Accelerated View #3
The mobility space has been effervescent for a while now, but September 2017 was pretty intense. Here’s what’s caught my eye over the past month and its importance for the future.
And I use the word ‘premium’ twice. Apologies in advance.
By Franz Luquet, Innovation Associate at Fahrenheit 212.
Why is the car interior of the future… in the future?
IAA, the biggest motor show on the planet, happened late September in Frankfurt, Germany. The occasion for automakers to not only reveal fun concepts we’re unlikely to see on the roads, but also add to the never-ending list of sub-segments (who knows what the Kia Proceed actually is… a ‘sport estate’? A ‘shooting brake’? An ‘extended hot hatch’, a ‘monster wagon’?). Ferrari also presented a V8-powered coupe-cabriolet that is very expensive and also red [insert fireworks emoji] and Mercedes unveiled a £2m limited edition 986hp hybrid hypercar called ‘Project One’ for which they didn’t even bother specifying the 0-60, because they’re not peasants.
Perhaps the concept car that attracted the most attention this year is Audi’s Aicon. First off, it seems to be ticking all the boxes of a proper, legit ‘vehicle of tomorrow’: electric, connected, autonomous and without a driving wheel. One could think it still might be missing an i- or e- attached to its name, but apparently, the first two letters are a hint at ‘AI’. Phew.
One the main reasons Aicon stole the limelight is that it looks great. Although the exterior seems to be another iteration on some sort of EV design template (see it below, in between its doppelgängers Lucid Air and Faraday Future 91… am I right?), the lines are sharp but elegant, and the possibility of rear LED enabling the car to communicate with people around it, is exciting.
The interior is quite stunning too, boasting a super slick interface that — considering Audi are already somwhat leading the pack in the field of infotainment — is surely one of the best ever made for a car. But all this raises a question.
Why does the future of car interiors seem to be tethered to the advent of autonomous vehicles?
Car interiors haven’t structurally evolved much in the past decades. Bar a couple of mostly inaccessible flagships such as Mercedes-Benz Maybach or Bentley Mulsanne, interiors are still mainly designed around the driver — and massaging seats are oddly quite rare at the back. From a passenger’s — ride-hailing customer’s — perspective, the backseat is a dull, barren space that does very little for you — whether you’re transiting for business or leisure.
These days, novel, innovative interior design concepts are generally presented as part of a self-driving vehicle. Yet, what are the differences between today’s manned on-demand mobility experience and tomorrow’s autonomous one? If you happen to not speak a word to your Uber driver, one could argue autonomous on-demand mobility is already a reality — minus the 50% to 80% markdown. So why is so little being done about the rear space of the Prius, the Civic, the Fusion, and the Galaxy?
From a business point of view, how come the back seat — in which paying customers all over the world complete 6 billion trips yearly — doesn’t allow for any type of ancillary revenue generation? To date, any solutions to generate money from the back of the car, such as Cargo, who raised almost $2M in seed funding last July, are not only early days, they’re also very incremental. They’re not part of upstream design thinking.
Why is Mercedes’ acquisition of Turo huge news
Daimler announced earlier this month that they’re investing $92M into the US leader of peer-to-peer car rental, Turo (and a few days later, they acquired German peer-to-peer carpooling startup Flinc for an undisclosed sum). It’s not the first time a major OEM took a stab at P2P rental but unlike BMW’s ReachNow, Daimler isn’t building a business from the ground up; they’re acquiring an existing, proven network and a much more meaningful customer base (Turo is present in over 4,500 cities in North America but don’t seem to share official figures — some talk about 2 million users and 111,000 listed vehicles).
Turo claims members renting out their vehicle on the platform earn $720 on average, which happens to be slightly over the monthly cost of owning a car according to the AAA: $706. With this, Daimler opens the opportunity to de-risk car ownership offsetting purchase and ownership costs. Could their customers translate this to ‘owning a Mercedes for free’?
For the Stuttgart-based juggernaut, this is not only a new revenue stream; it’s key stepping stone away from their dying historical value proposition. It’s not new that Western, urban consumers are buying less cars because they find them expensive to own and cumbersome to use, and that, soon enough, the price per mile of on-demand autonomous mobility will make buying a personal vehicle financially absurd. The Turo deal seems therefore a great way to stay relevant in an age where traditional ownership is making less and less sense, whilst — unlike with their ride-hailing arm MyTaxi — still doing what they do best: selling premium automobiles. It looks like a pertinent transitional business model into a future of on-demand mobility in which the people they call ‘customers’ won’t be buying or leasing from them.
Can Dyson deliver with that money, within that timeframe?
British billionaire inventor Sir James Dyson officially told the world that his company was working on making their own ‘radical’ and ‘premium’ electric vehicle and that it will be ready for delivery in 2020 or early 2021. That’s great news because they specialize in solving for the consumer with cleverly engineered, excitingly elegant products that last.
However, the amount of money invested is a little surprising. They’re investing £1bn in the development of the car and £1bn in the development of solid-state batteries (that seem to make a lot more sense than lithium-ion). But what’s ironic is that this announcement comes about one day after a mildly awkward Twitter exchange in which Elon Musk was making fun of an article claiming Daimler were investing $1B in an EV factory — which got Daimler to publicly declare they were, in fact, pouring over $10B into next generation EV plus an extra $1B into a new factory to produce the batteries (for up to 10 new vehicles). Meanwhile, Tesla burnt about £10B of shareholders and lenders’ money in the past 5 years. Doesn’t this make Dyson’s £2B = $2.7B sound meager? Especially since, unlike Mercedes and Tesla, they’re literally new to making cars — and on a super tight timeframe. And considering that this amounts to almost 80% of the company’s revenues, it makes it sound extremely enthusiastic too. Learning more about their plan will be exciting, and the next couple of years, thrilling to watch unfold. Good luck.