The automotive industry's big data opportunity - inside a new book on our driverless future

Profile picture for user jreed By Jon Reed May 22, 2017
Summary:
Two years is a long time when it comes to the pace of automotive disruption. In my latest Q/A with Evangelos Simoudis, he gives us a look behind his new book on big data and the automotive industry. We get into the five cultural forces causing change in this sector, and why trends like mobility services present new risks and opportunities for carmakers.

autonomous-cars
It's been almost two years since my Q/A with investor (and blogger) Evangelos Simoudis on automotive industry disruption - but if feels like ten. The pace of change in the automotive industry is intense, with new alliances and lawsuits on self-driving tech popping up constantly.

Since our Q/A, Simoudis has doubled down on his research and even published a book, The Big Data Opportunity in Our Driverless Future. Given that I drive an analog car and the only smart thing in it is my cell phone, I might be perfect interview foil.

In a recent email exchange, I asked Simoudis to separate the genuine change from the hype, and the five culture shifts behind these dramatic trends. In the process, he reveals the motivation behind the book, and the key factors that are converging on the auto industry.

ACE, data and mobility services - three reasons to write a book

Jon Reed: You've said that previous waves of technical disruption didn't really disrupt the automotive industry. That's all changed now hasn't it?

Evangelos Simoudis: The combination of technologies that make Autonomous Connected and Electrified (ACE) vehicles a reality along with the introduction of mobility services, particularly services such as ride hailing that promote on-demand mobility, are the key disruptors to the incumbent automotive industry and by extension to the transportation, logistics and energy industries.

Reed: And why is "ACE" such a fundamental shift?

Simoudis: The adoption of ACE vehicles will lead to completely new supply chains. The increasing use of on-demand mobility services particularly using such vehicles will lead to decreasing need to own personal vehicles particularly in urban settings. That will drive the adoption of new business models and will result in new value chains. All these changes significantly increase the risk of incumbent disruption.

Reed: Auto industry disruption is a topic you've blogged about extensively before. What made you take on the time-sucking challenge of doing a full book?

Simoudis: I first started looking into the automotive industry to try to determine the disruption risk created by startups. In fact, I devote part of the book providing recommendations to incumbents on how to co-innovate with startups or how to benefit from the innovations created by startups. In the course of my research, however, I felt that understanding the profound impact that data and artificial intelligence can have on next-generation mobility is so large that needed its own special treatment. Moreover, nobody was tackling the topic to the degree I felt was necessary so I embarked to write the book.

Reed: What is the one big thing you would like enterprise readers to take away from this book

Simoudis: Big data and AI are key ingredients in next-generation mobility, and as such they should be viewed as a strategic imperative for companies that want to play a central role in mobility. They are key not only for the navigation of autonomous vehicles, as we tend to mostly read today, but for all the services offered through and around such vehicles (from parking to charging, to maintenance to repair and from ride hailing to multimodal transportation).

Reed: But there is a broader trend here - away from a mass production/one car-one driver model.

Simoudis: Yes - this is about the personalization of every transportation experience, regardless whether it involves vehicles we own or vehicles we share. I purposefully used the term "driverless future" in the book's title because I wanted to underline not only the autonomous vehicles themselves but also the fact that mobility in the future will rely less on an individual having to drive to go to a destination. But to take advantage of the key ingredient, the participants must take a number of steps which I describe in the book.

Five culture changes are impacting personal mobility

Reed: With all the hype about so-called "self-driving cars," it's hard to separate out the forces causing disruption in the automotive industry. You make the key point that "on-demand mobility" is an equally important shift. Tell us about the implications of "on-demand mobility," and why urban/culture challenges are forcing the issue.

My research led me to the conclusion that there are five important challenges contributing to changes in personal mobility:

  1. Urbanization is increasing and more megacities are being created.
  2. Traffic congestion, particularly in megacities, is severely impacting individual productivity. Because our transportation infrastructures are inadequate or they are reaching their limit, building more infrastructure won't solve the problem.
  3. Pollution and climate change are impacting the quality of our life, particularly in cities.
  4. The population of many developed countries is aging fast. These populations will require constant assistance of various forms, including transportation assistance, in order to continue functioning properly.
  5. The socioeconomic conditions of certain population segments - particularly the Millennials - lead them to adopt the sharing economy to address many of their needs, including their transportation needs.

Reed: You hammer away at the misuse of terms like self-driving cars. You point out that what we're really dealing with is the aforementioned "ACE," Autonomous, Connected, Electric, and (eventually) driverless vehicles. Automakers have defined six levels of vehicle autonomy. Where do you think we are now, and how soon will the impact of ACE be felt in our lives?

Simoudis: Automakers are introducing cars with level 2 and level 3 driving automation. Examples, of this type of automation include the automatic breaking systems that many new car models now have, and/or the lane change avoidance. Tesla's Autopilot system is probably the best example of level 3 driving automation. We also have an increasing number of experimental vehicles exhibiting level 4 and level 5 driving automation. I agree with the automakers (new and incumbent) when they say that we will have operational vehicles with "basic" level 5 driving automation within the next 5 years.

Reed: Is the technology getting ahead of our ability to legislate it?

Simoudis: I am not as convinced that we will be able to have such vehicles ready for broad use by that time. In other words, once again the basic technology will be ahead of the necessary regulation. But to get everything worked out in order to convince the public to broadly trust such vehicles, without someone sitting behind the wheel ready to take over, will take additional time.

For example, autonomous vehicles hold a great promise for significantly reducing the number of traffic accidents. However, to achieve this promise we need to address many issues relating to vehicle instrumentation, transportation infrastructure instrumentation, and most importantly the ability of the AI systems used in such vehicles to take full advantage of the available data to provide safe and efficient transportation.

In part two of our interview, we'll get further into the data obstacles and why culture change is a big hurdle for the incumbents. We'll also examine the impact on urban planning. For those who are wondering about Simoudis' views on alternative transportation beyond automotive, from bikes to trains to hyperloops, we covered that in our original piece two years ago.