Next Generation Transportation

The move was bold – not just launch the pilot of self-driving vehicles in the streets of Pittsburgh, but give an opportunity for the public to get closer to the technology. Uber’s fleet of choice for the pilot was modified Volvo XC90 SUVs that were instrumented with hundreds of sensors where the Uber drivers would have the capability to take the control over during the ride, as needed.

At $69 billion, Uber is generously valued at 16 to 17 times its annual revenue. According to Bloomberg, Uber lost about $1.2 billion just this year with a large portion of the loss attributed to the high driver wages that Uber pay out. According to various figures, Uber pays 1.5 to 2 times more on an average to Uber drivers than traditional taxi drivers. Pressure is probably mounting for Uber to take the plunge (think IPO).

80% of the ride cost is split between the car owner and the driver, whereas the remaining 20% is taken by Uber. Uber is waiting for the day to have its fleet self-driven, thereby turning the table around, making it attractive not just for the riders but for Wall Street too!

The next generation transportation will be defined in the backdrop of partnership between traditional auto manufacturers and tech companies. Uber recently acquired Otto, a start-up company founded by former Google employees focused on autonomous vehicles. Tesla, ahead in this game, claims it has over 100+ million miles’ worth of autonomous driving data. Google very recently announced to roll out a service in San Francisco that would allow the Google owned “Waze” app users to carpool with commuters heading in similar directions. With the $500 million investment in Lyft that General Motors made, the game is ON to define the next generation.

With the self-driving cars, partially autonomous vehicles and ride-sharing models near the horizon, the viability of the business model behind this transportation system lies within the uptime and reliability of the vehicles on the road. Optimizing the ride, vehicle health and the cost are key to the bottom line and Connected Car promises to deliver just that.

Scheduling an appointment at the dealership to get the “Check Engine Light” will be “too-late”.  Time based scheduled maintenance will be replaced by “condition-based” maintenance – thanks to telemetry data and real-time analytics in the cloud that can notify the car owners of just-in-time or even predictive maintenance. The dealers will no longer need to stack inventory of parts. They can be part of this ecosystem getting the lead, enabling them to have just-in-time inventory. A round-trip to the dealer will be replaced by “Over-the-air” flash for most of the ECU fixes keeping the uptime and customer satisfaction at the highest. While our cells are rejuvenating at night, self-driving vehicles are going to share and learn its everyday experiences amongst its peers.

What is the future for the insurance carriers in the world of self-driving cars? Liabilities aren’t going to disappear for years to come till the technology matures. So, beyond vehicle health, the connected car ecosystem and ride-sharing model of transportation is bound to bring an overhaul and paradigm shift in the product offerings by insurance carriers as the association of the vehicle to the driver will become more dynamic in nature. The insurance product offerings are likely to move from “Pay-as-you-drive” to “Manage-how-you-drive”, thanks to hundreds of sensors and big data pipe between the vehicle and the telematics service provider.

Watch this space for “Diagnostics-as-a-Service” and “Risk-Analytics-as-a-Service” offerings that enables the OEMs and insurance carriers to get the best out of the Connected Car ecosystem!