Plotting the Vehicle Autonomy Revolution

July 1, 2015

Lindsay Brooke

Larry Burns has spent much of his 40-year career peering far beyond the horizon in search of future-mobility solutions. As General Motors’ Vice President of Research & Development and Strategic Planning from 1998-2009, Burns was a vocal proponent of energy diversity. He was one of the first high-ranking OEM engineers to predict how the rise of global megacities will impact personal vehicle design, technology, and ownership.

But he’s perhaps best known for spearheading two of the auto industry’s most innovative and inspiring concept vehicle programs. The AUTOnomy and Hy-wire, unveiled by GM in 2001 and 2002, sparked the public’s imagination with a flexible “skateboard” chassis, fully by-wire/ digital control systems, advanced propulsion, and roomy occupant-centric packaging ideas that experts say are influencing designs for next-generation autonomous vehicles.

A co-author of the acclaimed book Reinventing the Automobile: Personal Urban Mobility for the 21st Century (MIT Press, 2010), Burns is excited about the autonomous-vehicle revolution and the many benefits he sees resulting from it. He believes the combination of “big data” analytics, sensor technology, self-driving vehicles designed for a specific duty cycle, and shared-vehicle networks is poised to create a new business model that will disrupt the incumbent auto industry.

Now a Professor of Engineering Practice at the University of Michigan, Burns also serves as advisor to several firms including Google’s self-driving vehicle program. Among his recent work is a report that will interest automotive product planners and those studying future vehicle-use issues. Transforming Personal Mobility, produced in collaboration with Columbia University’s Earth Institute, details the value proposition of driverless, shared vehicle fleets introduced into communities as alternatives to personally owned vehicles.

The report studies the performance and potential cost savings of a driverless, shared vehicle fleet operating in Ann Arbor, MI, with similar analyses for the planned eco-city of Babcock Ranch, FL, and for driverless, shared fleets as a substitute for New York’s yellow taxis.

“The business model in my mind for ‘driverless, shared mobility’ is a community with 15% of the cars being driverless and shared serving the same travel demand that’s been met by the personally owned cars,” Burns explained. He cites the example of Ann Arbor, which currently has 120,000 cars operating daily in the metropolitan area, making trips averaging about 8 mi (13 km) in length at speeds under 30 mph (48 km/h).

“Instead of 120,000 cars, how many would you need to handle the exact same travel pattern both temporally throughout the day, the peaks, as well as geographically — and that’s counting for the ‘empty’ miles an autonomous car has to travel to reposition after it’s dropped somebody off,” he asked. “So we did the math modeling and simulation and the answer is 18,000 vehicles can do what the 120,000 vehicles are doing.”

That means drivers of more than 100,000 vehicles each day would gain productive time that is lost commuting and combing the streets and parking structures in search of a parking spot. “Time is the critical metric for drivers today,” he observed. “People want their time back, they’re crying for it. That’s why they text while driving.”

A standardized machine

In many cities, serving only about 10% of the miles driven within a 14-hour day will achieve a scale economy with the driverless, shared system, Burns reckons. That’s because most of the trips will start and end in areas with a high probability that somebody a block away just requested a trip. Therefore, the miles that an empty self-driving car must travel to pick up a customer are less than 5% of the “loaded” miles.

“So your fleet utilization is on the order of 70-85% throughout the day,” he said. “And your response time is less than two minutes.”

The vehicle that arrives to pick you up and deliver you autonomously to your destination will likely be based on a very commodity-like machine. “The value proposition is in the user experience, which is mostly software and user interfaces. It’s not in what the machine looks like,” Burns explained. There will be some visual differentiation, but the design goal is simplicity and a vastly reduced bill of material.

“We’ll dump a lot of build complexity because much of the stuff in vehicles today isn’t necessary in a driverless, shared car,” he said. “The more standardized the machine, the better.”

The human-machine interface (HMI) will be critical in this new mobility ecosystem. “When I push the app for the local shared-car network, I will be confident the car I’ve requested will arrive at my location in two minutes or less, and it will be clean, it will smell good inside, and it will be secure,” Burns said. “When I hit my security code it opens the doors, and it bills my account every time after it drops me off at my door. It will be personalized for my experience.”

Transformational business model

What is the “father of AUTOnomy” envisioning with his “driverless, shared” idea? A fleet of robotic transportation jellybeans that are as visually exciting and emotionally engaging as London’s staid black cabs or the yellow sea of ancient Checker Marathons?

“It’s a private-public form of transportation — a for-profit entity that is much better than a bus and will serve people who elect not to own a car, or can’t afford to own one, or are disabled or are too old or too young to drive,” Burns asserted. “It’s not meant to entirely replace personal vehicles; it’s an alternative.” The ride-sharing companies of the not-too-distant future that take the driverless-vehicle path “will be selling miles, trips, and experiences,” he said.

As a point of comparison, Burns noted car-sharing pioneer Uber Technologies has priced its miles at $2.50 and above in major cities. The Columbia report implies that a 2-person vehicle in a driverless, shared fleet would cost $0.15 per mile to operate versus the American Automobile Association’s $0.67 per mile for a personal vehicle. “The reason we’re at that low price point is our vehicle is one-quarter the mass and one-tenth the parts [of a typical personal car],” Burns explained. “And the driverless, shared car generates value 70-85% of the time versus being parked. So you depreciate it over a three- to four- year period rather than the typical 15-year period.”

From a financing, depreciation, and insurance perspective, that takes the cost down further to $0.15 from $0.67. “You can even put time value into that,” Burns said. “A medium-income American makes $25 an hour. If you move 30 mph at $25 an hour your implied time value is $0.83 per mile. And that hasn’t even been monetized. That’s why the business model is so transformational.”

There’s potential disruption to the insurance industry because the driverless vehicles won’t crash — in theory of course. And there’s disruption for the energy industry, Burns claims, because the fleets would be owned by private operators who will fuel from a central terminal, simplifying the switch to natural gas, biofuels, electricity or hydrogen.

The mobility transformation that Burns envisions, that makes business sense at about a 10% market share in most communities, won’t happen overnight. But the industry already is closely watching Google’s self-driving car program, and other players are investigating the space.

“What is going to happen is when Wall St. realizes the growth the auto industry was assuming was going to play out maybe isn’t going as fast as they thought, because of the alternative that is the driverless, shared vehicle that real customers are clamoring for? Their market caps are going to get hit very, very hard,” he warned. “Wall St. will reward whomever can put a profitable business model around it. If you make 10 cents per mile on 10% of the 3 trillion miles driven in the U.S., you’ve made $30 billion. That’s Apple and ExxonMobil-like profitability.

“So you don’t have to make the argument,” Burns concluded, “that all cars as we know them go away and will be replaced by this new class of vehicle for this to make business sense.”

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