Car on the CloudLet's get started!

Team 3

Last Updated: January 28, 2012

Screens

Screens

* (50 minutes per day x 240 days) / 60 minutes per hour

*R.A. How long are American commutes? The Economist. Oct 16. 2011

The average American spends 200 hours* commuting

• Aligns with technology (Maps, Search, Places, Wallet, Traffic Analytics)

• First mover advantage• Represents the future of automotive• Safer and more efficient• $8B in potential revenue in “DaaS”

Industry Today5-year Outlook

10-year OutlookConclusion

Automotive Telematics Today3G (Limited) Connectivity

Adaptive CruiseControl

SelfParking

Proprietary internally developed software Limited Navigation

Today

ECUs, Airbags, ABS, Engine Control & Monitoring

OBDII Interface

UI (Skinnable GUI + NUI)

Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc.

GPS & Google MapsAn

droi

d3rd

Par

ty

Apps

Car O

SSu

bsys

tem

s

Systems Controle.g. headrests, climate control

Tomorrow

ECUs, Airbags, ABS, Engine Control & Monitoring

Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc.3rd

Par

ty

Apps

Subs

yste

ms

OBDII Interface

UI (Skinnable GUI + NUI)

GPS & Google Maps

Systems Controle.g. climate

control

Predictive Analytics

Battery OptimizationTi

ghtly

inte

grat

ed g

Car

platf

orm Driverless

Systems

Goo

gle

Car

OS

Andr

oid

How will Google Crack the Market?

By leveraging unique existing capabilities to add value to the existing market.

No infrastructure overhead for auto makers

Predictive systems to optimize battery efficiency

Improved driving analytics and behavioral data, stored on the Google cloud

System-level phone integration, remote start & other systems controlsFree OS lowers

system design and future maintenance costs

Additional functionality to drivers via the Android UI

• Market penetration• Ad Revenue• Data on Driver

Behavior

Network Effects for Android Telematics

gCar Platform

ConsumersCar

Manufacturer

Short term: Mimic smart-phone strategy through free, open-OS,

designed to create customer lock-in

• Phone

integration• Apps• Car Efficiency

• Subsidized Software• Predictive Modeling• Driving behavior

analytics• Differentiator

(Customizable GUI,

customizable Android

Market Place for each

manufacturer)

What is a Car on the Cloud?

Cloud Computing gives consumers access to:• Optimized car settings• Software updates (maps)• Computationally intensive

tasks (voice commands)• Offloads expensive computer

elements• Big Data analytics on driving

data for researchers, policy makers, insurance companies and city planners

…..Most importantly, it represents a path to driverless cars.

The Cloud is Key

Introducing Driverless Cars, powered by Google™

How do we get there?

• Legislation already in place in Nevada to allow driverless cars

• Marketing and PR blitz to introduce driverless cars into the US

• “Vegas, powered by Google” -- Free cab service between casinos

Necessary Strategic Partnerships

Partner Google Partner Partner Google

Car Manufacturers New products & revenue streams

Access to their cars

Cellular providers $ Data connection

Content ProvidersNew placement for

contentMore content to monetize w/ ads

Local Governments Dramatically reduce road congestion

Legislative help

Utility CompaniesAnalytical data,

capacitance

$, access to their networks for future

products

• 40% revenue sharing agreement with auto manufacturers

• Remaining will be split between cellular data providers, and Google

• Driverless Cars, powered by Google rolled out nationally as legislation allows

• Platform for future capabilities: mesh networked cars (motes), data collection for insurance companies (monetization potential), OnStar like systems, etc.

Unique Value Proposition

Ancillary data services revenue

and advertising revenues kept

solely by Google

Driverless as a Service (DaaS) for $50/month

• Microsoft Sync, represents a potential threat and could leverage into a driverless solutions

• Apple has more than enough cash to enter this market• Car manufacturers may want to develop own system internally to

retain control• Existing subsystem and controls companies have relationships with

auto manufacturers that may be difficult to challenge• Reliant on communication standards being set between OS and

ECUs

Competitive Challenges

• Policy: State legislation for driverless cars• Consumer Privacy: Assurance and controls to protect consumers’

anonymity, unless opted-in• Security: Encrypted data connection to servers to transmit sensitive

data• Safety and Liability: Legal liability will need to be established in case

of accident• Suppliers: Potential for supplier backlash as Google moves down the

stack

Additional Risks

Forecast

NPV = $14.7B

Adjacent Vertical - V2G (Vehicle to Grid)

What is V2G?

V2G or Vehicle to Grid is a method of storing and supplying electricity from electric vehicles (EVs) directly to the grid/utility.

How does it work?

“Dr. Jasna Tomic of CALSTART reports that utilities will pay $15 to $55 per MWh for electricity supplied for frequency regulation, but the utility does not want to deal with 100,000 car drivers. The utility wants one aggregator in the middle to provide the power.”

V2G (cont)

Why Should Google Enter the V2G market?

• Charging analytics will work seamlessly with Android enabled electric vehicles and cloud computing infrastructure

• Expands and strengthens Google as a Platform in automotive• Fits strategically with Google smart grid initiatives• Has FERC approval to buy and sell electricity in wholesale markets• Positive five year NPV of $2.5B

How Should Google Enter the V2G market?

• Partner with Charging Station manufacturers and infrastructure providers.

• Unique opportunity to capture value in $85B US Auto market

• In the short term, Google needs to replicate the success of the mobile market to become the core OS of every vehicle. This will allow it to capture short term revenues from advertising and data analytics, but more importantly will provide a framework for future driverless car enhancements.

• In the long term, Google’s success depends on the adoption of driverless vehicles. In addition to earlier revenue models, Google will capture additional value by creating a Driverless as a Service (DaaS) subscription model. This will allow Google to capture revenue’s in excess of $8B per year after ten years for an NPV of $14B.

• Additionally, market entry into the automotive market will allow Google to enter new markets such as EV charging and demand response with yearly revenues in excess of $1B.

• Additional data monetization strategies are plentiful once Google’s core Car OS is widespread.

Conclusions

Thank You!

Appendix - V2G NPV Calculation

http://cet.berkeley.edu/dl/CET_Technical%20Brief_EconomicModel2030_f.pdf

Appendix - V2G NPV Calculation

2015 2016 2017 2018 2019 2020

Number of EVs sold in the US

500,000

750,000 1,000,000 1,500,000 2,250,000 2,700,000

Google Market Share 10% 25% 50% 75% 75% 75%

Number of Google Controlled Cars

50,000

187,500

500,000 1,125,000 1,687,500 2,025,000

Yearly Utility revenue saved by EVs

$ 4,000

$ 4,000

$ 4,000

$ 4,000

$ 4,000

$ 4,000

% Demand Response Revenue for Google 25% 25% 25% 25% 25% 25%

Cash Flow $ (1,000,000,000) $ 50,000,000 $ 187,500,000 $ 500,000,000 $ 1,125,000,000 $ 1,687,500,000 $ 2,025,000,000

Discout Rate 10%

NPV $ 2,535,325,201.90

Monthly Fee of $50

Allows car to be driverlessAllows car to get on Driverless lanesCovers content distribution

Driverless as a Service (DaaS)

Timeline

Today

Five Years

$1B in added revenue

Five Years

- $1B in added revenue

Ten Years

Driverless Car Introduced

$8B+ per year revenue

$35B NPV

Financials

Cars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Sold per year (000's) 6,500 7,015 7,324 7,576 7,611 7,623 7,700 7,700 7,700 7,700Cumulative Cars (000's)

6,500

13,515

20,839

28,415

36,026

43,649

51,349

59,049

66,749

74,449

% Driverless 5% 10% 18% 25% 35% 45% 50% 50% 50% 50%Market Captured 90% 90% 80% 70% 60% 60% 60% 60% 60% 60%Market Paying DaaS 100% 100% 90% 90% 80% 80% 80% 70% 70% 70%

Monthly Fee $ -

$ 50.00

$ 50.00

$ 50.00

$ 50.00

$ 50.00

$ 50.00

$ 50.00

$ 50.00

$ 50.00

Ad Rev per Car $ 2.00

$ 2.10

$ 2.20

$ 2.30

$ 2.40

$ 2.50

$ 2.60

$ 2.70

$ 2.80

$ 2.90

0.04

Cars Paying (000's) 293

1,216

2,701

4,475

6,052

9,428

12,324

12,400

14,017

Yearly fee $600 $600 $600 $600 $600 $600 $600 $600 $600

Total (000's) $ - $176,114 $732,486 $1,626,652 $2,695,958 $3,646,552 $5,681,424 $7,427,530 $7,474,895 $8,451,024

Total (000,000's) $ (2,000,000) $176.11 $732.49 $1,626.65 $2,695.96 $3,646.55 $5,681.42 $7,427.53 $7,474.89 $8,451.02

Google Revenue (000's)

$ 29,320,000

Percent 0.00% 1% 2% 6% 9% 12% 19% 25% 25% 29%

Dev Costs (000's) $ 2,000,000 $ (2,000,000)

$ (1,823,886)

$ (1,091,400)

$ 535,253

$ 3,231,211

$ 6,877,763

$ 12,559,186

$ 19,986,716

$ 27,461,611

$ 35,912,635

Profit (29%) $51,073 $212,421 $471,729 $781,828 $1,057,500 $1,647,613 $2,153,984 $2,167,719 $2,450,797

Present Value $ (2,000,000)

$ 46,430

$ 175,554

$ 354,417

$ 533,999

$ 656,624

$ 930,035

$ 1,105,334

$ 1,011,257

$ 1,039,377

$ 10,393,772

$ 14,246,800

Total Cars Today (000's) 137,079