Friday's Mobility Roundup 🚍🚊🚘🚲🛴
A roundup of headlines with the occasional commentary
The OG transportation
N.Y.C. Transit Postpones 4% Fare Hike, Hoping for Federal Rescue [NYTimes]
From the NYTimes:
New York City’s transit agency has warned for months of a fare hike that would take effect this spring, part of a regularly scheduled increase that would help fill a multibillion dollar budget hole after the pandemic drained the system of riders and starved it of nearly all its revenues.
But in a reflection of the agency’s stark reversal of fortune now that Democrats will be in control of the White House and Congress, transit officials announced on Sunday night that they would postpone the 4 percent fare increases for at least several months, anticipating significantly more federal aid.
Officials said they would delay fare increases until the local economy showed signs of a recovery and there was greater clarity about how much federal aid the agency could expect. Officials are hoping they will be given an additional $8 billion in relief, which is the size of the agency’s budget deficit through 2024.
Why it matters: Transit agencies across the country were facing existential crises prior to the Feds delivering much-needed aid. Critically, and in an unprecedented way, the first Covid stimulus bill allowed agencies to use that funding for *operations*. This is how agencies like Chicago’s CTA were able to continue running its ‘L’ train with normal service, despite far fewer riders. New York City also benefitted handsomely from the first tranche of federal aid, enabling the MTA to close a significant gap in its fiscal situation (but not all of the way). With ridership still down considerably from pre-pandemic times, the MTA’s board has been discussing the possibility of raising fares in an effort to bridge the gap.
Unfortunately, raising fares will hit the riders who are almost perfectly inelastic with respect to price; that is, the workers who have no other choice but to rely on public transit to get to work, to school, or visit their loved ones are the riders who will end up absorbing most of that fare adjustment. As currently structured, NYC’s MTA relies heavily on fares for its operations which places an unnecessary burden on its most price-sensitive riders. A better - and far more sustainable - financing mechanism would sound a lot like “congestion pricing”, something that NYC’s City Council Speaker Corey Johnson recently made clear in a letter to Biden’s DOT Sec nominee Pete Buttigieg.
Ride-hailing (aka ride-sharing)
Uber Green rolled out to over 1,400 towns and cities in North America [The Verge]
From The Verge:
Uber Green, the feature that allows customers to request rides in electric vehicles, is coming to more cities. After initially launching in 15 cities last September, the ride-hail company is bringing the feature to 1,400 additional cities and towns in North America. The new markets include Austin, Calgary, Houston, Miami, New York City, Tucson, Winnipeg, Washington, DC, and hundreds more.
Uber claims that “100 percent” of rides on its platform will take place in electric vehicles by 2030 in the US, Canada, and Europe, and by 2040 for the rest of the world. But rather than pay drivers directly to trade their gas-burning vehicles for electric ones, the company will impose an extra fee on trips completed in an electric vehicle to incentivize drivers to make the switch.
For a dollar extra, riders can specifically request a hybrid or electric vehicle. Uber drivers who use hybrid or electric vehicles to pick up passengers will get an extra 50 cents per ride, while drivers using specifically battery-electric vehicles get another dollar on top of that — for a total of $1.50 extra per ride.
Why it matters: Uber Green is one of those “feel-good” feature releases that packs more PR than it does environmental benefits. As designed, Uber is hypothesizing that eco-conscious consumers will want to pay more for “greener” rides. However, there is nothing which suggests that this is how consumers will respond. In fact, most of the ride-hail literature would seem to suggest the opposite: riders are most sensitive to changes in price and not the model or make of the driver’s vehicle, not pink mustaches, not how much money the TNCs donate to their favorite charitable causes, and certainly not a “commitment” to being zero-emissions by [insert XXXX] year.
This is a weird case of Uber trying to spur changes to its suppliers (driver-partners) by altering the behavior of its buyers (ride-hail customers). At the same time, many TNC drivers lack the capital to purchase electric vehicles in the first place which today are relatively more expensive than mass-market ICEs. Not to mention, unless you’re a Tesla owner (and if you are, I highly doubt you’re interested in driving for Uber/Lyft), EV charging infrastructure is still woefully inadequate across the continental United States. As a result, owning/operating an EV for the purposes of ride-hailing in most major metros is still just a nice-to-have rather than a growing trend.
Delivery / e-Commerce
Amazon purchases 11 new aircraft, expanding its air freighter fleet [Bloomberg]
From Bloomberg:
When the 767-300 passenger jets purchased from Delta Air Lines and WestJet Airlines are converted to freighters and have entered service by the end of next year, Amazon Air will have 85 owned and leased cargo planes. That fleet size raises expectations the e-commerce giant may take the operations in-house, following a pattern of its ground operations where the company first used third-party logistics networks and eventually took over most of those operations.
For Amazon, it’s all about customer satisfaction and meeting the one- and two-day delivery promises for its Prime subscribers. A disastrous peak season in 2013 that derailed deliveries and forced Amazon to give refunds to irate shoppers, led the company to build out a massive ground-logistics operation. Amazon now is opening warehouses and shipping hubs in the U.S. at a rate of one a day.
Why it matters: In my Competitive Strategy class, we did a case study on Airborne Express. Ever hear of it? Probably not, unless you were born prior to 1969. At one point in time, Airborne Express was one of the top players in the express mail delivery business, along with two other companies who we are all still very familiar with: FedEx and UPS. AE even had its own airport hub in Wilmington, Ohio. The company was known for catering to a select group of customers, namely large businesses that had very urgent orders, think IBM and Xerox. Despite pioneering a novel way of filling its aircraft with parcel containers, the company was ultimately acquired by DHL in 2003.
Airborne Express’ ultimate demise was not due to any single factor of its own doing. Instead, the express mail and parcel delivery industry is notable for its lack of product differentiation. Mailing a letter from Columbus, Ohio to Charleston, South Carolina is not a materially different undertaking than shipping a birthday gift from New York to Los Angeles. What FedEx and UPS were able to do that Airborne Express was not were achieve massive economies of scale. Fred Smith’s famous “hub-and-spoke” model revolutionized parcel delivery by air. Meanwhile, UPS perfected ground delivery making its brown trucks synonymous with the “package guy”.
Today, perhaps no other company have achieved faster economies of scale in e-commerce (and by deduction shipping logistics) than Amazon. Amazon’s purchasing additional aircraft is a clear signal that it too knows a thing or two about delivery, with this latest buying spree bringing its fleet size to ~85 owned and leased cargo planes. And because Amazon deals with almost every kind of product (backyard swimming pools and pharmaceuticals included), the company has a unique advantage in that it not only understands the routing optimization problem posed by traditional logistics companies like FedEx and UPS, but also consumers’ purchasing intent.
EVs
General Motors unveils EV van as part of new commercial business unit [CNBC]
From CNBC:
The van – part of GM’s plan to invest $27 billion in electric and autonomous vehicles by 2025 – will be the first vehicle under a new commercial business unit in GM called BrightDrop. The EV600 will be capable of up to 250 miles per charge, according to Pam Fletcher, vice president of global innovation, who will oversee the new division.
The first 500 vans will go to FedEx beginning this year, Fletcher said. Broader availability of the vans is expected in early 2022. The EV600 is the first commercial vehicle with GM’s next-generation Ultium battery system, which the automaker has spent billions on as a base for future EVs.
Why it matters: Companies like FedEx have a massive incentive to transition their fleets to zero-emissions vehicles. At the same time, FedEx (as do UPS and Amazon) has the ability to provide its own EV charging infrastructure at its shipping facilities where trucks can be connected to stations overnight or even deployed in staggered shifts to optimize the fleet’s available charging capacity. Traditional automakers like GM stand to benefit from this trend as large corporate fleets will serve as reliable customers for this new vehicle technology. It’s no surprise then that Ford and Daimler have announced similar plans. 250 miles per charge may seem like a drop in the bucket when it comes to package delivery, however battery life is only likely to increase (see below) and EV charging stations will only become faster and more efficient over time.
Electric car batteries with five-minute charging times produced [The Guardian]
From The Guardian:
Batteries capable of fully charging in five minutes have been produced in a factory for the first time, marking a significant step towards electric cars becoming as fast to charge as filling up petrol or diesel vehicles.
The batteries can be fully charged in five minutes but this would require much higher-powered chargers than used today. Using available charging infrastructure, StoreDot is aiming to deliver 100 miles of charge to a car battery in five minutes in 2025.
How it works:
The StoreDot battery replaces graphite with semiconductor nanoparticles into which ions can pass more quickly and easily. These nanoparticles are currently based on germanium, which is water soluble and easier to handle in manufacturing. But StoreDot’s plan is to use silicon, which is much cheaper, and it expects these prototypes later this year. Myersdorf said the cost would be the same as existing Li-ion batteries.
AVs
GM Jumps as Microsoft Joins $2 Billion Self-Driving Venture [Bloomberg]
From Bloomberg:
General Motors Co. and Microsoft Corp. are leading a $2 billion investment round in self-driving car startup Cruise LLC in a deal that will bring the software giant’s cloud and edge-computing capabilities to the venture. Shares of GM surged on the news. The additional funds will raise Cruise’s post-investment valuation to an estimated $30 billion, up from $19 billion when T. Rowe Price Associates Inc. invested in the company in 2019.
The partnership with Microsoft gives Cruise, which is majority owned by GM, a major software player in its corner and one with deep pockets. That will help the company compete in the race to commercialize autonomous driving with Waymo, which has access to the software capabilities of parent Alphabet Inc. Microsoft gets a potentially lucrative new cloud-computing customer as self-driving cars move closer to mass-market deployment.
Why it matters: The AVs space is going through a healthy dose of consolidation and rationalization. Since Zoox was acquired by Amazon and Starsky Robotics shut down its operations, the still-standing AV companies are emerging stronger (with more cash on hand) and more focused. Cruise is no different in this respect. With two very established brands like GM and Microsoft, Cruise scored a big win with this latest partnership. Too often AVs are viewed through the narrow lens of “self-driving” capabilities. What’s missing? The cloud to back up all of that data. Here, Microsoft’s Azure seems like a natural fit for a company like Cruise whose self-driving tech relies on a multitude of sensors and AI algos to transmit reams of data in real-time.
Self-driving startup Aurora moves toward autonomous trucking with PACCAR partnership [Pittsburgh Post-Gazette]
From the Post-Gazette:
The company announced Tuesday a partnership with PACCAR, a manufacturer of medium and heavy duty trucks based in Bellevue, Wash. Just as the acquisition of Uber was meant in part to bring Aurora’s self-driving technology to an already established rideshare platform of drivers and customers, the partnership with PACCAR will connect the company with a network based on trucking, freight and logistics.
Aurora will provide the hardware and software while PACCAR will provide the vehicles, transportation solutions and production support.“This partnership brings us one step closer to unlocking the autonomous freight market and delivering goods to those who need them,” Aurora CEO and co-founder Chris Urmson said in a prepared statement.
Back of the bus (but still worth your time):
Breaking down the future of micromobility along its three core axes [TrucksVC]
U.S. Department of Transportation announces additional appointees under the new Biden administration [US DOT]
TikTok star criminally uses Tesla Autopilot and posts video evidence [Electrek]
Waymo’s self-driving future looks real now that the hype is fading [Bloomberg]
“A brilliant, groundbreaking engineer that our country needs”: DJT pardons ex-Waymo (and ex-Uber) engineer Anthony Levandowski [Engadget]
Startups look beyond lidar for autonomous vehicle perception [TechCrunch]
Events Radar
Jan. 26 - 1-2pm CT - Transit App - How are transit riders (and Washington) reacting to the second wave? Register here.
Jan. 27 - 12-1pm CT - Rewarding Sustainable Mobility: Insights into Incentivizing Transit, Micromobility & Carshare. Register here.
Jan 28. - 2-3pm CT - Micromobility World - Building the Cities of the Future. Andrew Hawkins (The Verge) explores the future of car-free cities with experts from Swiftmile, Culdesac and more. Register here.