Clean transportation drives ahead with electric vehicles
The following is an excerpt from the State of Green Business 2017 report. Published by GreenBiz in partnership with Trucost, it provides a global view of the year's trends in sustainable business. The report is free to download here.
Electric vehicles are getting cheaper and driving farther. Shared rides arranged by smartphone are converging with age-old employee carpools to reshape commutes. Oh, and in case you haven’t heard, self-driving cars — some of them super-sized 18-wheelers — are rapidly making their way onto public roadways.
The road to the future of transportation is nothing if not busy, especially if it’s your job to figure out how to square new mobility technologies with existing automotive business models or large corporate fleets.
Depending where you sit on the glass-half-full spectrum, you might have heard that we’re just years away from traffic-free roadways marked by fully optimized networks of shared, self-driving electric vehicles — ACES, as one Stanford professor and entrepreneur has taken to describing the prospects for Autonomous, Connected, Electric and Shared Vehicles.
On the other hand, you might also have been warned that we’re heading for a "driverless nightmare," where personal robo-cars compound congestion, as they uncomfortably co-exist with today’s human-controlled cars, which still spew fumes out of the exhaust.
Until now, auto and tech companies such as Tesla, Uber, Google and a slew of old-line automakers spinning off new mobility divisions have focused most of their high profile R&D efforts on the consumer side of the market. But there are signs that the upheaval in personal mobility — like many industries being transformed by the sharing economy — is going corporate. Evolving B-to-B offerings are surfacing as large-scale collaborative efforts form to help businesses and policymakers make sense of the smart mobility wave.
To date, much of the activity in the commercial market for sustainable transportation has revolved around hardware — in particular, powertrain innovations such as alt-fuels, hybrids and EVs — that hold immediate promise to reduce operating costs. It’s a natural first step from an environmental standpoint, given that transporting goods to market takes 15 million barrels of oil per day, accounting for about one-fifth of global oil demand, according to a McKinsey analysis.
Of course, it’s not just electric and autonomous vehicles at play here. Good, old-fashioned gas- and diesel-powered cars, trucks and buses continue to go through technological tune-ups to improve their efficiency.
A proposed "LEED for fleets" certification model is one effort to keep an eye on. Another is BSR’s Future of Fuels initiative, which convenes companies such as Walmart, PepsiCo, UPS and others with major logistics operations looking to increase trucking efficiency. In 2016, the group released a Fuel Sustainability Tool that stacks up varieties of diesel and natural gas against more exotic alternatives such as algae-based biodiesel — a cocktail of fuel options that aviation companies such as Boeing and United also continue to explore.
Several individual companies with large fleets also find themselves approaching the end of five- or 10-year sustainability goals. Walmart, for instance, more than doubled fleet efficiency from 2005 to 2015, cutting 650,000 metric tons of emissions and saving more than $1 billion in fuel costs during 2015 alone. The company achieved the goal through a mix of low-hanging fruit — such as decreasing miles traveled when trucks are empty or underfilled — as well as more advanced vehicle light-weighting or fuel changes.
The next frontier in fleets, according to those watching the market: hybrid, plug-in hybrid and electric vehicles, with the most potential to reduce emissions in markets where charging networks can be powered by renewable energy. Given the magnified "range anxiety" around heavy-duty trucks, plus the fact that EVs still only account for about 1 percent of all vehicle sales, BSR projects that midsize vans and smaller trucks are likely to be converted first.
In the meantime, cities are also increasingly in the market for better EV charging networks and hybrid or electric buses. From Greensboro, North Carolina, to Silicon Valley, California, electric buses manufactured by large companies such as Duke Energy and upstarts such as Proterra (headed by an ex-Tesla exec) are increasingly making their way into public procurement processes.
Engines aside, one question for fleet buyers is how to integrate parallel developments in software and connected cars.
Efforts within the auto industry to adapt for accelerating demand for shared rides and shared cars is moving at breakneck speed. During 2016 alone, GM dropped $500 million on Lyft and spun out a mobility arm called Maven, joining Daimler offshoot Moovel and Ford Smart Mobility in the race to embrace distributed transportation tech. In the meantime, companies such as Uber, Lyft and Ride are moving to position themselves as commuter alternatives to offline carpools and public transit.
"Vehicle sharing is a very natural extension of our core model — to this point design, build, sell," Peter Kosak, GM’s executive director of urban mobility, told GreenBiz. "It’s instead of ownership or in addition to ownership. You’re just distributing a fleet rather than distributing sales, and you’re giving people access by the minute or the hour or the day or whatever."
While it’s not uncommon for companies to offer Zipcars or other shared vehicles on corporate campuses, giving up owned fleets entirely would be a much bigger leap. GM and Daimler already are building upon the concept of shared cars as a real estate perk, offering tenants of partnered high-end buildings access to short-term rentals or commuter shuttles. But there’s also the matter of making shared transportation accessible from an economic standpoint, which is likely to become even more contentious as Uber and Lyft lobby local governments for subsidies once reserved for public transit.
Infrastructure for shared vehicles, and especially shared electric vehicles, is another unresolved issue. Automakers still have yet to agree on a standardized EV charging system, leading to competing charger networks that usually pit Tesla (and its growing battery business) against everyone else. One area to watch is how renewable energy, and particularly pooled access models such as community solar, do or don’t merge with the buildout of EV infrastructure.
Perhaps the most interesting points of convergence is how trends toward EVs, shared vehicles and self-driving cars ultimately, um, collide.
While major automakers squabble about who can get a self-driving car to market fastest, will-they-or-won’t-they questions surrounding Google’s release of its long-discussed electric self-driving cars show no signs of slowing down.
In the meantime, alums of the company’s secretive automotive division are branching out on their own. Google alum Anthony Levandowski, for instance, started Otto, pivoting to self-driving semis instead of consumer cars. The company recently ran a test run for Budweiser and was acquired in the fall by Uber. "Per truck, there’s about eight times more CO2 emissions than a car," Levandowski said at the GreenBiz VERGE 16 conference in Silicon Valley. "I see it as an opportunity to have a much bigger impact."
While there’s no shortage of activity involving vehicle technology, what happens to all the data generated by connected vehicles is another open question. Cities, auto companies and corporate fleet managers are all interested in getting their hands on more data to maximize efficiency and meet sustainability goals, but connected cars are also prime suspects in the conversation about unresolved data privacy and cybersecurity issues.
As part of the rush for transportation data, providers of transportation-related information and communications technology, or ICT, look poised to ramp up services that help track and analyze fleet data. The overall fleet-management market is expected to triple in the next five years, from a $9.5 billion market in 2016 to $27.9 billion in 2021, according to a projection by Markets and Markets.
The question now is how the pieces come together, and what their cumulative environmental impacts might look like.
Although the conversation around self-driving cars is still tinged with science fiction, very real logistical nightmares also loom in the form of the more than 3 million people currently employed as professional drivers. Insurance and legal issues, too, look likely to become increasingly thorny issues. If two driverless vehicles collide, for instance, who’s at fault?
Companies to watch
Tesla — not just for its cars, but also for its growing charger infrastructure offerings.
Uber — keep an eye on the evolution of autonomous ridesharing, but also the looming battle between private carpools and public transit.
Walmart — long a bellwether for the corporate fleet crowd, watch where Walmart heads on powertrains and emissions for its busy trucks.