Welcome to Transportation & Logistics Briefing, a new morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.
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GM PLOTS ITS FUTURE IN ON-DEMAND RIDES AND DELIVERIES: GM’s Maven car-sharing unit is expanding tests and partnerships in delivery, leasing, and on-demand vehicles, indicating that the company could eventually take on Uber and Lyft in providing on-demand rides, Reuters reports. The 18-month-old unit started out providing cars for Uber and Lyft drivers, but is quickly diversifying its business and spearheading GM’s moves into alternative mobility services. Altogether, Maven’s fleet of 10,000 car-sharing vehicles have driven 170 million miles and provided 17.5 million rides for Uber and Lyft customers.
GM has close ties with Uber and Lyft, but seems like it is pulling away from them to reap greater benefits from on-demand mobility and the gig economy. GM has provided thousands of vehicles to Uber and Lyft drivers through the ride-hailing companies’ leasing programs, and also holds a 9% stake in Lyft, Reuters notes. However, Maven has started to lease cars directly to Uber and Lyft drivers, bypassing the ride-hailing startups, through Gig, a service that lets drivers rent Maven vehicles for $229 per week.
Additionally, Maven has partnerships in place with several startups in the delivery space to provide cars for their couriers. Those partners include InstaCart, Postmates, GrubHub, and Roadie, a crowd-sourced last-mile delivery service. Couriers for the companies can rent Maven vehicles at the same rate as Uber and Lyft drivers.
Meanwhile, Maven is moving further into providing cars or rides directly to consumers – it’s already tested a peer-to-peer car-sharing service, according to Reuters. Such a service would compete indirectly with both Uber and Lyft. When asked if GM is looking to launch its own ride-hailing and delivery services, Maven’s VP Julia Steyn responded, “You’re on the right track.”
The advent of digital technology in the auto space is forcing traditional carmakers to consider new revenue opportunities, including car-sharing, ride-hailing, and delivery. GM’s step-by-step approach – leasing cars through sharing economy startups, then leasing them directly to contractors, and eventually providing on-demand cars and deliveries itself – is a smart approach. Traditional automakers don’t always have the same software or logistics expertise as some of the on-demand startups that populate the sharing economy. However, automakers can certainly provide vehicles for those companies while they develop that expertise through acquisitions, talent recruitment, and partnerships, enabling them to launch their own on-demand services down the road.
- BI Intelligence
HOW PELOTON PLANS TO DISRUPT TRUCKING: Peloton Technology, a six-year-old Silicon Valley startup, is one of a growing number of startups looking to disrupt the nearly $700 billion US trucking industry through software automation. The company’s co-founder, Josh Switkes, started exploring the trucking space while working at another startup, and saw an industry burdened by high fuel, labor, and safety costs that still performed many back-office operations manually with spreadsheets, a profile on Trucks.com recounted.
- Peloton is looking to make an impact in trucking by quickly solving one of the industry’s pressing pain points – fuel costs, which make up nearly 40% of the costs of operating a commercial trucking vehicle. The company wants to automate trucking, but is not waiting to develop fully autonomous trucks, which are still at least a decade away from hitting the road. Rather Peloton is working on “platooning” software that allows multiple trucks to drive closely bunched together in a convoy by communicating with each other to ensure they keep them at a safe and steady distance. Closely following one another in this fashion reduces the drag caused by wind resistance on the vehicles, so their engines don’t need to consume as much fuel to maintain speed. Based on previous testing, the front vehicle in a two-truck platoon using Peloton’s software increases its fuel efficiency by 4.5%, while the rear vehicle has a 10% improvement.
Focusing on automated platooning technology will allow Peloton to make an impact on the trucking sector much more quickly than other startups focused on fully autonomoustrucks, such as Embark. Reducing fuel costs fills an immediate and industry-wide need, and regulators in various jurisdictions will likely be amenable to the technology because it reduces greenhouse gas emissions. Peloton plans to bring its platooning tech to market later this year, and its potential fuel cost savings should translate to fast adoption. Volvo, for one, is already working with Peloton to integrate its technology into its trucks. A solid customer base for platooning would then open up opportunities for providing other automated driver-assist services like automated braking and lane changing, eventually leading up to a fully autonomous vehicle.
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TRUCK MANUFACTURERS RACING TO LAUNCH OVER-THE-AIR UPDATES: Truck manufacturers are working fast to add over-the-air (OTA) updates, software updates to trucks’ systems that can be delivered wirelessly, to their vehicles, Trucks.com reports. OTA updates would allow manufacturers to issue new upgrades to their vehicles as easily as consumers download new upgrades to their smartphones or computers.
OTA updates could be used to deliver instant improvements to trucks’ navigation and engine systems, or even to fix software bugs. This would save time and resources that would otherwise be spent on bringing the vehicles to a dealership or other repair location for such fixes and upgrades. That would also reduce the revenue lost by trucking fleets when their vehicle are out of service for repairs.
Automakers have recognized the benefits of OTA updates for transportation vehicles for a couple of years now, but truck manufacturers are just starting to come around. An IHS Markit report released this past June predicted that OTA updates could save the automotive industry a total of $40 billion by 2023. All of Tesla’s vehicles are equipped to receive OTA updates, and GM plans to enable them in all of its vehicles by 2020. On the trucking side, Volvo announced this past May some models in its Mack lineup would be capable of receiving OTA updates by the end of this year, and auto parts supplier Delphi recently acquired software startup Movimento, which has installed OTA technology in more than 19,000 commercial vehicles.
Tesla’s recently announced plans to enter the truck manufacturing space will push OTA updates to the forefront of the trucking industry. Tesla has set the standard for OTA updates in the consumer automotive space, and will be able to leverage that expertise in trucking. If Tesla gains a reputation as the trucking industry standard for OTA updates, it would gain a substantial competitive advantage. That puts pressure on other truck manufacturers to accelerate their own OTA capabilities to fend off new competition.
In other news…
- Deutsche Post DHL and Ford launched their new jointly-produced StreetScooter WORK XL electric delivery vans in Germany last week. The vans are based on a Ford Transit chassis and feature an electric drivetrain, and the two companies plan to build 2,500 of them by the end of 2018. Deutsche Post DHL will use the vans for urban last-mile deliveries in Germany, and also plans to sell some of the vehicles to third-parties. The electric vehicles can help reduce fuel costs for last-mile deliveries to customers’ residences, which is the most expensive part of the delivery process. Reports emerged last week indicating that rival German automakers BMW and Daimler may be looking to merge their respective DriveNow and Car2Go car-sharing services. Reuters reported that the two companies have been in talks about combining their two services in order to better compete with other alternative mobility schemes, particularly ride-hailing giants Uber and Lyft. DriveNow currently has close to 1 million users worldwide, and Car2Go has about 2.7 million, but that is dwarfed by Uber, which reported last October that it was servicing more than 40 million riders monthly worldwide. The automotive industry is pushing back against a proposal by the Trump administration to change to the North America Free Trade Agreement (NAFTA) because it may result in higher costs. The administration wants more stringent “rules of origin,” which determine whether participating countries can charge tariffs on imports. Under current law, 62.5% of a vehicle’s parts must be manufactured within the NAFTA region to avoid tariffs. This has allowed automakers to build cars in other NAFTA countries, particularly Mexico, and then sell them in the US without paying tariffs. The administration has hinted that it may want to include a requirement that a certain percentage of a vehicle is produced in the US to avoid tariffs.