Motor City vs the Golden State

Peter Kosak, Executive Director, Urban Mobility at General Motors, sits down with Alex Kreetzer to discuss urban mobility, supporting smart infrastructure and the divide between Silicon Valley and Detroit. 

The automotive business model is evolving and integrating into a broader mobility ecosystem. This has allowed the integration of mobility solutions that had previously been vertical, creating greater transparency. What was previously a design, build, sell, own relationship between automakers and their customers is now evolving to include such things as subscription-based services that remove the burden of ownership, for both parties. This new innovative way of doing business has unlocked a larger addressable market which can be integrated with other modes of transportation. Speaking to Peter Kosak, one of the leaders of General Motors’ Urban Mobility division, I explore the next steps for the automotive market. He tells me that, although this new framework may seem different, “it all still evolves and integrates on top of a design, build, sell model and, while the lion’s-share of discussion surrounds things like ridesharing, I still believe that the long term view is that ownership models will change as well and people will still want to own or have a share of ownership of an autonomous vehicle.” Analysing this further, you can see that this process still follows the traditional automotive model, but has evolved into something that is revolutionary in terms of user experience and providing benefits to people who are unable to drive.

This illustrates the transition of the automotive industry, however it is no longer exclusive to the sector but to the entire mobility industry, all blended into one ecosystem. Kosak tells me that there are three core elements behind all of this: “one of them is embedded connectivity and the ability to access and manage fleets. Related to this is app-based access, where people can access and control certain things. Thirdly, there is this overall evolving network view of mobility where you can take advantage of a whole variety of different options with app-based access, making choices about how you want to get around. Mobility is becoming more natural from a choice standpoint where it becomes more predictive and more responsive,” he says. Once again, all of this occurs on top of and around a traditional automotive business model. “The reality is that, at the core of it, personal mobility is a freedom and there is a very strong desire in people to have access,” Kosak continues. Mobility services have changed the perception of modern transportation, persuading people that they will not need a car by the end of the decade. This becomes even more enticing for customers when we see the introduction of autonomous cars, which will lower costs and increase efficiency in our day to day lives. Ultimately, the customer cannot say no to all of this, meaning that automakers who want to succeed in the mobility industry will have to find their place in a different kind of ecosystem

The city's perspective

The emergence of this disruptive environment is creating so many opportunities, especially through urban infrastructures. Talking to city authorities is a focus point for GM, looking at co-creating and testing in urban areas to benefit the private sector, city governments and consumers. Kosak tells me that this is going extremely well, however he still believes that, “although the enablers are here, there is so much work to do, so much to be tested, so much to be refined. There is so much to learn and improve for these things to be realised and for the values to be unlocked.” 

Working with cities all over the US, GM is using its Maven ridesharing service to develop these urban areas. In March last year, Maven provided off-rental vehicles into ridesharing services with Lyft. “Through this, we unlocked a new population pull for Lyft drivers, with thousands of vehicles deployed daily which have passed the depreciation curve but are still nearly new, so the carrying cost over the period of time of deployment is lower,” Kosak explains. “It's great for Lyft because it gets a bigger population of drivers and more supply in a supply-driven industry.” So far, the collaboration has seen vehicles cover over 150 million miles and has carried nearly 15 million riders in nearly-new GM vehicles across the country. 

The next step for GM was to deploy its new Chevrolet Bolt EV with 400 km electric range, three times the electric range of any vehicle with DC Fast Charge capability. Through combining two innovations like ridesharing and EVs, GM is working towards a smarter city. Alongside this, GM’s partnership with EVgo, the nation's largest public DC charging network, in San Francisco and San Diego has seen 55 vehicles deployed in the US, covering over 200,000 miles thanks to over 2,000 DC Fast Charge stations. “Some Lyft drivers are routinely covering over 200 miles per day and this kind of deployment has been possible through this partnership and platform,” comments Kosak. “We are now operationalizing and learning EVs into taxi fleets that are now waiting for autonomous technology.” There is still a lot to do, but we are living in an exciting time. Through deploying large fleets of EVs in major cities around the world and watching driver behaviour through daily cycles, automakers like GM can help revolutionise transportation in urban environments. 

Mobility services propelling EV adoption 

We have seen the most significant jump in EV adoption over the last few years, however we still have a long way to go. This change is not just from an OEM perspective, but from an infrastructure point of view and, through collaboration between companies like GM and Car2Go, a German car rental company and subsidiary of Daimler, modern societies are starting to pay attention to EVs. Despite this significant development, people still do not think that an EV can compete with conventional fuels. Kosak explains to me that there are three major headwinds that EVs face today: battery cost, range and charge time. “An innovation such as ridesharing will sharply accelerate EV development, as people are seeing the demand materialising and it is becoming less risky for them to invest. On the other side, we are getting an overwhelming response from our drivers who no longer want to go back to gas engine cars as EVs are fun, efficient and easy to live with.” 

It is not just the drivers that are realising the capabilities of these alternative fuel vehicles; passengers are also becoming more aware of EV progression. In areas like California this has opened up a completely new perspective of the new market. “When you have this in a market like California, which is probably the leading market in the US for EV familiarity, adoption and support, you can really see the potential.” This major deployment of EVs is the first step. The next step is to roll out autonomous vehicles, which will completely change the psychology of shared use and ownership, sparking opportunities to work with cities to integrate this technology into mass transit and have a single pay system that could even be subsidised. “This effect on cities will introduce more jobs, provide many additional options and create a better service for the customer, all while creating carbon-free miles and better air quality. These factors are good for everyone and this is when you get stuff moving forward quickly, when there is a lot in it for everybody.”

Blue sky thinking

Kosak believes that the automotive industry has always been fueled by innovation and passion. “I have been in the industry for over 30 years; it's why I moved to Detroit from Boston. It has always been my passion and I would argue that the same company that introduced embedded connectivity to the world for safety, concierge services and everything else in 1996 is perfectly capable of innovating, even in the leading technology spaces. That said, there is no denying that the ‘blue sky’ thinking of Silicon Valley and some of the innovations that have come out of the area are awesome. I think that there are smart people in both regions who are innovation and technology oriented.”

Silicon Valley's ecosystem and progress system is what led GM to purchase Cruise Automation in 2015, as well as partnering  with Lyft in the same year, in order to support the automaker's future aspirations in the connected car market. Cruise automation has brought a lot of expertise into GM in terms of artificial Intelligence and learning what an autonomous vehicle has to achieve in order to truly take someone away from the driver's seat and have it operate on its own. “From a software standpoint, I think we had a lot to learn from a Silicon Valley-based company like Cruise Automation. This is why we purchased it and that is why we have recently made announcements about growing it as there is such a big talent pool in this area.” Unsurprisingly, most things that come out of the Californian state are software and processing consumer electronics orientated. While this is important, a computer or phone is very different to a car or a truck. It would take a long time for Silicon Valley to try and manufacture autonomous vehicles when they know very little about this area, similar to the problems automakers have with advance software. “It takes a long time to gather the knowledge and capability to create autonomous vehicle networks,” says Kosak. “Once again, I see it as a blend of the two regions and through acquisitions and collaborations.” 

This innovation will significantly impact our lives over the next decade and this will completely transform automotive business. Kosak echoes that subscription-based services, autonomous vehicles and e-mobility will force automakers to adopt a new way of thinking. “We will soon see an environment where there will be new kinds of individual ownership and small fleet ownership that will unlock the ability for people to access self-driving technology without having to call up an autonomous taxi. The sharing economy is a two-sided coin, one side is shared use from a consumer perspective and the other is fractional ownership which will be enabled by things like blockchain monetization, which will enable seamless and trusted transactions. This will be huge and so transformative, evolved out of the traditional automotive model but it will be a very different environment. It is something we are thinking about a lot at GM and I am very excited about what’s to come.”

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