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Either as a lesson from the smartphone patent wars, or a non-confrontational culture, automakers are keen to avoid patent wars as they computerize their vehicles.  However, in an effort to capture as much of the electric and/or autonomous vehicle market as possible and drive demand for their vehicles, the automotive industry appears to be revamping its business strategy when it comes to leveraging their patent portfolios.

Historically, companies attempted to capture market share by asserting large patent portfolios around commercially valuable features in order to exclude rivals.  Innovative new technologies poised for large-scale market adoption typically correspond with a heavy uptick of patent filings. Within five years of Apple launching the first iPhone, one out of six active patents was smartphone-related in October 2012, representing more than 250,000 patents.  To increase market share, companies asserted their patents against rivals, sometimes in drawn-out battles resulting in large damages awards.

That’s one way to use patents.  Automakers, however, may now be avoiding patent wars for various reasons, including insufficient market adoption of electric and/or autonomous vehicles to warrant such large scale patent wars.  Instead of asserting patents at this time, some companies with large electric and/or autonomous vehicle patent portfolios have evolved their business strategy to include using patents as a way to tempt rivals into entering the market and spur growth, thereby indirectly increasing demand for their products.

Indeed, Tesla’s patent pledge in 2014 that they would “not initiate patent lawsuits against anyone who, in good faith, wants to use our technology,” while seemingly altruistic at the time, is considered by some an attempt at promoting electric vehicle technology ahead of other early stage technologies such as hydrogen fuel cells.  Shortly after this announcement, Toyota countered Tesla by opening up 5,600 of its hydrogen fuel-cell patents in an attempt to promote the adoption of its competing technology.

Last month – almost five years after Tesla’s original pledge – Toyota announced royalty-free access to its nearly 24,000 patents for hybrid and other vehicles using electrification technology.  Rather than merely promote growth in the vehicle electrification market, Toyota, a tier 1 automaker, has a new hybrid strategy to also become a tier 2 supplier of hybrid systems.  By encouraging adoption of their technology and becoming a supplier for their rivals, Toyota can increase its bottom line by increasing their supply and reducing costs associated with developing electrified vehicles.

While automakers are avoiding patent wars for the time being, they have by no means abandoned leveraging their patent portfolios to reach their business goals.  And when the stakes get high enough, which could be within a decade based on projections of $500 billion for electric vehicles and $60 billion for autonomous vehicles, they may yet revert to patent wars.

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What if the automotive industry builds autonomous vehicles and no one wants them?  What if no one trusts them well enough to want to own one or ride in one?  This is precisely what was addressed at the recent World Congress Experience.  The lack of regulations, be they national, state, regional or local is definitely a hindrance to the adoption of a more autonomous future.

Even if regulations get drafted here and there, they may not be consistent from location to location.  This can be as bad as not having regulations at all.  Developing and manufacturing a vehicle that will adhere to regulations in one county while not meeting them in another state is not cost effective.  In fact, it is likely cost prohibitive.

How and when regulations should be drafted is not necessarily an easy question to answer.  Write regulations too early, and they may not address the vehicles that actually end up on the street.  Write regulations too late, and a variety of “standards” may already be in production or in people’s hands.

To help move the industry in a common direction, SAE International has established the Automated Vehicle Safety Consortium.  This Consortium, joined by Ford, GM and Toyota, will:

work to help safely advance the testing, precompetitive development, and deployment of SAE Level 4 and 5 automated vehicles. The AVSC will provide a safety framework around which autonomous technology can responsibly evolve in advance of broad deployment, ultimately helping to inform and accelerate the development of industry standards for autonomous vehicles (AVs) and harmonize with efforts of other consortia and standards bodies.

The consortium will leverage the expertise of current and future members to establish a set of AV safety guiding principles to help inform standards development. The first output from the AVSC will be a roadmap of priorities, applicable to developers, manufacturers, and integrators of automated vehicle technology and focusing on data sharing, vehicle interaction with other road users, and safe testing guidelines.

These are lofty goals and might help lead the industry in the right direction.  It would allow the industry to take a step toward self-regulation or at least toward taking an active role in writing the rules by which the industry would have to play.  Having the industry so involved is certainly a good idea.  Adding other stakeholders may further benefit the industry to get a broad perspective on the issues that it will face.

The Autonomous future seems to inch closer every day.  But we are still a long way from seeing what it will look like.  We are equally far from knowing if people will fully embrace this new technology, especially if they lack the confidence in its safety and efficacy.

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Without question, autonomous cars and autonomous systems are here to stay. As automotive manufacturers, suppliers, and new entrants to the industry dive headfirst into the autonomous vehicle sector, questions remain as to how prepared U.S. cities are as the impending swarm of self-driving and semi-autonomous cars, trucks, and buses hit city roads in the coming years. Cities and states around the United States are facing budgetary constraints which have led to crumbling road infrastructure, overburdened and out of date public transit systems, and increasingly higher traffic congestion. While consumers and industry leaders see autonomous vehicles as the salvation to commuting woes, lack of coordination between transit systems, poor urban planning, and lack of attention to long-term transit solutions may delay or prevent the benefits of autonomous vehicles from ever being realized.

A recently released research report from the Regional Plan Association notes several important facts that cities and consumers must understand as autonomous vehicles hit the road. While autonomous vehicles provide promises of hassle free driving, cities are not built in a way to maximize the benefit of autonomy, but rather cater to the interests of self-driving consumers. In an effort to accommodate autonomous vehicles as a form of commuting, cities will have to consider an overhaul of streetscapes and how autonomous vehicles can plug the gaps and integrate within existing transit infrastructure. This means a concerted focus by cities to commit to a mass modernization of traffic management systems (“TMS”) and integrating autonomous vehicles into city-wide transit plans. But, a report by the National League of Cities (“NLC”) finds that only 6% of major metropolitan areas transit plans include discussions, let alone plans, relating to autonomous vehicles.

While a few cities around the county have implemented modern TMS systems which account for real-time traffic flow, few cities utilize connected systems between cars and the TMS system. Volkswagen’s Audi name badge was one of the first major manufacturers to provide the vehicle architecture system which supports a TMS 2.0 system utilizing Vehicle-2-Infrastructure (“V2I”) technology. The Audi V2I system, which was recently launched in Las Vegas, NV in 2016, establishes real-time communication between vehicles and the TMS system throughout a city. In theory, this type of TMS system will utilize real-time data, including location, speed, and destination of vehicles on the road (if known) to efficiently move traffic along select transit corridors. The V2I system will utilize vehicle data to maximize transit efficiency for a consumer in the car, as well as fellow drivers and passengers on the roadway. Furthermore, such systems will notify cars when to move along alternate routes to avoid accidents and re-route drivers if more efficient transit methods exist, such as subways, buses, or light-rails. At its present stage, the Audi V2I system only allows the TMS system to communicate to cars the traffic light changing information. The Audi system currently shows on the Heads-Up Display and system computer the time until the participating traffic lights are to change in an effort to reduce stress “and allows the driver to relax knowing approximately how much time remains before the changing of the light.” But, future iterations of this system will likely incorporate more granular data to impact the start/stop features on cars, allow for navigation optimization based on light timing, speed recommendation to maximize green light sequencing, more efficient traffic flow patterns, and coordination with other transit systems to maximize transit efficiency as a connected system. As more vehicles on the road shift towards autonomous and semi-autonomous systems, V2I systems will only become more robust and effective as a tool to maximize transit efficiency and integrate cars into the “tapestry of transportation” throughout a city.

This focus on autonomous and the integration of the car into the “tapestry of transportation” is a necessity for the full benefits of autonomous vehicles to be realized by consumers and businesses alike. While 20% of the cities in the NLC report are entertaining the prospect of a “road diet”, only 3% of these cities take into account alternative transit services like Uber, Lyft, bike-share programs and Chariot, despite the fact these systems are ubiquitous in major cities throughout the United States and Canada. In fact, a study by University of California Davis’ Institute of Transportation Studies found that while ride hailing services like Uber and Lyft slightly decreased car ownership – a widely articulated benefit of these services – these services also result in the unintended consequence of increased traffic congestion. As a result of Uber and Lyft replacing taxis with a more convenient and consumer friendly form of transit, consumers who would ordinarily bus, bike, or walk are now instead, pulling out their phone to hail a ride. The report authors note that “[r]ide-hailing is … likely to contribute to growth in vehicle miles traveled in the major cities represented in [the] study.” As services like Uber and Lyft look to integrate autonomous systems into their ride-hailing fleets, costs of operation are likely to decrease and as a result reduce the cost to consumers as well. As a ride hailing service’s “price-plus-convenience factor” outweighs that of alternative transit forms, more and more consumers will shift from public transit, such as light rail, bus, and bikes towards ride hailing apps. This will ultimately result in more autonomous vehicles clogging roadways as consumers shift to transit methods with the highest benefit. Until autonomous systems effectively integrate into legacy transit systems, the utopian benefits of speeding down roadways at uniform speeds and without delay will never be realized in part of full.

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While developers of autonomous vehicles have not always had welcome news from the California DMV, they recently received some helpful clarity on the regulations applicable to autonomous vehicle testing on California public roads.

The DMV’s revised proposed regulations permit companies to, among other things, test vehicles without having a driver in the car, a change from past proposed rules.  Manufacturers must apply to be allowed to conduct driverless tests; part of that application process will be to notify local authorities of when and where such testing will take place, and to set up a law enforcement interaction plan, which will inform local law enforcement and other first responders on how to safely interact with driverless cars in the event of an accident or emergency.

The regulations also provide for applications for deployment of autonomous vehicles on California roads by end-users, including vehicles that do not require drivers to operate.  Among other things, the application will require consumer education plans, for the manufacturer to explain to end users the autonomous technology (and its limitations and mechanisms for engagement and disengagement), and law enforcement interaction plans much like the ones required for testing.  The California DMV retains discretion to approve these applications if it is satisfied with the manufacturer’s testing for safety on public roads.  Other provisions include review processes for denial of these applications; circumstances in which granted applications can be suspended or revoked; and required disclosures to consumers about how their personal information will be gathered and used.

As the California DMV is taking these steps, though, Congress is moving ahead with its own legislation.  The House of Representatives recently passed the SELF-DRIVE Act regarding autonomous vehicle technology; the Senate’s own measure, the AV START Act, has advanced out of committee and will likely be voted on by Senate in the near future.  Among other things, the AV START act would expressly preempt state laws regarding “the design, construction, or performance of highly automated vehicles, automated driving systems, or components of automated driving systems” unless the state standards tracked the federal standards.  These bills, if passed and signed into law, would give NHTSA the task of setting safety standards for autonomous vehicles, supplementing existing requirements that are based on the assumption that a driver is performing driving tasks at all times—and until those standards are issued, it is hard to say what exactly will be required of manufacturers.

While federal action may ultimately narrow the impact of the new California DMV regulations, those state regulations are likely to provide concrete guidance for testing before federal standards take effect, and do so in a state that will be a hotbed for testing and development of autonomous vehicles.  The California DMV is accepting public comments on the revised proposed regulations through October 25, 2017.

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A recent study published by AlixPartners estimates that for each car-sharing vehicle on the road, 32 personal vehicle purchases do not occur, which to date has resulted in 500,000 missed vehicle sales for automotive manufacturers. AlixPartners estimates that by 2020, automakers will miss out on an additional 1.2 million vehicle sales as a result of ride sharing systems as they begin to mature nationwide. As of 2016, 6 million people worldwide were using some form of shared-vehicle transportation and its projected that could grow to 30 million people by 2020.

Survey respondents indicated “ease of access, convenience and economics” were primary reasons to utilize car-sharing over ownership. Although environmentalism has often been picked as a driving motivator for the use of ride-sharing systems, it was not found to be an influential factor among survey participants. The survey found that 51 percent of participants avoided vehicle purchases due to car sharing and 45 percent of participants will likely avoid future purchase of personal vehicles. In an unsurprising fashion, the survey found the decision to not purchase a personal vehicle was highest among younger consumers but surprisingly, also highest among households with children – both presenting future issues for the auto industry.

While Zipcar (owned by Avis since 2013) has been the U.S. market leader for ride sharing since launching in 1999, major automotive manufacturers and rental-car agencies have started to enter the market as consumers’ sentiment begins to trend away from personal-vehicle ownership. General Motors, Ford, BMW, Enterprise, and Avis have found ways to utilize their extensive fleets of vehicles and nation-wide footprint to expand their brand and product utilization in this rapidly changing transit landscape. While smartphones and rapidly increasing urban density have driven ride-sharing adoption up until this point, many believe the rapid expansion of automated and driverless cars could be a key catalyst for car-sharing to grow well beyond the current early-adopters.

In January 2016, General Motors Corporation launched its Zipcar competitor, Maven, in 8 markets around the United States and has slowly expanded to 13 cities with over 35,000 members. Since launching, Maven has logged over 145 million miles driven by Maven customers and General Motors has expanded its fleet to include the Chevy Bolt EV, Suburban, and Malibu in numerous markets. Additionally, General Motors has invested over $500 million into Uber competitor, Lyft, and used Lyft to set up Maven Gig which offers special pricing to “gig economy workers as a way to easily gain access to a vehicle for short stints to do things like deliver groceries and food on demand, and provide ride sharing services.”

In a different move, Ford Motor Company announced in 2016 the acquisition of Chariot Transit Inc. via its subsidiary Ford Smart Mobility. Chariot is a commuter shuttle service which utilizes a mobile-phone application to allow passengers to reserve rides on a shuttle between home and work during commuting hours in the San Francisco Bay region. Additionally, in 2017 Ford launched the Ford GoBike, a bike sharing system in San Francisco with 7,000 bikes and over 400 docking stations making it the second largest bike sharing system in the United States.

While Uber, Lyft, Google’s Waymo, General Motors, and Ford see automation coming together with ride sharing for their cars and the day-to-day driver, the University of Michigan announced that the 2017 school year will see the launch of two fully-automated, 15-passenger, all-electric shuttles. The goal of these shuttles is to transport students, faculty, and staff between UM’s Engineering campus, which is located on North Campus, and the university’s North Campus Research Complex. With Ann Arbor, Michigan and the surrounding Detroit Metropolitan area positioning itself to be the connected and autonomous transit development hub of the country, this move by the University of Michigan in relation to its larger-scale Mcity autonomous project provides a unique opportunity for automotive manufacturers and suppliers to see how the mix of ride sharing and autonomous vehicles will shape the commuting landscape in the coming years.

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One year ago, we posted about the National Association of City Officials’s (NACTO) policy recommendations for autonomous vehicles.  NACTO focused on the projected infrastructure requirements for autonomous vehicles.  Now, the National League of Cities (NLC) is weighing in that cities need to speed up their efforts of preparing for autonomous cars.

In its Autonomous Vehicles – A Policy Preparation Guide, NLC pointed out several key areas of infrastructure development, including two sometimes overlooked components – the broadband needs of a mixed autonomous vehicle transportation system, and how to handle the terabytes of data that will be created by autonomous vehicle technologies.  NLC recommended cities work hand-in-hand with regional broadband providers to begin planning this technology now in order to support the wireless needs of the future, which will dwarf the needs of today.  Cities will also need to budget for the data processing, storage, and security of the massive amount of data that will be generated.  This data will raise privacy and cyber security concerns.  The report identifies partnerships with local academic institutions as one potential way to obtain affordable access to data storage and processing.

Although a McKinsey & Company report predicts fully autonomous vehicles remain a decade away from hitting the roads, connected car technologies are already prevalent in today’s vehicles and vehicle manufacturers plan to begin producing fully autonomous vehicles within the next four years.  In the world of infrastructure planning, autonomous vehicles and their needs are just around the corner.

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With automated cars comes hopes of safer driving, more efficient commuting, increased productivity, reduced human errors, and fewer accidents. However, as self-driving cars becomes a reality, car accidents may lead to legal controversy over who is responsible for the accident; the manufacturer or the owner?

In September 2016, the National Highway Traffic Safety Administration (NHTSA) released a Federal Automated Vehicles Policy which adopted the Society of Automotive Engineers (“SAE”) classification levels for automation. The SAE developed a five point scale to classify levels of automation based on the required input of the human driver or occupant. The scale goes from level zero, denoting full human control, to level five, denoting fully autonomous vehicle requiring no human input. Cruise control is considered level one, while “partial automation”, including parking assist, lane departure warning, and automatic breaking,  is considered level two. Although Tesla’s “Autopilot” feature begins to break the threshold of level two  and move into level three,  it continues to require human input and monitoring to operate. Highly automated vehicles fall between levels three and five.

Despite accidents involving autonomous vehicles, this steady shift from human input towards partial and fully-autonomous operation creates a unique and complex legal question for not only the consumer, but fellow motorists, manufacturers, and their suppliers.

In March 2017, there was an accident involving a Tesla X and a Phoenix police officer.  According to USA Today, the accident barely qualified as a police report as there were no injuries or damages and the contact between the cars was merely a “tap” because the driver alleged that his Tesla was in auto-pilot mode. Similar incidents have been reported with Uber, Waymo/Google, and GM’s autonomous systems in recent months but the overwhelming majority of incidents have been the fault of the opposing driver. As the number of level 1-3 and ultimately level 1-5 autonomous vehicles become more ubiquitous on the roadways, questions have been raised on who will be liable if the vehicle is considered fully autonomous or in fully autonomous mode and is involved in an accident where the incident was the fault of the vehicle and not the passenger or human driver.

In May 2016, Tesla reported its first driver death while the Tesla Autopilot system was activated when a Tesla hit a tractor-trailer that was crossing a highway perpendicular to the flow of traffic. An investigation by NHTSA concluded that the driver had at least 7 seconds to respond and possibly mitigate or avoid the crash, which is longer than most drivers in similar situations, but that distraction likely caused the driver to be non-responsive to the hazard. An investigation of the Autopilot system installed at the time of the accident noted it was designed to avoid rear-end collisions but that the onboard radar was ineffective because it “tunes out what looks like an overhead road sign to avoid false braking events.” Although Tesla has provided extensive information to drivers to point out the Autopilot system requires “continual and full attention” while driving, several autonomous industry experts have been critical of Tesla’s roll-out for giving the public the impression the system is more autonomous and hands free than it is.

We’ve said it before, but as cars become more autonomous, liability may shift from the driver to car, and therefore, to the manufacturer of the vehicle and/or the supplier of the autonomous component system. But, at what point this liability transfers and by how much will be up for debate in states across the country over the coming years. As the shift in liability continues, it’ll also be interesting to see if, and how, a shift in litigating these matters might follow.

Historically individual states have been responsible for determining liability laws and now the  rules for highly automated vehicles. However, this creates a coordination issue as individual states determine their own individual rules. According to the NHTSA Federal Automated Vehicle Policy, states should allocate liability among highly automated vehicle owners, operators, passengers, manufacturers, and others when a crash occurs. The likely question to be raised is, if a highly automated vehicle is determined to be at fault in a car accident, then who will be held liable? Furthermore, it creates an issue if individual states set liability and fault levels at varying thresholds, with little coordination, leaving manufacturers, drivers, and suppliers scrambling when their product crosses state lines.

As major and minor manufacturers race to bring autonomous vehicles and systems to the market in the coming months, states are faced with allocating liability among those involved in accidents to a degree much more difficult than in the past. Unlike the traditional method of allocating liability, the autonomous vehicle and system adds a new player to this calculous, that of the manufacturer and supplier of the system. This element is largely unknown territory to major vehicle manufacturers and their suppliers which increases the need for more vigilance in system development, maintenance, and driver education than past iterations of emerging transit technology.

Please note Foley Summer Associate, Katrina Stencel was a contributing author of this post. The Dashboard Insights team thanks her for her contributions.

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The cars we drive to work every day run primarily on computers that collect thousands of data points. Same goes for the factory that manufactured them and the company that designed and sold them. This evolution makes cybersecurity vital at every step in the supply chain. We know manufacturing is one of the most hacked industries. We know hackers target individual cars. We’ve seen cybersecurity best practices from Auto-ISAC and NHTSA. With that, we wanted to provide companies with a list of concrete steps to consider to help minimize the risk of, and prepare for, cyber-intrusions.

Below is our list of 17 measures every company should consider to reduce the risk of cyber-intrusions.

  1. Conduct internal compliance and risk assessments, to determine your organization’s vulnerability to cyber-attacks.
  2. Develop and implement corporate policies and procedures required for compliance with federal and state privacy and security laws.
  3. Develop quick-response teams to handle potential cyber-attacks, using pre-formulated decision trees and procedures so that you don’t have to develop them while under the fire of an ongoing attack.
  4. Establish secure data backup protocols to ensure that, even if your company is under attack, important company records are secure.
  5. Establish protocols to deal with common forms of cyber-attacks (denial of service, etc.).
  6. Line up outside experts, if necessary based upon the risk profile of your company, to swing into action if company processes are overwhelmed by a cyber-attack.
  7. Perform periodic audits of cybersecurity practices against industry norms, accepted best practices, and the risk profile of your organization.
  8. Implement information security best practices, reflect them in information security policies, records retention and management policies, and in internal controls/standard operating procedures.
  9. Make certain the CEO and executive leadership are properly informed about the cyber risks to your company and that they’re involved in oversight and the decision-making process related both to cyber-attacks and proactive cybersecurity measures.
  10. Review funding of all electronic security measures to ensure they are adequate to cover not only routine compliance measures but also to allow for proactive testing and probing of systems in light of increasingly sophisticated measures being used by hackers.
  11. Collect only that personally identifiable information from clients, customers, or company personnel that is needed for identified business needs, with the retention of such information being only for as long as it serves those business needs, with storage being accomplished in a way that minimizes the chance of it being of any use outside the organization (encryption, etc.).
  12. Review cybersecurity programs to ensure they apply industry standards and best practices.
  13. Coordinate cyber incident response planning across the entire company.
  14. Store sensitive information securely (encrypting where appropriate) and away from other data that does not require the same level of protection. Use a layered defense approach to protect “crown jewel” information.
  15. Conduct appropriate data security due diligence on third-party service providers with access to personal information and sensitive business information, and require them to enter into agreements that they are implementing robust data security procedures, follow up to ensure these requirements are in fact implemented.
  16. Assess ways in which your company’s access vulnerabilities (website, VPNs, remote access, and so forth) are configured to minimize potential intrusion risk, with regular testing and probing to update and address identified risks.
  17. Perform companywide training, tailored to the personnel at issue, to ensure the importance of adherence to all electronic security measures are followed.

This list was generated as part of a Legal News: Cybersecurity newsletter by Greg Husisian, Chanley Howell and Jacob Heller titled, “Cybersecurity and the New Trump Administration: Your Top Ten Questions Answered.” Click here for the original publication.

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Multiple developments recently demonstrate that self-driving vehicles continue their steady march to potential world domination.  First, there was Apple meeting the application requirements for autonomous vehicle testing in California.  As reported in USA Today, this gave Apple “the green light to test self-driving cars in Calif.”  Among the more interesting nuggets in this story is that there are now 30 – thirty! – companies who have obtained Autonomous Vehicle Testing Permits in California.  The list is precisely the mix of automotive, technology and supporting companies one would expect.

The competition for where companies may test autonomous vehicles also heated up this week.  New York passed a budget waiving a law prohibiting driverless vehicles.  New York law, dating back to 1971, required drivers to keep one hand (or prosthetic) on the steering wheel at all times.  Despite the urging of the Upstate Transportation Association to extend the ban on self-driving cars for the next 50 years, New York decided to open up its roads to self-driving and self-parking cars.

Back on the West Coast this week, California decided that if vehicles will be self-driving, why not go all the way.  They did this by “opening the door for testing on the streets of truly driverless cars without a backup driver.”  That is, no wheel, no pedal, and no human (though, what good might a human be with no wheel or pedal, but, we digress).  If that happens, passengers will not even have to worry about ripping out their Johnny Cab driver to take control.

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It is “Auto Show” week in Detroit, as the city hosts the 2017 North American International Auto Show.  This week includes press unveils of new and updated models, the latest mobility technologies at the AutoMobili-D pavilion, the charity preview featuring 17,000 auto industry players in tuxedos and long dresses and, of course, predictions for where the automotive market in North America is going in 2017.

Some of those predictions were reviewed at the Association for Corporate Growth’s “Automotive Outlook” event held on January 10th at the beautiful and buzzing Detroit Athletic Club.  The featured speakers included Michael Robinet, Managing Director, Automotive Advisory Solutions at IHS Markit (IHS), one of the most respected forecasters in the automotive industry, and Dave Andrea, Executive Vice President of Research for the Center for Automotive Research (CAR), one of the most respected researchers in the automotive industry.  As expected with speakers of this caliber, the content was excellent.

Several themes emerged from the forecasts.

The North American Automotive Industry Will Be Flat This Year.

In 2016, a total of 17.55 million cars and light trucks were sold in North America, a record.  For 2017, IHS forecasts 17.6 million units and CAR forecasts 17.5 million units.  These are great numbers by historical reference, but are further evidence of the “plateauing” of the industry that we have observed recently.

President Elect Trump Has Added Some Uncertainty to the Market.

This sounds like an understatement, but it is worth emphasizing.   There is increased uncertainty regarding trade policy, including potential renegotiation of the NAFTA  treaty and/or increased tariffs on cars imported from Mexico.  There is also increased uncertainty regarding energy policy, including whether the higher Corporate Average Fuel Economy (CAFE) standards, due to become fully effective in 2025, will be relaxed (although product plans are becoming less alterable as we get closer to that date and hybrids already play an increasing role in those plans), and the impact of energy policy and oil prices on car buying decisions.  Tax reform may also drive activity in unknown ways.

It is All About the Mix.

The overall automotive market in North America is strong, but not all segments are strong.  Light trucks and SUV’s/CUV’s continue to do well; passenger cars/sedans are much softer; and the adoption of electric cars continues to be relatively modest (although the new Chevrolet Bolt, a 238 mile range EV that received the Motor Trend Car of the Year Award for 2017 earlier this week, is expected to be well received – pictured above).  This mix impacts OEMs and automotive suppliers in different ways, and both IHS and CAR cautioned attendees to “look beneath the waves/look beneath the water line” (pick your metaphor) to see what is really going on in detail in the market.

Connected and Autonomous Vehicle Development is Accelerating.

The industry is in a modern “race to the moon” to achieve full vehicle autonomy, which is still a ways off, but within the planning horizon.  We are moving to Level 3 now – autonomy with driver intervention. While widely adopted, on road Level 5, full autonomy without intervention, is still far out there in the mid-2020’s at best.  In my mind, technology will continue to move faster than standards setting and harmonization, infrastructure improvements, and full consumer acceptance.  In the interim, automotive companies must operate in the current market, adjust to the emerging ridesharing and car sharing models as Vehicle Miles Traveled continue to be split in different ways, and develop and implement enhanced connectivity and safety features (ADAS) as the march to autonomy continues.

Risk is Rising/Disintermediation Will Occur.

With mobility models changing, nontraditional players coming into the market, political and regulatory uncertainties increasing, and vehicle price increases (with the enhanced content) beginning to challenge affordability for many consumers, the risks in the market are increasing overall.  Will OEMs and large Tier 1’s continue to be the technology integrators in the future, or will others increasingly play that role?  Players that adapt to these risks most nimbly and correctly will be rewarded, while others will be challenged.

In 2017 overall, it will be a pleasure and thrill to be part of one of the most interesting and watched industries: the mobility industry.

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