Amazon Investment in Electric OEM Paves Way for ‘Limitless’ Mobility Potential, Analyst Says

Amazon’s $700 million investment in electric OEM Rivian is a potential step by the retail giant to launch a mobility service that would supplement its delivery platform, said Grayson Brulte, a consultant with Brulte & Co.

“I think it’s limitless where Amazon takes it,” Brulte told Auto Finance News. “There’s a lot of money to be made in niches. Do they bundle a mobility service with [Amazon] Prime? So now they’re moving individuals and goods at the same time, and the cost of delivery rapidly plummets. And the rides for the individual go down, as well, because it’s subsidizing the ride.”

It remains unclear as to how Rivian — which declined to comment — plans to finance its new fleet of vehicles to would-be consumers. Brulte noted that Amazon’s vast reach in the global market puts the company in a good position to fill that need. “Amazon can borrow money very cheaply. [The company] has an incredible ability to underwrite, if they so choose, or to partner with a bank — a Goldman Sachs or Bank of America — to underwrite at a very low percentage,” he said.

Besides, Amazon is already making loans to small businesses. “It’s not out of their wheelhouse,” Brulte said. “If you look at Amazon’s small business program, some of those loans are $35,000, $40,000, $50,000. That’s a comparable rate to a vehicle, similar metrics.”

A question mark in the equation is whether Amazon would launch a mobility service or an autonomous mobility service, given that it invested in self-driving technology platform Aurora earlier this month. “You’re looking at a $250,000 to $400,000 underwriting,” he said. “Amazon has the balance sheet and the cash flow, which provides the company with the ability to borrow [money] to underwrite that.”

As featured in Auto Finance News on March 6, 2019.

Retailers are Testing Autonomous Vehicles

The race is on for retailers to incorporate self-driving vehicles into their last-mile strategies, but the technology is still far from mainstream consumer adoption. For now, major brands are starting to roll out some trial programs.

This week, Amazon launched a pilot in Washington where some orders will be delivered through an autonomous vehicle called Scout. Scout, which will initially be accompanied by a human employee, was developed in-house; other retailers are partnering with tech companies. Kroger is working with Nuro on a pilot in Scottsdale, Arizona; Walmart is deploying two autonomous vehicle trials (with Ford and uDelv, after a previous experiment with Waymo) to pilot the home-delivery use case. Walmart saidit wants to get a better sense of how customers interact with them and use that data to inform what comes next.

Retailers are still trying to figure out how autonomous vehicles can enhance customer experiences, how they can improve supply-chain efficiency and how they can be deployed at scale.

Industry observers say the use cases still haven’t been fully fleshed out.

“The business models are still being developed and worked on,” said Grayson Brulte, an innovation consultant who focuses on emerging technologies, including autonomous vehicles. “From a retailing standpoint, I’m not sold on autonomous delivery as the holy grail for retail; if you look at retail trends starting to evolve, it’s becoming more experience-based.”

It’s a concept where the autonomous vehicle essentially becomes a marketing tool for brands that want to sell products to passengers. The mobile self-driving car offers possibilities for design innovations, product placements and in-store assistants.  

According to CB Insights, 46 companies are currently working on deploying some form of autonomous vehicle technology. But Brulte said two big hurdles are impeding widespread use: the lack of regulatory clarity (especially important during accidents) and customers who aren’t yet accustomed to them.

“Right now, the regulatory environment around autonomous vehicles is uncertain — there’s no framework nationally, and the other hurdle is public acceptance,” he said.

For now, autonomous vehicle trials are marketing exercises to get consumers excited about the technology’s capabilities in an effort to drum up interest, said customer data platform IgnitionOne chief operating officer Chris Hansen.

“A lot of these [retailers] are trying to follow Amazon and rightfully so,” he said. “It’s the high end of the hype cycle — it’s cool to see where things are going in 15 or 20 years. Just because you have an AI-powered machine that is transporting a package doesn’t mean it doesn’t create liability for people on the street.”

It’s also not clear whether autonomous delivery will be cost-effective for all retailers deploying the technology.

“It’s not something all brands are going to be able to do on a cost-effective and productive way,” said Eric Silver, a partner at tech investment firm Alt-Capital. “It remains to be seen whether a company that acts the way Amazon does is going to have monopoly power.”

As featured in DIGIDAY on January 25, 2019.

Preparing Florida’s Infrastructure for Smart Growth and Development

Florida is already the third largest state in America and we’re growing by over 1,000 new residents every day. We have 21 million residents and we’ll grow by 5 million more by 2030.

By then, we’ll have 3 million more drivers on our roads, 50 million more visitors and we’ll need 20 percent more water.

The good news is that Florida’s business leaders have a plan and it’s getting traction. This is good for Florida, good for job creation and it’s a great way to Secure Florida’s Future.

While we’re growing, Florida is also becoming more diverse. Aging Baby Boomers will continue to swell Florida’s elder population and at the same time, the Millennial and GenX generations are growing as a share of Florida’s total population.

As Florida’s population changes, it is important that our infrastructure systems respond to their changing needs. Creating long-term investments in Florida’s transportation, energy, water, telecommunications and agriculture infrastructure is essential.

Our infrastructure needs to support growing demand as well as a wide range of options — from sustainable water solutions to autonomous transportation systems.

The Florida Chamber Foundation’s ‘Florida 2030’ research outlines where Florida needs to be by 2030 to remain globally competitive.

To secure Florida’s future, we must consider the water and energy needs for nearly 5 million more residents, be ready for the hard and soft infrastructure needs like broader telecommunications, improved roadways and railways, air, space and seaports, ensure Floridians can connect to job opportunities, education, health care options, each other and the world, as well as support continued economic growth while preserving Florida’s essential environment and community assets.

So, how do we make sure Florida is prepared for smarter growth?

The Florida Chamber’s Infrastructure Coalition, chaired by former Florida Department of Transportation Secretary Ananth Prasad, is focused on creating long-term investments in Florida’s energy, water, transportation, telecommunications and agriculture infrastructure.

With Washington, D.C.’s likely focus on infrastructure, the Florida Chamber’s Infrastructure Coalition aims to maximize Florida’s economic growth opportunities. And, here at the state level, double down on efforts to prepare for Florida’s growing population through infrastructure investments.

As part of the Florida Chamber’s continuing efforts, we are working closely with state leaders like Senate President Bill Galvano to enact smarter growth policies that meet Florida’s long-term needs and will, this week, present recommendations the Florida Chamber’s Infrastructure Coalition has prepared for Florida’s elected officials to consider.

The Florida Chamber understands the importance of innovation and technology play in Florida’s future- specifically as they relate to Florida’s infrastructure future. Florida 2030 research estimates that by 2030, more than 25 percent of all miles driven (including freight) could be by autonomous vehicles. With guidance and leadership from state leaders like Sen. Jeff Brandes, Syd Kitson of Babcock Ranch and Grayson Brulte of Brulte & Company, the Florida Chamber created Autonomous Florida, a statewide initiative that works to ensure Florida continues leading the way in autonomous transportation. Our vision? To make Florida the autonomous capital of “all things autonomous” in North America.

I believe Florida will continue to grow and we can remain competitive if we plan better for the next 5 million residents than we did for the last 5 million.

This week, leaders from around Florida and the nation will gather at American’s first solar-powered town, Babcock Ranch for the Florida Chamber Foundation’s 2018 Growth & Infrastructure Summit, to discuss the future of Florida’s transportation and infrastructure systems, as well as outline the strategies needed to grow smarter.

Governor-elect Ron DeSantis, Senate President Galvano and House Speaker Jose Oliva have all signaled an interest in keeping innovation and infrastructure at the core of Florida’s economic development future.

This is great news as we fight to Secure Florida’s Future.

As featured in Florida Politics on December 11, 2018.

Waymo One, the first commercial robotaxi service, is now picking up passengers in Arizona

Robot cars are now officially a real business. Waymo on Wednesday launched a commercial robot ride-hailing service in Arizona called Waymo One.

Like Uber or Lyft, customers will summon a ride with a smartphone app. But in this case, the car will be driving itself.

“This is a game changer. It’s historical in nature,” said Grayson Brulte, who heads driverless car consulting firm Brulte & Co.

Only “a few hundred customers” will have access to the app and participate in the early stages, according to Waymo, which is an arm of Google parent Alphabet Inc. Although the cars will drive themselves, a Waymo engineer will sit behind the wheel in case anything goes wrong. Waymo did not say when the cars will start arriving without a human minder or when the program will be expanded.

Waymo’s cars, Chrysler Pacifica minivans bristling with autonomous driving technology, are available in several eastern and southeastern Phoenix suburbs, including Chandler, Tempe, Mesa and Gilbert. The fares are similar to those charged by Uber and Lyft.

Waymo has ferried Phoenix-area passengers in robot cars since April 2017 in what the company calls its Early Rider program. Unlike Early Rider — which Waymo will continue — Waymo One customers won’t be required to sign nondisclosure agreements and won’t be expected to continually provide feedback about their experience.

Waymo One represents the beginnings of a business that could be worth a lot of money. How much, no one yet knows: Wall Street estimates of Waymo’s market value, should it be spun off, range from $50 billion to $175 billion.

Waymo began driverless-car development in 2009. Although dozens of companies, from small start-ups to major motor vehicle manufacturers, are developing driverless systems, Waymo is considered the emerging industry’s leader — in large part because of Google’s expertise in mapping and machine learning combined with the rich ample investment dollars churned out by Google’s search advertising money machine.

There appears to be far more demand for the service than Waymo is able or willing to provide at present. The Early Rider program attracted 20,000 applicants, the company said, but only about 400 were chosen.

A big reason for the slo-mo nature of commercial rollout, according to Waymo, is safety.

Self-driving technology is new to many, so we’re proceeding carefully with the comfort and convenience of our riders in mind,” Waymo Chief Executive John Krafcik said in a statement.

The emerging driverless car industry suffered a blow in March when an Uber robot car hit and killed a pedestrian in Arizona. The experimental vehicle, with an apparently inattentive Uber employee behind the wheel, plowed into a woman walking a bicycle across a highway at night. Although the pedestrian wasn’t in a crosswalk, neither the human driver nor the driverless system applied the brakes until after the woman was hit.

Deaths involving Tesla’s Autopilot system have also drawn headlines, although Autopilot is not intended to be used as an autonomous system.

Practically every company developing driverless cars uses a combination of radar, optical, ultrasound and lidar sensors — except Tesla, which has said expensive lidar, which uses laser light to detect objects, will not be necessary for the driverless cars it plans to deploy.

Even if robot cars prove safer than human drivers — one of the intended aims — bad publicity from freak accidents or manufacturer missteps could slow the technology’s acceptance by the general public and political representatives.

The Phoenix area was chosen deliberately for its friendliness to driverless cars — and not just because of the support of Arizona’s governor and local officials. (Regulations on driverless cars are less stringent in Arizona than in California.)

The flat, snow-free desert terrain, the well-kept and well-marked roads, the scarcity of trees to block street signs, and sun-blasted sidewalks on which few pedestrians tread all lend themselves to early robot car deployment.

Other companies are planning to take on more challenging environments. GM-Cruise announced plans to offer a commercial robotaxi service on the streets of San Francisco by the end of this year, but according to Reuters technical problems have delayed the rollout.

As featured in the December 5, 2018 edition of The Los Angeles Times.

Why Honda’s Waymo Talks Failed and GM Clinched the Deal

Honda Motor Co. and Waymo, the self-driving car unit of Alphabet Inc., were nearing a deal to jointly develop autonomous vehicles earlier this year when the Japanese company walked away, according to people familiar with the matter.

Just a few months later, Honda bought into General Motors Co.’s GM Cruise LLC unit instead, choosing a familiar partner over a tech heavyweight. There are any number of reasons to explain why the Waymo deal failed, but the most pressing issues underscore the complexities that technology companies and automakers face as they both team up and also compete for a piece of the future of transportation.

For one, Waymo wasn’t willing to share the substantial technology it had already developed to run autonomous vehicles, and was seeking to cut a deal that would focus on Honda providing the cars, according to two people with knowledge of the matter, who asked not to be named because the talks were private. Essentially, Waymo wanted to be the brains and have Honda be the brawn in the relationship.

“It’s about control of technology and user experience,” said Grayson Brulte, co-founder of autonomy consulting firm Brulte & Co. “You have to assume that Honda wants to maintain a degree of control.”

One person familiar with the talks said that Waymo wanted Honda to supply electric vehicles — an area where the automaker is just beginning to establish itself. All of Waymo’s existing partnerships supply EVs or plug-in hybrids because its autonomous driving system needs more power than the puny 12-volt batteries in conventional cars.

After starting talks with Honda in late 2016, Honda told Waymo it was working on an EV for the partnership that would compete with Tesla Inc.’s Model 3. But by December of last year, Waymo was concerned about progress toward that goal and Honda went shopping for battery packs to power the vehicle, the person said.

Meanwhile, Honda had an existing partnership with GM to develop fuel cells. The Detroit automaker has its Chevrolet Bolt EV in showrooms and has developed a battery pack that will be used in 20 new EVs globally by 2023. In June, the companies announced a deal that would have Honda using GM’s cells and battery pack. GM’s battery not only had good range, but by working together the two automakers figured they could lower costs.

Shortly after that, the two started talking about teaming up on autonomous technology, too. GM had demonstrated its self-driving cars last year and drawn a $2.25 billion investment in May from Japan’s SoftBank Group Corp., giving its tech credibility.

Over the past two months, Honda workers went to San Francisco to take a deep dive into GM Cruise’s technology. Its engineers took multiple rides a day for weeks, one of the people said. Honda got to examine Cruise’s code and get a close look at the technology, which is something Waymo doesn’t like to do.

The result: a deal announced this week in which Honda pledged to put $2.75 billion into Cruise in exchange for a 5.7 percent stake, valuing the company at about $14.5 billion.

“This is a great deal for GM and it satisfies Honda’s needs” for a partner on batteries, said Mike Ramsey, an analyst at Gartner Inc. “The other deal falling through isn’t a problem for Waymo.”

Shares of GM have advanced almost 3 percent since the pact was announced, while Honda has declined less than 1 percent.

Honda and Waymo declined to comment on the collapse of their talks. Kyle Vogt, Cruise’s chief executive officer, said in an interview that his company’s deal was the result of “a pre-existing relationship with Honda that goes back and covers many collaborations on new technologies.”

Waymo likely wouldn’t have sold a stake as GM did with Cruise. Alphabet has other businesses that have sold interests, such as Verily, a health-care technology unit, that got a $800 million investment from Singapore’s Temasek last year. However, Waymo’s partnerships haven’t involved selling equity, with Alphabet retaining full ownership.

Even if Waymo was willing to sell a piece of the company, its valuation would likely be a sticking point in any deal similar to the one Honda struck with Cruise. Morgan Stanley analysts have valued Waymo at well over $100 billion, so even a small investment would be very expensive for an automaker like Honda. Alphabet also has more than $100 billion in cash, so Waymo doesn’t need outside funding.

For Honda, teaming with GM is a way to get into autonomy while sharing the investment. Meanwhile, Cruise gets more cash to push the technology and possible future access to a market like Japan for ride-sharing and delivery services.

Honda and Waymo are still talking about a partnership. Waymo already has a deal with Fiat Chrysler Automobiles NV to turn its Chrysler Pacifica minivans into self-driving vehicles, and an agreement with Tata Motors Ltd.’s Jaguar Land Rover to put the technology into the Jaguar I-Pace electric sport utility vehicle. For the most part, those companies are supplying a total of about 80,000 electric cars to Waymo, which installs its own the software and sensors.

Waymo is in talks with Fiat Chrysler about licensing its technology so the carmaker can sell driverless vehicles to private owners, although that’s a much longer-term goal.

As for Cruise, Vogt said GM is open to other partners, even more carmakers. “This is a space that’s evolving rapidly,” he said. “We’ll talk to any partner.”

As featured in Bloomberg on October 4, 2018