Traditional Insurance Companies Need to Evolve for Mobility

The traditional business days of car insurance are “numbered,” as the on-demand sharing economy continues to rise, Grayson Brulte, president of Brulte & Co., told Mobility Buzz, which is why several auto insurers are looking into rideshare coverage.

And Slice Labs, an insurance startup, is no exception.

Slice Labs developed a pay-per-use rideshare insurance app that it is now testing with 50 rideshare drivers. The startup plans to roll out the app — and begin issuing policies — in two cities by the end of the second quarter, Tim Attia, Slice’s chief executive and co-founder, told Mobility Buzz.

Slice bills its product as a first-to-market platform that protects the rideshare drivers while covering the liability associated with ridesharing. The Slice policy is valid for the entire time the driver is logged onto the rideshare app.

Because of Slice’s unique model, it has garnered attention from reinsurance group Munich Re, which shares the risk by purchasing policies from other insurers to limit the total loss to the original insurer.

New York, N.Y.-based Munich Re is attempting to figure out how it can “disrupt its current model” so that it does not go out of business, Brulte told Mobility Buzz. “I think more insurance companies will have to figure that out.”

Many auto insurers including Geico, Allstate, and Farmers Insurance have started offering or testing rideshare-specific insurance in select markets in recent months. However, most of these policies are not on-demand, but extensions of auto insurance policies designed to ensure drivers have coverage until they accept a ride.

Rideshare drivers need to be covered, but purchasing an annual policy — which is the typical option offered by some of the large auto insurers — is not always cost-effective, especially for drivers that only drive 15 hours per week, for example. “We wanted to make it easy, and add a policy with the same experience as an annual policy,” but provide drivers with a pay-per-use policy, Attia said.

Slice and Munich Re have agreed to an ongoing roll-out of products and territories, according to a published report. Slice will supply the technology platform to deliver the products directly to the consumer, and it will also handle the service and processing of claims. Slice’s automated underwriting rules are agreed upon by Munich Re.

As featured in Mobility on April 20, 2017

Porsche is the One to Watch in the Driverless Race

An expert in the driverless market has earmarked Porsche as the company to watch in the automated car race

Grayson Brulte, the co-founder of Brulte & Company, told Driverless that the luxury car company were the underdogs in a highly competitive and specialized field.

One company to keep an eye on is Porsche. Volkswagen Group is an investor in Gett and the company is preparing to use the Gett platform to offer a Porsche chauffeur service in select cities around the world. The service will be used to model an on-demand Porsche autonomous vehicle service.

Brulte’s comments come after Porsche CEO Oliver Blume told German newspaper Westfalen-Blatt in 2016 that the company would not be morphing into a driverless entity because it’s better “to drive a Porsche by oneself.”

Nevertheless, Gett is receiving a cool $300 million investment from the German company in March, which could help to propel the Volkswagen Group into its own automated ride-sharing service down the line. Volkswagen and Porsche merged their manufacturing companies in 2011 to form an “Integrated Automotive Group.”

Last year the BBC reported that Porsche would be launching an electric model, a plug-in hybrid of the 911 version, which would hit the market as early as next year.

Volkswagen have been relatively open about their ambitions, with Matthias Müller, the Chairman of the Board of Management of Volkswagen Aktiengesellschaft, stating that the Germanic giant aimed “to become one of the world’s leading mobility providers by 2025.” Müller said:

“Within the framework of our future Strategy 2025, the partnership with Gett marks the first milestone for the Volkswagen Group on the road to providing integrated mobility solutions that spotlight our customers and their mobility needs.” — Matthias Müller, the Chairman of the Board of Management of Volkswagen Aktiengesellschaft

However, there is a lot of competition in this field, with Tesla, General Motors Co. (GM), Google, Apple, Ford, Lyft, and Uber all vying to be top dog.

Meanwhile, Brulte suggests that there won’t be just one winner in this increasingly crowded driverless arena. Indeed, he maintains that there will be “multiple winners after a series of bankruptcies, mergers and consolidations.”

That’s no surprise, given the ongoing drama between Uber and Google affiliate Waymo, who are suing Travis Kalanick’s company for data fraud.

However, Brulte did have an idea about who would be the apparent champions.

“Waymo and Tesla will emerge as clear winners in the early days of autonomy,” he told Driverless. “As autonomy evolves, look for OEMs to partner with software platforms such as Gett to offer a consistent branded autonomous vehicle service experience.”

As featured in Driverless on April 18, 2017

Uber’s Driverless Car Program Executive Quits as Court Case Rages On

Uber’s driverless car program lead has quit after just one year working for the ride-hailing company

Sherif Marakby, the Vice President of Global Vehicle Programs at Uber, announced his departure from the car sharing company on Monday. Marakby joined Uber in April 2016 after 25 years working for Ford Motor Co. Marakby is just the latest executive to abandon ship after Google affiliate Waymo sued Uber for data theft.

Marakby was a key player in launching Uber’s driverless ride-hailing pilot program in Pittsburgh. Autonomous Vehicle expert Grayson Brulte suspects that Marakby will return to Ford as Uber’s “growing pains” continue. Brulte, the co-founder of Brulte & Company, told Driverless:

Currently, there are a lot of opportunities for an executive with the experience and proven track-record of Mr. Marakby. Only Mr. Marakby truly knows what is next. However, I would not be surprised to see him re-join Ford with a focus on launching Ford’s autonomous ride-sharing program and integrating Argo AI’s technology.

The recent exodus of Uber employees also includes former president Jeff Jones and former head of communications Rachel Whetstone. Uber was also racked with accusations of sexism after a former engineer’s damning blog post.

But in a statement released to Driverless, Marakby didn’t specify why he called it quits with Travis Kalanick’s company after a year:

“Self-driving is one of the most interesting challenges I’ve worked on in my career, and I’m grateful to have contributed to what will soon be a safer future for everyone. — Sherif Marakby (Former Vice President of Global Vehicle Programs at Uber)”

Uber also skirted around the issue when this Driverless reporter reached out for comment. Instead, a spokesperson praised Marakby’s “deep experience and knowledge of the automotive industry.” They did not respond to Driverless’s queries about Marakby’s reasons for leaving.

However, Brulte thinks the cab company can recover from the negative PR of 2017, but only if the necessary changes are made internally:

Travis Kalanick should follow the Domino’s Pizza playbook and make a very public admission of Uber’s countless mistakes and missteps. Own the mistakes, be open and honest about those mistakes, do not try to sugar coat them. The public will reward Uber for honesty, only if the company changes their culture and fully embraces the public admission of mistakes and missteps. Then work to repair the brand’s image and improve the service.

Brulte pointed out that both the market and public rewarded Dominio’s Pizza for being honest about how bad its pizza was in 2010. The pizza giant shot a series of commercials inside their test kitchen, whilst admitting that their pies weren’t up to scratch.

In March of this year, Dominos’s CEO Patrick Doyle told CBS News that they knew it would be a “breakthrough” PR move, which led to a double-digit increase in sales. Indeed, Brulte thinks following this lead is the way forward for Kalanick’s company as well: “If Uber does the same and dramatically cuts loses, the company will eventually have a very successful IPO,” Brulte told Driverless.

As featured in Driverless on April 18, 2017

Apple Receives Permit to Test Self-Driving Cars in California

Apple became the world’s most valuable tech company by changing the way we communicate. Now it’s looking at changing the way we get around.

The Cupertino firm received a permit on Friday from the state Department of Motor Vehicles to test self-driving vehicles on public streets in California.

Though the permit covers only three vehicles, it’s the biggest concrete evidence that the company sees itself as a player in the race to bring self-driving cars to the road.

As Detroit automakers rush to staff research facilities in Silicon Valley — General Motors pledged Thursday to hire more than 1,100 California employees — tech firms don’t want to lose the chance to develop the software or hardware that powers self-driving cars.

The DMV said the company’s permit covers three Lexus RX450h vehicles from model year 2015, as well as six human drivers who will oversee the tests.

When asked to comment on the permit, Apple referred to a statement issued in December after the company submitted feedback to the National Highway Traffic Safety Administration on the agency’s guidelines for self-driving vehicle development.

At the time, Apple said it was “investing heavily in machine learning and autonomous systems,” and that there are “many potential applications for these technologies, including the future of transportation.”

The filing is a rare look into Apple’s largely secretive automotive work.

Several months ago, reports suggested Apple was abandoning rumored plans for a car manufacturing business, as hundreds of members of the company’s car team were let go, reassigned or left the project.

Bloomberg reported in October that Apple was shifting its focus to developing an autonomous driving system, giving the company more flexibility either to work with other automakers or eventually return to building an actual vehicle.

Analysts agreed Friday that the permit indicates Apple is still working on software at least.

“It doesn’t necessarily mean they’re going to manufacture a vehicle, but it certainly means they’re continuing to work in the autonomous vehicle space,” said Rebecca Lindland, executive analyst at Kelley Blue Book.

Such a move could help bolster Apple’s offerings as it faces decreasing interest in its core products, such as the iPhone, iPad and Mac. The company’s 2016 net sales declined 8%, or $18.1 billion, largely because of a year-over-year drop in iPhone sales.

In contrast, the company saw an increase in net sales for its services category, driven by growth in its App Store, licensing and AppleCare sales. Analysts speculate that Apple car software — essentially a dashboard iOS — could one day be sold as a service.

“The analysts and investor community are always looking for what is the next growth driver for Apple,” said Grayson Brulte, co-founder and president of Brulte & Co., an innovation advisory and consulting firm. “And I believe it’s services.”

Apple could eventually create an ecosystem in which consumers hail a self-driving vehicle powered by Apple software by tapping their iPhone, then listen to Apple Music during the ride, Brulte said.

Huge questions remain about self-driving vehicles, who will want them and who will make them.

Apple faces an increasingly crowded field of competitors. In California alone, 29 other automakers, autonomous technology companies and other firms have received test permits from the DMV. Google, for instance, has been testing on public roads for several years and racked up 2 million miles of driving since 2009.

Though seemingly late to the game and small in scale, analysts said Apple’s public entrance into the field should not be taken lightly.

“It’s a shot across the bow in a very, very big way,” Brulte said.

Gambling on self-driving vehicles representing the future of their businesses, automakers have staffed up in California, where engineering talent has more experience in software design than car design.

The latest is GM, which on Thursday received an $8-million tax credit from a California economic development board for promising to hire more than 1,100 workers in the state. The hires will bolster GM’s autonomous vehicle division in the Bay Area.

Development of autonomous vehicles is “much more technology-dependent,” and requires network and data transmission knowledge, said Dan Edmunds, director of vehicle testing at Edmunds.com.

That’s a big change for the Detroit automakers that gave the Motor City its name.

“With the power of Silicon Valley playing a key role in the development of autonomous vehicles, it only makes sense to go where the talent is,” said Lindland of Kelley Blue Book.

As featured in the April 15, 2017 edition of The Los Angeles Times

Credit Cards to Play Big Role in Autonomous Cars

The credit card industry might get a massive boost once autonomous vehicles come to market, and what’s more: Consumers will no longer need excellent credit when financing a car.

“Today, you can either buy, finance, or lease a car, and all three things require excellent credit; I believe in the future, that’s going to go away,” Grayson Brulte, president of Brulte & Co., told Mobility Buzz yesterday.

Consumers can get a credit card with “OK” credit, he said, but to finance a car with a really good rate, consumers often need “stellar credit.” And a majority of the U.S. population do not have great credit, which is why the used-car market exists today, he added.

“In the future, autonomous cars will become subscriptions,” he said, like a “Netflix for cars.” The business model will operate more like Geico Insurance or a cell phone bill, for example, where a consumer puts a credit card on file and agrees to have that card charged X amount of dollars each month, he explained.

“It’s lowering the risk to the OEM, because [the consumers] are not going to own the vehicle,” he said. “You are going to subscribe to a vehicle, and when you need it the vehicle will be summoned to you. So if the credit card is declined, or if you have insufficient funds, or whatever the scenario may be — and say you can’t pay the bill — there will be no risk to the OEM for the car coming to you because they just don’t send the car to you.”

The OEMs and captives will be able to put more individuals into the vehicles, all while lowering the risk, he said. “Today, when you buy, lease, or finance a car it’s going to one family or one individual. In the future, that same vehicle can go to four to 10 different families. The use rate will be higher.”

Consumers will be subscribing to a brand, whether it be an individual subscription or a family subscription. “For OEMs, that’s just going to increase their profit,” Brulte said. “It’s going to come down to a family for convenience to have three vehicles at a time, but they are typically not going to utilize three at a time.”

In short: The days of long-term loan contracts are over. “It’s the society we live in,” he said.

As featured in Mobility on April 14, 2017