BMW and Daimler Merge Mobility Services Divisions

BMW Group and Daimler AG will merge their respective mobility service divisions into a 50/50 joint venture, while still maintaining competition within their core businesses.

The venture is a “clear sign” that the mobility market is “maturing,” Grayson Brulte, a consultant and co-founder of Brulte & Company told Auto Finance News.

“Across the board look for M&A activity in autonomy, ridesharing and carsharing,” he said. “There are too many companies competing for the same piece of the pie.”

The venture is designed to combine services in the five areas: On-demand mobility, carsharing, ride-hailing, parking, and charging. For example, Daimler’s Car2Go and BMW’s DriveNow carshare programs — which include a total of 20,000 vehicles, 4 million customers, in 31 major international cities — will be combined, pending regulatory approval of the merger.

Other Daimler services slated to merge with BMW programs include Urban booking and payment platforms Moovel and ReachNow; Ride-hailing services mytaxi, Chauffeur Privé, Clever Taxi, and Beat; digital parking services ParkNow and Parkmobile Group; and networked public charging stations ChargeNow and Digital Charging Solutions.

In regards to how the joint venture will specifically operate, and how the platforms will co-exist or change, could not be addressed yet, a Daimler spokeswoman told AFN.

“We just signed the agreement so it’s a little too early to say,” she said.

BMW did not respond to requests for comment by press time.

Harry Campbell, of the popular blog The Rideshare Guy, agreed there will be more M&A activity with OEMs.

“I think automakers know that a discreet point in the future is that ownership is going to be changing; transportation-as-a-service from Uber and Lyft have been eating away with this and autonomy, and I think carmakers know they’re going to be a big shift but aren’t sure how to be involved in this future model,” he said.

This future is one where we have reached full autonomy and autonomous services have proliferated the market. But in the meantime, BMW and Daimler are able to gather more data and learn more about customer behavior than each company would by itself. Brulte said he anticipates that the mobility ecosystem will see more mergers and acquisition activity throughout the year, although he was unsure of what companies may be next.

“Watch where the dominoes fall, because this is just the beginning,” he said.

The formation of the joint venture will produce a significant valuation and earnings effect at Daimler Financial Services, while BMW will see a one-time valuation and earnings effect in the BMW AG’s group financial statement and thus lead to an adjustment of the company’s guidance, the press release said. Under these circumstances, pre-tax earnings on Group level would increase slightly in 2018 compared with the previous year.

The Daimler spokeswoman declined to say how much this would impact future Daimler earnings but did say that if the joint venture receives regulatory approval this year it would significantly increase Daimler Financial Services’ EBIT. However, until regulatory approval is granted, it could not be determined when exactly an impact from the joint venture would be seen.

As featured in Auto Finance News on March 28, 2018

Uber Self-Driving Program’s Fate Unclear As It Lets California Test Permit Lapse

The future of Uber’s self-driving vehicle program is increasingly murky as the company has told California it won’t be renewing a permit to test robotic cars in the state.

This news comes after Arizona suspended the rideshare company’s AV program there following a fatal collision with a pedestrian.

Uber last week announced that it was halting all testing of autonomous vehicles on public roads in Arizona, California, Pittsburgh and Toronto after the March 18 accident that killed Elaine Herzberg, 49, as she crossed a dark street in Tempe, Arizona. The California Department of Motor Vehicles sent a letter to Uber on March 27 confirming the company’s decision.

“Uber has indicated that it will not renew its current permit to test autonomous vehicles in California. By the terms of its current permit, Uber’s authority to test autonomous vehicles on California public roads will end on March 31, 2018,” Brian Soublet, chief counsel for the California DMV said in the letter to Austin Heyworth, Uber’s public affairs manager.

Should Uber at some future date want to restart testing in California, not only will it need a new permit, the company “will need to address any follow-up analysis or investigations from the recent crash in Arizona and may also require a meeting with the department,” Soublet said.

The Arizona accident is the first known fatality involving a pedestrian and an autonomous vehicle, and a black eye for the Uber program that was working to get back on track after a high-profile legal fight involving stolen trade secrets with Alphabet Inc.’s Waymo. Federal investigators and Tempe’s police department are studying the accident to determine if Uber’s self-driving Volvo XC90 SUV had malfunctioning sensors, software, computers or an entirely different flaw.

“To regain public trust Uber has to come out and explain exactly what happened in Arizona and how it’s going to fix it,” said Grayson Brulte, an autonomous tech industry consultant based in Beverly Hills.

“You really have to wonder what is the long-term roadmap for Uber’s program? Does (CEO Dara Khosrowshahi) shut this down or hit the reset button and rebuild it from the ground up? And if so, does Uber partner with a big OEM rather than do it alone?”

Uber didn’t respond to a question about whether Khosrowshahi remains fully committed to the program, but confirmed the decision not to renew its California permit at this time.

“We proactively suspended our self-driving operations, including in California, immediately following the Tempe incident,” Uber said in an emailed statement. “Given this, we decided to not reapply for a California DMV permit with the understanding that our self-driving vehicles would not operate on public roads in the immediate future.”

In the wake of the Uber accident, Nvidia said today that it too was halting public roads tests of its self-driving vehicles. The company currently has just four cars registered for the AV program, according to the California DMV. Likewise, Toyota suspended tests of its autonomous vehicles on public roads in California and Michigan last week and has not yet resumed them, said John Hanson, a company spokesman.

Waymo, which today announced an autonomous vehicle partnership with Jaguar in addition to its program with FCA to get Pacifica Hybrid minivans, has continued its U.S. testing and has General Motors’ Cruise unit. NuTonomy, the self-driving tech unit acquired by Aptiv, has just restarted testing its robot cars in the Boston area after a brief suspension.

“Testing resumed today in Boston following a review of our program and its safety protocols with city officials,” the company told Forbes in an emailed statement.

Arizona Governor Doug Ducey, who welcomed Uber’s self-driving vehicles to the state in late 2016, this week rescinded the rideshare company’s ability to test there. In a March 26 letter to CEO Khosrowshahi, Ducey said he’d directed the state’s Department of Transportation to “suspend Uber’s ability to test and operate autonomous vehicles on Arizona’s public roadways.” In addition to its fleet of more than 150 automated Volvo XC90 SUVs testing in and around Phoenix, Uber also stopped testing its self-driving semi-trucks in the state.

Uber’s Volvo test vehicle was loaded with sensors, including LiDAR and radar that can see pedestrians and objects in dark or in light. And even if the LiDAR, which shoots out pulsed laser beams to create 3D, 360-degree images of a vehicle’s surroundings, failed, the radar should have detected the metal bicycle that Herzberg was pushing.

For now, it’s hard to assess the broader impact of the crash on other developers of autonomous technology, Karl Iagnemma, nuTonomy’s CEO, said Tuesday at the NADA 2018 Global Automotive Forum in New York.

“It does shine some light on some of these questions about the uniformity of practices,” he said, such as how many human safety drivers are in the test vehicles and there use of redundant sensors and other equipment. For its part, nuTonomy takes a “real belt and suspenders approach to safety,” in terms of backup systems and heavy use of simulated testing, Iagnemma said.

The real risk is the threat “the public comes out of this with a partially formed view of autonomy,” he said.

As featured in Forbes on March 27, 2018

Beijing Issues First License to Test Autonomous Cars Despite Fatality In US

Beijing has issued its first license for testing autonomous vehicles on city roads, just days after the first known fatal accident involving an AV and a pedestrian in the U.S.

Baidu Inc. received a temporary license to operate AV’s on 105 kilometers of designated roads in the capital, in what was described as the first step towards wider testing.

The designated roads are located in less densely-populated areas on the outskirts of the city. The licenses are valid for 30 days and can be renewed after the self-driving cars pass follow-upassessments.

Earlier this month, Shanghai issued testing licenses for the first time to Shanghai-based SAIC Motor Corp Ltd, and electric vehicle start-up NIO.

The Beijing announcement comes four days after a 49-year-old woman was hit and killed by an AV being tested by Uber in Arizona. Uber and Toyota have halted AV testing the U.S. in response.

The timing of the Beijing announcement was seen by some as an indication of China’s desire to compete with the U.S. in the development of autonomous vehicles.

“The announcement seems timed to make a statement,” said Grayson Brulte, a business consultant in Beverly Hills who focuses on autonomous vehicles. “People don’t realize it but the U.S. is in a race to get this technology out there first. It’s a national security issue.”

In an apparent acknowledgement of the tragedy in the U.S., Tao Ji, technical director of Baidu’s automatic driving, said safety and obeying the rules of the road will be priorities in early tests, with the vehicles traveling below the speed limit.

“A driver usually learns how to drive better on actual roads instead of in a driving school, and so do self-driving cars,” added Guo Jifu, president of Beijing Transport Institute.

According to regulations for managing road testing for self-driving vehicles, autonomous vehicles are eligible for public road testing only after they have completed 5,000 kilometers of daily driving in designated closed test areas and passed assessments.

Despite the new licences, China has lagged behind the U.S. in testing AVs. In a recent study of national preparedness for autonomous vehicles by KPMG, China came 16th on a list of 20 nations in terms of readiness for autonomous vehicles, just below Spain, but ahead of Brazil, Russia and India.

China received an especially low score on the regulatory front. It cited AV unfriendly government regulations such as requiring public maps to be no more than 50 meters accurate, and requiring that drivers must keep both hands on steering wheels.

As featured in the China Money Network on March 23, 2018

After Uber Crash, Florida Still Welcomes Free-Range Robot Cars

The anything-goes approach meant to bring autonomous vehicles to Florida won’t change after the first fatal collision.

Florida has been trying to lure self-driving cars to the state for testing on public roads, shaping laws that are much more lax than places like California and New York. The fatal accident this week in Arizona, another state that’s opted for a laissez faire approach to unproven robo-cars, appears unlikely to change the state’s approach.

Jeff Brandes, the Florida state senator who has led the local effort to become a hotbed of autonomous vehicles, said in an interview this week he sees no reason to add tougher regulation to self-driving cars. Florida already allows carmakers and technology companies to run autonomous vehicles without a driver, and the companies aren’t required to report problems such as traffic accidents.

Lax oversight of self-driving vehicles came under new scrutiny on March 18 after an autonomous car being tested in Tempe, Arizona, by Uber Technologies Inc. stuck and killed a pedestrian. As a result, Uber, Toyota Motor Corp. and self-drive startup NuTonomy have said they would suspend testing.

“We have to remember that there was a safety driver in the vehicle,” Brandes said of the pedestrian death in Arizona. “The technology and the driver couldn’t react fast enough to avoid the accident. I don’t think this changes anything for the state of Florida.”

A Florida law passed in 2015 allows cars to be used without drivers. California allows tests without safety drivers but, unlike Florida, requires human operators to maintain remote control of the vehicle. California also requires companies to report all accidents and so-called disengagements, the instances when a driver takes over from the car’s autonomous system.

Companies would rather perfect their technology without worrying about public scrutiny, said Grayson Brulte, president of autonomous consulting firm Brulte & Co. That’s led to a migration from strict states to those with fewer rules. Arizona now has more than 600 autonomous vehicles on its road, according to the governor’s office, while California has about 365.

Across the U.S., 21 states have laws on the books governing the use of self-driving cars, according to the National Conference of State Legislatures. Another 11 have executive orders from governors. New York, one of the strictest states, requires a driver to be present in the vehicle and that tests be done with supervision of the state police. Michigan, on the more permissive end of the spectrum, allows self-driving cars to operate on any road in the state without steering wheels, pedals or human backup drivers.

Companies don’t want to test vehicles in states without laws that recognize self-driving cars. If an accident happened, they could be considered negligent for operating a technology that isn’t addressed by state law, said Michael Morgan, a partner with law firm McDermott, Will and Emery in Los Angeles.

“You need legal cover,” Morgan said, “which at a minimum is a statute that recognizes it and allows you to do it.”

Arizona has become a popular state to for trial runs. Alphabet Inc.’s Waymo tests its vehicle there, among other places, and plans to launch its first commercial ride-hailing using autonomous vehicles service in the Phoenix area later this year. Cruise Automation, the self-driving unit owned by General Motors Co., also runs in the state.

Arizona’s rules were created by Gov. Doug Ducey with a 2015 executive order. If the state legislature has other ideas, Brulte said, lawmakers could pass a provision that supersedes the order.

The fact that Florida has a law eliminates that political risk. “Florida has put policies in place to usher in the future of autonomy,” Brulte said.

Several companies have moved to take advantage of Florida’s accommodating environment to launch pilot projects. Volkswagen AG’s Audi brand has tested semi-autonomous drive systems there. Ford Motor Co. will be trying out a delivery service that handles groceries and pizza from Domino’s in Miami and Miami Beach, although the self-driving cars will include humans.

Voyage, a British startup, is already running a self-driving taxi service in the Villages, a massive retirement community north of Orlando that houses 125,000 people. Starsky Robotics, a San Francisco startup, has been operating a Freightliner tractor trailer with no driver in Florida. The truck is monitored from a remote driver who watches video feed via cameras.

Brandes, the state senator, said Florida is getting a lot of interest from tech companies and carmakers about deploying in the state. Florida’s laws, sunny weather and retiree population—which often needs transportation assistance—make it an ideal test bed.

“Many major companies are eyeing Florida as a place to deploy autonomous vehicles,” Brandes said. “We will move forward.”

As featured in Bloomberg on March 23, 2018

Self-Driving Cars May Ultimately be Safer than Human Drivers

As long as robot cars roam public streets and highways, they will occasionally kill people. That’s an ugly truth that no one in the driverless vehicle industry can deny.

Will those robot cars kill people at significantly lower rates than drunk, stoned, tired or distracted human drivers do now? Automakers, technology companies, politicians and regulators are betting they will, as driverless vehicles are rolling out faster than almost anyone expected as recently as a year ago.

As long as robot cars roam public streets and highways, they will occasionally kill people. That’s an ugly truth that no one in the driverless vehicle industry can deny.

Will those robot cars kill people at significantly lower rates than drunk, stoned, tired or distracted human drivers do now? Automakers, technology companies, politicians and regulators are betting they will, as driverless vehicles are rolling out faster than almost anyone expected as recently as a year ago.

Speculation by Tempe’s police chief that the robot may not be at fault in the crash may temper any public or political backlash.

Uber was testing the robot car in autonomous mode with a human engineer, who was behind the wheel but not driving. Elaine Herzberg, 49, walking a bicycle, stepped in front of the car from a center median, according to video evidence, police said.

“The driver said it was like a flash, the person walked out in front of them,” Tempe Police Chief Sylvia Moir told the San Francisco Chronicle. “His first alert to the collision was the sound of the collision.

“It’s very clear it would have been difficult to avoid this collision in any kind of mode [autonomous or human-driven] based on how she came from the shadows right into the roadway.”

The National Highway Traffic Safety Administration and the National Transportation Safety Board are both investigating the incident.

Automakers who publicly responded to the news had different reactions. Toyota temporarily suspended public-road driverless testing in the U.S. In Germany, Volkswagen Group Chief Executive Matthias Mueller latched on to the chief’s assessment. “There are indications that this accident was unavoidable,” he said at an earnings news conference. “We won’t let ourselves be brought off course from our long-term strategy on the basis of tragic events like this.”

Uber issued a statement offering prayers to the victim and her family and promising a thorough investigation. Other companies at the forefront of driverless technology — automaker Tesla, ride-hailing company Lyft, driverless technology pioneer Waymo — have remained silent about the Uber incident thus far.

“That’s the right thing to do,” said Michael Sitrick, who heads Sitrick & Co., a Los Angeles crisis management and public relations firm. “They’re saying, ‘Let’s take a deep breath’ ” while the matter is sorted out.

The industry will need to think strategically about how to handle future tragedies, he said. In general, people fear new technology. “But when you’re putting people’s lives at risk, it’s much more serious than a bug in your phone,” Sitrick said.

The driverless vehicle industry faces a conundrum. Statistical proof that robot cars significantly reduce the crash and death rate would ease public acceptance of robot-caused carnage because it’s better than the alternative. But the only way to accumulate the hundreds of millions of miles of driving experience needed to prove that is to put the cars on the road.

In the face of uncertainty, emotions trump numbers for many people, Georgetown’s Towns said. “Behavioral research shows that losses are felt more strongly than gains.”

Or, as University of South Carolina law professor Bryant Walker Smith put it Monday: “This woman’s tragic death is going to be in every major newspaper and on every major website” while everyday highway deaths go uncovered.

The potential effects of robot cars and trucks are enormous. As the motor vehicle industry is transformed, market researchers say hundreds of billions of dollars — and millions of jobs — are at stake.

“Driverless cars are going to be one of the main pillars of the economy,” said Grayson Brulte, a driverless car industry consultant in Beverly Hills.

A technology-history buff, Brulte noted that in an early Wright brothers test, their new flying machine crashed and killed a U.S. Army lieutenant who rode along with Orville Wright, who was injured. The soldier had taken the place of the man originally scheduled for the ride: President Theodore Roosevelt.

“It’s very important that we do not allow one tragic accident to sway public opinion,” he said.

Carmakers and technology companies need to be far more transparent as they push forward, experts said. “It’s important that we all learn from this accident and we make these technologies even better, said Alain Kornhauser, a professor at Princeton University and a leading authority on driverless cars. “To that end Uber must release all of the data leading up to this crash. All of the video, radar, lidar and logic trails for the three or so seconds leading up to the crash. If this releases some of Uber’s intellectual property, so be it.”

That advice, however, bumps up against the highly secretive process of new technology development. Driverless technology companies are racing to develop and control the intellectual property in sensors and mapping and machine-learning software and reap the profits. Uber co-founder and former Chief Executive Travis Kalanick has called competing driverless systems an “existential threat” to Uber, which recently settled a lawsuit in which Waymo accused it of stealing trade secrets.

And up to this point at least, industry has successfully pushed for less regulation. Legislation that liberalizes driverless vehicle rules — allowing manufacturers to sell up to 2,500 driverless cars a year without having to follow regulations that require hardware such as steering wheels and side mirrors — has been passed by the U.S. House of Representatives. A similar bill is being considered by the Senate.

As featured in the March 21, 2018 edition of The Los Angeles Times