The Disruption that comes from Autonomous Vehicles
The rapid development of autonomous vehicles is incredible. Over a short period of time the concept has transformed from science fiction to something that is just around the corner. It is also becoming apparent that the automotive industry as we know it today will look very different with the main players being disrupted by companies that are better at electric cars, software and networks like Tesla, Google, Apple, Uber and others. This disruption will hit hard and fast because the disruption will change what people value in a vehicle but also the ownership of vehicles will be significantly reduced as many people shift to on-demand and sharing services versus owning a vehicle. Benedict Evans has a great post describing this coming change that you can find here.
The transition from a transportation network of regular cars and trucks to autonomous vehicles will be a significant network disruption. I describe what a network disruption is in an earlier post here. The development of autonomous cars will be very rapid but can seem somewhat evolutionary as cars continue to add features like self parking, accident avoidance and lane departure warning. However once the autonomous vehicles are here there will be no mistaking the disruption for anything else. By using the framework of the network disruption we can look into the future to try and foresee what other company or companies might find significant value as the transportation network changes.
Tesla, Google, Apple and Uber are all joining in the disruption of transporting people and when a driver is no longer needed then on-demand and sharing become significantly cheaper than owning a vehicle. However the network disruption to autonomous vehicles brings with it a potentially much more powerful disruptive effect and that is thinking about all the possible vehicle uses that don’t involve transporting people at all. This is where a new company or companies that aren’t related to the automotive industry today can capitalize on the the network change. It is also likely that the dominant player here won’t be Tesla, Google, Apple or Uber because the value system developed for the transportation of people won’t match the value system for the transportation of goods and services. An example of a service might be a lawnmowing service where the vehicle delivers and deploys a robotic mower and then takes it away when the mowing job is finished. I also think the courier, delivery and trucking companies won’t be able to make this transition either because the structure of the business will be so different then what is there today.
What will be the critical point of difference?
The focus on experience, design and innovation are what will bring success in the world of autonomous vehicles for people. This gives me confidence in understanding how Tesla, Google, Apple and Uber will all be players here and will see great success. It is also why those players won’t be able to participate in autonomous vehicles for goods and services. A focus on value and innovation will be what wins in the world of autonomous vehicles for goods and services — think of innovative companies focused on value like Amazon, Walmart and Dell.
How would I approach the problem?
I don’t know what the solution will look like and of course there will be a lot of trial and error to get there, but here are some thoughts:
Creating an 0pen platform and using modular components in the design will allow many different companies to supply the components for the vehicle. To get value you want to drive commoditization of common components and innovative customization for different applications.
You also want maintenance to consist of quickly replacing components on the vehicle and not repairing parts while they are on the vehicle so that reliability is measured in uptime (minimizing downtime).
Swapping of batteries is likely the model that would make sense for recharging versus rapid battery charging to maximize uptime but it could be one of the customization components where the battery module interface is designed in such away where battery swapping or rapid charging could be an option depending on the application.
Safety is about helping to protect things that might come into contact with the vehicle versus protecting the contents of the vehicle itself. As well occupant comfort and noise don’t need to be considered at all. Suspension decisions can be based on simple metrics of vehicle control, vibration reduction and minimizing bumps and jolts on the cargo. This is greatly simplified from what exists in the automotive market today since none of this needs to be subjectively rated.
The user experience is really focused on the custom module that is used to transport the goods/services. Some examples are delivering pizza, groceries, packages, tool rental, and retail that comes to you. Imagine a shoe shopping service where the vehicle comes to your house with the type of shoes that interest you and in your size so you can try them on and see if there is anything you want to purchase.
What companies would be well suited to capitalize?
I think this challenge would suit Amazon really well. They are already experts in optimizing value and in many ways this is like applying what they do in their warehouses to the rest of the world. As well they would start out as one of their own largest customers for the platform by delivering their own packages. Amazon is very open about allowing others to participate and benefit from a new platform. This is described in a previous post called the Compound Platform Effect that you can find here. This approach to delivering packages seems more reasonable than drones, but drones could be part of the equation. There are situations where a drone could be used for the last 10 feet to deliver a package to your door step.
As well this might be an opportunity for a company like Walmart where they are known for innovative logistics and a sharp value focus. In this case it is a nice strategic approach for them to give them an opportunity to leapfrog the disruption of retail that comes from online shopping.
Robotics companies might be well positioned to take advantage of this network disruption. Much of the value in an open platform like this comes from some of the robotic automation that would exist in a battery swapping system or in the module that might automatically deliver packages or deploy other robots.
A progressive city that can show a plan and requirements to allow autonomous vehicles on their streets may be able to attract companies and investment that could play a critical role in this opportunity.
Other Effects
It is also interesting to imagine the other network disruption effects that autonomous vehicles that aren’t designed for transporting people may create. Here are some thoughts:
Entirely new businesses and business models can be created around autonomous vehicles. Just think of approaching the business model where your retail storefront is a website and an autonomous vehicle. Another example could be on-demand hotel rooms (like an autonomous RV) that comes to you.
The demand for garage space in real estate will be greatly reduced as car ownership drops and many tools and recreational equipment/vehicles are easy and convenient to get on-demand.
The non people carrying autonomous vehicles will be designed for very low cost per mile. During low usage times, maybe in the middle of the night, what could these autonomous vehicles be doing to generate revenue outside of their normal role. Could the same vehicle that delivers pizza be used to restock ingredients to the pizza shop from a distribution center early in the morning?
Final Thoughts
For a company to take advantage of this opportunity today they need to find an existing network where they can work on the product and strategy so that they have a clear advantage when the new network (autonomous vehicles allowed on city streets) is available. Some possible opportunities are solutions for University/Corporate Campuses, large manufacturing/warehousing facilities, construction sites etc…
One opportunity is to design a scaled down version for campus use that uses the roads, paths, and walkways and can go anywhere inside the buildings. The vehicle would be as narrow as a wheelchair and would use the network of ramps and handicap door openers to get around. Robotic arms could actuate the door openers and operate elevators inside the buildings. Its important to approach the problem using an open architecture, modular components, swappable batteries and design the autonomous vehicles for different uses. Usage examples might be security, cleaning and delivering packages.
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