Using our News Commentary feature (client registration required), Lux Research analysts have been tracking the energy storage space with unprecedented detail, covering more than 300 chosen individual developments during the past half year. These innovation-related events span from partnerships and investments to new research and new factories, and include information about the companies involved and our own takes on the developments. While this set of coverage is not meant to include every single development, it does capture much of what Lux analysts think is worth considering. The full dataset is available to Lux members to explore here, by clicking the News tab’s Energy Storage filter (client registration required), which includes interactive versions of the visualizations shown below. To help extract insights from this wealth of data, in this summary we analyze the trends that have emerged out of this in-depth coverage of how the energy storage landscape looks like in 2017 thus far, using the following heat map:
If you’re in San Francisco, you may have gotten an offer on December 14 to “Experience the future, starting today” as you “Take a ride in a Self-Driving Uber”. What’s remarkable about that? The little local startup announced that its hometown fleet of autonomous vehicles would now be carrying passengers, as they have for the last three months in Pittsburgh, Pennsylvania (where its Carnegie-Mellon collaboration is based). The cars will still have an “experienced operator” at the wheel, and will cost the same as the same trip in the company’s human-driven UberX service. What’s also remarkable is that Uber’s program was stopped by the California Department of Motor Vehicles on its very first day. Continue reading
Last week ended with Apple announcing a $1 billion investment in the Chinese ride-sharing company Didi Chuxing. Didi Chuxing is Uber’s biggest competitor in the Chinese market. Apple’s investment is meant to act as a chance for Apple to learn more about Chinese market segments. The investment would also be a key component in Apple’s rumored self-driving vehicle project.
With each new partnership or investment announcement, an ecosystem within the autonomous vehicle space is developing that consists of three key components: autonomous vehicle technology development, the emergence of new business models, and manufacturing of vehicles. To survive in this evolving ecosystem, companies must be able to touch all three of these points. It isn’t feasible for any one company to hit all three of these by itself, though; companies operating in this space are looking for relationships with other companies to be able to fill any gaps. A recent example of this is the automaker GM, investing in the ride-sharing company Lyft, and in the process of acquiring the autonomous vehicle technology developer Cruise (client registration requred). Lux recently wrote a report (client registration required) comparing automotive OEMs and the companies that were lagging behind were the ones that chose to ignore one of these components, like Audi and its conservative approach to technology implementation or Renault Nissan and its lack of self-driving vehicle technology.
Apple’s recent investment shows that it is taking the autonomous vehicle space very seriously, even if it hasn’t openly stated that it is working on this technology. But for Apple to consider approaching the rest of the pack, there is still a critical question remaining: who will make its cars? Previously, Daimler and BMW both rebuffed Apple’s advance, likely due to arguments over data ownership and Apple’s notoriously demanding requirements from its partners. Clients can expect tech companies operating in the autonomous vehicle space to look elsewhere for the vehicle manufacturing piece of this new – and still developing – ecosystem. If an automotive OEM isn’t an option, Apple will need to look toward tier-ones with experience manufacturing vehicles.
By: Kyle Landry
What They Said
In a recent interview with CNN, Tesla’s CEO Elon Musk stated, “The Tesla car next year will be, probably be 90% capable of autopilot.” He continued that highway driving would obviously be automated by 2015. When asked by the interviewer how this would happen, Elon replied, “With a combination of various sensors. Cameras plus image recognition, radar, and long-range ultrasonics, that should do it.” The interview ended with few concrete facts, but Elon asserted, “Tesla is a Silicon Valley company; if we’re not the leader, then shame on us” – thereby asserting Tesla’s supposed dominance of the emerging autonomous vehicle market.
What We Think
If Elon Musk’s comments seems far-fetched and vague, it’s because they are. In its latest release, Tesla has effectively caught up with competing car companies, but certainly hasn’t passed them. Manufacturers like Daimler, Audi, BMW, and Ford, alongside many others, are all incorporating advanced driver assist systems (ADAS) into their cars. Tesla’s new release highlights two major ADAS features: automatic lane change and the ability for the car to read speed-limit signs and adjust speed accordingly. While an advancement for Tesla, neither feature is all that new – in 2013, there were 19 automakers with adaptive cruise control systems on the market, most of which offer the ability to read and react to speed limit signs, and others have automatic lane-change prototypes on the road.
Claims that autonomy for Tesla’s cars will be a simple matter of firmware and software updates are unrealistic. The 12 sensors that Tesla has installed onto its new car are a mix of cameras, radar, and ultrasonic sensors. While we don’t doubt that all of these sensors will be important in the progression towards autonomy, we disagree with the view that the hardware to enable autonomy is already fixed and that future cars will only require software upgrades to become autonomous. Google has been testing its autonomous vehicle, outfitted with significantly more sensors than Tesla’s, and they continue to struggle in poor visibility weather conditions. We agree that advances in machine vision, and subsequent software updates will add a lot of capability to ADAS features; however, the hardware is far from fixed. Tesla may soon find that as vision algorithms improve they will require dedicated processors like CogniVue’s (client registration required) to efficiently run the required computation in real-time. Furthermore, by fixing its hardware and relying on future software and firmware updates Tesla may miss out on emerging imaging solutions like Fastree3d‘s (client registration required) imagers that can offer advances in terms of speed, accuracy, and cost over currently used sensors.
Even if the technology to make a fully autonomous car is available in the next five to six years, as Elon suggests, it will be many years of prototyping and testing before that technology hits the road in commercially available vehicles. The first adaptive cruise-control-equipped vehicles came onto the market in 1995, and it’s taken the technology nearly 10 years to reach its currently limited market share. If a prototype of a fully autonomous vehicle is possible in five years, it will be at least another decade after that before buyers start enjoying hands-off driving.
Given the bold claims, it is likely that in 2015 Tesla will be backpedaling from its CEO’s comments. Perhaps Tesla has a partnership in the works and its ADAS features are being developed by outside developers, but nonetheless, Tesla has notoriously been delayed in product deployments. Still, marketing and PR are a true strength of Tesla, and conversations in our automotive network indicate frustration that Tesla is viewed as so advanced while in reality numerous OEMS have technologies equal to or more advanced than what Tesla is claiming. Clients should expect Tesla to continue to drive the conversation, but expect the rapid innovation in ADAS and autonomous vehicles to progress quickly – and much of it outside of Tesla’s walls.
The U.S. government has announced much stricter fuel efficiency standards for the future, requiring a 54.5 mpg average for cars and light-duty trucks by 2025. This would nearly double the fuel efficiency that vehicles must currently achieve by law. The standards will scale according to vehicle footprint: 61.1 mpg will be required of an average compact car by 2025, while large pickup trucks will be allowed 33.0 mpg. The announcement also includes special provisions for large hybrids, and for vehicles powered by electricity, natural gas, and fuel cells. Among these is the ability of alternative-fuel car-makers to sell credits earned by exceeding the standards. Major carmakers were involved in discussions with the government prior to its decision, and mostly support the 54.5 mpg target. However, in order to boost fuel efficiency, they will incur significant research and production costs, which will be passed on to car buyers.
There are multiple reasons why battery electric vehicles (BEVs) will not benefit significantly from the mandate. First, 54.5 mpg will be achievable even with the smaller batteries of micro-hybrids, mild hybrids, full hybrids (HEVs), and plug-in hybrids (PHEVs),
especially when coupled with the use of lightweighting technologies (client registration required). The shift to BEVs is driven more by strict policies like California’s zero-emission vehicle standard, however strict regulations such as that remain few and far between. Secondly, the ability of BEV companies like Tesla to sell credits to others is not a business model: credits can boost revenues modestly, but will not save a company or make a vehicle line profitable. Furthermore, the final version of the standard allows competing natural gas vehicles to qualify for the credit, as well. Finally, as the incumbent internal combustion engine powered vehicle approaches 54.5 mpg, it will erode two key selling points of the electric car – lower fueling costs and lower total cost of ownership.
Therefore, clients looking for winners from the new standards should track three other spaces. The first are incremental improvements to today’s vehicles, including turbochargers, efficient transmissions, and lightweight materials. Next, in the hybrid space,
manufacturers of small and medium-size lithium-ion packs will see increased volumes due to growing adoption of HEVs, PHEVs, and potentially micro- and mild hybrids (see the report “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles” — client registration required). Finally, leaders in natural gas and fuel cells stand to benefit: in the U.S., Honda is the only carmaker offering a commercially-available compressed natural gas passenger vehicle. The company is also a frontrunner in fuel cell development, along with Toyota, GM, Daimler, and Hyundai.
The automobile is at a turning point, unprecedented in its 100+ years of history. Rising gas prices, stricter fuel economy standards, a progressively more environmentally conscious customer base and forward-looking business models are all breaking the traditional automotive ecosystem. In response, OEMs are evolving their partnership webs in order to endure and compete.
This week’s graphic comes from a recent Lux Research report in which analysts examined the growing web of cross‐cutting industry relationships to see how automakers compared on the Lux Partnership Grid. Companies were scored on two metrics, partnership strength and technology diversity. Based on these scores, each automaker fell into one of the four quadrants in the graphic above.
Lone Wolves represent OEMs that are continuing business as usual, and have little footprint in the emerging technologies that threaten the status quo. The Dilute ecosystem quadrant encompasses automakers with a few partnerships scattered across a variety of technologies. The Siloed ecosystem includes OEMs that are putting their faith in a few, or in some cases one technology, while the Expansive ecosystem hosts OEMs who average nearly 16 partnerships apiece, representing an average of eight unique technologies.
A review of the partnership grid reveals multiple trends:
- Small companies tend to cluster in the Lone Wolves region, while large corporations partner ambitiously in a variety of areas so they group more in the Expansive quadrant. One exception is Fiat-Chrysler, which has only three, unsubstantial partnerships to its name.
- Daimler, GM, and Toyota lead the pack. All have formed strong partnerships in pursuit of technical diversity, placing them squarely in the Expansive ecosystem. Daimler has developed partnerships that span multiple key emerging technologies, including a JV with Toray to make carbon fiber reinforced plastics (CFRP) (Client registration required), a JV with Evonik (Li-Tec) to make Li-ion batteries (Client registration required), and participation in Europe’s Clean Energy Partnership for establishing fuel cell vehicles and hydrogen fueling infrastructure.
- Meanwhile, General Motors (GM) has emerged from a low point in its corporate history to emerge as a future looking company by partnering in a variety of technologies, and investing in companies at a variety of stages. It has invested in battery start-ups like Envia Systems (Client registration required) and Sakti3 (Client registration required), and in the fuels space with ethanol companies Mascoma (Client registration required) and Coskata (Client registration required). In the materials space, GM also sees value in CFRP, forming a JV with Japanese materials company Teijin.
- Lastly, Toyota is leveraging its leadership in hybrids, to position itself for advances elsewhere, such as advanced electrification (via its investment in Tesla). It also retains activity in hydrogen powered fuel cell vehicles and infrastructure, where it teamed with Air Products and Shell to install the first pipeline-fed hydrogen station in the U.S. In materials, Toyota has partnered with Toray to source CFRP initially used for the hood and roof of one of its Lexus models. As with Daimler and GM, these activities will prepare Toyota to profit from an ever changing landscape where the vehicle of tomorrow may not look like anything conceived today, but will no doubt carry key technologies in the areas of energy storage, increased connectivity, and new materials.
Source: Lux Research report “Under the Hood: Mapping Automotive Innovations to Megatrends.”
A group of U.S. and German automakers demonstrated an electrical vehicle charging standard at Electric Vehicle Symposium 26 (EVS26) that used a single plug to support both AC charging (including ‘level 1″ at 120V and “level 2” at 240V) and DC fast-charging. Ford, General Motors, Chrysler, Daimler, Volkswagen, BMW, Audi, and Porsche are all behind the new standard – which means they’re not behind the CHAdeMO DC fast-charging standard backed by Nissan and other Japanese automakers (or, for that matter, behind the separate DC charger offered by Tesla).
At stake is more than whether noted venture capitalist and chromed-out Fisker Karma owner Justin Bieber can plug in when he drops in on Elon Musk to talk investment strategies. Charging standards are widely, and rightly, seen as a key precondition for widespread market adoption. Issues of charging station availability and the resulting “range anxiety” are bad enough for would-be EV owners, without further doubts over whether or not the latest charging station will be compatible with their cars. Eventually good sense should prevail and send one approach the way of Betamax and the HD-DVD. In the meantime, the high cost of EVs is a bigger impediment, and >>the slow downward march of battery costs means that automakers have time to sort out their differences<< before EVs are ready for widespread adoption (see the report “Searching for Innovations to Cut Li-ion Battery Costs“).
Last week, Johnson Controls (JCI) filed a petition to dissolve its joint venture with the French battery-maker Saft, which is opposing the proposed breakup. According to a Saft press release, JCI would like to expand the markets for JCI-Saft beyond the originally planned automotive applications, while Saft would prefer the JV not encroach on areas “where Saft is already strongly positioned and enjoys a rapid development.” The JV has found some traction in the automotive market, including agreements to supply batteries to both Ford and Daimler, and both sides indicated that the recent events will not compromise current supply and development relationships.
The dissolution of JCI-Saft would significantly shakeup the intensely competitive electric-vehicle battery market. While governmental support has primed an aggressive build-out for lithium-ion (Li-ion) batteries destined for electric vehicles, growth has been slow and the number of players grabbing firm supply contracts are few and far between (see the report: Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market – client registration required). LG Chem has emerged as a clear front-runner, while other substantial suppliers like SB LiMotive and JCI-Saft have found more limited success. Trailing the pack are emerging suppliers such as A123 and Ener1 (see also the May 11, 2011 LREVJ – client registration required) which have taken major financial hits due to overly aggressive estimates regarding their electric-vehicle businesses. JCI likely surveyed the landscape and saw that it would be wise to target applications outside of the automotive realm to find more market opportunities for the JV’s Li-ion batteries.
While the consequences of the falling-out remain to be seen, this scenario shows that both parties don’t view the automotive market as the strong growth opportunity that likely drove the original partnership. JCI realizes that it has already missed out on the opportunity to take the initial front-runner position for automotive applications, while Saft appears not to value the automotive market as a big enough opportunity to risk exposing its utility business to JCI via JCI-Saft, where it could be forced to cannibalize existing business.
Additionally, virtually all the major Li-ion producers have recognized that applications outside of automotive will be crucial to justify the major build-out of capacity – with grid storage the most common target. Examples include A123 and Altair Nanotechnologies, both of which made rapid shifts to grid applications once their automotive efforts slowed. While grid storage could be a significant area of growth for Li-ion (see the report: Grid Storage – Islands of Opportunity in a Sea of Failure – client registration required), it remains nearly as uncertain as the automotive market, as the U.S. Federal Energy Regulatory Commission (FERC) still has not determined how energy storage for the grid will be regulated. FERC is considering a pay-for-performance framework in the regulation market, which could potentially place a premium value on Li-ion batteries’ ability to balance supply and demand (frequency regulation). A final determination, however, is not due until sometime in 2012. In the meantime, battery-makers must place bets in both automotive and grid storage knowing that each holds as much peril as promise.
In late November, Daimler announced it would work with Toray to build its own carbon fiber production facility in order to hedge against supply scarcity issues. Before this announcement, the pair had worked together to further develop Toray’s “high-cycle” resin-transfer molding (RTM) process, which supposedly reduces curing time to about 10 minutes. The terms of the recent arrangement were not disclosed, but Daimler did say that it is looking to integrate the carbon fiber-reinforced plastics (CFRPs) into the Mercedes CL, SLK, and CLS models. It remains unclear where exactly the composites would end up. But it’s likely that they will form parts of the frame as Daimler aims to drop body-in-white (BIW) weight by 10%.
Automakers today understand the benefits of composites but are still skeptical about using them outside of small-volume exotics (like the 2009 Corvette ZR1, produced at 2000/year) given their worsening economics at higher volumes. Together, Daimler and Toray are looking to buck that trend and push CFRPs into vehicles produced at 25,000/year to 30,000/year volumes. This move will be an important test for composites in the automotive industry. Success could open the floodgates in the years to come.