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DAIMLER AND VOLVO PLAN FOR A DIGITAL FUTURE: Two of Europe’s biggest automakers are looking at how they can change their businesses to better compete in the future of autonomous and shared mobility, media outlets report.
- Daimler is reportedly finalising plans to split its car and truck businesses, Bloomberg reports. The major restructuring would result in two separate entities — Mercedes-Benz Cars & Vans and Daimler Trucks & Buses. The two new entities, along with its separate financial services business, will be housed under the umbrella of the Daimler holding company. Daimler wants to split the car and truck businesses to grant them more independence and flexibility to explore new technologies, partners, and business models, as well as possibly spinoff additional business units, in the future. The two entities will also continue to partner on joint initiatives like developing self-driving technology for cars and trucks. Daimler hopes the move will help it defend its position as the world’s largest manufacturer of luxury cars and heavy-duty trucks as adoption of electric drivetrains and autonomous technologies begins to pick up in the coming years.
- Meanwhile, Volvo has spun out its Polestar division into a separate brand that will focus on electric cars and shared mobility services, according to The Financial Times. The new brand unveiled plans for three new electric vehicles that will be manufactured for its subscription car-sharing business, which allows customers to book its vehicles for temporary use through a mobile app for a monthly fee. The brand’s three vehicles, dubbed the Polestar 1, 2, and 3, will be a hybrid coupe, a fully electric sedan, and a fully electric SUV. The sedan will be a direct competitor to Tesla’s Model 3, and will launch in 2019.
The moves would make Daimler and Volvo the latest legacy auto company to revamp their organisations or spinoff new businesses to prepare for new tech trends in the auto space. Ford, for example, spun out its own mobility unit last year, while major auto supplier Delphi recently reorganized into two separate entities to support its autonomous software development and burgeoning electric drivetrain business. These legacy auto brands need to invest in digital initiatives to fend off new entrants like tech companies and startups, while still maintaining their legacy businesses. So they are often splitting up their businesses to pursue these competing objectives. Legacy automotive companies captured about 70% of the auto industry’s profits in 2015, but that share could fall to less than 50% by 2030, with new entrants making up the difference, according to PwC. Much of that shift in profits will be driven by increased consumer use of mobility services at the expense of car ownership rates, as well as sales of new technologies including autonomous systems.
GM TO TEST SELF-DRIVING CARS IN NYC: GM plans to test its self-driving electric Chevrolet Bolt hatchbacks in New York City starting early next year, which would make GM the first company to test self-driving cars in the city, according to The Wall Street Journal. The automaker’s engineers are currently mapping a five square-mile area of Lower Manhattan where it plans to test the cars. In addition, GM will create a new team of engineers under its Cruise Automation division, which houses all its self-driving efforts, in the city.
But New York is a much more difficult environment for the vehicles to handle, which is an indication that GM is aggressively accelerating its self-driving efforts. Cruise CEO Kyle Vogt told The Journal that the streets of New York present a much greater challenge for GM’s self-driving vehicles than any other environment they have seen thus far. Lower Manhattan is significantly more densely populated than Phoenix and San Francisco, where GM has recently been testing its vehicles, so the cars will face more pedestrians, bikers, and other cars to navigate around. In addition, the cars will have to deal with inclement weather that they have not yet confronted, such as snow or ice on the roads.
GM is clearly pushing to be one of the first companies to deploy self-driving cars. Last month, Deutsche Bank predicted that the automaker was only quarters away from deploying self-driving vehicles for ride-hailing purposes. By forcing its self-driving cars to confront new and challenging scenarios on the streets of New York, GM hopes to accelerate its software development and rush to market as soon as possible.
WAYMO DETAILS ITS SAFETY PROCESSES FOR SELF-DRIVING TECHNOLOGY: Alphabet’s Waymo subsidiary, an early leader in self-driving technology, released a 40-plus page report detailing all of the safety protocols of its self-driving technology. The report provides a comprehensive overview of how the company trains its software to safely navigate public roads, as well as how it handles cybersecurity, collision avoidance and reporting, and compliance with state and federal regulatory guidelines.
Consumer acceptance remains a significant barrier to self-driving car adoption. Waymo is seeking to educate the public about the safety and benefits of its self-driving technology, which it began testing back in 2009. A recent Pew survey of more than 4,000 American consumers found that more respondents were worried about riding in an autonomous vehicle than were enthusiastic. The top reasons that respondents weren’t willing to ride in a self-driving car were fears around giving up control of the vehicle and safety concerns.
Greater overall awareness about self-driving technology could help overcome the consumer acceptance barrier, as consumers who are more knowledgeable about self-driving cars tend to be more open to riding in them. Pew’s survey found that 57% of respondents who said they had read or heard a lot about self-driving cars were willing to ride in one. That share fell to 38% among those who had read or heard little about them.
In addition to the report, Waymo is also seeking to educate consumers through a recently launched ad campaign that highlights the safety features of its technology. This education effort also extends to the in-car experience, as Waymo’s test vehicles proactively explain their driving decisions to passengers through audio and visual displays, the report said. Waymo is already providing rides to the public in the Phoenix area through its limited Early Rider program, and recent media reports suggest that the company may be nearing a commercial launch for a ride-hailing service there using its vehicles. That means consumers’ safety concerns around self-driving cars are an increasingly pressing issue for Waymo to tackle.
In other news…
- Alphabet’s Project Wing drone delivery arm has begun delivering burritos in partnership with Mexican restaurant Guzman and Gomez in Southeast Australia, according to TechCrunch. The moonshot project’s drones are flying about 120 kilometers per hour, but won’t be travelling more than about three kilometers. The company is using these initial efforts to collect data that it can use to improve its drones’ flight capabilities.
- California-based dockless bike-sharing startup LimeBike raised $US50 million in Series B funding at an undisclosed valuation, according to TechCrunch. Coatue Management led the funding round and was joined by Andreessen Horowitz, Franklin Templeton Investments, DCM Ventures, and GGV Capital. This new capital brings the company’s total funding to $US72 million. The company, which currently operates in 11 cities, will use the new capital to scale up and avoid getting crowded out by Chinese rivals like Mobike and Ofo that are moving further into the US.
- UberEats, the ride-hailing giant’s food delivery arm, is on pace to earn about $US3 billion globally in 2017, according to a new report from the Financial Times. The business unit is on pace to contribute more to Uber’s revenue this year than ever before, but is still only profitable in 27 of the 108 cities it operates in. Additionally, the service faces steep competition from Grubhub and others in the food delivery space. In other Uber news, the ride-hailing giant’s board member Ariana Huffington said earlier this week that the planned investment from Softbank, which hit a snag last week, will likely go through next week.