Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNF podcast. Autonomous vehicles might be the cars of
Speaker 1: the future, but following a flurry of venture capital and
Speaker 1: private equity funding about a decade ago, investment in the
Speaker 1: technology is looking a little more tempered this last year,
Speaker 1: failing to reach four billion US dollars for the first
Speaker 1: time since twenty seventeen. While Apple has taken a step back,
Speaker 1: green shoots have come in the form of Tesla's Robotaxi announcement.
Speaker 1: In such a cash intensive industry, what autonomous vehicle strategies
Speaker 1: and technologies are appealing to car manufacturers well? To tell
Speaker 1: us more about this, on today's show, I get to
Speaker 1: speak with bnaf's head of Intelligent Mobility, Andrew Grant. We
Speaker 1: talk about the adoption of autonomous vehicles across different regions,
Speaker 1: such as robotaxis in China. We also review the different
Speaker 1: levels of automation that are available on the market and
Speaker 1: discuss Tesla's potentially controversial decision to continue with cameras as
Speaker 1: sensors while other parts of the market are embracing the
Speaker 1: more expensive light our technology. B ANDAF subscribers can find
Speaker 1: Andrew's recent research note at BNAF dot com or at
Speaker 1: BNF on the Bloomberg terminal. It's titled driving the next
Speaker 1: phase of electric Mobility in Europe. If you want to
Speaker 1: receive an update when we publish a future episode of
Speaker 1: Switched On, make sure to subscribe on Apple Podcasts or
Speaker 1: Spotify or wherever you get your podcasts and give us
Speaker 1: a review to share us with others. But right now,
Speaker 1: let's jump right into our conversation with Andrew about the
Speaker 1: outlook for the automated vehicle sector. Andrew, thank you for
Speaker 1: joining on the show today.
Speaker 2: Nice to be here, Thanks Stanna.
Speaker 1: We are here to talk about autonomous or automated vehicles,
Speaker 1: depending upon how you want to refer to them, and
Speaker 1: some of the developments in that space. Now, before we
Speaker 1: get to the Jetson's Cars of the future and where
Speaker 1: everybody's head kind of immediately goes when we think of
Speaker 1: autonomous vehicles, let's talk about those kind of at the
Speaker 1: lower level of the computer intervention here. So let's go
Speaker 1: through level zero through five. Can you give me a
Speaker 1: bit of a definition first of all, what an autonomous
Speaker 1: vehicle is and then go through those different numbers of autonomousness.
Speaker 2: Great way, of putting it down and thanks. Yeah, So
Speaker 2: definitions are very important in this space. Consumers need to
Speaker 2: know who's in charge of the vehicle as it's operating
Speaker 2: on the road. So there's various levels of automated driving
Speaker 2: that are defined by SAE International. That is the institution
Speaker 2: that used to be known as the Society for Automotive Engineers,
Speaker 2: and they have what essentially are six levels of driving automation.
Speaker 2: I'll simplify that a little bit just for our purposes
Speaker 2: because it's useful to just bundle these into different categories.
Speaker 2: So you have your level zero and level one, where
Speaker 2: there's either no assisted driving or just partially assisted driving
Speaker 2: that will help the human driver on the road.
Speaker 1: So is this the old school cruise control that's been
Speaker 1: around since my mother was driving me around?
Speaker 2: Yeah, exactly. Get up to a certain speed, lock it
Speaker 2: in and you should be should be fine. Then you
Speaker 2: get to your sort of more sophisticated driving, your advanced
Speaker 2: driver assistant systems that start to come in at what
Speaker 2: is known as level two and level three partial and
Speaker 2: conditional automated driving. So in these circumstances, the human driver
Speaker 2: is still the one that is in control of the vehicle.
Speaker 2: The computer and the self driving system are really an
Speaker 2: extension of that human driver. They are meant to help
Speaker 2: out make the driving a lot safer, but ultimately the
Speaker 2: onus is on the human driver to be in control. Now,
Speaker 2: at level three conditional automation, that means at certain stages
Speaker 2: and in very specific conditions which hopefully the vehicle manufacturer
Speaker 2: makes very very clear to the human driver, the computer
Speaker 2: is able to take over and do the self driving
Speaker 2: or drive the vehicle itself.
Speaker 1: So what's an example of this is the self parking
Speaker 1: or is this if you're about to get in an accident,
Speaker 1: it breaks for you.
Speaker 2: Yeah, so that parking is part of this, or automating
Speaker 2: parking where you don't actually have to do anything and
Speaker 2: the vehicle is going to do the parking for itself.
Speaker 2: But also it's specific location, so say on a controlled
Speaker 2: section of highway that's been mapped very thoroughly. Mercedes Benz
Speaker 2: has come out with a product where it is marketed
Speaker 2: as a level three self driving system and under those conditions,
Speaker 2: it's the computer that is under control of the vehicle,
Speaker 2: but it can still notify the human driver that it
Speaker 2: needs to come back in and take control of the vehicle.
Speaker 1: Okay, so I've got an idea of here we are
Speaker 1: zero to three. Now as we get up to four
Speaker 1: and five, what starts happening Now.
Speaker 2: You're talking about a different approach to the automation of
Speaker 2: the vehicle. What you have here is highly and fully
Speaker 2: self driving vehicles, and we just tend to bundle four
Speaker 2: and five together. That's really where it gets really sophisticated
Speaker 2: self driving technology. The computer is in control, it's doing
Speaker 2: the driving, and the human can do other things while
Speaker 2: in the vehicle.
Speaker 1: And what are some examples of cars on the road
Speaker 1: right now that are at that level four or five.
Speaker 2: Well, there's a few cases of this, so probably most prominently,
Speaker 2: which is the spin off from Alphabet Google their self
Speaker 2: driving car project. So weimo's operating in Phoenix, Arizona, in
Speaker 2: San Francisco and testing in a few other places throughout
Speaker 2: the US. These are level four highly autonomous vehicles that
Speaker 2: are capable of operating without any human in the vehicle.
Speaker 2: They have a bunch of sensors, very sophisticated computing under
Speaker 2: the hood of the car, and they do self driving
Speaker 2: on their own. There's a few other companies that are
Speaker 2: kind of pushing towards this space cruise. GM owned company
Speaker 2: was operating at the sort of level before an incident
Speaker 2: last year. And then there's a variety of companies throughout
Speaker 2: China that are operating at this level. So companies like
Speaker 2: Ponyai by do Or also operating these sorts of level
Speaker 2: four highly autonomous robotaxis that are available for public use.
Speaker 1: Okay, so we have a lot of different topics to
Speaker 1: get through today, and everyone hold on to that zero
Speaker 1: through five. Zero being low, five being high, and the
Speaker 1: different levels of autonomous vehicle that working to talk about today.
Speaker 2: But if it helps to simplify it a little bit,
Speaker 2: we just like to think of it as you've got
Speaker 2: your partially andconditional automated, that's your aid ass and then
Speaker 2: you've got your highly and fully automated that's your robotaxi.
Speaker 2: So those kind of two simple buckets of self driving.
Speaker 2: They're very different implications. They have different use cases, different
Speaker 2: financial opportunities. So we kind of simplified into those those buckets.
Speaker 1: That does simplify it quite a bit. So we've got
Speaker 1: it in these two categories. Let's talk about the money
Speaker 1: for a second though. So about a decade ago, there
Speaker 1: was a flurry of activity and the VC space, and
Speaker 1: some of the PE companies were as well investing in this,
Speaker 1: And what I want to know is where does it
Speaker 1: stand now in terms of investment and kind of have
Speaker 1: those original VC investments turned into bigger investments. Have they
Speaker 1: gone through the startup value of death? That sounds like
Speaker 1: there are a lot of fairly established companies that are
Speaker 1: actually trialing a lot of this technology right now in
Speaker 1: different parts of the world. But is it as much
Speaker 1: in the investor's i as it was, say a decade ago.
Speaker 2: Well, the simple answer is no. So a lot of
Speaker 2: money's flowed into this space. You're talking about seventy five
Speaker 2: billion in private equity and bention capital investment that we've
Speaker 2: tracked over the last ten years up to the start
Speaker 2: of twenty twenty four. And that really peaked in sort
Speaker 2: of twenty nineteen when a lot of investors were getting
Speaker 2: on the idea of a general self driving computer that
Speaker 2: could operate multiple applications. It could do a robotaxi and
Speaker 2: transport people. It could ultimately be applied to trucking. This
Speaker 2: driver could go anywhere and do anything. And then what
Speaker 2: we sort of had for the years since then is
Speaker 2: as there's been slightly less money flowing into the space,
Speaker 2: companies have had to come up with more specific use
Speaker 2: cases for their technology. They were pitching for very specific
Speaker 2: applications of their technology. So while them was less investment
Speaker 2: flowing into the space in general, it was more targeted
Speaker 2: and more directed towards companies that actually were developing a
Speaker 2: business model. They weren't just going to solve self driving
Speaker 2: in general, they were going to solve a specific pain
Speaker 2: point for consumers or businesses. So funding's dropped off. It
Speaker 2: was about four billion dollars that we tracked that went
Speaker 2: into the space last year. That's not small by any means,
Speaker 2: but significantly down from what we've seen previously. However, there's
Speaker 2: been some big announcements this year. Tesla's gone all in
Speaker 2: on this space. This obviously doesn't count towards venture capital
Speaker 2: investment because Tesla's are one of the biggest companies in
Speaker 2: the world, but they're spending about ten billion dollars this
Speaker 2: year just building out the self driving compute systems to
Speaker 2: try solve their self driving algorithms. Well, recently there's been
Speaker 2: some decent sized funding deals. So Applied Intuition raised two
Speaker 2: hundred and fifty million dollars through one of its funding rounds,
Speaker 2: and then quite recently Waive their British owned companies raised
Speaker 2: one billion dollars, which is a funding amount that at
Speaker 2: a Series C stage is something we haven't seen in
Speaker 2: this space in a little while. So nice to see
Speaker 2: those big billion dollar deals coming back.
Speaker 1: I can certainly see how from the end user standpoint,
Speaker 1: whether it's in a taxi or in a car you're
Speaker 1: driving yourself, that if this technology is working effectively, it's
Speaker 1: safer and you're ultimately in a vehicle that will you know,
Speaker 1: make fewer human errors assuming all goes right. Some companies
Speaker 1: have been decreasing their activity, while others have really been
Speaker 1: dialing up how their focus is on autonomous driving. You'd
Speaker 1: mentioned Tesla was one of them. Can you talk about
Speaker 1: some of the other automakers that are in this space
Speaker 1: who are adopting this technology and really what their strategy
Speaker 1: is and what the use cases and why they think
Speaker 1: it's going to give them a competitive edge.
Speaker 2: Yeah, definitely. So what's really interesting, maybe if I tie
Speaker 2: this back to why we actually are talking about self
Speaker 2: driving vehicles in what the listeners are are, we'll well
Speaker 2: know is very a Decarbonization Focus podcast and all the
Speaker 2: work we do at B and F is very decarbonization focused.
Speaker 2: Self driving vehicle technology is key to many automakers strategies.
Speaker 2: If you are investing in self driving vehicle development, that
Speaker 2: means you may not be investing in some of the
Speaker 2: other things that you need to do to become an
Speaker 2: automaker of the future. In Tessa's case, they have laid
Speaker 2: off a big chunk of this supercharger division and are
Speaker 2: devoting more of their resources towards self driving vehicle developments.
Speaker 2: Other automakers have gone the other way, where they have
Speaker 2: kind of cooled it a bit on some of their
Speaker 2: self driving vehicle ambitions and are focusing more on, say,
Speaker 2: operating more connectivity services. Maybe they are focusing more on
Speaker 2: aid asas and developing technologies that they can actually sell
Speaker 2: to consumers these days. Where this becomes really interesting is
Speaker 2: are you holding out for kind of a long term
Speaker 2: revenue and profit potential of some of your highly automated
Speaker 2: vehicle systems, or are you going to try make most
Speaker 2: of your money from aid asas and selling partially in
Speaker 2: traditional automation to consumers today. So I would say the
Speaker 2: majority of traditional automakers are tending to focus on those
Speaker 2: level two level three self driving systems and selling the
Speaker 2: host to consumers because as some of the modeling that
Speaker 2: we've done shows, that is a big potential revenue driver.
Speaker 1: How much do these systems cost and are they only
Speaker 1: found in luxury vehicles, because you know, if it sounds
Speaker 1: like it's the technology of the future, I'm going to
Speaker 1: guess that it's actually going to be a real premium
Speaker 1: and you're actually thinking about a vehicle.
Speaker 2: I mean, it's a definite added cost. It can be
Speaker 2: ranging from a couple hundred dollars for your level two
Speaker 2: systems up to a few thousand dollars for your more
Speaker 2: sophisticated level two what we can sometimes refer to as
Speaker 2: level two plus and level three systems. So that's a
Speaker 2: cost that sometimes the automaker will want to incorporate into
Speaker 2: the purchase price of their vehicle and sell it to
Speaker 2: the consumer with that price baked in, and sometimes they'll
Speaker 2: want to charge a separate amount for that. And we
Speaker 2: keep talking about Tessa, but there's a really good example
Speaker 2: of this with the autopilot and the full self driving
Speaker 2: software package which I'm using inverted commas. There for full
Speaker 2: self driving because it is not in fact a full
Speaker 2: self driving software package. It is a level two partial
Speaker 2: automation package, and they charge between eight and ten thousand
Speaker 2: dollars for that to purchase that package and use it
Speaker 2: within their vehicle. They have recently just cut the price
Speaker 2: on that down to eight thousand dollars, but it's a
Speaker 2: significant chunk that's added on top of the vehicle that's
Speaker 2: kind of depending on which type of test that you're buying,
Speaker 2: that's three to twenty percent of the cost of the vehicle.
Speaker 1: Given that this is a show that focuses on how
Speaker 1: decarbonization is changing the industries that we cover, to what
Speaker 1: extent do you find that autonomous driving is included in
Speaker 1: with a car that is an electric vehicle? Do you
Speaker 1: tend to find these together or really is autonomous driving
Speaker 1: across any number of cars and there's no strong correlation.
Speaker 2: Or there's definitely a very strong correlation between vehicles that
Speaker 2: are electric and vehicles that are self driving. So, first off,
Speaker 2: at the aid as level, a lot of the new
Speaker 2: vehicles that are being designed and packaged together, those tend
Speaker 2: to be electric vehicles. And while you're designing a new vehicle,
Speaker 2: it's much easier to add new technologies to that vehicle
Speaker 2: than it is to take an existing vehicle and then
Speaker 2: kind of pile this new tech on top of it.
Speaker 2: So inherently the newer vehicles out there, the electric vehicles
Speaker 2: also tend to have aid AAS and partially automated features
Speaker 2: as well. But then what we've observed with some of
Speaker 2: the robotaxis there and the testing data that's out there,
Speaker 2: a really high share of those vehicles are electric, to
Speaker 2: the degree of about ninety percent of the kilometers traveled
Speaker 2: in autonomous mode in California. Amongst all the companies that
Speaker 2: are operating there, and there's a list of about forty
Speaker 2: companies that are permitted to operate in California, ninety percent
Speaker 2: of those cometss were done now with electric drive trains.
Speaker 1: Why do you think that is?
Speaker 2: I mean a few different pressures. So one, you are
Speaker 2: going to be bringing in well a taxi service into
Speaker 2: an urban area, So it kind of makes sense if
Speaker 2: you are bringing it vehicle into an urban space, you
Speaker 2: might have some regulators that are looking at you with
Speaker 2: a close eye. Probably helps a little bit to have
Speaker 2: an electric vehicle as part of that. There are just
Speaker 2: going to be a lot more electric vehicles in the future.
Speaker 2: It makes sense to build on a drive train that's
Speaker 2: going to be more prevalent. And then there are some
Speaker 2: technical aspects to this as well. So if you have
Speaker 2: a big battery, you are running a big computer on
Speaker 2: these batteries as well, so you're going to have to
Speaker 2: have a big battery in any case.
Speaker 1: You've brought up the technology a few times. And then
Speaker 1: also Tesla, which then brings me to the different competing
Speaker 1: technologies that are being used at the moment. So Tuessla
Speaker 1: uses these cameras around the vehicle. And then there's lighter,
Speaker 1: which can you actually first explain what lightar is compared
Speaker 1: to a camera based technology, and then can we discuss
Speaker 1: kind of which ones are being used where and with
Speaker 1: what types of companies.
Speaker 2: So LIGHTER is light detection and ranging. Think of it
Speaker 2: just as a laser, So it's a different type of
Speaker 2: sensor that's used in these types of applications. Of all
Speaker 2: the robotaxis that are currently on the roads, they all
Speaker 2: use LIGHTER. It's a great sensor for practical purposes. It's
Speaker 2: got great range, it can operate in a lot of
Speaker 2: different weather conditions. It creates a very reliable three D
Speaker 2: map of what's happening in and around the vehicle and
Speaker 2: can really complement some of the other sensors that you're
Speaker 2: using in this space, so it will complement what the
Speaker 2: cameras see as well. The disadvantage of it is that
Speaker 2: it is very expensive. So the initial versions of this
Speaker 2: were uputs of thirty five thousand dollars for a single sensor.
Speaker 2: That's come down signif evantly and the technology has changed.
Speaker 2: It's gone from being one very pricey sensor that would
Speaker 2: kind of sit on top of the vehicle, it would spin,
Speaker 2: it would do a lot of different things. Now light
Speaker 2: or developers have kind of broken that up into a
Speaker 2: bunch of smaller versions that are positioned throughout the car
Speaker 2: or around the car, and incollective do the same thing
Speaker 2: but for a fraction of the cost. Now, for some developers,
Speaker 2: and Tesla being one of them that I would mention,
Speaker 2: are in the minority of the autonomous vehicle space, the
Speaker 2: price hasn't come down quick enough, and they don't see
Speaker 2: it coming down quick enough. You're talking still even at
Speaker 2: the kind of the best end, it's about five hundred
Speaker 2: dollars for one of these sensors, you need a couple
Speaker 2: of them on a vehicle. Some developers use up to
Speaker 2: eight of those, so it's still an added cost on
Speaker 2: the vehicle that pushes up the price. And on top
Speaker 2: of that, you still need the cameras to be doing
Speaker 2: a good job. So the approach of Tesla and one
Speaker 2: or two other developers in the space is to rely
Speaker 2: on the cameras to create this version of what's around
Speaker 2: the vehicle and what's ahead of the vehicle, and not
Speaker 2: rely on these sensors that can push up the price
Speaker 2: of the vehicle.
Speaker 1: So, given that Tesla's continued with the less expensive but
Speaker 1: the technology that's traditionally been working for them, is there
Speaker 1: a risk is light er costs continue to decline and
Speaker 1: the adoption becomes more prevalent, that Tesla could get left
Speaker 1: behind in this technology or at some point need to
Speaker 1: adopt it themselves.
Speaker 2: I mean, Elon Musk has been very clear that he
Speaker 2: has no intention of allowing the incorporation of lidar, in
Speaker 2: fact any other sensors long range radar for dy imaging
Speaker 2: radar within the Tesla self driving ecosystem. So it doesn't
Speaker 2: seem likely that Tesla would be doing that they are
Speaker 2: taking a gamble that they will solve self driving with
Speaker 2: their advanced computing that they're building out and spending all
Speaker 2: that money on. There is the potential that while they
Speaker 2: are working on that algorithm and pushing it ahead, they
Speaker 2: do just get beaten out by companies that are willing
Speaker 2: to lean on some of these other sensors and maybe
Speaker 2: take the additional cost of pushing up the hardware price
Speaker 2: of their vehicles. But there's also the option of, at
Speaker 2: some state which I would never discount, that Tesla does
Speaker 2: a bit of a U turn and ultimately starts to
Speaker 2: incorporate some of these sensors as the costic lines. There's
Speaker 2: a report that's just come out recently that Tesla purchased
Speaker 2: two million dollars worth of LDAR from Luminar Prominent Ladder
Speaker 2: supply last year. So this is something that they are
Speaker 2: testing with, but all statements coming out of the company
Speaker 2: are that they have no plans to put this into
Speaker 2: their vehicles. So waiting with beta breadth for August eighth,
Speaker 2: which is the announced dates of the Tesla Robotaxi being unveiled.
Speaker 1: Great. So, now that I have a good feel for
Speaker 1: the technology, I want to pivot a little bit to
Speaker 1: the regional dynamics. You know, we do this event in
Speaker 1: San Francisco every year, which is the BNEF Summit actually
Speaker 1: that takes place there and it's very focused on transportation.
Speaker 1: A lot of the people at the summit, both our
Speaker 1: team and the different clients that we have at the event,
Speaker 1: we're definitely in a lot of these robotaxis. So I
Speaker 1: saw it as a very real thing. There Where is
Speaker 1: the adoption? Am I right in thinking that the US
Speaker 1: is a big adopter of the autonomous driving technology? And
Speaker 1: outside of the US, also where else do we find it?
Speaker 2: I mean two definite leaders in the space, the US,
Speaker 2: with some states in particular being well ahead of others,
Speaker 2: and in China. So different approaches to how these vehicles
Speaker 2: are being deployed, and most of that's coming from a
Speaker 2: regulatory front, but you are looking at places like kind
Speaker 2: of southern states across the US where there are robotaxis
Speaker 2: being deployed, not just robotaxis, also some self driving trucks
Speaker 2: that are being tested to a fairly significant degree. And
Speaker 2: then California with San Francisco and the Bay Area being
Speaker 2: the tech hub that it is, it's a prominent area
Speaker 2: for robotaxi testing and deployment, and then across China. So
Speaker 2: a lot of the major cities in China, ranging from Beijing, Shanghai, Muhan,
Speaker 2: are significant autonomous vehicle test hubs, but working quite closely
Speaker 2: with the regulators to deploy some of these vehicles.
Speaker 1: So talk to me a little bit about the testing.
Speaker 1: How does that work as a test hub? You have
Speaker 1: this geo fenced area that the vehicles then ultimately operate
Speaker 1: in and then they collapse to a certain number of
Speaker 1: miles or people inside or people not inside. How do
Speaker 1: you go about testing the technology?
Speaker 2: For the most part, that comes down to the relationship
Speaker 2: with the regulators. This is a new space. There's a
Speaker 2: lot of back and forth between companies that are looking
Speaker 2: to deploy these types of technologies and the regulators. They
Speaker 2: end up having to go through what we call a
Speaker 2: bit of a policy gauntlet. You I'll use California for
Speaker 2: an example. You end up having to get a first
Speaker 2: a testing permit from the California Department of Motive Vehicles
Speaker 2: that allows you to drive around with a human driver
Speaker 2: supervising in the vehicle. Then you can get a driverless
Speaker 2: testing permit where you are allowed to take the driver
Speaker 2: out the vehicle. Then you are ultimately allowed a deployment
Speaker 2: permit from the California Department of Motive Vehicles and that
Speaker 2: lets you put your vehicles into into operation. But then
Speaker 2: you also need the California Public Utilities Commission to give
Speaker 2: you permission to transport passengers, either at a testing phase
Speaker 2: or for for commercial reasons, so you need a bunch
Speaker 2: of different permits. Then you might need to go to
Speaker 2: the federal level and get permission. If you are using
Speaker 2: a custom designed vehicle as your robotaxi, you need the
Speaker 2: federal government to sign off on being able to operate
Speaker 2: that vehicle on public roads. So once you've got this
Speaker 2: collection of permits, then you need to go to the
Speaker 2: local governments and work with them to make sure you're
Speaker 2: not disrupting things that they're trying to do. And they
Speaker 2: have ways to limit and control what robotaxes are deployed
Speaker 2: and how they're deployed. So these companies are building up
Speaker 2: big policy teams and regulatory teams that are working with
Speaker 2: regulators to design the right type of regulation. But it's
Speaker 2: really kind of iterative and step wise, and you kind
Speaker 2: of can't really go from Hey, I've built this technology
Speaker 2: in a lab and then two weeks later, I've deployed
Speaker 2: it on streets and people are using those robotaxes. It's
Speaker 2: very iterative and it's very building up the process over time.
Speaker 1: So let's stay on the robot taxis for a minute.
Speaker 1: One of the things when we think about decarbonization is
Speaker 1: the fact that autonomous vehicles could drive down the need
Speaker 1: for car ownership because you can have more vehicles available
Speaker 1: when you need them. And also these robotaxis, well the
Speaker 1: driver doesn't need to sleep. They maybe need to charge
Speaker 1: at their battery yet, but they don't need to sleep,
Speaker 1: so you have much longer use of the vehicle throughout
Speaker 1: the day. What impact does the autonomous driving technology have
Speaker 1: on the number of miles traveled for some of these vehicles.
Speaker 2: That's a great question and something that we put into
Speaker 2: our long term electric vehicle outlook. This can be a
Speaker 2: kind of a foundational element in the number of vehicles
Speaker 2: that you need on public roads in the long run.
Speaker 2: So since the vast majority of robotaxis in our view,
Speaker 2: will end up being shared vehicles, they will either be
Speaker 2: owned by a company or a central entity and shared
Speaker 2: amongst many users. That means that they will be traveling
Speaker 2: more than those privately owned passenger vehicles that will sit
Speaker 2: in driveways or parking lots most of the day. Our
Speaker 2: estimate is that it's between three and five times the
Speaker 2: annual mileage of your private passenger vehicle. That means you
Speaker 2: need few of them to provide the same amount of
Speaker 2: mobility to consumers. So there are some benefits to that.
Speaker 2: If it's managed properly, you don't have to kind of
Speaker 2: have so many vehicles on the streets. You maybe don't
Speaker 2: need so much parking that you can use for for
Speaker 2: other applications. There is a bit of a risk that
Speaker 2: some people are concerned about in that you would have
Speaker 2: a lot of what they call deadhead miles, which would
Speaker 2: be vehicles that are circulating looking for passengers, not parked,
Speaker 2: but just driving around and nobody's using them. So that's
Speaker 2: something that's worth paying attention to.
Speaker 1: Which you do end up seeing with taxis and cities
Speaker 1: all over the world.
Speaker 2: Yeah, exactly. And there's a lot of different ways to
Speaker 2: drive down those numbers, and you can kind of look
Speaker 2: at some of the databack solutions that some of the
Speaker 2: ride hailing companies are working with and they've had some
Speaker 2: success in driving down deadhead because ultimately nobody wants dead head.
Speaker 2: The companies that are operating these vehicles, the drivers that
Speaker 2: are operating these vehicles don't want that as well. They
Speaker 2: are not earning while they are driving without anybody in
Speaker 2: the vehicle, so they're not trying to do that, and
Speaker 2: they want to limit those those types of miles.
Speaker 1: I can't help but have a chuckle because my father
Speaker 1: is a grateful dead fan, and they are referred to
Speaker 1: as dead heads. So it is a sign of the
Speaker 1: times that we are using that term in a very
Speaker 1: different way. Right now, let's talk about some of the
Speaker 1: growth markets. So you had mentioned that adoption is quite
Speaker 1: high in the US, China coming is in a close second.
Speaker 1: Where are we also seeing kind of the frontier markets
Speaker 1: for this technology, and where do you think we'll see
Speaker 1: growth in the medium term.
Speaker 2: I think anyway where there's a dense urban environments that
Speaker 2: meets a few criterias, so well marked streets, decent weather
Speaker 2: is a big help for some of these robotaxi applications.
Speaker 2: And then governments that are I wouldn't say necessarily willing
Speaker 2: to be flexible, but are thinking about regulations in this
Speaker 2: space in a thoughtful way. That's kind of the minimum
Speaker 2: criteria for this technology to accelerate and be deployed. So
Speaker 2: there's a few places where that is true, but yet
Speaker 2: more kind of regulatory developments is needed.
Speaker 1: Well. And then let's talk about a growth market for
Speaker 1: Tesla specifically, So they have set up a pretty large
Speaker 1: project in China. Can you comment on that a little bit, Yeah.
Speaker 2: Sure, So, currently Tesla's FSD, their full self driving name
Speaker 2: brand product which I mentioned earlier, is not a full
Speaker 2: self driving system, is not available in China right now.
Speaker 2: It's something that they've recently received permission or at least
Speaker 2: passed too critical milestones to be able to introduce their
Speaker 2: technology in the market. Now. China is the world's biggest
Speaker 2: auto market, big potential for them to introduce this type
Speaker 2: of technology there, particularly when you consider this is kind
Speaker 2: of eight thousand dollars or whatever they are able to
Speaker 2: charge for it on top of the purchase price of
Speaker 2: the vehicle. So good a little earner for them. And
Speaker 2: since they've got these types of permissions, they can possibly
Speaker 2: start introducing this technology. But they're not the only game
Speaker 2: in town. A lot of the local companies, particularly this
Speaker 2: new crop of electric vehicle automakers that China has are
Speaker 2: offering at least at an SAE level Driving Automation classification level.
Speaker 2: It's a similar type of technology. And from what we've tracked,
Speaker 2: those technologies are being offered at a much lower price
Speaker 2: than what Tesla would be potentially introducing this vehicle, so
Speaker 2: potential for them there but decent amount of competition.
Speaker 1: And then just going back to this convergence between the
Speaker 1: self driving technology and electric vehicles and the battery packs
Speaker 1: that are in the electric vehicles themselves, how much of
Speaker 1: the battery does this technology really draw upon and does
Speaker 1: it really dramatically reduce the number of miles traveled by
Speaker 1: some of these vehicles, and is that really a concern?
Speaker 1: And really are there any other drawbacks to this technology
Speaker 1: that maybe I'm not seeing?
Speaker 2: Yeah, I mean in some cases, so you have a
Speaker 2: few different providers of self driving computers rending from video
Speaker 2: to mobile eye that are all providing different compositions of
Speaker 2: computing power that end up under the hood of the
Speaker 2: vehicle and do the self driving. Now, the power consumption
Speaker 2: of these can vary, but we ransom some numbers and
Speaker 2: in kind of a worst case scenario, nearly half of
Speaker 2: the battery or the capacity of the battery would be
Speaker 2: drained by some of these self driving systems. That's a
Speaker 2: lot that is kind of a worst case scenario number,
Speaker 2: and I would mention that as these different computers get iterated,
Speaker 2: it's something that is declining rapidly, So we don't expect
Speaker 2: that type of number in many real world applications as
Speaker 2: we progress. But also, if you're operating in a robotaxic capacity,
Speaker 2: this is something that you can design around. So if
Speaker 2: you are getting to say a three hundred mile range vehicle,
Speaker 2: and you might be only getting two hundred miles out
Speaker 2: of that, that's something that you can design your usage
Speaker 2: patterns around.
Speaker 1: We've talked a bit about the companies that are really
Speaker 1: going all in on this technology and prioritizing it as
Speaker 1: a part of their strategy. But can you give me
Speaker 1: some notable examples of those who have really backed away
Speaker 1: from it.
Speaker 2: Well, one of the most high profile that's kind of
Speaker 2: recently cooled on self driving and in fact vehicles in general,
Speaker 2: is Apple up until the end of twenty twenty three,
Speaker 2: or we have data that shows that they were testing
Speaker 2: this self driving vehicle technology in California right up until
Speaker 2: the end of last year, so this has been a
Speaker 2: pretty recent decision they and then they have decided to
Speaker 2: pull back on self drive VIA and that after years
Speaker 2: of trying different strategies of they're going to be a
Speaker 2: fully self driving robotaxi service, they're going to be a
Speaker 2: partially automated vehicle that will kind of compete with your
Speaker 2: traditional automakers. Eventually they've decided that they are going to
Speaker 2: pull back from that. And there's probably a few different
Speaker 2: reasons for that, one of them being the competition in
Speaker 2: the space, but also the complexity of this environment and
Speaker 2: balancing the need for an electric vehicle and a self
Speaker 2: driving vehicle and all the other technology that goes into
Speaker 2: these applications.
Speaker 1: Well, and actually you've mentioned there were a lot of
Speaker 1: companies and a lot of activity about a decade ago.
Speaker 1: Presumably there are a few companies that are now left
Speaker 1: is emerging as the leaders in this space as the
Speaker 1: industry I mean, actually, has there been consolidation or has
Speaker 1: it essentially been that just some companies have really pulled
Speaker 1: out in the lead.
Speaker 2: There's definitely been a lot of consolidation and a lot
Speaker 2: of companies that have pivoted to specific applications. So a
Speaker 2: company like Aurora, for instance, started off as a robotaxi developer,
Speaker 2: they now focus almost exclusively one large application, heavy duty
Speaker 2: trucks and doing long haul driving. And then there's companies
Speaker 2: that have been bought up and are now part of
Speaker 2: much larger entities. Zoos, for instance, one of the more
Speaker 2: prominent companies and one of the more active robotaxi testers
Speaker 2: within the US and within California, is now a subsidiary
Speaker 2: of Amazon. So a lot of the tech companies are
Speaker 2: very interested in the space and have some interest or
Speaker 2: some venture. Microsoft placed quite recently a big investment in Wave,
Speaker 2: so the tech companies are monitoring this closely. So it's
Speaker 2: interesting to see Apple pull out while a lot of
Speaker 2: the other tech companies are still actively involved and funding
Speaker 2: their adventures.
Speaker 1: And you bring up an important part of miles traveled
Speaker 1: and really how goods get from place to place in
Speaker 1: supply chains, which are trucks and delivery vehicles. Beyond the
Speaker 1: robotaxis and the consumer vehicles that end up having all
Speaker 1: these safety features added, are the delivery trucks in our
Speaker 1: supply chain vehicles. A huge part of this market or
Speaker 1: is it kind of a little bit slower to react
Speaker 1: to it.
Speaker 2: Trucking is a really interesting use case because if you
Speaker 2: really think about it, a lot of the applications seem
Speaker 2: like there might be some of the lower hanging fruit
Speaker 2: of the space. If you are driving from one point
Speaker 2: to another, you know a start points, you know an
Speaker 2: end points. If you are doing long haul trucking, particularly
Speaker 2: across the southern US where a lot of these companies
Speaker 2: are located, you're dealing with pretty good road conditions. It's
Speaker 2: pretty decent and consistent weather the whole time, and for
Speaker 2: the most part, it seems like regulators are fairly open
Speaker 2: to some of these solutions that seems like the perfect combination.
Speaker 2: A lot of the trucking companies haven't been able to
Speaker 2: reach the stage where they are removing drivers fully from
Speaker 2: the vehicles for those fixed journeys, but there's a number
Speaker 2: of promises that that will happen this year. So Aurora
Speaker 2: plus AI and Kodiacrobotics are all targeting to remove the
Speaker 2: driver from the vehicle during the course of this year
Speaker 2: and run some of those operations. So big things ahead
Speaker 2: for the self driving.
Speaker 1: Truck space certainly something to watch. So we talked a
Speaker 1: little bit about how it changes the number of miles
Speaker 1: traveled for the vehicles themselves. But can you actually talk
Speaker 1: to me a little bit about how this changes the
Speaker 1: way they we interact with the vehicles and the way
Speaker 1: that people essentially drive, get around, receive their goods. What
Speaker 1: are some of the overarching themes and takeaways in particular
Speaker 1: given that we're BNF and we talk about decarbonization here, well.
Speaker 2: I mean one of the main ways we think about
Speaker 2: this is just how it's changing how people would react
Speaker 2: in the vehicle and how the driving patterns that they
Speaker 2: would have if some of the burden of driving that
Speaker 2: vehicle is taken away or lightened. So there's some early
Speaker 2: studies out there, and this is kind of early data
Speaker 2: that show that people are more willing to drive longer
Speaker 2: distances if they have a reliable advanced driver's sistance system
Speaker 2: in the vehicle that is helping them drive. Now, that's
Speaker 2: really interesting because it means that maybe people will be
Speaker 2: more willing to drive or prefer to drive longer distances
Speaker 2: versus taking a train or maybe a short hall flight
Speaker 2: or things like that. So it could really change the
Speaker 2: number of miles that are traveled on roads that obviously
Speaker 2: has a big impact on electric vehicle batteries. It has
Speaker 2: a big change on that number of vehicles that are
Speaker 2: on the roads. So it's something that we're paying a
Speaker 2: lot of close attention to.
Speaker 1: Yeah there, I mean, just the couple of examples you
Speaker 1: gave have huge implications. So fewer rail journeys may or
Speaker 1: may not end up increasing emissions overall, but actually fewer
Speaker 1: flights would certainly reduce emissions. So it really depends upon
Speaker 1: I guess what it's replacing and how it changes actually
Speaker 1: even where people live and how they commute to work
Speaker 1: and how they go about their lives. So we'll watch
Speaker 1: this space and I look forward to seeing what analysis
Speaker 1: comes out of your team on how the future of
Speaker 1: vehicles and how we get around comes about.
Speaker 2: Thanks for having me, Dana.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
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