Issue #23: Future of Transportation and Logistics.
Hello there! This week we’ll be diving into the world of transportation with Ken-Ichi Hino. Ken-Ichi and I first spoke ~ 3 years ago and, unlike many exploratory calls, that conversation has continued, grown/morphed/expanded with every walk, coffee chat and phone call we’ve had since. He’s an expansive thinker with a keen eye for detail (probably comes from being a math major). Super smart with a knack for thinking beyond the obvious, another Booth School of Business grad, cleantech consultant and deep-thinker about the future of transportation and logistics. I hope you enjoy.
Before you dive in; I won’t be releasing a paid version of Polymathic. In working on it, and after conversations with a few good friends, I realized I’d be robbing myself of the joy I derive from PM by putting a price on it. And there’s no fun in that :)
ACES – autonomous, connected, electrified and shared. It seems like every week there are new developments in at least one of these major trends in transportation.
“Shared” has been a term typically associated with ride-hailing platforms – Uber, Lyft, etc. – and used somewhat interchangeably with “transportation-as-a-service”, but new transportation models indicate that “subscribed” may be the better “S” term.
Finnish startup MaaS Global offers a monthly subscription that enables unlimited access to public transit, taxis, cars, and bikes under a fixed monthly price. Uber’s recent acquisition of Jump and its new partnership with Masabi position it to offer access to the same modes of transportation that MaaS Global does, and it has experimented with subscription pricing (Uber Plus). Lyft rolled out a subscription plan last month, now available in 30 markets, and its leadership has cited Netflix and Spotify as examples of future transportation pricing models.
CNET has assembled a good list of the auto OEM subscription offerings (essentially a more flexible lease) and the various price points, services, and restrictions they include.
Speaking of leases, according to Bloomberg New Energy Finance, 80% of US battery electric vehicles (excluding Teslas) are leased. This compares to a 30% lease rate for the country across all vehicles. Why? Bloomberg cites rapidly falling costs of new BEVs and tax credits only applying to new vehicles as major reasons for why the used BEV market is challenged, leading customers to leave the risk of obsolescence to OEMs by leasing rather than taking it on themselves by buying. Hey, consumers are smart!
While all of these developments are innovative, most of the activities getting the hype today leverage only one of the ACES trends. It is only by stepping back to explore how the trends interact with, reinforce, and enable each other that we begin to see how the magnitude of potential transformation is exponentially greater than the sum of the impacts of the individual ACES trends. Daniel Sperling’s book ’Three Revolutions: Steering Automated, Shared, and Electric Vehicles to a Better Future’ and the ’Transportist’ blog from David Levinson are two resources for further exploration.
A broad view also uncovers how much uncertainty there is about almost every aspect of the future of transportation, and how fragile our assumptions might be. One example is what the physical vehicles of tomorrow might look like:
Toyota has launched the e-Palette Alliance, partnering with Amazon, DiDi, Mazda, Pizza Hut, and Uber, to build a flexible, multi-purpose, automated electric vehicle for transportation of both people and goods. There’s also a cool concept video. (Shameless plug: I wrote about Amazon’s potential role in shaping transportation a couple months ago)
Another thought-provoking vehicle design (and cool video) comes from Next Future Transportation, with battery-powered modular pods capable of connecting while in motion for transportation of both people and goods.
These concepts of new vehicles for shared transportation tend to be electric, and this report from RethinkX lays out a case for the economic advantages for autonomous, shared electric vehicles [Seyi’s Note: This is a Must Read]. Announcements such as Waymo’s partnership with Jaguar for its electric I-Pace SUVs and UPS partnering with Workhorse for electric delivery trucks align with such thinking.
On the other hand, Ford has backed hybrids as its vehicle of choice for the future of transportation. One of the major challenges it sees is that it expects its vehicles to be in use for roughly 20 hours per day and the charging time necessary for BEVs will reduce profits.
The questions of vehicle types and BEVs vs hybrids (or any other energy source) are intertwined with countless others and involve diverse stakeholders, from urban planners and electric utilities to e-commerce platforms and more. This complexity presents both a challenge to those seeking to create antifragile positions and a massive opportunity for those that navigate it effectively.
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You can now claim to be an expert in this space but only if you read all the links ;)
Polymathic Monthly will take a summer break but you’ll get two more fab issues (one from another good friend and one from me) before that happens. The break will give you time to read all the links you’ve bookmarked and books you’ve bought ;)
Keep sending your thoughts, they fuel me…
Seyi