Mercedes Hastens Electric-Car Shift as Combustion Era Fades

 Elisabeth Behrmann:

Mercedes-Benz is accelerating its rollout of battery-powered autos in a race to meet tighter emissions rules as European buyers turn away from fuel-efficient diesel cars.
 In a 10 billion-euro ($10.8 billion) project, the world’s largest luxury-car maker intends to release 10 new electric vehicles by 2022, three years earlier than a target announced at the Paris auto show in September. The expedited time frame reflects the urgency facing manufacturers as they brace for a shift away from traditional automotive technologies. Combustion engines would continue to be refined for a “transitional period,” Mercedes parent Daimler AG said on Wednesday.

China’s Booming Car Market Fueled by Credit

Anjani Trivedi:

BMW has been a market leader in providing financing, and its auto-financing penetration levels in China have risen from 36% in 2013 to almost 50% in 2016, according to Bernstein analysts. Yet borrowing costs aren’t standing still. A BMW-backed ABS in China was issued at 4.2% in December, just months after it issued an ABS at 3%.
 Already, car sales are showing signs of coming off their peak levels, especially with stresses rising in the money markets. Demand is slowly shifting beyond China’s first- and second-tier cities, to where income levels are lower—and where the ability to pay off loans quickly is potentially lower. Going by Beijing’s track record, it could continue to push lending to support the car market. But it could be a lot tougher this time, as stresses elsewhere in the financial system build.

Japan gambles on Toyota’s hydrogen powered car

Robin Harding and Kana Inagaki:

Sakichi Toyoda, the founder of Toyota, once offered a ¥1m prize to the inventor of his dream: an electric battery that would free Japan forever from its dependence on imported oil. Toyoda imagined cars running on abundant hydroelectric power. All he needed was a battery to provide 100 horsepower for 36 hours, with a weight below 225kg and a volume of less than 280 litres.

That was in 1925. Almost a century later the prize remains unclaimed. Toyota’s engineers fondly refer to the elusive power source as a “Sakichi battery” and the very difficulty of making one has led them in pursuit of an alternative fuel to power its cars: hydrogen.

That pursuit is playing out in a small factory near the company’s headquarters in Toyota City, central Japan, where an elite team of workers are hand-building a vehicle that represents a huge gamble for the world’s second-largest motor manufacturer. The Mirai is either the future of the automobile or a technological trap about to swallow a prized swath of Japanese industry.

21 Industries Other Than Auto That Driverless Cars Could Turn Upside Down

CB Insights:

It’s all but a certainty that autonomous or driverless vehicles will be widely used in the United States at some point over the next two decades. Already, over two dozen major corporates including Google, Apple and Mercedes Benz are hard at work building their own self-driving vehicles. Tesla’s Model S already includes an autopilot mode where the car drives itself on highways.
 Clearly tech and auto companies stand to gain, but many other industries could face serious upheavals unless they are able to adapt to the many changes self-driving cars will bring to the market.

How REI’s Co-op Retail Model Helps Its Bottom Line

Bourree Lam:

For a few years retailers have been facing some big challenges: falling in-store sales and the shuttering of big box stores. That’s led many to wonder how outdoor specialty retailer Recreational Equipment Inc. (REI) could be doing so well, as seemingly similar companies, such as Sports Authority, go bankrupt. REI’s annual revenue grew by 5.5 percent in 2016, and the company reports healthy sales growth for both its brick-and-mortar and online stores.
 The answer to all these questions may have something to do with the company’s business structure: REI is a retail cooperative, meaning it’s owned by its members. The company has created somewhat of a community by offering memberships, offering its over 6 million active members a dividend for future purchases at REI and one vote in an annual board of directors election for $20. That might seem innovative, but perhaps what’s more surprising is that, in many ways, REI is just practicing old-school retail wisdom.

The retail apocalypse has officially descended on America

Hayley Peterson:

The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia, the next two countries with the most retail space per capita, according to a Morningstar report from October.
 Visits to shopping malls have been declining for years with the rise of e-commerce and titanic shifts in how shoppers spend their money. Visits declined by 50% between 2010 and 2013, according to the real-estate research firm Cushman & Wakefield.

Why Augmented Reality Will Be the Next Revolution in Retail The Pokémon Go craze may have faded, but it provides clues to how retailers can use technology to engage consumers

Kamil Klamann and Sekoul Krastev

In the summer of 2016, pedestrians on New York’s Fifth Avenue encountered crowds of (mostly young) people, hastily running into Central Park, smartphones in hand, shouting out Pokémon names and cross-street locations. Within days of its release on July 6, 2016, Pokémon Go, an app that brought the 1990s gaming craze to virtual life, became a phenomenon. Its 40 million daily active users (at its peak) surpassed those of Tinder, Snapchat, and Twitter and created a level of in-app engagement that Facebook could only envy. It took complete control of the commutes, lunch breaks, and social gatherings of legions of people around the world. Intent on “catching” Pokémon in the wild, gamers thronged into museums, streets, even Arlington National Cemetery.
 Although the Pokémon Go fad now has predictably faded, it holds important lessons for companies intent on reaching and engaging consumers where they are, especially retailers: The game, the first truly social augmented reality (AR) experience, enthralled the new breed of omniconnected consumers as nothing else had done previously. Players not only shared an insider world where they could fight each other, but they also walked together and gathered at PokeStops in the middle of the night. The people who embraced the augmented reality of Pokémon Go live in a world where the line between real and digital is so blurred that they essentially became one and the same — constantly augmented and improved by invisible technologies. And they are hungry for better, more personalized experiences.

The retail apocalypse has officially descended on America

Hayley Peterson:

More than 3,500 stores are expected to close in the next couple of months.
 Department stores like JCPenney, Macy’s, Sears, and Kmart are among the many companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.
 Some retailers are exiting the brick-and-mortar business altogether and trying to shift to an all-online model.
 For example, Bebe is closing all of its stores — about 170 — to focus on increasing its online sales, according to a Bloomberg report. The Limited also recently shut down all 250 of its stores, but it still sells merchandise online.

Apple store creator Ron Johnson on Recode Decode


That people can’t grab stuff. Although, now they can.
 They grab stuff … In the walls, but it was very spartan. It was just computers and that was it, because we didn’t have other products and they were just hooked to the internet, and people came, and what do you do? It’s an inviting, beautiful environment, I might as well put my hands on a product.
 Then you used glass and wood.

Cadillac’s subscription plan

Mike Colias:

After participating free of charge in a three-month pilot of General Motors Co.’s new Book by Cadillac subscription plan, Ms. Sandall said she is considering becoming a full-time member when it is time for a new vehicle. For $1,500 a month, the program covers ownership costs and lets members trade in and out of Cadillac’s 10 models up to 18 times a year.
 The effort is the latest experiment by a car company to test whether people are willing to treat personal transportation like a Netflix account, where temporary, on-demand access outweighs the benefits of ownership.
 GM has been among the industry’s chief tinkerers with the ownership model, anticipating that the century-old arrangement of consumers buying, insuring and repairing their own vehicles eventually will lose favor. In early 2016, it formed a car-sharing company called Maven and around the same time invested $500 million into ride-hailing service Lyft Inc., Uber Technologies Inc.’s main rival.

The Taking Economy: Uber, Information, and Power

Ryan Calo & Alex Rosenblat:

Sharing economy firms such as Uber and Airbnb facilitate trusted transactions between strangers on digital platforms. This creates economic and other value and raises a set of concerns around racial bias, safety, and fairness to competitors and workers that legal scholarship has begun to address. Missing from the literature, however, is a fundamental critique of the sharing economy grounded in asymmetries of information and power. This Article, coauthored by a law professor and a technology ethnographer who studies the ride-hailing community, furnishes such a critique and indicates a path toward a meaningful response.
 Commercial firms have long used what they know about consumers to shape their behavior and maximize profits. By virtue of sitting between consumers and providers of services, however, sharing economy firms have a unique capacity to monitor and nudge all participants — including people whose livelihood may depend on the platform. Much activity is hidden away from view, but preliminary evidence suggests that sharing economy firms may already be leveraging their access to information about users and their control over the user experience to mislead, coerce, or otherwise disadvantage sharing economy participants.
 This Article argues that consumer protection law, with its longtime emphasis of asymmetries of information and power, is relatively well positioned to address this under-examined aspect of the sharing economy. But the regulatory response to date seems outdated and superficial. To be effective, legal interventions must (1) reflect a deeper understanding of the acts and practices of digital platforms and (2) interrupt the incentives of sharing economy firms to abuse their position.

Via Steve Crandall.

Social media reality check

Bob Hoffman:

The problem is that the evidence that social media marketing has been a mass delusion is piling up and reaching a point at which it is becoming hard to hide from. To wit:
  – A recent report published in the Harvard Business Review says: “Across 16 studies, we found no evidence that following a brand on social media changes people’s purchasing behavior….nor does it spur purchasing by friends.” (This study, by the way, had some serious flaws of its own which I discuss here.)
  – In a study by Duke University, the American Marketing Association and Deloitte, over 88% of senior marketers surveyed said they could find no measurable impact from social media marketing.
  – A study by Forrester Research reported that only .07% — that’s 7 in ten thousand — of a major brand’s Facebook followers ever engage with one of its posts.
  – Coca-Cola’s Global marketing chief Marcos de Quinto said, “Social media is the strategy for those who don’t have a…digital strategy.”
 The silly idea that people want to go online and have conversations about their toothpaste or their tires only makes sense if you understand the fantasy land in which marketing people live — an alternate universe of meatballs who are “passionate about brands.”

U.S. Subprime Auto Loan Losses Reach Highest Level Since the Financial Crisis

Matt Scully:

U.S. subprime auto lenders are losing money on car loans at the highest rate since the aftermath of the 2008 financial crisis as more borrowers fall behind on payments, according to S&P Global Ratings.
 Losses for the loans, annualized, were 9.1 percent in January from 8.5 percent in December and 7.9 percent in the first month of last year, S&P data released on Thursday show, based on car loans bundled into bonds. The rate is the worst since January 2010 and is largely driven by worsening recoveries after borrowers default, S&P said.
 Those losses are rising in part because when lenders repossess cars from defaulted borrowers and sell them, they are getting back less money. A flood of used cars has hit the market after manufacturers offered generous lease terms. Recoveries on subprime loans fell to 34.8 percent in January, the worst since early 2010, S&P data show.

Waymo Asks Court to Block Uber’s Self-Driving Car Project


Waymo, the self-driving car business spun out of Google’s parent company last year, asked a federal court on Friday to block Uber’s work on a competing self-driving vehicle that Waymo claimed could be using stolen technology.
 Waymo also filed testimony from employees and a Google security engineer describing how Anthony Levandowski, a former Google executive, discussed Uber’s interest in the technology and systematically stole proprietary company documents. In February 2016, Mr. Levandowski left to start his own self-driving truck company, Otto. He sold it to Uber for $680 million six months later.

The Electric Car Rush Started Too Early

Leonid Bershidsky:

BMW wants electric vehicles to make up 15 to 25 percent of its sales by 2025. But the Bavarian firm has only sold 70,000 i-series plugin cars since 2013. That didn’t go a long way toward covering the 4 billion euro ($4.3 billion) research and development cost. Other companies that are investing heavily into EVs aren’t selling many, either. Renault-Nissan had a target of 1.5 million electric cars for 2010-2016, but, according to Bloomberg Intelligence, it only sold 28 percent of that number. Despite all the subsidies and tax breaks, EVs only make up about 1.2 percent of the global market. In relative terms, the market is growing fast — the EV share was just 0.1 percent in 2011 — but in absolute terms, there are too few EVs on the road to justify the attention they’re getting.
 To spend heavily on electrification, companies have to believe forecasts from experts who don’t have skin in the game. McKinsey, for example, recently put out a report arguing that consumer interest in electric cars is growing. All automakers need to do is keep up incremental improvements and advertising more to increase awareness.
 That could turn out to be wishful thinking, because the modern EV caters to a specific-use scenario that increasingly doesn’t work for today’s consumers.
 The most long-range electric cars can go 250 miles on a charge under perfect conditions. They take hours to charge at most of the currently available stations, and even the minimum of 30 minutes one needs to spend at a Tesla Supercharger is a nuisance on long journeys. The cars, however, are fine for someone who lives in the suburbs (in a single-family home, so charging at night isn’t a problem) and works nine to five in the city, where the car can be hooked up to a charging pole during an office shift.

Mexico City: One man’s mission to introduce electric cars


Hector Ruiz has made it his mission to convert old cars in Mexico City to run on electricity.
 But with over five million vehicles in the city, he has a long way to go to have an impact on air pollution.

Complexity and Strategy

Terry Crowley:

 I struggled with how to think about complexity through much of my career, especially during the ten years I spent leading Office development. Modeling complexity impacted how we planned major releases, our technical strategy as we moved to new platforms, how we thought about the impact of new technologies, how we competed with Google Apps, how we thought about open source and throughout “frank and open” discussions with Bill Gates on our long term technical strategy for building the Office applications.
 I want to explore the issues I faced then and how our approach was influenced by how I thought about complexity.
 I’m currently rereading Melanie Mitchell’s “Complexity: A Guided Tour” and am heartened that even professional academics who study complexity full time have a hard time defining or measuring it. No breakthroughs here, I’m afraid, but let us try to construct a mental model that we can use to explore the topic.
 When we think about enhancing a software system, we can consider the curve that measures aggregate functionality against the aggregate cost required to achieve it. My impression from reading journalists and analysts writing about software is that they believe you have a linear curve that generally looks like this:

Autonomous cars must learn to drive the Italian way, the German way and every way in-between Nissan’s Stewart Callegari explains how driving cultures affect autonomous cars.

Alistair Charlton

Another challenge faced by autonomous cars is how to navigate different countries and around humans using different forms of etiquette.
 Callegari explained how self-driving cars will need to be taught how human driving and behaviours differ by country, and adapt accordingly.
 “Blatting down the Autobahn at 250km/h (155mph) is quite common in Germany, then you’ll get chased down by a Mercedes or a Porsche. Then in Italy you’ll have someone in a Punto doing the same thing, but the driving conditions and the expectations there are quite different.”

BMW says ‘nein’ to Android Auto

Frederic Lardinois:

Like CES, the Mobile World Congress in Barcelona also now attracts its fair share of car makers. Ford was an early adopter a few years ago, and now others are joining the fray, too. I sat down with Dieter May, BMW’s senior vice president of Digital Services and Business Models (in an i3, of course).
 During our conversation, we touched upon quite a few topics, ranging from self-driving cars, to the future of car ownership and the new business models that in-car technology enables. “We offer [Apple’s] CarPlay as an option but not Android Auto,” he said. “We believe the changes that are coming to the inside of the car and the user experience — like self-driving cars — you have to control the customer interface. That’s part of the brand experience and for that, I don’t want to have an Android screen and I especially want to be able to deeply integrate these systems.”

Technology’s Purpose

Ian Bogost:

“No… it’s a magic potty,” my daughter used to lament, age 3 or so, before refusing to use a public restroom stall with an automatic-flush toilet. As a small person, she was accustomed to the infrared sensor detecting erratic motion at the top of her head and violently flushing beneath her. Better, in her mind, just to delay relief than to subject herself to the magic potty’s dark dealings.

Uber’s self-driving unit quietly bought firm with tech at heart of Alphabet lawsuit

Alexandria Sage:

A company now owned by Uber last year quietly bought a small firm specializing in sensor technology used in autonomous vehicles, giving the ride services company a patent in the technology and possibly a defense against a trade secrets theft lawsuit filed against it by rival Alphabet Inc.
 The chief executive of little-known Tyto Lidar LLC said in a May 2016 post on LinkedIn that the company had been sold, at the same time as he and three other executives joined Otto, according to their profiles on the online business network. Official U.S. patent data shows Otto acquired Tyto technology at the same time.
 Otto, a self-driving truck startup founded by former Alphabet employees, was bought by Uber in August.
 The unpublicized acquisition may become a factor in the high-stakes legal fight between Uber and Alphabet, the parent of Google, as the two Silicon Valley companies aggressively develop self-driving technology, widely seen as the future of private road transport in the United States.