential customers putting off getting their drivers licenses and vehicles. Vehicle sharing could also help alleviate traffic congestion and air pollution in densely populated cities.


BMW also sees it as a way to get consumers more excited about owning one of their products. Richard Steinberg, who used to head up BMW and Mini’s electric car sales in North America, now serves as CEO of DriveNow USA, a BMW-owned carsharing program. “We definitely get lots of people excited about being behind the wheel of a premium product,” Steinberg said.


BMW appears to agree with Ford on the changing role of automakers. BMW has added that it not only leads the way on premium products but it now includes the phrase “and premium services for individual mobility” in its mission statement, according to Steinberg.


Major auto insurance provider USAA is taking ridesharing very seriously. USAA is working with state insurance departments in Colorado and Texas to offer coverage for drivers in Uber and other ridesharing services. “Ridesharing is a growing industry, and it’s important that our members have the right insurance coverage,” said Alan Krapf, president, USAA Property and Casualty Insurance Group. State Farm and Allstate are also looking into different insurance coverage options for drivers who work for ridesharing companies.

I Betcha: My take on clean transportation trends to watch in 2014

Cadillac ELR and smart gridLuxury extended range cars: Extended range, plug-in hybrids will see their next luxury models hit the market next year. The Fisker Karma was the first one, but those sporty luxury cars have been out of production for quite a while now. The two models to watch in 2014 will be the Cadillac ELR and the BMW i8. The 2015 Cadillac ELR will start showing up in January at dealer lots and will start at $75,955. The 2014 BMW i8 will go for $135,625, including a $925 destination charge, when it shows up in the US during the spring season. They’ll be competing with the Tesla Model S, BMW i3, and later in the year, Tesla Model X crossover, all of which are battery electric vehicles. The extended range models are pricy even after federal tax credits and state incentives but offer the benefit Fisker has been selling – reduced range anxiety. Their production volumes will be limited, but GM and BMW have a lot of experience in successfully making and marketing luxury models.

Pricing:  MSRP pricing for electric vehicles dropped in the first half of 2013 to the extent that the “price war” label could be applied for the first time. I would expect to see more of that happen including the cost of buying a Level 2 charger and having it installed in your garage. Multi-unit Level 2 chargers installed in parking garages, condos, and workplaces, are becoming a little bit more cost competitive, too. Converting business vehicles over to natural gas or propane may take a while to see a significant price drop – it’s still small in transaction numbers. Perhaps seeing more pickup trucks from the Big 3 with those alternative fuel options will push the cost down in a more competitive marketplace.

Connectivity: Seamless and simple connectivity between the smartphone and dashboard is expected by car owners today and has huge potential for improving the driving experience – such as not getting lost and making the trip more fuel efficient. It also has a lot to do with finding the right charging stations and alternative fuel spots – ones that actually work and will accept your payment method.

Responding to a crisis as an opportunity: Check out this blog post by Roger Lanctot, associate director, automotive practice, at Strategy Analytics. He makes the point that Tesla’s software update after its Model S battery fires tells a story about the issues automakers are facing on responding to customer perceptions and working with their dealer networks. Tesla was able to announce a software update to raise the speed at which the car automatically lowers itself by an inch for better aerodynamics. Other automakers, including Chrysler and Toyota, can provide their customers with software updates via smartphones for app updates and installation. This has happened despite dealer resistance. Lanctot, who led a speaker panel in November at Connected Car Expo, makes the point that GM (and OnStar) and other OEMs could do well to learn something from Tesla’s solution for software updates and the marketing points the automaker can score (and, I would say, customer retention). I would also say that turning problems into opportunities is there for every clean transportation technology – finding enough alternative fueling and charging stations, lithium battery durability, range anxiety concerns, dependability of the engine while using the alternative fuel, bringing a new fuel or powertrain into the fleet, and justifying the investment.

Lightweighting: For automakers in the US and Europe to meet ambitious government mandates on fuel efficiency and carbon emissions, ligthweighting the vehicles is being tried out – bringing in more magnesium alloys (BMW), aluminum (Ford in the next F-150 pickup), and using more plastics (every OEM) being clear examples. The biggest concern has been safety – metal might be heavier than its alternative, but it’s more likely to retain its structure during a collision or once the vehicle is weighted down with a lot of cargo. Government safety standards are more stringent these days, but there needs to be more confidence in the testing procedures.

Infrastructure: It’s the classic quandary in clean transportation. Will people really buy enough of these green vehicles to turn a profit? Is there enough alternative fueling and charging infrastructure to alleviate their range anxiety? The numbers are getting better (as readers of the monthly Green Auto Market Extended Edition can confirm – where stats on charging and fueling stations are reported each month). One of the ways this is seeing improvement is through local market alliances, many times organized by Clean Cities coordinators. Infrastructure suppliers play a key role, too. In this Green Auto Market interview, Schneider Electric’s Mike Calise talked about an alliance bringing together stakeholders such as employers, a carshare service, Schneider Electric, and Toyota to set up train stations with EV charging, carsharing, and bike stands. The concerns of community stakeholders have to be addressed and integrated within the infrastructure planning to get the necessary buy-in.

A few other points to make. Don’t write off biofuels in the wake of the EPA’s Renewable Fuel Standard decision. Or with concern over the economic viability of the fuel, or whether environmental concerns offset their advantages. Check out Biofuels Digest – you may be astonished at how big advanced biofuels are becoming as an industry and what investors think about it. A lot of it has been going on outside of transportation, but that’s starting to change. Carsharing and van pooling are starting to take off in the US – Zipcar, City CarShare, Enterprise CarShare, Hertz 24/7, and Car2go (a Daimler subsidiary) are expanding in several markets, and I’m starting to see a lot more van pooling services out on the roads. Fleet managers are extremely important stakeholders and decision makers to follow. Pay attention to what Claude Masters, NAFA’s president, is up to including organizing workshops with CALSTART. Fleet management companies (such as ARI, PHH Arval, GE Capital Fleet Services, Wheels, Enterprise Fleet Services, and Donlen) are offering fleets more services in sustainability, clean transportation, and alternative fuel vehicles.

Millennials and GenY: How to market green transportation and employ them without getting too annoyed

Millennials and GenY on their phonesMost everyone reading business news these days and going to conferences are hearing a lot of information on young people, who are typically referred to as Millennials or GenY. The number of young people in this demographic is huge – kids of Baby Boomers are much larger in numbers than the previous generation, which has been called GenX. It’s good to get educated and updated on some of the study findings, as these people are being educated and employed, working up the ranks, and are making very significant transportation decisions. So here are a few trends and perspectives to think about…..

  • Age range: They’ve been born somewhere between 1980 to the mid-1990s – so they’re about 18 to 33 years old.
  • No longer in love with cars:  While their parents got their drivers licenses soon after turning 16, that’s getting extended much longer these days – some of them up to age 20. Their interesting in buying a car or inheriting an aged family car is much less than it was 25 years ago. There’s a lot of concern among automakers and dealers that this huge market segment is buying fewer cars than Baby Boomers and Generation X – and that there’s quite a lot of them.
  • They are very interested in green transportation – hybrids and electric vehicles; car sharing and public transportation makes sense to them. They are more likely to embrace autonomous, driverless vehicles than their parents seem to be. They’re very utilitarian about transportation and don’t look forward to driving spacious cars and crossovers, luxury vehicles, or pickups like many other consumers in the US market. We’re starting to see a lot of recognition of these deeper trends from BMW testing out EV and urban transportation options, and Ford being active on intelligent highway consortiums. Automakers are starting to change their identities from vehicle manufacturers to transportation providers, and seem to recognize that it’s critical to go this route to engage brand loyalty from Millennials.
  • Extremely pragmatic and independent – with “Whatever!” being their teenager mantra: You may notice young people don’t carry some of the social order unspoken rules that their parents did. If they’re dating someone from another racial/ethnic group or have friends who are gay, lesbian, or bisexual, it’s not an issue for them. They don’t seem to understand their parents being uneasy about it. Dad might say, “Well, one of my friends in college was gay,” to offer support, and his son will tell him that he’s being discriminatory.
  • Don’t have the same work ethic and habits of someone over 40: Mom and dad might be willing to work really long hours and get pay raises, but their kids usually march to the beat of a different drummer. They tend to be focused more on basic living expenses and pragmatic necessities. Many times, they were given a lot of stuff already by their parents and it doesn’t impress them all that much anymore. They might get absorbed in a new project at the office for a few weeks, but won’t necessarily consistently deliver on what was asked of them by their employers. That can be a source of frustration for young employees and older supervisors who see a generational split.
  • Very special education: They received lots of awards at school from an early age for just about anything, including showing up in the classroom. Their parents demanded excellent education for them and moved them to the best high schools to get the highest test scores, earn college credits, and take music lessons. The sad part is that many of these kids have bachelor’s and master’s degrees and are struggling to get jobs.
  • Distraction is a problem: They grew up gaming and surfing the web – and do spend a lot of time staring into their phones. They’re capable of doing four things at once, but focusing on one task for very long can be tough for them – not to mention for their supervisors. There’s a lot of emphasis lately on distracted driving by young people being a crisis, according to safety specialists. However, that might be a bit extreme since there are less of them driving than in the past and cars are safer these days. The problem with people texting and talking on their smartphone while driving extends to all generations; state laws are getting tough to try and deal with it.
  • Get creative about connecting with them. As Scott Pechstein, VP of Sales for Autobytel recently told Automotive Digest, it’s taking a lot of work for dealers to reach young consumers. Facebook, social media, and reputation of the dealership is important to them. Social media and speaking to them via text in the style and method Millennials want to be spoken to are necessary to reach the market segment.
  • Younger people see cars quite differently: New car-sharing services, travel applications and other technological tools are contributing to a broader shift away from driving among Americans, especially younger ones interested in digital multitasking on the go, according to a study released by the US PIRG Education Fund. “Personal auto ownership used to be the clear ticket to mobility,” said Joanna Guy, of the Maryland PIRG Foundation. “For baby boomers, driving your car represented freedom and spontaneity. But today — especially for younger people — owning a car increasingly represents big expenses and parking hassles.”
  • Younger car shoppers (especially first-time buyers) are very interested in seven-inch touchscreens on the new compact Chevrolet Spark. Pairing is available to the iPhone or Android and other mobile devices for contact lists, stored music, reading and composing text messages, videos and slideshows, and other perks on Chevy’s MyLink infotainment system.
  • There are persuasive articles out there saying Millennials are more similar to previous generations than you’d think. While their style, communications, interests, and love affair with cars seems to be different than their elders, they are coming through with typical behaviors seen for many years in the workplace and retail environment. Much of that comes through their background – education, family, peer group, opinions, life experiences, etc.

Big Picture: GM takes on Tesla, How to market green vehicles to nerds

GM CEO Dan Akerson’s strategy to wipe Tesla Motors off the map
GM CEO Dan AkersonThere’s more information coming out on General Motors’ agenda taking on competitor Tesla Motors. It seems to be based on the historic trend of a giant automaker wiping out a small startup. GM is willing to become the loss leader, and has the deep pockets to make up for it long term. GM CEO Dan Akerson told The Detroit News: “We’ll sell more (Chevrolet) Volts and lose less money on the Volts than they’ll lose on the (Tesla) Model S.” GM’s executive management wasn’t happy with the findings from a market study conducted during the summer and led by GM vice chairman Steve Girsky. Akerson is also skeptical that Americans will ever buy plug-in vehicles in large numbers. (Detroit News Reporter David Shepardson wrote that Tesla’s profits came entirely from California’s zero-emission vehicle credits and other credits – though many would disagree with that statement.) GM’s strategy to knock out Tesla seems to be based on a three-fold plan:  1. Flood the market with cheaper Chevy Volts.  2. Launch and flood more with a soon-to-be released $30,000 200-mile range electric car. 3. Go head-to-head against the Model S with the extended range, and comparably priced, Cadillac ELR. “But I do think when the (Cadillac) ELR comes out late this year, early next — it’s certainly in the same postal code as Tesla, but now we’re going to move up,” Akerson said. “It’s not going to be a mass-produced car.”

Toyota going very direct in its marketing of RAV4 EV
Marketing strategies used by automakers are changing at a consistently fast pace these days as unexpected trends and opportunities continue popping up; for example, what was initially a DVD rental company – Netflix – now produces and promotes its own TV series. Toyota has one of its own – marketing the all-electric RAV4 to go after tech-savvy early adopters who subscribe to DirecTV’s satellite service in Los Angeles, San Francisco, and San Diego. The TV ads are ending up on the TV screens of this micro-niche audience through what’s called dynamic advertising. Marketing data firms provide DirecTV with consumer information from credit cards and other sources to identify the most likely prospects that would have interest in the electric RAV4. These are consumers likely to buy new gadgets.

Already maxed out selling to early adopters? Don’t forget about nerds
Check out my post on Autoblog Green covering the launch of RideNerd.com. This could be the ultimate car shopping site for those consumers demanding detailed information on new car choices based on fuel economy, smog and greenhouse gas emissions, and cost of ownership. Nerds are hardcore researchers and analysts – and do comparison shopping to the nth degree.
Here are a few other points I would make about this unofficial market segment that could be of interest to those marketing new vehicles….

  1. They’ve loved gaming from an early age – Dungeons and Dragons, Playstation, X-Box, and Nintendo.
  2. They tend to have expertise in what’s being displayed at Comic-Con.
  3. They tend to have an odd sense of humor – enjoying gallows humor, social satire, and bizarre movie scenes such as the Knights of the Ni demanding shrubbery in “Monty Python and the Holy Grail.”
  4. They’re generally strong in mathematics and science during their school years.
  5. Being right about something is a very big deal; debates go over well unless the nerd can be proven wrong – then it doesn’t go so well.

If you’re wondering how I’ve become so well informed about the lifestyle habits of nerds…. Let’s just say I only performed above average in math and science classes, but I’m good at asking engineers (aka “engi-nerds”) and scientists to explain, in layman’s terms, the nuts and bolts. I’ve never been too interested in gaming and haven’t purchased graphic novel superhero biographies. I do watch the Monty Python movie whenever I get a chance.

Tesla-Mania:  Tweeting for engineering staff to deliver self-driving cars
Of course Tesla Motors CEO Elon Musk couldn’t let self-driving cars slip away as major automakers have announced plans to roll out autonomous cars by 2020. Musk and his company have covered it all – Tesla’s own branded version of fast chargers, battery swapping, the fastest commuter rail line concept ever conceived, customized lease packages, fashionable retail stores and service centers, Model S road trips, and chumming with loyal Twitter followers. Musk recently tweeted a “help wanted” ad on the social media site. He’s calling it an “autopilot system” for the Model S. Engineers who’d like work on that project for Tesla should contact the company at autopilot@teslamotors.com.

Car sharing is here to stay, and growing to large numbers
Navigant Research thinks car sharing is set to fly – from the current number of 2.3 million subscribing members around the world to more than 12 million by the end of the decade. Global revenue is expected to be growing by a large volume – from $1 billion this year to $6.2 billion in 2020. Automakers and car rental companies have jumped in the pool, taking on Zipcar (owned by Avis) and a few other upstart brands.

Chesapeake leaves natural gas vehicle market
Chesapeake Energy Corp. has eliminated its seven-member natural gas vehicle team, which had been responsible for part of the Oklahoma City-based oil and natural gas company’s efforts to develop additional markets for gas usage. Chesapeake has played an important role in adoption of NGVs and development of the infrastructure, and these vehicles play a major role in its own fleet, as Tim Denny, Vice President of Administration, explains in this video. Rich Kolodziej, president of Natural Gas Vehicles for America, said Chesapeake has been an important player, but other companies and organizations have taken on that role now.

Ford employees gaining access to workplace charging stations
Ford Motor Co. is joining ranks with what a few competitors have been doing – installing electric vehicle charging stations – at more than 50 of its US and Canadian offices and manufacturing plants. It’s being done to offer employees a perk – making workplace charging available. The automakers will start installing its 200 chargers in November and will continue rolling them out next year. Employees will be able to charge free for the first four hours on any Ford vehicle.

Goodbye car guys, hello smart transportation players

traffic in LAThere’s more evidence that change is in the air, when it comes to car ownership in America.

The University of Michigan Transportation Research Institute (UMTRI) just released two studies on the issues. One study showed by that the rate of vehicle ownership on a per-person, per-household, and per-licensed driver basis peaked in 2006 prior to the Great Recession. Another UMTRI study found that there’s been a significant decline in vehicle miles traveled – those numbers peaked in 2004.

The studies have found change is due to increased telecommuting, higher use of public transportation, greater urbanization, and changes in the ages of drivers. A big one is Gen-Y/Millenials losing interest in drivers; only 28% of 16-year-olds had driver’s licenses in 2010, compared with 44% in 1980, according to UMTRI. Miles driven by young people 16-to-34 years old also dropped quite a bit – 23% between 2001 and 2009. Older drivers also play into it – they make up the majority of drivers on American roads and are tending to drive shorter distances.

Expanded transit systems and bike-share networks are also playing into less miles driven behind the wheel. Bicycle commuting in the US grew by 47% between 2000 and 2011, and at much higher levels in a few bike-friendly cities.

As recently reported in Green Auto Market, Southern California is once again the bellwether of changes in transportation trends.

  • Light rail has been expanded 26% in the past eight years. Bike lane networks have doubled to 292 miles. Bus and train ridership is growing – up nearly 5% in May 2013 versus May 2011.
  • Even more significant – the total number of passenger cars has declined in Los Angeles. The market rebounded from the recession, but the 2012 sales numbers were 28,000 less than five years earlier.

Transportation alternatives, sometimes called Smart Transportation, are gaining a lot more interest in sprawling urban environments. It’s tied to consumer interest in…..

  • Carsharing, vanpooling, and group transportation modes.
  • Alternative vehicle technologies including plug-ins, hybrids, and alternative fuels.
  • Bike lanes and safety gear for bicyclists.
  • Light rail and busing.
  • Living closer to work and retail stores with more foot traffic – and less annoyance with finding parking spaces and being charged fees for them. Plus more telecommuting through the latest technologies.
  • Eventually, advanced vehicle technologies are expected to play a larger role in the solution through autonomous vehicles that can park themselves and eventually driverless cars. Safety, reduced traffic congestion, and cleaner air are typically cited reasons for moving forward in these breakthroughs.