AV REPORT
Brian Krzanich, CEO of Intel says AVs represent a new type of “consumer space” for entertainment companies.
Waymo, Google’s AV subsidiary, has a deal with Fiat Chrysler Automobiles to use Pacifica minivans.
GM’s management made it clear during its presentation that the motive for its AV strategy is purely a business one. This is about profit. According to the presentation, ride-hailing services currently in operation (Uber, Lyft) cost consumers between $1.60 and $2.40 a kilometre. The companies pay drivers equal to about “three quarters” of that revenue. By taking the driver out of the equation, costs plunge possibly to below $1 per kilometre. In an age when younger generations are choosing to live in urban cores and not buying cars in a traditional manner, this could be a big business. GM expects it will be able to generate several-hundred thousand dollars of revenue over the lifetime of each AV in a ride-share business. This is much more than the $30,000 that vehicles sold currently generate for GM, according
to numbers quoted in the presentation. It is believed that early AVs will cost upwards of several hundred thousand dollars, putting them out of range for most drivers. Operating these cars through a ride share service is one way to develop the technology while working toward a reduction in costs. It is worth pointing out that GM recently bought a company called Strobe, which makes LiDAR systems. Currently, these light-based radar systems cost about $20,000. But it is said that Strobe is working to produce a LiDAR system for just $300. These are the kinds of cost reductions that will allow the sector to blossom. There will also be new revenue streams generated by AVs. As one analyst points out, “The cars will capture information about traffic, consumer habits, how delivery services
work and what happens in car accidents… That could help GM create a massive Internet of Things platform that could be of use to a variety of businesses, including insurance and delivery companies.” Uber has signed a deal with Volvo that will deliver 24,000 AV SUVs. Waymo, Google’s AV subsidiary, has a deal with Fiat Chrysler Automobiles to use the Pacifica minivans being built in Windsor. The Ontario Teachers’ Pension Plan was one of the major institutional investors buying up a stake in ride-share company Lyft. The company recently went to market for financing. In the case of the GM fleet, the company will utilize its electric Bolt vehicle. According to a GM executive speaking at the presentation, these cars will, “... need minimal maintenance and upkeep even when in constant use as part of a ride-share fleet.” So far investors seem to love the idea. Shares in GM have been on tear of late, rising 24 percent so far this year, far outpacing Ford, which has yet to introduce similar plans. Another deal announced in the past few weeks takes the AV hype to remarkable new levels. Chipmaker Intel and Warner Brothers announced a partnership to develop technologies that will bring entertainment options to the AV market. As Brian Krzanich, CEO of Intel put it in an interview; AVs represent a new type of “consumer space” for entertainment companies. That is, once people don’t have to drive they will need to be entertained while travelling. Krzanich was also quoted as saying, “... the rise of the AV industry will create one of the greatest expansions of consumer time available for entertainment we’ve seen in a long time.” The Hollywood Reporter notes that some analysts predict that in-car streaming entertainment could result in as much as $200 billion per year in extra revenue.” Another Hollywood studio executive was quoted as saying, “Can the windshield be the movie screen of tomorrow?” The answer is clearly, “yes.” Advertisers will be able to deliver interactive, geo-located advertising based on nearby shops, restaurants and businesses. Passenger biometric data will recognize that the passenger is generally too hungry to wait. The passenger can be served with ads and offers for nearby restaurants. The most frenzied predictions are that the telecom companies, content providers, game developers and e-commerce companies will transact business within the car. Will collision repair centres have to develop the skills to fix video screens? Arguably, yes. February 2018 collision Repair 39