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There are four waves of innovation sweeping through the automotive industry that will disrupt vehicles more in the next 10 years than they've changed in the last 100.

Each week, we explore connected cars, electrification, changing ownership models, and autonomous self-driving vehicles, as we seek to understand and prepare you for the future of transportation.

Aug 14, 2019

EP016 - Automotive Research Leader at Deloitte, Ryan Robinson

Episode 16 is an interview with Ryan Robinson, Automotive Research Leader at Deloitte; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Ryan and Scot discuss a variety of topics, including:

  • The digital transformation of the car buying experience
  • How declining consumer confidence in autonomy has created a cooling trend 
  • Common use cases for AVs, such as geo-fencing in cities
  • The electric vehicle battery of the future: is it lithium ion?
  • Measured impacts and projections of ride hailing and carsharing
  • The potential for connected car as a revenue stream

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The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo.



Scot:    Welcome to the vehicle 2.0 podcast. Today we are recording live from the automotive intelligence summit. And we have a real special treat for listeners. We have here live on the show, Ryan Robinson, and he is from Deloitte where he is the automotive research leader. Welcome to the show, Ryan. 

Ryan:    Thanks Scott. Yeah, glad to be here. 

Scot:    Cool. Well, let's start off. I would love to hear, you're obviously deep in the auto space. Would love to hear a little bit about your career path and how you ended up in this space.

Ryan:    Well, it's, it's a, it's a bit of a long story. So I started off with a kind of a boutique consultancy in the automotive sector in Toronto, in Canada where I'm from. And from there I moved on to a pwc where I did some vehicle forecasting work on the sales and production side in Detroit. And then I got a chance to move back to Toronto with JD power and I was with them for eight and a half years before I got an opportunity to join Deloitte. So that was three and a half years ago. So it's a, been a bit of a whirlwind.

Scot:    Awesome. So we've you know, we've, we've read a lot of your, your research and it's been really helpful for us. Kinda, I'm relatively new to the auto industry, have obviously had a car for a long time, but my, my previous life is e-commerce. So I'll also, it's interesting that Deloitte cuts across both. I can kind of like feel the, the influence there of kind of, you know, understanding digital, you know, coming from like the retail world that I like. I do. Then you guys are pile out of that to your research on, on the auto side, which actually helpful. It's helpful for me, at least audience of one at least.

Ryan:    So I sit inside a a thought leadership center here in the U S and I've got a counterparts that that, that cover off on the retail space consumer products and and also the travel and hospitality sector. So, you know, we get together on a, on a very regular basis and we're always looking for kind of synergies to kind of crossover our research. And and I think that's, it's actually a good a segue to get into, you know, what I think is happening in the auto space particularly with where the consumer is concerned. Cause I think there's, there's a lot of crossover and convergence when we talk about how consumer expectations are being taken from one sector over into another. So, and I think it's having a, a pretty dramatic effect on how vehicles are, are a retailed going forward.

Scot:    Yeah, let's jump into that. So a, I'm a big fan of the research that talks about the value oriented consumer into convenience oriented consumer. My e-commerce buddy Casey Luba over at Deloitte talks a lot about that. The cost, the bifurcation and then as it is, are you seeing that, you know, we've, you know, so Carvana for example, has made it insanely easy to buy a car. It kind of applying that e-commerce level of experience to, to that.

Ryan:    Yeah, I mean certainly there's, there's a level of of digital transformation that's impacting the, the car buying experience. In terms of the, the retail bifurcation analysis. It's, it's a little more difficult to, to think about it in the automotive context. Cause for a number of reasons, one, over the years there's been a, a real a real significant shift down market from some of the luxury brands to, to try to attract and, and discover new customers, if you will and get them on their, their product ladders. There's also a lot of a lot of segmentation or sub segmentation of the consumer basis caught on. So to try to identify you know, what, what would be a a pure kind of budget brand versus a luxury brand. It's not so clear cut anymore in in, in order to apply to, to, to that kind of analysis. So I'm a bit different.

Scot:    Okay, cool. Well, here on the vehicle 2.0 podcast, we have a framework where we talk about the four big changes coming to vehicles. So we have changing ownership, connected car, EV and AV. I'll, I'll give you kind of, you know, spin the wheel and pick your favorite topic amongst those are you know, we'd love to hear your thoughts on, on those. Yeah, for sure. Sure.

Ryan:    So so we should, we can dig into say the autonomous space first. And we, we do a a global consumer survey. Every year we talked to, last year we talked to this are they, I should say this past year we talked to about 25,000 consumers covering off on 20 different countries. And we asked them a variety of questions around some of these, what you might call the case technologies, right? And in terms of the autumn the autonomous space, something very strange is happening. I think on the one hand, when you, when you see technologies coming into view for the consumer, as they get more information about them as the as they get more comfortable with them you tend to see consumers really gravitate towards them. And our data is telling us something quite different. And we think it's got a lot to do with the, the small number of of accidents involving autonomous vehicles in the last 18 months to two years.

Ryan:    Considering that we're in a space now where the ubiquity of of social media and the echo chambers that get created around some of these topics it doesn't take very many of these you know, sometimes very tragic incidents to, to really have a, a negative impact on the consumer psyche overall relative to that technology. So as far as the percentage of consumers that don't think the technology is going to be safe it's it's actually flattened off, actually leveled off a year over year from where we were last year. So I think it's a, it, it's indicative of a bit of a cooling trend. The consumers are really taken a second thought on this, on this technology and whether or not they're really bought in going forward.

Scot:    Yeah. So That's interesting on the consumer side, when, when do you think the technology will be ready? Do you have a point of view on that?

Ryan:    Yeah, it's, it, you know, for as many people that that talk about this, this technology in the space, that's probably how many opinions you're getting to yet. It's interesting though, if you're, if you've been going to the consumer electronics show like I have for a number of years, it's fascinating to me how that conversation has changed, or at least the tone of that conversation has changed. So two years ago, for example, even as, as recently as two years ago the, the, the messaging was, you know, this is, technology is right around the corner. You better get ready for it because, you know, it's almost here kind of thing. And now I think we're starting to get just this past January a lot more maybe realism being injected into that conversation. So you know, I've, I've been hearing you know, thoughts around 20, 30, 20, 35, even 20, 40 before we start to see, you know, any kind of a real penetration for that technology.

Scot:    Interesting. Yeah. And I saw at ces this year, a lot of the, it went from a kind of a general use case to very specific, you know, this could be on a corporate campus, this could, you know, there's a lot of talk about long haul trucking. So, so it seems like they've pruned the tree down from, you know, any point a to point B to very specific use cases as well.

Ryan:    Yeah. On the one hand you, you, you have those kind of very specific geo-fence kinds of applications which I think are fine. I mean if the, if the, if the location that we're talking about is very well mapped it doesn't, it doesn't change very much. In terms of the in terms of the, the routing and things like that sure. I think that makes it a lot easier to, to find a use case for it. The thing about long haul trucking I've always been of the opinion that that would be a very good use case because it, it really does cut down on the number of variables involved. I mean everybody is going in the same direction. Everybody is, you know, going at it at relatively the same speed. All you really have to do is figure out kind of the last mile when they get off the, the highway itself.

Ryan:    But when you ask consumers whether or not they're comfortable sharing the highway at, you know, 65, 70 miles an hour with, you know, a multi ton vehicle that's driving itself, you know, they're, they're actually quite skittish about that reality. Yeah. It's hard to ask that question in a positive way. Yeah. Yeah. Interesting. Cool. So how about electric vehicles? Do you see that kind of being closer on the horizon? Yeah, I mean, on the other side of the, of the technology coin I guess is, is electrification. And, and you know, we, we look at it as a bit of a spectrum. So, you know, electrification could mean, you know, anything from hybrid to kind of full battery electric. But the, and I think it's a lot closer in, in terms of you know, when, when we're going to start to see you know, a lot of that critical mass getting achieved, but it's not going to be a rising tide lifts all, all boats kind of scenario where, you know if you talk about it from a geographic standpoint certainly markets like China are are very aggressively following a a path that will take them to, to critical mass of electrified or electrified vehicles a lot faster than say, we're going to see here in North America.

Ryan:    And that's got a lot to do with the fact that, you know, they're very concerned about things like urban pollution. And beyond that, you know, it's it's, it's it's a very distinct decision that's being made to, to be a a global leader on, on, you know, the next generation of, of mobility. And I think that you know, Europe's gonna is, is starting to follow pretty quickly in the wake of the diesel gate scandal. There was there was a desire on the automaker front to kind of rebrand yourself away from, from diesel technology. And, and the the only forward-looking kind of propulsion technology that was in view at the time was, was electric vehicles. So I think that we're seeing a lot of, a lot of that in North America here.

Ryan:    We're still we're still lagging behind for a number of reasons that range from, you know, not quite as as strict a policy on environmental regulations to you know, what, what amounts to be still a relatively low fuel price environment. And also the type of vehicles that that we, we like to drive here are keeping us in that kind of combustion engine. A story for a little bit longer. Yeah. Do you think lithium ion, is the technology going forward or do we need some breakthrough new battery technology? They keep talking about some, some new battery technology and in terms of the kind of, the kind of materials that are being used, a solid state batteries are also, you know, obviously still being talked about. I think, you know, it really comes down while a lot of the discussion is around the, the dollars per kilowatt hour and trying to get that down into a range where consumers don't really have to compromise on costs to be able to get access to that technology.

Ryan:    I think that a lot of companies are taken and battery producers are, you know, hard at work trying to find that next step in the, in the development of the technology itself. You know, solid state is, is a great technology to think about in terms of the increased charge discharge time that would go a long way to consumers fears around or their concerns, I should say around the, at the time it takes still to refueler that electric vehicle. And if, even if it's 20 minutes to half an hour you know, that's still too long, you know, and there's also, you know, some safety concerns still with the lithium ion technology. If the batteries can puncture and you know, can start I think it's a terminal cascade failures or whatever they call it. And Elon Musk phase for splinting and, you know, solid state technology would help on that front too.

Ryan:    Or at least that's the that's what's being talked about. So I think there is another step in battery technology that we're going to get to. Very cool. How about different ownership models? Do you guys see, does ab kind of have to happen for that to change or do you see that happening before we get to full AAV? The ownership models, I think that there's, there's a couple of ways we can we can attack that topic. If we're talking about things like, you know, ride hailing models and things like that. I think that's how, I mean it's, it's been happening for, for a few years now. And, and I think that our data will, our data shows us just in the last couple of years that you know, there it was a very disruptive technology ride hailing itself. And I think it was, it was really born on the back of the, the, the digital interface that allowed people to, you know you know, call a ride and and see the ride getting to them.

Ryan:    And probably most importantly, being able to, to utilize an integrated payment system, digital payment system for that and that, and that really was very disruptive. But now, you know, the, the price of, of getting a very slick act cap out the door is coming way down. It's almost, you know, at a, at a commodity type level now. So that's not the barrier to, to entry that it once was in a lot of the disrupted, you know, traditional players like taxi fleets are reasserting themselves and getting their own app at the door. So I think that the the, the competitive landscape is, is, is changing quite dramatically on that front. If we talk about things like subscription models as a way to, you know, offer the consumer more flexibility or more choice. I, it's a great idea. I think it's a very, it's very promising. The, the only issue is, is around pricing I think. And I think that's, I think there's still a little ways to go in terms of finding the sweet spot to attract a lot of people to that model.

Scot:    Yeah. It all sounds good. And then you look at the prices and it's like, you know, $1,500 a month and you're like, so it's two to three x kind of like what you're currently paying. Right?

Ryan:    And it's, you know, there, we have to remember that there is there, there's, there's the specter of an affordability issue that's, that's growing I think in, in, in the marketplace. And particularly when it comes to younger consumers that might not have the, the kind of economic wherewithal that, that some previous generations had. There's also a lot more there's a, there's a lot more pull on from different sources on their wallets these days. I'm talking about subscription models. You know, it's not out of the realm of possibility that you have maybe upwards of seven or eight subscriptions for an everything from, you know, Netflix to, you know, your, your dry cleaning. And when you add it all up, people still have to kind of balance, you know, how they're going to get things done at the end of the day. So they have a budget for transportation and if they can, if they can fill that need with a, a bit more of a flexible arrangement, whether that's ride hailing or car sharing or, or whatever that is. And it keeps them out of having to, to get into car ownership, you know, I think that's attractive to, to a growing number of people.

Scot:    Yup. Cool. So then the last topic is connected car. That one can, you know, the, there's the tactical, I wanna use my phone, tax us to my car and, and you know, kind of get data from my car, but then there's kind of also taking that to the next level where that data starts to feed into city planning and those kinds of things. What do you think about connected cars impact the, the connection

Ryan:    Or is coming? And you know, I think it's a, it, it's a really interesting topic because on the one hand it's, it's a question of trust, right? So you have consumers that are, that are telling us they're very concerned with things like data privacy, data security even things to do with personal safety around connected vehicles is is a large topic for consumers right now. And on the other hand, you know, you have, you know, manufacturers and other types of, of industry stakeholders that are looking for different ways to monetize the mobility experience. So if we think that we are at some point and we can debate the timelines I guess, but at some point we're moving we're moving into a new business model where we're not necessarily just, you know, bolting cars together and selling them to end consumers.

Ryan:    You have to figure out what's, what's the next revenue stream, you know, connected cars and the data being generated off those cars. That can be very valuable for companies to in terms of, you know, just trying to, to take waste out of their own production system. There's applications for, you know, predictive maintenance and all of the things that come along with that. You know, there's also what you talked about in terms of how it can feed into a a smart connected urban environment or a smart city. We've still got consumer concern. We've still got, you know the traditional stakeholders that really are coming to the realization that it may not be in their set of core competencies to figure out how to do this going forward. So where that's I think one of the reasons why we're seeing a lot of the a lot of the partnerships, a lot of strategic alliances that are, that are cropping up in the industry. Some of the M and a activity and some of the investments that are being made in startups cause these are, it's a different skill set I think to be able to, to figure out what to do with this data.

Scot:    Yeah. Just kind of how many data scientists you have on staff. Right, right. Not many of the traditional car oriented companies have, have a lot of focus on that. Cool. So if, you know, so we've got these kind of big changes all colliding. We've got a lot of constituents out there. We've got the manufacturers, we've got the whole finance infrastructure, we've got the dealer kind of network, we've got rental car companies and we have all these new kind of digital disruptors. You think there's a winner in this or you have any predictions on, you know, w what happens to these various large constituents in this whole kind of changing world?

Ryan:    Well, I think, you know, that the, the answer to that question in my mind, it starts with the amount of financial pressure that's being applied to a lot of these traditional stakeholders that are, that are trying to find, you know, their way or their place in the next evolution of, of mobility. So, you know, when we talk about these, these case technologies is forward-looking vehicle technologies. The space that we're in right now. It's not as though, you know, OEM manufacturers can pick and choose what they want to be involved in. They kind of have to to figure out how they can be involved in all of it all at once. It's a very difficult position to be in and it requires a, a massive, a hideous amount of investment to that or be at this being piled into to all these things. So when you think about that pressure, you couple that with the, with the realization that there may not actually be an ROI for them at the end of the day.

Ryan:    So for example you know, the, the connected space you know, the, in our survey we asked consumers, you know, what, what they're willing to pay extra to, to be able to gain access to a technology that would improve road safety, right? So cars can talk to each other, they can talk to infrastructure, so on and you know, it's it's upwards of 30, 40% of consumers in the u s at least that tell us that they're not prepared to pay anything extra to gain access to that. So the question of ROI on the tens of billions of dollars is being piled in to the sector at the moment is a, is a huge question. So to answer your question though specifically, I think that preamble is important because what it sets up is a situation where we might actually see a lot more convergence happening in the market.

Ryan:    So you know, strategic alliances that are within sector, the automotive sector start to bleed out into a strategic alliances that crossover different sectors. So you know, Telekom, financial services, those sorts of things. And whenever you see a, a large number of, of strategic alliances and tie ups happening to me, in my mind at least, it's a, it's a precursor to some m and a activity. So we might actually be looking at some point in the future for the rise of the consumer company, if you will. Right. So it's not necessarily an automotive company anymore. And a lot of the automotive companies are re are trying to rebrand themselves as, you know, more mobility providers. I don't think we're quite there yet because there's a lot of pieces that still need to get plugged into to that equation. And I think there's a role to play for you know, financial providers who are a lot further down the road on, you know, mobile payment and things like that.

Ryan:    To, you know to, to really round out that equation for the consumer. And like I said, off the top, you know, as consumers start to, to take their experiences from one sector and, and apply that to their expectations in another sector. You know, we, that also might be feeding into this convergence of, of companies and and sectors going forward. Yeah. So, so you think there's going to be like a big, Monolithic Amazon like company that provides this whole slew of things? Is that Kinda, am I reading what you're talking about having a big consumer company? Is that kind of the not Amazon, obviously. Yeah. Not to, not to put too fine a point on it. I mean, there's, there, there is examples out there of companies that are, you know, rolling up their own sector and then figuring out how to off and start to own other sectors. And so, you know, big companies get bigger and I, and I think that's, that's something that we've got to keep in mind.

Scot:    Very cool. So I know we really appreciate you taking time out of a busy conference schedule. And any last points. The one I always like to ask folks is you know, where, where can they follow you online? Are you more on Linkedin, Twitter, or are over on the Deloitte website?

Ryan:    I think the best thing to do is to, to check out our Deloitte insights website portal. So that's, that's really where we put all of our, all of the best thought leadership and insights that, that we're delivering to the market. And and I think it's it's been a great been a great interview. Thank you for having me on. Look forward to keeping this conversation going.