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    Self-driving cars:The next revolution |

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    A message from Gary Silberg andRichard Wallace

    For 125 years the automotive industry has been a force for innovation and economic


    growth. Now, in the early decades of the 21 century, the pace of innovation is speeding up and the industry is on the brink of a new technological revolution: self-driving vehicles.

    The new technology could provide solutions to some of our most intractable socialproblemsthe high cost of traffic crashes and transportation infrastructure, themillions of hours wasted in traffic jams, and the wasted urban space given overtoparking lots, just to name a few. But if self-driving vehicles become a reality, theimplications would also be profoundly disruptive for almost every stakeholder in theautomotive ecosystem. As one industry executive put it, Everything, from how wemove goods to how we move ourselves around, is ripe for change.

    KPMG LLP and the Center for Automotive Research (CAR) collaborated on this report,interviewing leading technologists, automotive industry leaders, academicians, andregulators to develop hypotheses on how self-driving vehicle technology could unfoldand its potential impacts. It is clear from our research that any company remain

    ingcomplacent in the face of such potentially disruptive change may find itself leftbehind, irrelevant.

    For those who embrace innovation and opt to lead rather than follow, a new frontier isopening in the realm of mobility services.

    We hope you will find our report illuminating and that we will have opportunities todiscuss our findings with you in the near future.

    Gary Silberg Richard WallacePartner, KPMG LLP Director, Transportation Systems Analysis

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    National Sector Leader Automotive Center for Automotive Research

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    Self-Driving Cars: An Introduction

    On the cusp of revolutionary change

    For the past hundred years, innovation within the automotive sector has broughtmajortechnological advances, leading to safer, cleaner, and more affordable vehicles. But forthe most part, since Henry Ford introduced the moving assembly line, the changes

    sthave been incremental, evolutionary. Now, in the early decades of the 21 centur

    y, theindustry appears to be on the cusp of revolutionary changewith potential to dramaticallyreshape not just the competitive landscape but also the way we interact with vehicles and,indeed, the future design of our roads and cities. The revolution, when it comes, will beengendered by the advent of autonomous or self-driving vehicles. And the timing maybe sooner than you think.

    KPMG LLP and the Center for Automotive Research (CAR) joined forces in developingthis white paper to examine the forces of change, the current and emerging technologies,the path to bring these innovations to market, the likelihood that they will achieve wideadoption from consumers, and their potential impact on the automotive ecosystem.

    Our research included interviews with more than 25 thought leaders, automotive and high-tech executives, and government officials as well as analysis of industry trends. This whitepaper presents our findings, with an emphasis on the convergence of sensor-based andcommunication-based vehicle technologies and its implications.

    The revolution, when it comes, will beengendered by the advent of autonomous orself-driving vehicles. And the timing maybe sooner than you think.

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    The findings are outlined in four sections:

    Market dynamics examines the market dynamics and the social, economic, and

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    1 environmental forces that are making change inevitable.

    2 Convergence discusses the ongoing convergence of the key enabling technologies.

    Adoption focuses on the path to widespread adoption of advanced automated driving

    3 solutions, which we believe will take place in stages, leading over time, to reliance on

    increasingly autonomous or self-driving vehicles.

    Implications for investment addresses the social, political, and economic implications

    4 of self-driven automobiles and their impact on the entireautomotive ecosystem.

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    Market dynamics

    Imagine. It's 6:25 p.m. and you've just wrapped up a meeting. You still have several itemson your must-do list before you can call it a night and a 25-minute commute that usedto take as long as 90 minutes in the bad old days of rush-hour traffic.

    But no worries today. You flick open an app on your phone and request a pick-upat theoffice; a text confirmation comes back and a few minutes later a car pulls up. Home,you say, as you launch a call to your client in Shanghai. The car slips easily into the self-drive lane, checking road conditions and flashing a message that you will arrive homein 24 minutes. In that time, you will have reviewed a report with your client, answerede-mails, and set your pick-up time for tomorrow morning. You arrive home ready to relaxand focus on your family. You step out of the car and it moves off to its next pick-up.

    A Self-Driving Car?

    Even now that military drones have become a familiar topic, the idea of self-driving cars sounds prettyfar fetched. But is it still just science fiction? Something that gets batted around in robotics labs and thinktanks? Or are self-driving vehicles on the verge of becoming a viable form of personal mobility? Will themarket accept them, want them, and pay for them?

    We think the answer is a resounding yes: The marketplace will not merely acceptself-driving vehicles; it willbe the engine pulling the industry forward. Consumers are eager for new mobility alternatives that would

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    allow them to stay connected and recapture the time and psychic energy they squander in traffic jams anddefensive driving. Or as Stanford University's Sven Beiker put it, The paradigm shift in the consumer's mind

    1relative to personal mobility is a key factor for self-driving vehicles.

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    The Status Quo: The High Cost of MobilityDriving Demographics

    The desire to go where we want whenever we want has been aWill people willingly cede control to a machine and give up

    powerful market force for centuries. And the automotive industrydriving their own car? For baby boomers, especially, turning

    has beenand continues to bea critical component of the U.S.16 and getting a driver's license was a rite of passage. Buteconomy, employing 1.7 million people (across manufacturers,

    demographics are changing, as are attitudes towards driving.suppliers, and dealers) and providing $500 billion in annual

    Younger generations, the ones who grew up with gamecompensation, as well as accounting for approximately 3 percent

    consoles and smart phones, are not so in love with cars. They

    2of GDP. But mobility is increasingly expensive and inefficient.

    live perpetually connected lives, and while they may haveFirst, of course, is the total cost of vehicle ownership, which can

    the same desire for mobility on demand, some see the act of

    8bring the price of a $21,000 car driven an average of 15,000 miles

    driving as a distraction from texting, not the other way around.per year to more than $40,000 over five yearsfor a machine that

    Their antipathy towards driving may be a good thing, givensits unused on average, almost 22 hours out of every day.3

    these statistics: Distractions account for 18 percent of crashes

    with injuries, and 11 percent of drivers under age 20 involved inWe also pay heavily to build and maintain our roads. The U.S.


    crashes with fatalities were reported to have been distracted.Department of Transportation (USDOT) estimates that newconstruction of four-lane highways in an urban area costs

    This groupmembers of the Gen Now generation (seebetween $8 million and $12 million per mile. Even resurfacing that

    Figure 2 below)are not rushing to get driver's licenses theroad, at an estimated $1.25 million per mile, can be daunting for

    way baby boomers did. In 1978, nearly half of all 16-year-oldscash-strapped governments.

    and 75 percent of all 17-year-olds had licenses; by

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    2008, those numbers had dropped to 31 percent and 49

    The average American commuter now spends 250 hours a year10

    percent, respectively.behind the wheel of a vehicle; whether the value of that timeis measured in lost productivity, lost time pursuing other

    Figure 2interests, or lost serenity, the cost is high. Today, those

    Demographic breakdowncommuters inch along during rush hour traffic; they drive in circlesaround city streets looking for parking spaces; and, according to

    Demographic Population Percentage of Totala report published by the MIT Media Lab, In congested urbanareas, about 40 percent of total gasoline use is in cars looking

    Digital Natives (014 years) 49 million 16%for parking.4

    Safety and the Human TollGen Now (1534 years) 84 million 28%

    We pay in other important ways. In 2010, there wereapproximately six million vehicle crashes leading to 32,788traffic deaths, or approximately 15 deaths per 100,000people. Vehicle crashes are the leading cause of death for

    Gen X (3544 years) 43 million 14%

    Americans aged 434. And of the 6 million crashes, 93 percent

    5are attributable to human error. The economic impact ofcrashes is also significant. More than 2.3 million adult drivers

    Baby Boomers (4565 years) 80 million 26%and passengers were treated in U.S. emergency rooms in2009. According to research from the American AutomobileAssociation (AAA), traffic crashes cost Americans $299.5

    6Older Adults (66+ years) 47 million 16%

    billion annually.

    The pursuit of improved vehicle safety has spurred theNational Highway Traffic Safety Administration (NHTSA) to

    Denotes segment of population that is untapped today due to being below

    driving agefocus attention on self-driving vehicles. As NHTSA's Associate

    A percentage of older adults are driving impaired. The trend of self-driving willAdministrator for Vehicle Safety, John Maddox, explained in

    provide them added mobilityearly 2012, the goal is not merely to make self-driving vehicles

    A percentage of baby boomers will enter the older adults category when theas safe as human drivers, who, as the evidence shows, are

    trend of self driving sees market introduction


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    not very safe at all. The goal is to develop crash-less cars.

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    Together, the Gen Now generation and Digital NativesParking lots and garages form urban dead zones, draining the

    comprise 133 million current and future drivers, or more thanvitality from city streets. In his book ReThinking a Lot (2012),

    43 percent of the U.S. population. Older adults, the 47 millionEran Ben-Joseph notes, In some U.S. cities, parking lots cover

    Americans aged 66 and over, face different mobility challenges.more than a third of the land area, becoming the single most

    While they still cherish their autonomy, they are prone to developsalient landscape feature of our built environment.13

    age-related impairments to their driving ability.In summary, current trends are unsustainable over the

    Even aging boomers are increasingly distracted by cell phoneslong-term, and new alternatives are emergingnot just

    and other gadgets; they, too, will soon move beyond safe drivingfrom within the automotive sector, but from a host of new

    age. Among the boomers we interviewed, even those whoplayers and unlikely suspects. From universities, such as MIT,

    owned premium cars said they would willingly give up driving toStanford, Carnegie Mellon, and Columbia, to leading high-tech

    work in exchange for an easier commute.companies, such as Google and Intel, to start-ups, the shape of

    personal mobility is changingand could ultimately transformSelf-driving cars open up new possibilities and new markets,

    every aspect of how we use, purchase (or not), insure, andand not just for those who are legally eligible to drive, but also

    even finance our vehicles. This transformation willfor younger people, older people, and those with disabilities. For

    have profound implications for any company within thethem self-driving promises greater freedom and mobility and

    automotive ecosystem.greater control over their lives.

    Running Out of Space

    In the early days of the automobile, America was expanding,1 KPMG Interview, 5/30/2012.

    conquering the vast open spaces with a network of highways.2 Contribution of the Automotive Industry to the Economies of All Fift

    y States and the United Statesth

    Kim Hill, Adam Cooper and Debbie Maranger Menk. Center for Automotive Research. Prepared for TheIt was the work of the 20 century, planning and building the

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    Alliance of Automobile Manufacturers, The Association of International Automobile Manufacturers, The3.9 million miles of paved public roads that now connect Seattle

    Motor & Equipment Manufacturers Association, The National Automobile Dealers Association and Theto Miami, Bangor to Baton Rouge, and Detroit to Mountain

    American International Automobile Dealers Association. April 2010.View. Americans mythologized their cars and the freedom of

    3 Using TCO calculator at, 7/12/2012.the open road. We shaped our towns and villages around the

    4, building vast suburbs miles beyond our gritty urban

    5 Maddox, John, Improving Driving Safety Through Automation, NHTSA, 2012.centers, adding big-box stores and mega-malls surrounded


    three-times-greater-than-congestion-costs/, 6/28/ acres and acres of parking lots.

    7 Maddox, John, op. cit.But now population density is increasing and the trend in the

    8, 7/18/2012.U.S. and worldwide is one of rapid urbanization. The United


    10 Ad Age, op cit.Nations reports that 82.1 percent of Americans lived in urban


    World Urbanization Prospects, United Nations Department of Economic and Social Affairs, 2011.areas in 2010, up from 79.1 percent in 2000, meaning that 14.1


    Research and Innovative Technology Administration, Bureau of Transportation Statistics, http://www.percent more Americans lived in urban areas in 2010 compared 01_11.html, 7/24/ 2000. By 2020, the UN estimates that 84.4 percent of

    13 Ben-Joseph, Eran, ReThinking a Lot, MIT Press 2012, will live in urban areas, with more than 28 percent

    asp?ttype=2&tid=12874&mode=toc, 7/20/2012.

    11living in urban areas of more than five million people.

    Over the past 50 years, increased population density in theUnited States coincided with an increase in household wealthand growth in the number of multi-car families. From 1960 to2010, the number of registered vehicles in the United Statestripled, from 74.4 million in 1960 (one car for every 2.4 people)to 250.2 million registered vehicles in 2010 (one for every

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    121.2 people).

    In some U.S. cities, parking lots cover more than a third of theland area, becoming the single most salient landscape featureof our built environment.

    Eran Ben-Joseph, MIT Press

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    Self-driving cars: The next revolution 9

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    Self-Driving Cars: Section 2

    ConvergenceCan we build a safe, self-driving vehicle? Yes. In fact, Google has already logged morethan 200,000 miles in a fleet of self-driving cars retrofitted with sensors. And Googleis not alone; traditional automakers and suppliers have also developed self-drivingfunctionality using sensor-based solutions and have a host of new applications inthe pipeline. At the same time, a number of organizations, including automotiveandhigh-tech companies and the USDOT, have been focused on the potential for using

    connected-vehicle communication technologies for collision avoidance and traffic management.

    What's missing, so far, is the convergence of sensor-based technologies andconnected-vehicle communications that is needed to enable truly autonomousvehicles. In this section we discuss the existing technologies, their current limitations,and why we believe they are likely to converge in the not-so-distant future.

    Sensor-Based Solutions

    The automotive industry is currently developing sensor-based solutions to increase vehicle safety in speedzones where driver error is most common: at lower speeds, when the driver is stuck in traffic, and at higherspeeds, when the driver is cruising on a long stretch of highway (see Figure 3). These systems, known asAdvanced Driver Assist Systems (ADAS), use a combination of advanced sensors, such as stereo camerasand long- and short-range RADAR, combined with actuators, control units, and integrating software, toenable cars to monitor and respond to their surroundings. Some ADAS solutions, such as lane-keeping andwarning systems, adaptive cruise control, back-up alerts, and parking assistance, are available now. Manyothers are in the pipeline.

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    Figure 3: Speed zones for driver assist systems



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    Low Speed (mph)High Speed (mph)(b)

    Key: Industry focus speed zones

    Note: (a) May not consider acceleration and driving conditions e.g., handoff of control residential versus highway

    (b) Indicative of situation where driver is cruising along empty stretches of highway at steady high speeds

    The next generation of driver-assist systems will likely offer Companies are also developing sensor-based, driver-assistedgreater vehicle autonomy at lower speeds and may reduce solutions, which use stereo cameras and software andthe incidence of low-impact crashes. For example, traffic jam complexalgorithms to compute the three-dimensionalassist solutions work at speeds up to 37 mph and could be on geometry

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    of any situation in front of a vehicle in real timethe market as early as 2013. from the images it sees.14



    The next generation of driver-assist systems will

    likely offer greater vehicle autonomy at lower speeds

    and may reduce the incidence of low-impact crashes.

    Self-driving cars: The next revolution 11

    ----------------------- Page 12-----------------------Such sensor-based systems offer varying degrees of assistance

    These features are especially important for active safetyto the driver, but, in their current form, are not yet capable of

    applications, because safety-critical communication mustproviding self-driving experiences that are complete and cost-

    be reliable, immediate, network and device agnostic, andcompetitive. Their limitations include:

    secure. Another benefit of DSRC is that it operates using free

    spectrum, which is already reserved by the U.S. government fora) Perception of the external environment: So far, the fusion

    transportation applications.of available sensors and artificial intelligence is not capableof seeing and understanding the vehicle's surroundings as Wi

    thin the automotive industry, two entities have emergedaccurately as a human being can. Humans use a combination

    for testing and developing V2V and V2I communications.of stored memories and sensory input to interpret events as

    The Vehicle Infrastructure Integration Coalition (VII-C) isthey occur and anticipate likely scenarios. For example, if a

    a collaboration among federal and state departments ofball were to roll onto a road, a human might expect that a child

    transportation and automobile manufacturers. In 2009,could follow. Artificial intelligence cannot yet provide that level

    the coalition published the results of its connected vehicleof inferential thinking, nor can it communicate in real time with

    concept testing; it is now focused on policy issues that mustthe environment. These algorithms are very complex and will

    be resolved before the technology can be deployed. Anotherneed to replace over 16 years of human learning, explained

    group, the Crash Avoidance Metrics Partnership (CAMP)Christian Schumacher, Head of Systems & Technology for

    held driver clinics in six U.S. locations as part of a Connected

    15Continental Automotive Systems, N.A.

    Safety Pilot.

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    b) Cost: Creating a 360-degree view of the vehicle'senvironment requires a combination of sensors and may costmore than consumers are willing to pay. Light Detection andRanging (LIDAR)-based systems provide 360-degree imagingbut are complex, expensive, and not yet ready for the market.The LIDAR system used in the Google car, for example,cost $70,000. Value chain stakeholders will need to have aclear and compelling business case before investing in thistechnology. (Please refer to the Adoption section for morein-depth analysis on cost and investment considerations.)

    Connectivity-Based Solutions

    Connected-vehicle systems use wireless technologies tocommunicate in real time from vehicle to vehicle (V2V) andfrom vehicle to infrastructure (V2I), and vice versa. (Note thatwe use the expression V2X as shorthand for communicationbetween vehicles and any other object.) According to theUSDOT, as many as 80 percent of all crashesexcluding

    those in which the driver is impairedcould be mitigatedusing connected-vehicle technology.

    Dedicated Short-Range Communication (DSRC), whichuses radio waves, is currently the leading wireless mediumfor V2V communication. It operates at 5.9 GHz frequency,using standards such as SAE J2735 and the IEEE 1609 suite(protocols that establish what messages are sent, whatthe messages mean, and how they are structured),16 and

    is being tested rigorously to see if it can fully support V2Vcooperative safety applications. Currently, DSRC offers thegreatest promise, because it is the only short-range wirelessalternative that provides all of the following:

    Fast network acquisition Priority for safety applications15 KPMG Interview, 5/2/2012.

    16 Low latency Interoperability

    SAE ( and IEEE ( re two major associations of engineers and other technical

    professionals who establish industry standards for engineering.

    High reliability Security and privacy17 KPMG Interview, 5/2/2012.

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    To move beyond the test phase and set the stage for self-

    longer-term solution to the infrastructure investment costdriving vehicles, a number of obstacles must be overcome:

    that is associated with DSRC.17 However some inherent

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    shortcomings exist with cellular technology for use in activea) Critical Mass: Because V2V communication requires

    safety systems: it suffers from latency issues (it is too slow)other similarly equipped vehicles for sending and receiving

    and has bandwidth constraints, both of which reduce itssignals, the technology will not achieve its potential until the

    viability for safety-critical applications.capability is ubiquitous. That may require mandates and willcertainly require cost-effective solutions and the ability to

    c) Dependency on Sensors: Although connected vehicle

    retrofit existing vehicles. (For more on this topic, please see

    solutions can communicate with the external environment,Section 3: Adoption.)

    sensor-based solutions will need to co-exist in order to cover

    situations that involve obstaclesobstructions in the road orb) Infrastructure Modifications: V2I communication for

    pedestrians, for examplethat would not be connected andactive safety will require infrastructure equipped with

    communicating with the network.DSRC-compliant transceivers, and the cost of building

    that infrastructure may present barriers. An intermediate

    Figure 4 (below) provides a framework for evaluating the

    solution might focus only on crash avoidance at high-volume

    pros and cons of the underlying technologies in connected-

    or other critical intersections. Another solution could use

    and sensor-based solutions. The ratings (low-medium-

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    cellular technology and its existing infrastructure for longer-

    high) indicated in bright colors show areas where further

    range communication and DSRC for shorter ranges. Heri

    development is needed before the technologies can be used in

    Rakouth, PhD and manager of Technology Exploration at

    mass-market convergence-related applications.

    Delphi, notes, Advances in cellular technology could be a

    Figure 4: Framework for evaluating technologies









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    ve Metric: COST

    Evaluative Metric: RELIABILITY

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    LR MER

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    vehicle technologies and sensor solutions would provide aand complexity of stand-alone solutions. Adding DSRC would

    necessary level of redundancy.eliminate the need for the more expensive sensors and bringdown the cost of the overall package.

    d) Infrastructure Investment: Connected vehicle solutions

    require large-scale infrastructure investments. Convergenceb) Proxy for Human Senses: Convergence would increase

    could help mitigate some of this requisite investment bythe inputs that are available for decision making and reduce

    covering some use cases using sensors.the need for more sophisticated artificial intelligence. Thecombination of sensors and connected-vehicle solutionswould allow self-driving vehicles to collect the requisite

    Figure 5: Benefits of convergenceSensor-Bas

    ed Solution Only

    Cannot sufficiently mimic human senses

    Not cost-effective for mass market adoption

    Lack of adequate 360 mapping of environment in urban grids

    ConnectedVehicle Solution Only

    DSRC does not currently work with pedestrians, bicyclists, etc.

    DSRC-basedV2I might require significant infrastructure investment

    V2V requires high market penetration to deliver value reliably


    Convergence will facilitate adequate mimicking of human senses

    Convergence will reduce need for an expensive mix of sensors

    and reduce the need for blanket V2I investment

    Convergence will provide the necessary level of functional

    redundancy to ensure that the technology will work 100 per cent

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    ym Autonomouso Adaptive Cruise Cooperative

    Platooningn Controlo Adaptive Cruis

    et t Control (CACC

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    ectionee Speed Adaption Movement

    Assist rge g

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    n Autonomous Electronic EmergencyCooperative Collision

    oi Warning Systems Brake Light

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    Degree of cooperation

    Key: Indicates DOT focus application for connected vehicles

    Self-driving cars: The next revolution 15

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    Self-Driving Cars: Section 3


    Assuming the technologies mature, convergence occurs, and connected, self-driving

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    for mass deployment,19 stated Hideki Hada, Toyota. On the next page we describe a baseline adoption

    scenario, an aggressive one, and a conservative one.

    Focused and phased introduction is a realisticpath for mass deployment.

    Hideki Hada, General Manager, Integrated Vehicle System Dept., Toyota

    19 KPMG Interview, 5/16/2012.

    16 Self-driving cars: The next revolution

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    Early applications Adoption levels No change No change

    sell the promise out as a

    ftermarketAGGRESSIVE SCENARIO of self-driving retrofit is gradually


    Consumersn embrace tangible

    Adoption densityo

    it benefits reaches critical

    po mass

    d NHTSA issuesAf NRI followed by Adoption and speed

    o immediate V2V of change eventually

    et mandate that level off

    aR includes aftermarket


    Technologybreakthroughs leadto even greater

    Time value for V2Xsolutions

    Early applications Assist systems Adopton plateaus Private enterprise

    sell the promise providegreater due to lack of V2X introduces

    BASE CASE SCENARIO of self-driving value proposition to functionality in aftermarket

    vehicles. cons

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    umers aftermarket solutions

    n Consumers excited Early adopters flock Aftermarket retrofit

    oi by tangible benefits to new offerings reaches requiredt

    pdensity for `control'

    o NHTSA issues NRI NHTSA issuesdA V2Vmandate but appsf

    o without aftermarket Adoption eventually

    e component levels off (nott


    necessarily at

    100 percent



    Initial adoption Unfavorable NRI Slow rise in Adoption levels

    slow due to lack causes adoption adoption as never reach critical

    CONSERVATIVE SCENARIO of consumer to plateau due to sensor mass for self-driving

    enthusiasm lack of consumer technology due to lack of V2X

    for early assist interest in available improves capability

    no and information sens

    or-basedit systems solutions


    d NHTSA issuesAf NRI unfavorable

    obecause DSRC not

    et seen as viable for

    aR V2V

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    Self-driving cars: The next revolution 17

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    Pieces of the Puzzle

    of the underlying sensor-based technologies exist, althoughThe adoption of most new technologies proceeds along an

    not all of them are robust enough to be considered automotiveS-curve, and we believe the path to self-driving vehicles will

    grade. They will require further testing and validation and willfollow a similar trajectory.20 It will be the confluence of multiple,

    be subject to the automotive industry's long development and

    interdependent activities and forces, including regulatorysourcing cycles.action, business cycles, technological advancements, andmarket dynamics, that will ultimately determine the trajectory

    Nonetheless, we believe that sensor and connected-vehicle

    technologies will continue to develop and converge, leadingand speed of market adoption. (See opposite page for our take

    to an eventual inflection point beyond which it is likely that theon three possible adoption scenarios.)

    driver will increasingly be taken out of the loop.As we noted in the previous section, several sensor-basedautomated driving applications, such as Adaptive CruiseControl and Park Assist, are in use today, and the automotive

    20 As C.S. Smith described it in his book, A Search for Structure, The S curvecan be used to

    apply to the nucleation and growth of anything, really any thing that hasrecognizable identityindustry and technology firms are already working on more

    and properties depending on the coherence of its parts. It reflects theunderlying structural

    conflicts and balance between local and larger order and the movement of interfaces in responsesophisticated solutions. While the available technology does

    to new conditions of components, communication, cooperation, and conflict. (http://inside.mines.not yet enable self-driving, it is moving in that direction. Most

    edu/~meberhar/new1/classes/down_loads/smith.pdf), 7/20/2012.

    Figure 7 Pieces of the Adoption Puzzle

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    Laying the Groundwork: Engaging ConsumersSelling the Value Proposition: To adopt the new technologies

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    and embrace fully self-driving vehicles, consumers will needEven if the current technological limitations did not exist, it

    to see real value for each new feature they buy. The industry'swould be necessary and even preferable to introduce self-

    ability to deliver an attractive value proposition, customizeddriving capabilities gradually. Doing so would still provide

    for different segments of the market, will drive consumers'benefits to vehicle operators and the transportation network,

    willingness to pay and, therefore, will be critical to widespreadand provide time for consumers to learn about and begin to

    adoption. Younger generationsthose within the Digitaltrust the technology.

    Natives and Gen Now cohortswill likely be the most receptiveBuilding Trust: There is no margin for error with safety-criticalto self-driving, but they also comprise the market segment withtechnologies. They must work perfectly every time; life andthe least purchasing power. Therefore, the industry will need todeath hang in the balance. Consumers will not relinquishprice these packages accordingly.control until they are certain their vehicles and the mobile

    One potentially attractive pricing scenario would be to have aenvironment are 100 percent safe and reliable. But John

    baseline set of self-driving features that would be standard inAugustine, managing director of USDOT, is optimistic. When

    every vehicle, and then include a menu of options that couldpeople can see what the car can see, they are convinced, hesaid at the 2012 Driverless Car Summit.21 The ramificationsbe priced as self-driving on the go (similar to premium trim

    options). Such a tiered pricing model could speed adoption byof an early autonomous or connected-vehicle traffic crash

    providing affordable options for a broader range of customers.could be calamitous. Bad publicity is a significant risk for the

    Baseline features could potentially be spelled out in adeployment of innovative automotive technology, even if the

    government itself is not the cause.

    Facilitating a Learning Curve: Autonomous vehicleWhen Antilock Braking Systems (ABS) were first introduced,

    technology will revolutionize the driving experience, andnegative publicity and poor consumer education delayed

    consumers will need time to learn how to use and managemass-market adoption. Similarly, when Electronic Stability

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    urban areas. This approach might obviate the need for broadertechnology requires a large network of vehicles equipped with

    infrastructure investment and create inducements for othersimilar, or at least interoperable, communication systems.

    cities and individual consumers to adopt the technology. ThisWith high degrees of vehicle autonomy comes the need for

    is especially feasible in high-density areas such as the boroughhigher degrees of cooperation and, hence, higher levels of

    of Manhattan, where drivers could reap the benefits of V2Iadoption density to deliver the technology's full value and

    communication without the need to retrofit all of New York City.potential. Density is critical for V2V safety applications and forautomated driving. Some monitored automation applications Bringing Costs Down: According to research conductedhave cooperative features, which require minimal levels of by

    J.D. Power and Associates,24 20 percent of consumersadoption density to deliver on their value proposition.

    surveyed said that they would definitely/probably be willing to

    pay as much as $3,000 for autonomous driving applications.Enabling the Aftermarket: A viable aftermarket solution is

    23However, today's more advanced sensors, such as LIDAR,

    a key to adoption, says Doug Patton, DENSO's senior vice

    cost tens of thousands of dollars. As convergence of the twopresident of Engineering. Without a viable aftermarket solution

    technologies occurs, fewer sensors would be needed, perhapsto retrofit vehicles already on the road, it will take a longer

    bringing the total cost down to $1,000 to $1,500 per vehicle,time to achieve the necessary critical mass. While a significant

    as economies of scale are achieved. When the pricing is right,number of aftermarket vehicles will need to have fully enabled

    the rate of adoption will likely increase, enabling users todevices for V2X communication, a portion of them will only

    realize greater value from V2V communication and creating aneed to have comparatively dumb devices that transmit

    reinforcing effect. As more people adopt the new technologies,their location.

    greater economies of scale will bring costs down, attracting still

    more consumers.

    23 KPMG Interview, 5/4/2012.

    24 J.D. Power and Associates, 2012 U.S. Automotive Emerging Technologies Study.

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    20 Self-driving cars: The next revolution

    ----------------------- Page 21-----------------------

    Developing a Legal and Regulatory Framework Incentives: If NHTSA does not issue a full mandate for

    V2V safety, it's possible that the agency might instead offerStates and Local Laws Legislation, or lack thereof, will impact

    incentives to automakers who introduce convergence-basedthe speed and trajectory of adoption. To some extent, states

    solutions and to consumers who are willing to buy them.such as Nevada are ahead of the curve, having already passed

    Incentives would be less powerful than a full mandate, butlegislation that permits licensing and operation of autonomous

    would, nonetheless, have broad effects on the industry,vehicle licenses. These actions help focus greater attention on

    because they would likely enable first-mover advantages forthe emergence of self-driving vehicles and create environments

    manufacturers that are further ahead in the development lifewhere further testing and validation of the technologies can

    cycle of V2V technologies and self-driving solutions.occur. However, private enterprise will still need to play a role indeveloping products and concepts that facilitate consumer pull. ALegal Framework: If the driver, by design, is no longer inIf this happens, it could motivate regulatory agencies to issue control, what happens if the vehicle crashes? The drivernecessary regulations. As the director of the Nevada DOT put could well be an innocent bystander or might at least bearit, Make a [self-driving] product that the consumer wants, and lesser liability than drivers do today. A legal framework will bewe will adapt and follow. And as more states establish policies, necessary to deal with the potentially complex liability issuesfederal regulators may be compelled to act to ensure a uniform that may come with self-driving cars.and cohesive approach.

    Insurance underwriting will be another thorny issue. InterviewsA Federal Mandate: Automotive suppliers and vehicle

    with insurance risk firms indicate that the entire underwritingmanufacturers believe a government mandate requiring that

    process will need to be revamped, and a greater portion ofvehicles be equipped with V2V safety technology (just as

    the liability could transfer to manufacturers and infrastructureseatbelts and airbags are now mandated) will be instrumental

    providers (federal and state). These legal concerns, and thein motivating the automotive value chain to invest in developing


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    estion of who owns the risk, will need to be addressedconvergence-related technologies. Any such mandate or seriesof mandates will also need to encompass criteria that will drive for convergence solutions to gain mass-market adoption.development across the industry. Litigation-related issues that come with widespread use of

    autonomous vehicles will be a challenge.In fact, USDOT has already launched a Connected VehicleSafety Pilot Program, and NHTSA will use data from the pilot asimportant input for determining if a Notice of Regulatory Intent(NRI) regarding V2V safety will be announced in 2013. NHTSA'sregulatory approach could evolve along one or more of several The advantage of a mandate is that itpossible paths: mandatory deployment of the technology,voluntary installation of wireless devices in new vehicles, or would spur development across theadditional research and development. industry and expedite adoption of

    An affirmative NRI in 2013 is likely to be succeeded by therelease of specifications in 2014 or 2015. Assuming a four- convergence solutions.year vehicle development cycle, the first vehicles with built-inV2V and V2I capability could launch in 2019, perhaps sooner ifmanufacturers opt to pursue DSRC with or without a mandate.

    The advantage of a mandate is that it would spur developmentacross the industry and expedite adoption of convergencesolutions. Figure 8, on page 22, shows a potential time line forintroduction of V2X-based applications, assuming a favorabledecision by NHTSA in 2013.

    Self-driving cars: The next revolution 21

    ----------------------- Page 22-----------------------

    Figure 8 Shows a potential time line for2025

    introduction of V2X-based applicationsSufficient built-in and after-market penetration

    to support self-driving applications

    2018/2019Launch of first vehicleswith V2V/V2I capability

    2014/2015Final proposed rule making


    NHTSA issues draft

    proposed rulemaking

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    NHTSA Notice of

    Regulatory Intent

    Note:(*) Assuming average three-yearvehicle development cycle toaccommodate testing, validation, etc.

    (*) Assumes mandate will hasteninvestment an enabling technologies

    22 Self-driving cars: The next revolution

    ----------------------- Page 23-----------------------

    Spurring the Necessary Investment Conclusions

    But relying on government spending is a risk. Given a sluggish We believe convergence of sensor-based and connected-economy and widening state and federal budget deficits, vehicle technologies will happen and will have a positivethe appetite for infrastructure investment is likely to be low. effect on the adoption of both systems. We think drivers willInterviews with industry participants indicate that a purely take the leap. Convergence will bring enhanced mobility andDSRC-based system might require a multibillion-dollar safety and reduced environmental impacts. It may also haveinvestment on a national level. far-reaching implications for the traditional automotive value

    chain and beyond.

    These costs could be mitigated by leveraging some of theexisting cellular infrastructure. Doing so would be possible Automotive and technology companies are already investingonly if a combination of DSRC and cellular (or an alternative in connected andautonomous technologies and is proven viable for short- and long-range While there is noclear leader, companies are trying to figurecommunication, respectively. The likely outcome is out how to compete and collaborate at the same time. Wesomewhere in between, with DSRC infrastructure present believe that overthe longer term, the evolution of theseat important intersections and other critical nodes within the advancements will cause a rebalancing of the automotive valuetransportation system. chain, with nontraditional firms playing a more significant role.

    We explore these implications in the next section.If slow economic growth continues, it would likely curtailcapital spending, especially by automotive companies, whichstruggled during the recent recession. It is unlikely that Figure 9 Shows the various facets and forces that must cometraditional automotive companies would be willing to spend together to enable self-driving.heavily on technologies for which the ROI time line is unclear.On the other hand, companies that fail to invest

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    Today Medium Term Long Term

    ----------------------- Page 24-----------------------

    Self-Driving Cars: Section 4

    Implications for investment

    In the new world of self-driving (autonomous) cars, who will design and manufactureautomobiles? Who will design the consumer experience? Who will own the

    aspirational brands? Will the automotive brands still matter? If so, how will they adaptto maintain competitive advantage? Who will lead in this evolving ecosystem?

    These questions and others abound, as various participants in the automotiveecosystem grapple with the impact of these potentially disruptive new technologies.Intel, for example, recently launched a $100 million Connected Car Fund because, says Mark Lydon, director at Intel Capital, Intel is looking to apply its expertisein consumer electronics and systems intelligence to the development of smartervehicle technologies that seamlessly blend IT, CE, and next generation ADAS whilemaintaining optimal safety. The Connected Car Fund was created to further this visionand spur greater innovation, integration, and collaboration across the automotivetechnology ecosystem.25

    What's clear is that the convergence of sensor-based safety systems and connected

    vehicle technology will have far-reaching implications as the technology matures andbecomes pervasive. Below, we have listed a number of major implications that, in ourview, represent significant paradigm changes for the vehicle transportation ecosystemas a whole. Some will offer enormous economic and social benefits, while otherswillpresent significant challenges for society:

    Crash Reduced Need forData New Models

    Elimination New InfrastructureChallenges for Vehicle


    E F

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    know how to avoid conflicts with other vehicles. Simulations ofare designed for human driverswho are

    intelligently controlled intersections indicate that such a systemtoo often inexperienced, distracted, or impaired. Thus, today's

    could perform 200300 times better than current traffic signals.30roadways and supporting infrastructure must accommodatefor the imprecise and often-unpredictable movement patterns

    The convergence of sensor-based safety systems and connectedof human-driven vehicles with extra-wide lanes, guardrails,

    vehicle technology could also assist transportation agencies withstop signs, wide shoulders, rumble strips and other features

    asset management and reduce maintenance costs. Vehiclesnot required for self-driving, crashless vehicles. Without those

    could report road or weather conditions back to transportationaccommodations, the United States could significantly reduce

    agencies, which could then rapidly address issues such as roadthe more than $75 billion it spends annually on roads, highways,

    deterioration or icy conditions. Additionally, autonomous vehiclebridges, and other infrastructure.27

    traffic could automatically be rerouted around problem areas, ifnecessary, while maintenance crews address the problem.

    An essential implication for an autonomous vehicle infrastructureis that, because efficiency will improve so dramatically, traffic

    Parking, too, will be affected. Vehicle sharing would keep vehiclescapacity will increase exponentially without building additional

    in more constant use, serving more people and reducing demandlanes or roadways. Research indicates that platooning of vehicles

    for parking infrastructure. Vehicles, now built via just-in-timecould increase highway lane capacity by up to 500 percent.28 It

    systems, could now reach travelers using similar logic.

    may even be possible to convert existing vehicle infrastructureEven a 10 percent reduction in need for infrastructure

    to bicycle or pedestrian uses. Autonomous transportationinvestmenta conservative estimate relative to such a

    infrastructure could bring an end to the congested streets anddramatic change in needswould result in savings of $7.5

    extra-wide highways of large urban areas. It could also bring thebillion per year, or $75 billion per decade compared to current

    end to battles over the need for (and cost of) high-speed trains.infrastructure expenditures.

    Self-driving vehicles with the ability to platoonperhaps inspecial express lanesmight provide a more flexible and lesscostly alternative.

    26 Self-driving cars: The next revolution

    ----------------------- Page 27-----------------------

    Data ChallengesData Analytics and Aggregation: It is possible that individual

    privacy is threatened less by the collection of public locationAn enormous amount of data will become

    information than by the aggregation of information, combiningavailable for alternative usage, which is likely

    location and route data with other personal information.

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    to present challenges and opportunities

    Current laws may not be equipped to adequately addresspertaining to data security, privacy concerns,

    new technologies and the growing data industry. Large-scaleand data analytics and aggregation.

    data mining and analytics techniques have been highlighted inData Security: Numerous security threats will arise once

    newspaper headlines of late, stirring much concern over thepersonal mobility is dominated by self-driving vehicles.

    power of aggregation and analytics. Consumer and privacyUnauthorized parties, hackers, or even terrorists could capture

    advocates are already calling for more transparency amongdata, alter records, instigate attacks on systems, compromise

    data brokers and requesting that these firms publicly revealdriver privacy by tracking individual vehicles, or identify

    information on the data they collect, how they collect it, who has

    residences. They could provide bogus information to drivers,access to it, and how it is used. In early 2012, the Federal Trademasquerade as a different vehicle, or use denial-of-service

    Commission issued a report urging greater transparency fromattacks to bring down the network. The nefarious possibilities are

    data brokers.mind-bogglingthe stuff of sci-fi thrillers. But system security

    Though many view large-scale data aggregation as intrusive,will undoubtedly become a paramount issue for transportation

    manipulative, and an invasion of privacy, it has its benefits as with the successful deployment of integrated sensor-

    Location and route information collected from vehicles allowsbased and cooperative vehicles.

    for numerous types of location-based services (LBS) that maySecurity systems protecting against such threats could include

    be personalized for travelers. The Pew Research Center reportscharacteristics such as data sanitization (e.g., removal of

    that, as of 2012, three-quarters of smartphone users use location-identifying information) and data suppression (e.g., reducing

    based services, up from just over half of smartphone users insampling frequency). They could aggregate data (possibly within

    2011. As consumers and businesses become more comfortablethe vehicle rather than having the vehicle transmit large quantities

    with new technology, the field of location-based services is set toof raw data). They could use vehicle authentication, encryption,

    continue expanding.tamper-proof hardware, real-time constraints, user-defined

    Beyond direct traveler services, acquisition and use of data couldprivacy policies (allowing data handling preferences for each

    be beneficial for businesses, government agencies, universities,user), and defense-in-depth (meaning each layer of hardware and

    economic developers, nonprofit groups, and other would provide its own security functions).

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    Data could be used by state departments of transportationNew threats to personal privacy: Even now, with pervasive

    or other road managers to analyze road use patterns and planconnectivity in and outside of our vehicles, we are finding

    maintenance and improvements. Licensing agreements couldit increasingly difficult to preserve our privacy. As the use

    allow organizations access to vehicle and travel route data underof autonomous and connected vehicle solutions expands,

    controlled conditions and for legitimate purposes. Sharing couldmaintaining individual privacy within the transportation system

    be done through the data collecting agency itself, or may involvemay become even more arduous. Although the increased use of

    a third party that would gather data, remove any individuallysensing, tracking, and real-time behavior evaluation

    identifiable information, and make it available to interestedcreates new privacy issues as well as ethics and policy

    organizations. Such work is already being done with certain datadilemmas, the benefits to be derived from vehicle sensor and

    sets with organizations.

    communication technologies make them an appealing pursuit formost stakeholders.

    Privacy concerns must be resolved to enable the deployment of27

    Includes federal, state, and local expenditures.integrated sensor-based and cooperative vehicle technologies.

    28 Platooning With IVC-Enabled Autonomous Vehicles: Strategies to Mitigate CommunicationA balance between privacy protection interests and other

    Delays, Improve Safety and Traffic Flow. IEEE TRANSACTIONS ON INTELLIGENT

    TRANSPORTATION SYSTEMS, VOL. 13, NO. 1, MARCH 2012. Pedro Fernandes, Member,affected interests is essential to resolve conflicts between the

    IEEE, and Urbano Nunes, Senior Member, IEEE.stakeholders who will make decisions about how information

    29 Transportation Research Board, Highway Capacity Manual, 5th Edition. collected, archived, and distributed. Potential stakeholder

    30 Multiagent Traffic Management: A Reservation-Based Intersection Control Mechanism. In

    The Third International Joint Conference on Autonomous Agents and Multiagent Systemsconcerns are numerous: disclosure of vehicle data could reveal

    (AAMAS 04) pp. 530-537, New York, New York, USA, July 2004. Kurt Dresner and Peter Stone,trade secrets; public personalities, such as politicians and

    University of Texas at Austin Department of Computer Sciences.

    celebrities, could be connected to potentially embarrassinglocations or routes; and ordinary citizens could find themselvesspammed or stalked as the data enables a variety of harmfulapplications such as commercial misuse, public corruption,and identity theft. And what's to prevent nefarious governmentsfrom using the expanded surveillance capabilities to spy ontheir citizens?

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    Self-driving cars: The next revolution 27

    ----------------------- Page 28-----------------------

    New Models for VehicleBut many other variables will affect global demand for vehicles.

    OwnershipPricing is a significant variable that could dramatically change

    the demand curve. If prices for a basic autonomous vehicle fellSelf-driving vehicles could contribute

    below $10,000, for example, ownership would be within reachto a significant redefinition of vehicle

    for a much broader segment of the world's population. And asownership and expand opportunities

    vehicle ownership becomes possible for previously excludedfor vehicle sharing (imagine Zipcar on

    demographic groupsyounger and older drivers, those with

    steroids). If vehicles can drive themselves, they can bephysical limitations, and those with fewer resourcesthesummoned when needed and returned to other duty when

    resulting increase in demand could help offset some of thethe trip is over. Thus, travelers would no longer need to own

    aforementioned decreases.their own vehicles and could instead purchase mobilityservices on demand.

    Travel Time Dependability

    Even when vehicle usage is at its peaknear 5:00 p.m. in theAnticipated travel time is the most useful

    U.S.fewer than 12 percent of all personal vehicles are on theinformation to support trip decisions

    road, which means, of course, that 88 percent are not in use.and assess the operational status of a

    (Not all of those vehicles would be available for sharing at anytransportation network, and convergence

    given time; the composition of the 12 percent changes as tripsprovides the opportunity to eliminate,

    begin and end, and vehicles would need time to travel fromor at least substantially reduce, uncertainty in travel times.

    the end of one trip to the beginning of the next.) Self-drivingNonrecurrent congestion can account for as much as 30 percent

    vehicles could be used more efficiently throughout the dayof the delay faced by drivers.31 In addition, with unpredictable

    instead of being parked most of the day and night. This wouldtraffic patterns, traffic congestion can occur at any time of day. In

    require new models for vehicle insurance and maintenance butlarge urban areas such as Los Angeles, rush hour congestion

    would also provide multiple new business opportunities.regularly lasts more than six hours, and approximately 40 percent

    of total traffic delay occurs in off-peak hours when travelers and

    freight companies expect relatively free-flow conditions.32

    With the surface transportation network composed of self-

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    amounting to a cost of more than $100 billion annually in delay

    of Facebook.and fuel, $23 billion of the delay cost can be attributed to theeffects of congestion on truck operations.

    An automated transportation system could not only eliminatemost urban congestion, but it would also allow travelers tomake productive use of travel time. In 2010, an estimated 86.3In 2010, an estimated 86.3 percent ofpercent of all workers 16 years of age and older commuted toall workers 16 years of age and olderwork in a car, truck, or van, and 88.8 percent of those drove alone,while the remaining 11.2 percent traveled in a carpool. Thus,commuted to work in a car, truck,conservatively, more than 90 percent of workers 16 years or olderor van, and 88.8 percent of thosedrove a car, truck, or van to work. A driver loses productivity whilecommuting, because attention must be given to driving. The

    drove alone, while the remaining 11.2average commute time in the United States is about 25 minutes.percent traveled in a carpool.Thus, on average, approximately 80 percent of the U.S. workforce loses 50 minutes of potential productivity every workday.

    Self-driving cars: The next revolution 29

    ----------------------- Page 30-----------------------

    30 Self-driving cars: The next revolution

    ----------------------- Page 31-----------------------

    Improved Energy EfficiencyPotential New Business Models

    E F Would fuel prices plummet? WouldIn today's consumer-driven technology

    CAFE (Corporate Average Fuel Economy)world, smart phone and tablet makers tu

    rnstandards disappear? Consider how much

    out new models every year (at least) to feed

    more energy-efficient transportationtheir tech-hungry consumers with the lat

    estwould be in the post-convergence world.

    and greatest. Will the same phenomenonA transportation system composed of self-driving vehicles

    begin to occur in the driverless era? We think so. Consumers willwould decrease energy consumption in at least three primary

    expect the latest gadgets in their driverless carsand that meansways: more efficient driving; lighter, more fuel-efficient vehicles;

    a new landscape and new business pressures for current playersand efficient infrastructure. The energy policy and geopolitical

    in the automotive ecosystem. As Larry Burns puts it, Incumbent

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    34implications could be profound.

    players rarely do well when industries disrupt. There are many

    industries involved in this complex ecosystem of self-driving,In an autonomous vehicle transportation system, vehicles will

    each with a varying pace of speed and innovation. Convergencenavigate far more efficiently than current human operators do.

    of technologies may lead to convergence of industries in whichThe inefficiency of human-driven vehicles leads to considerable

    ecosystem participants will need to compete and collaborate atcongestion at high traffic volumes and frequent traffic jams. In

    the same time. There will be more pressure than ever to innovateits 2011 Urban Mobility Report, the Texas Transportation Institute

    or get left on the scrap heap of outdated technologies. The varying estimated that congestion costs Americans 4.8 billion hours of

    capabilities, willingness, and foresight of the various ecosystemtime, 1.9 billion gallons of wasted fuel (equivalent to two months'

    participants will ultimately answer many of the questions posedoperation of the Alaska Pipeline), and $101 billion in combined

    by the coming convergence. Who will play the leading role in thisdelay and fuel costs. That's $713 per year for each commuter.

    ecosystem when self-driving becomes a reality? Who will createEven the most fuel-conscious human drivers could not match

    value, and who will claim it in the self-driving ecosystem?the fuel efficiency of autonomous cars communicatinginstantaneously and continuously within a connected andcontrolled infrastructure. Platooning alone, which would reduce

    27 Includes federal, state, and local expenditures.


    Skabardonis, A., P. Varaiya, and K. F. Petty. Measuring recurrent and nonrecurrent trafficthe effective drag coefficient on following vehicles, could reduce

    congestion. Transportation Research Record. 1856, 118-124, 2003.

    32highway fuel use by up to 20 percent (just as drafting behind

    Texas Transportation Institute (TTI). Urban Mobility Report. Sept 2011. , 7/12/2012.


    Twenty percent is an accepted estimate based on field tests by PAT

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    H (California) and in thetraffic congestion would be a thing of the past; stop signs and

    European SARTRE project (Volvo, Ricardo, etc.). Most of the sources are project web sites.intersection queuing could also disappear.

    Vaughan, Michael. The Globe and Mail [Toronto, Ont] 08 June 2012: D.6.

    34 Comment made during presentation NADA/IHS Automotive Forum, NYC, April 3 2012.

    Vehicles could also be significantly lighter and more energyefficient than their human-operated counterparts as they nolonger need all the heavy safety features, such as reinforced steelbodies, crumple zones, and airbags. (A 20 percent reduction inweight corresponds to a 20 percent increase in efficiency.)

    And we could even turn off a few lights. Today's roadways and

    Congestion costs Americans 4.8supporting infrastructure are designed for human driverswhobillion hours of time and 1.9 billion

    need visual input to navigate. Thus, multiple electric traffic lightsoperate 24/7 365 days a year at every controlled intersection

    gallons of wasted fuel.across the U.S. (Even in times of low traffic volumes, the signalsmust at least flash.) Across the nation, our streets, intersections,and highways are brightly lit all night for the benefit of humandrivers. An autonomous vehicle, capable of seeing withinfrared, radar, or other means, would have no need for suchexcessive lighting and signals. We could design our night lightingfor safety and security, rather than vehicles. Converting thetransportation infrastructure for autonomous vehicles couldeliminate the need for much of the night lighting across thenation, reducing light pollution and energy use.

    Self-driving cars: The next revolution 31

    ----------------------- Page 32-----------------------

    Who will make and sell carsin the future?

    Imagine a new automotive ecosphere in which manufacturing is nolonger a core competency and consumer demand for the newesttechnology is as avid as demand for the latest, greatest videoconsole or smart phone. Who will make and sell cars? Who willget left behind? What kinds of strategic alliances, joint ventures,or mergers will reshape the competitive landscape? Will newconsumer products companies enter the market? In pondering thesequestions, we've identified four potential new business models.

    Incumbent players rarely do well whenindustries disrupt.

    Larry Burns, Co-Author of Reinventing the Automobile: Personal UrbanMobility for the 21st Century

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    The Branded Integrated Life-Style Model The OpenSystem Model

    It's a sleekly designed experience, riding in this self-driving car. It's all about the data and how to use these data to customizeAs elegantly designed as the sleekest smart phone. You use the consumer value proposition. The market for big dataan app on your phone to summon your car when you need it is growing exponentially. Market intelligence provider IDCor to program a daily pick-up. It's as simple as setting the alarm predicts that by 2015 the Big Data market will be $16.9on your phone. Your windshield doubles as a screen, synching billion,up from $3.2 billion in 2010.35 A major player in the data

    seamlessly with your other connected devices. As you ride market might not want to manufacture vehicles, but couldalong, you swipe through applications and web sites, checking well design a vehicle operating system. With more than ayour progress and the local weather on a digital dashboard, billion c

    ars serving up trillions of data points about consumeruploading photos to your favorite web site or watching a video. behavior, traffic patterns, and topography, an operating systemWhen you arrive at your destination, the screens you've opened (OS) developer could afford to give away the OS but accrueare synched and waiting for you on whatever device you pick significant value from the data they could aggregate. Whoup next. would manufacture the vehicle? The OS provider could partner

    with anyof the world's vehicle manufacturersand not just theIn this model, perhaps a company with no traditional traditional automotive manufacturers. Partnerships could bepresence in the auto industry that is already an integral part established with one or more new players who might competeof the consumer's life outside the vehicle could become a in the branded technology arena.key participant in the ecosystem. Since self-driving vehicleswill no longer need the same level of rigorous testing and The OpenSystem Value Proposition: Utility, Technology,validation, and manufacturing could potentially be outsourced, Customizationtheir emphasis would be on consumer research, productdevelopment, and sale of integrated lifestyle experiences.

    The Branded Lifestyle Value Proposition: Design, Technology,Software, Consumer experience

    32 Self-driving cars: The next revolution

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    The Mobility On Demand ModelThe OEM Model

    Zipcar was the pioneer in the shared-vehicle field, but otherTraditional automotive manufacturers have decades of

    players are breaking into the market. Whereas current mobilityexperience in designing and manufacturing vehicles, and

    on demand providers must make vehicles easily accessibleshaping an emotional connection with consumers. But will they

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    for customers in urban areas, their vehicle maintenance andmove fast enough to maintain their brand dominance? Smart

    parking fees are high. With self-driving vehicles, proximity toautomotive manufacturers should be planning now, thinking

    end-users would no longer be necessary. Vehicles could beabout how to restructure their organizations and what potential

    dispatched by taxi and car service companies.strategic investments they should be making. History has not

    been kind to those who get stuck protecting the status quo inGiant retailers with a core competence in managing complex

    the face of disruptive change. In fact, collaboration is alreadydistribution channels or fleet providers with the capability

    taking place across the ecosystem as companies strive toto manage the complexity of renting and allocation of fleets

    stay relevant. The joint project between Intel and DENSO36 to

    could enter the fray and accrue significant value in the newdevelop in-vehicle communication and information systems

    ecosystem. New entrants in the market might compete atexemplifies the new cross-industry synergistic relationships.either end of the spectrumwith generic, low-cost utilitariantransportation on demand at one end (the low-cost airline

    Vertical integration is an option for companies looking tomodel) and super-luxury mobile executive suites and sleeping

    bring a critical skill or technology in house. Some vehiclepods at the other (the first class or private jet experience).

    manufacturers have established venture capital subsidiariesSuccess will be determined by efficiency, reliability, flexibility,

    to invest in promising new technologies as a means ofvehicle maintenance, customer service, ease of human-vehicle

    bridging any skill or technology gaps. Doing so may provide ainterface, and integration with existing consumer devicesand

    competitive advantage in this rapidly evolving ecosystem.all the other psychographic factors that determine consumerbehaviors and brand preferences.

    The OEM Value Proposition: Design, Technology, HMI, Supply

    Chain ManagementThe Mobility on Demand Value Proposition: Flexibility,Reliability, Convenience, Cost

    35 IDC Press release (March 7, 2012),,




    Self-driving cars: The next revolution 33

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    Pros and Cons of the Technologies in Development

    The table below shows the potentially applicable technologies, their strengthsand limitations, and the key players developing them.

    Technology What It Does Limitations & Opportunities Key Players

    LIDAR Light Detection And Ranging. Noise removal. Interpolation Siemens, Hella, Google

    An optical remote sensing to fixed point spacings.

    technology that measures Triangulation issues.

    distance to a target or otherproperties of the target by

    illuminating it with light.GPS The Global Positioning System The a

    ccuracy of a GPS receiver Garmin, TomTom, Parrot, Apple,is a space-based satellite is a

    bout +/- 10 meters, not Google, Governmentnavigation system that pract

    ical for locating an objectprovides location and time the s

    ize of an automobile, whichinformation anywhere on or is a

    bout 3 meters long.near the earth.

    DGPS Differential Global Positioning The DGPS correction signal Government

    System is an enhancement loses approximately 1 meter

    to GPS that improves location of accuracy for every 150 km.

    accuracy from +/- 10 meters to Shadowing from buildings,

    about 10 cm. underpasses, and foliage causes

    temporary losses of signal.

    RTK Real Time Kinematic satellite The base station rebroadcasts N/A

    navigation is based on the use the phase of the carrier that it

    of carrier phase measurements measured; the mobile units

    of the GPS, GLONASS, and/or compare their own phase

    Galileo signals where a single measurements with the ones

    reference station provides the received from the base station.

    real-time corrections.

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    Digital Maps Digital mapping (also called Only some parts of the world Google, TomTom, Microsoft,

    digital cartography) is the have been mapped (mainly Navteq, Apple

    process by which a collection of urban areas), and there is a need

    data is compiled and formatted for a critical mass of mappers to

    into a virtual image. enter and cross-validate data in

    order to achieve a satisfactory

    degree of accuracy.

    34 Self-driving cars: The next revolution

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    GlossaryGlossary of Terms

    3G Third Generation of Mobile Telecommunications

    4G Fourth Generation of Mobile Telecommunications

    AAA American Automobile Association

    ABS Antilock Braking System

    ADAS Advanced Driver Assist Systems

    AHS Automated Highway Systems

    CACC Cooperative Adaptive Cruise Control

    CAFE Corporate Average Fuel Economy

    CAMP Crash Avoidance Metrics Partnership

    CES Consumer Electronics Show

    DGPS Differential Global Positioning System

    DSRC Dedicated Short Range Communication

    ESC Electronic Stability Control

    GDP Gross Domestic Product

    GLONASS Globalnaya Navigatsionnaya Sputnikovaya Sistema

    GPS Global Positioning System

    HMI Human Machine Interface

    IEEE Institute of Electrical and Electronics Engineers

    LBS Location-Based Service

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    LIDAR Light Detection and Ranging

    LTE Long-Term Evolution

    MIT Masachussetts Institute of Technology

    NHTSA National Highway Traffic Safety Administration

    NRI Notice of Regulatory Intent

    OEM Original Equipment Manufacturer

    OS Operating System

    ROI Return on Investment

    RTK Real-Time Kinematics

    SAE Society of Automotive EngineersUSDOT United States Department of Transportation

    V2I Vehicle to Infrastructure

    V2V Vehicle to Vehicle

    V2X Vehicle to External environment

    VII-C Vehicle Infrastructure Integration Coalition

    Self-driving cars: The next revolution 35

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    Contact Us

    Gary SilbergJos PlessersPartner, KPMG LLPDirector, Strategic Services GroupNational Sector Leader AutomotiveKPMG LLPT: 312-665-1916T: 312-665-3418E: [email protected]: [email protected]

    Richard WallaceChris BrowerDirector, Transportation Systems AnalysisManager, Strategic Services GroupCenter for Automotive ResearchKPMG LLPT: 734-929-0475T: 313-230-3096E: [email protected]: [email protected]

  • 8/9/2019 Self Driving kkk


    Gary MatuszakDeepak SubramanianGlobal Chair Technology,Senior Associate, Strategic Services GroupMedia & TelecommunicationsKPMG LLPKPMG LLPT: 312-665-1075T: 408-367-4757E: [email protected]: [email protected]

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