DISRUPTION IN TRANSPORT

WHAT MIGHT THE FUTURE OF TRANSPORT LOOK LIKE?

WHAT IS DISRUPTION?A DISRUPTIVE PRODUCT OR SERVICE HELPS TO:• CREATE A NEW MARKET & VALUEAND• SIGNIFICANTLY WEAKEN,• TRANSFORM, OR• DESTROY AN EXISTING PRODUCT / MARKET CATEGORY / INDUSTRY.

EXAMPLES OF DISRUPTIVE TECHNOLOGIES

The first car with internal combustion engine was invented in 1806 and the first petrol powered automobile in 1886. Isn’t it the time for a new innovation?

IT’S USUALLY THE EXPERTS AND INSIDERS WHO DISMISS THE DISRUPTIVE OPPORTUNITIES.• NAAH …• NEVER GONNA HAPPEN …• NOT IN THIS LIFETIME …• IT’S GONNA TAKE 100 YEARS …• …

“I do not believe the introduction of motor-cars will ever affect the riding of horses.”

Scott Montague - UK MP - 1903

“There is no reason for individuals to have a computer in their homes.”

Ken Olsen – CEO, Digital Equipment Corp -1977

“Airplanes are interesting toys but of no military value.”

Marshall Ferdinand Foch – Ecole Superieure de Guerre - 1904

DISRUPTIVE FIELDS IN TRANSPORTElectric Vehicles

Autonomous Driving

Solar Energy

EV DISRUPTIONTESLA MODEL S : THE CAR OF THE YEAR 2013• AGILITY OF A PORSCHE SPORT CAR• SMOOTH AND EFFORTLESS AS A ROLLS ROYCE• CARRIES AS MUCH AS A CHEVROLET EQUINOX SUV• MORE EFFICIENT THAN A TOYOTA PRIUS• DRIVES UP TO 510 KM BY ONE RECHARGE WHICH

COSTS 24 NZ$ (EQUAL TO 2.26 L/100 KM)THE BEST SELLING LARGE LUXURY CAR IN US, 2014ONE BRAND THAT DIDN’T EXIST 10 YEARS AGO, HAS OUTPERFORMED ALL THE OTHER FAMOUS BRANDS LIKE BMW, MERCEDES AND …

IS EV DISRUPTIVE?EV IS NOT JUST SUPERIOR TO THE INTERNAL COMBUSTION ENGINE VEHICLES (GASOLINE/DIESEL). IT’S A DISRUPTIVE PRODUCT.

EV is 5x more energy efficient than the ICEV.Energy efficiency:• ICEV 17%-

21%• EV 85%-

99%

Ev energy costs are 3-6x cheaper than ICEVAnnual fuel cost:• Petrol

1625$• Hybrid

796$• Electric

279$

EV maintenance costs are 5-10x cheaper than ICEV• Fewer moving

parts: motor lasts for decades

• TESLA MODEL S: “INFINITE MILE WARRANTY in 8 years”

Electric motor is far more powerful than ICE motor• Constant

torque• Top Speed 249

kph• Can reach to

97 kph in 2.8 seconds

Wireless charging.• Already being

used in some bus lanes at stops in South Korea and UK (Milton Keneys route)

EV CHANGES THE PRICE/PERFORMANCE EQUATION

• IT IS SHIFTING THE EQUATION.• WHEN?

THE SWITCH FROM ICEV TO EV• THE MAIN ISSUE HOLDING BACK THE MAINSTREAM

ADOPTION OF EVS IS THE COST OF BATTERIES.• LI-ON BATTERY COSTS DROPPED ~14%/YEAR OVER 15

YEARS.• INVESTMENT IN BATTERY TECH INCREASING DRAMATICALLY

BY IT/ELECTRONICS, AUTOMOTIVE & ENERGY INDUSTRIES.• SINCE 2010 BATTERY COSTS HAVE DROPPED ~16%/YEAR.• BY 2022 ICE MOTOR MANUFACTURING INDUSTRY AND

FUEL PRODUCTION INDUSTRY WOULD BE MASSIVELY DISRUPTED.

AUTONOMOUS DRIVING DISRUPTION• NISSAN RENAULT CEO: FULLY SELF-DRIVING

CARS MAY HIT THE ROAD IN 2018.• MANY HIGH-END CARS ALREADY HAVE

SEMI-AUTONOMOUS DRIVING CAPABILITIES AND ARE MIGRATING TO MID-RANGE CARS• LIDAR TECHNOLOGY (LIGHT+RADAR) WAS

FIRST USED BY GOOGLE FOR AUTONOMOUS DRIVING CARS.

IS LIDAR EXPENSIVE?

• PRICE OF GOOGLE LIDAR IN 2012: 70,000$• PRICE OF GOOGLE LIDAR IN 2014: 10,000$• PRICE OF ANOTHER US COMPANY: 1,000$

SDC VS. HUMAN DRIVER• BASED ON A SURVEY 57% OF PEOPLE TRUST AND ARE READY TO USE SDC.• HUMAN DRIVER IS NOT AN EFFICIENT DRIVER.• AT BEST, 95% OF HIGHWAY SURFACE IS NOT BEING USED

AT A GIVEN TIME.• CARS EQUIPPED WITH ADAPTIVE CRUISE CONTROL (ACC)

CAN IMPROVE HIGHWAY CAPACITY BY ~40%.• USING BOTH ACC AND INTER-VEHICLE COMMUNICATION

CAN BOOST HIGHWAY CAPACITY BY 273%.• SO, THERE MIGHT BE AMPLE OF FREE CAPACITY IN THE

EXISTING ROAD NETWORK IN THE FUTURE.• A SDC CAN PICK YOU UP, DRIVE YOU TO YOUR

DESTINATION, DROP YOU OFF, FIND A CAR PARK, PARK ITSELF, AND PICK YOU UP AGAIN AS YOU ORDER.

ARE WE GOING TO ENCOURAGE INCREASED USE OF PRIVATE CARS?• IDEALLY NOT!• CARS ARE VERY EXPENSIVE COMPARED TO THEIR USAGE.• AVERAGE CAR PRICE = 31,000$ + FUEL + INSURANCE + …

•CARS ARE PARKED 96% OF THE TIME!• IN US, EACH PARKING SPACE COSTS TAXPAYERS 20K$-70K$ TO BUILD

AND MAINTAIN.• SO, “FREE PARKING” IS VERY EXPENSIVE!

CAR AS A SERVICE: THE END OF CAR OWNERSHIP

• COMBINE SELF DRIVING CARS WITH RIDE SHARING: AVAILABLE ANYTIME, ANYWHERE TO TAKE YOU ANYWHERE• SDC COST/KM CAN BE ~80-90% LESS THAN OWNING A PRIVATE CAR, SO LESS DESIRE/DEMAND TO OWN A CAR

• 80% FEWER CARS IN TOTAL WOULD BE NEEDED.• CAR MANUFACTURING, CAR INSURANCE AND OIL INDUSTRIES WOULD BE IMMENSELY DISRUPTED.

• 80% FEWER PARKING SPACES WOULD BE NEEDED: CITYSCAPE CAN BE REDESIGNED (MORE PARKS INSTEAD OF PARKINGS)• HELSINKI HAS ANNOUNCED INTENTION TO BUILD MOBILITY ON-DEMAND BASED ON SELF-DRIVING CARS BY

2025.

SOLAR ENERGY DISRUPTION• SOLAR PANEL PRICE HAS

DROPPED 154X SINCE 1970.• INSTALLED SOLAR PANEL

CAPACITY HAS INCREASED 100X SINCE 2000.• BY THIS RATE OF INCREASE

ALL OF THE WORLD’S ENERGY (NOT JUST ELECTRICITY) WOULD BE SOLAR BY 2030.

CAN SOLAR ENERGY CONTINUE GROWING AT THIS RATE?Solar PV price

to:Petroleu

mNucle

arNatural

Gas Coal

Times (1970-2013) 5,355X 1,540

X 2,275X 900X

Times (1970-2020) 16,065X 4,620

X 6,825X 2,700X

• IT IS ANTICIPATED THAT SOLAR PANEL PRICES WILL GO DOWN BY ANOTHER 2/3 UNTIL 2020.• ENVIRONMENTAL CONCERNS AND CHEAPER

SOLAR ENERGY, WOULD BOOST THE FORECASTED GROWTH TO EVEN FASTER IN THE COMING YEARS.

SUMMARY

Electricity price to go down• By 2016 it would become

cheaper than any other known source of energy.

Electric Vehicles to become more affordable• By 2022 Electric vehicle

would become cheaper than vehicles with any other known type of engine.

Demand for vehicle ownership to decline• Part of it would be done by

increased safety and convenience of self driving cars.

• The other part should be done by the network operator to encourage shared ownership.

WHAT MIGHT THE FUTURE OF TRANSPORT LOOK LIKE?• LOWER TRAFFIC ON THE ROAD NETWORK AND LESSER NEED FOR ROAD

NETWORK EXPANSION.• LOWER LONG-TERM PARKING DEMAND AND HIGHER DEMAND FOR PICK

UP/DROP OFF SPOTS.• LOWER DEMAND FOR THE BUSSES AND THE OTHER TYPES OF MASS TRANSIT

SYSTEM (PUBLIC TRANSPORTATION WOULD BE USING MEDIUM CAPACITY VEHICLES TO PROVIDE HIGHER FLEXIBILITY).• LOWER CONGESTION BY MORE EQUILIBRIUM DISTRIBUTION OF TRAFFIC OVER

THE ROAD NETWORK.• SAFER ROADS FOR PEDESTRIANS AND CYCLISTS IN THE ABSENCE OF HUMAN

ERRORS.• INCREASED PRODUCTIVITY BY BEING ABLE TO START WORKING ON THE WAY

TO WORK.