Autonomous cars are no longer just the realm of science fiction – and the social and economic implications are enormous. Cars with basic autonomous capability are in showrooms today, semi autonomous cars are coming in 12-18 months, and completely autonomous cars are set to be available before the end of the decade. Beyond the practical benefits, it is estimated that autonomous cars can contribute $1.3 trillion in annual savings to the US economy alone, with global savings estimated over $5.6 trillion. There will undoubtedly be bumps in the journey – including issues of liability, infrastructure support, technical, regulatory, consumer acceptance and even pricing/ penetration. After all the conventional automobile industry has been around for 110 years and the disruption in terms of performance will take time. On the other hand, climate related issues, gasoline prices, lower costs of running will be key to faster acceptance. There would be obstacles, but none of these currently appear to be insurmountable.
Urban growth with special attention to sustainable development and multi modal transportation is the next big opportunity in transportation systems. Electric vehicles with disruptive quick battery exchange technologies are the key to the future. Tesla is one of the most important examples in the this space. But, the real sustainable and price sensitive solutions could be from China.
The PRC has been undergoing a significant transitional phase with special economic zones opening foreign trade to many cities including Shenzhen, Tianjin, Hainan Island and most recently the Waigaoqiao free trade zone in western Shanghai. This change in economic structure has sparked massive development and urbanization of Chinese cities. It is expected that over 70% of the population in China will live in major cities by the year 2035, compared to about 25% in 1990. This rapid urban development has been followed by a list of social and environmental issues.Most cities have been formed around the development of massive automobile infrastructure which puts heavy demand on scarce petroleum resources, creates congestion issues, and results in severe degradation of environmental air quality. In order to prepare for continued growth and work toward the resolution of some of these emerging issues, government policies and business models are taking aim at creating sustainable vehicle transport models that utilize existing infrastructure.
With that back ground, Electric vehicle manufacturer in China, Kandi, is developing an electric vehicle sharing and leasing model to help four primary environmental crises; fossil fuel energy demand, pollution, traffic congestion and parking.While this business model will not completely solve these issues but has the opportunity to incrementally contribute to their resolution over time. Kandi has also readied a couple of cars working on electric energy – Kandi’s “low end” JN6290EV model from scrap metal and “mid end” JL7001BEV Panda. The compact size, easy maneuverability, quick acceleration and lower operational cost of running make these cars a commuter’s dream.
But what is novel to Kandi’s business model is that Car share program from Kandi. Once a customer buys a car from Kandi – he would be entitled to a unique car sharing program. He could just drive into any of Kandi’s Car share garages exchange his car for another car and drive off. The cars deposited by the users are automatically charged while idle in their slot. One also has the option of getting a battery swap done without changing the car. Kandi’s management is in the process of making many such garages to support its customers.
What also works to the benefit of a company like Kandi is the sponsorship from the administration. The government recognizes the need to implement sustainable energy strategies and modify the existing paradigm of energy and transportation throughout China. State Council policy supports the EV business model by offering up to a revised 60% subsidy on purely electric vehicles. The subsidy policy requires a 30% market share for companies that come from other provinces. This market sharing policy should allow Kandi to gain footing in other major cities. This combination of demand and supply side management policies are a major step in the right direction for transportation in China. The car share model is funded in such a way that it can also operate without a subsidy package and depends mainly on land availability.
Beijing is on record as one of the most polluted cities in the world and Kandi’s EVs will not help better this status substantially in the next few months – however, it does promise to take off some load from the conventional energy driven options in the next few years to come. WHile the operations at Kandi are at a pilot stage, scaling up is a challenge and if addressed correctly, individual vehicle demands will be encouraged to slow down significantly.
Continued from earlier post- Tesla: That moment in history where a new frontier is breached
In terms of nerd magnetism, nothing on the road compares to the Model S, with the possible exception of the Google’s Self-Driving Car. The car has a touchscreen instead of the usual physical buttons on its dashboard controls. There’s the novelty of the electric drivetrain, and the 17-inch touchscreen lets the driver pull up massive, full-screen maps or open the sunroof with a finger swipe. The car alerts drivers when they’re near a charging station and can be programmed to recharge at home during cheaper, off-peak hours. The outside handles retract flush into the door when not in use. And, like any hot gadget these days, the car has apps. In an online forum, an owner in Illinois asks for a software update to the remote climate-control system so he can override a timed shutoff and keep his dog cool while going to lunch. Someone else has written an app that pairs Google Glass with a Model S, letting an owner who’s forgotten where he parked see the vehicle on a map while its headlights flash.
Even the flaws of the Model S seem to resonate with geeks. Early versions of the outside handles malfunctioned—they sometimes wouldn’t extend out of the door—and the windshield wipers seemed to have a mind of their own. Tesla fixed those and other problems with a software upgrade delivered via the car’s high-speed wireless connection. It’s part of being an early adopter.
Following Tesla’s lead, General Motors and Ford have started hiring software developers by the hundreds, in GM’s case quadrupling its technology department. Software is in many ways the heart of the new vehicle experience. From the powertrain to the warning chimes in the car, you’re using software to create an expressive and pleasing environment.
If there’s a secret to Tesla’s success, it’s been to outsource as little as possible. The company has insisted on doing just about everything it can in-house, which has helped it develop intellectual property and control costs. Tesla built the battery pack replacement feature into the Model S, for example, and then designed the robots that will do the work.Unlike every other major car company, Tesla has also kept its retail business in-house. It’s trying the Apple model of placing its own stores in high-end malls and shopping centers instead of relying on dealer franchises. Salespeople, who don’t receive commissions, help buyers configure their cars on giant touchscreens. The company has created an unusual financing program meant to assure buyers that their Tesla will retain its value when they sell it. If you buy a car through Tesla’s financing program, you get a guaranteed option to sell it back to the company at a price pegged to a comparable BMW, Mercedes, Audi, or Lexus. Should something go wrong with your car, Tesla will send a concierge with a new Model S loaner, repair your car, and return it. Tesla recommends the Model S be brought in once a year for servicing. The warranty is still valid if you don’t.
In many ways, Elon Musk’s Tesla S is akin to the leap of faith that Apple took with the iPhone. The Tesla S is leading the transition in the 100 year old of a Gasoline driven car to a performance vehicle powered by alternate and cleaner energy.
It is that moment in history – when something is born and a new frontier is disrupted. Tesla Motors and Elon Musk are re-scripting automobiles with the Tesla S.
Whats common to – Steven Spielsberg, Steve Wozniak, Morgan Freeman, Will Smith, Demi Moore, Cameron Diaz, Ben Affleck, Seth Green, Craig Venter… and the list continues. These celebrities are backing Elon Musk’s Tesla S in a title fight for the Automobile future of the world. The R&D and Business teams at Tesla are out to prove the Tesla S’s superiority over any other Gasoline driven car –
1. They have announced a rapid expansion of its network of recharging stations
2. To reduce the entry cost, Tesla S is working on production of 2 cheaper models in the next 2 years
3. There’s also a leasing plan option that Tesla and Elon Musk is working upon.
In Tesla’s 10 years of existence, the company has suffered through embarrassing delays and leadership overhauls, verged on bankruptcy at least once, and been a favorite target of short sellers. In May it posted its first profitable quarter, with earnings of $11.2 million; sales for the first quarter rose 83 percent, to $562 million. Musk raised the 2013 sales estimate by a thousand vehicles to 21,000, an eightfold increase over 2012. A few weeks later, Tesla paid off a $465 million government loan early and then raised $1 billion from investors. The stock price has soared in the past six months, from $32 a share to $129.90 on July 15, before falling $18.21 in one day after Goldman Sachs published a skeptical report about the carmaker’s margins. Tesla has a market cap of about $13 billion, or about the size of Mazda Motor, which, according to a Bank of America Merrill Lynch estimate, will sell about 1.3 million vehicles globally in 2013.
Much to the naysayer’s chagrin and Elon Musk’s advantage – the Tesla S outdoes most of the commercial units of day in terms of performnace. The Model S does zero to 60 miles per hour in 4.2 seconds, has plenty of room (including a “frunk,” a second trunk under the hood), and gets the energy usage equivalent of 95 miles per gallon. Last November it became the first electric to win the Motor Trend Car of the Year award; in May, Consumer Reports gave the Model S its highest car rating ever—99 out of 100.
Tesla and Elon Musk are close to Apple and Jobs in 2007 – who took a leap of faith fundamentally redesigning the phone experience. The target is not to become the hottest car in Silicon Valley – The target is upending Ford, GM and the ExxonMobil.