Detroit auto executives looked at the experiment and said that Google was wasting money. Who was going to buy autonomous features that cost an extra $200,000? But these executives didn’t understand the impact of

exponential change. Two years later, the technology was $100,000. Again, Detroit executives still saw no reason to explore autonomy. A year later, the tech was only $50,000. Today, it’s less than $1,000—that’s the com- pounding effect of exponential change over 12 years. Now, Detroit car companies are scrambling to buy

autonomous vehicle start ups. Traditional car companies typically take five years to plan, pilot and perfect new cars. Do you see a problem? Google has a 12-year head start on traditional car companies. Let’s look at the cost of just one part of the autonomous system, called Lidar, a technology for measuring distances of objects. In 2012, the Lidar systems for autonomous vehi- cles cost $75,000. By 2018, that had fallen to just $40 because there were multiple technologies in Lidar that were all ex- ponentially improving in price performance, compounding the cost declines. In 2020, the cost is only $10.

Tesla’s Value As of last month, Tesla’s value is $387 billion. Compare

that to the value of Ford added to General Motors added to Fiat Chrysler. Today, these three traditional Detroit au- tomakers are worth $86.4 billion combined. So, you can quadruple their combined value and they’re still worth less than Tesla. That should be a clear warning that profound change is eventually coming to the school bus market.

Cheaper, Faster, Smaller, Better, Easier to Use Technology isn’t just getting cheaper its getting

smaller, faster, better, more versatile and easier to use all at the same time. Do you remember when you bought a GPS—a Garmin, TomTom or Magellan? It probably set you back $700, plus you had to pay to subscribe to map updates. Well, if you own a smartphone, you have GPS embedded in it for free, and it can find the fastest routes around traffic jams and accidents. And it means you never have to buy a map book again. So exponentially improving technology can eliminate costs while im- proving the driving experience. The improvements announced by Tesla, mean that

batteries will be 56 percent cheaper per kWh in three years. At the same time, range will increase by 54 per- cent and the cost of investment to produce each GWh of batteries will fall by 69 percent. In other words, there are multiple benefits to the innovation. Let’s look at what happened to taxis in the largest U.S. taxi

market, New York City. Dispatched trips fell from 500,000 a day in 2012 to half that many in 2019. Meanwhile, Uber rose from fewer than 100,000 daily trips to nearly 600,000. As a result, NYC Taxi Medallion prices plummeted 90 per- cent from a high of $1.1 million to $110,000 recently.

Life Cycle Cost EVs are already cheaper in life cycle cost, sometimes

referred to as total cost of ownership. While EVs are currently more expensive than gas- or diesel-powered vehicles to buy up front, fuel and maintenance costs are more than 70 percent lower. For high use vehicles, like taxis and in some cases school buses, the economics of fleet management completely change. In analyzing cost, an organization needs to look at both the capital costs (CAPEX) and the operating costs (OPEX). For vehicles that have a long life and high use, OPEX costs are often more important that CAPEX. Here’s a staggering statistic: The average gas car has

more than 2,000 moving parts. By contrast an EV has 20. That’s one of the reasons that EVs have dramatically lower maintenance and repair costs—the design is dra- matically simpler. Tim Shannon, the director of transportation for Twin

Rivers Unified School District in Sacramento, Califor- nia, has 30 EV school buses and is expecting delivery of another 27 by the end of 2021. That means that his district has the most EV school buses of any district in the U.S.—a record he’s very proud of. From actual experience of running this fleet of EV school buses, Shannon confirmed the fuel costs for EV buses are 80 percent less than fossil fuel buses and maintenance costs are 60 to 80 percent less. Twin Rivers doesn’t have to replace brakes as often on EV buses because the electric engines slow the vehicles down when braking. What was unexpected and surprising is the wear-and-tear on tires is less. Batteries are located in the center of the bus to more evenly distribute weight than in traditional buses, thus greatly reducing tire wear. Other unexpected benefits include not having to have

as large of a maintenance team because these buses don’t break down as often as the district’s diesel or CNG buses, and the garage doesn’t have to carry as much inventory of spare parts. “In fact, the only thing we’ve really had to do is change light bulbs,” Shannon noted. Many of Shannon’s buses have been funded 100 per-

cent through grants, while others only required a $60,000 contribution by the school district. “It’s a use it or lose it principle,” Shannon added. In other words, chase these grants today because they might not be here tomorrow.

Safety & Insurance A staggering 94 percent of accidents on U.S. roads

are due to driver error. We are on the cusp of the age of autonomous vehicles. This is exciting because it means that a staggering 40,000 American lives will be saved every single year and 2.5 million people won’t be perma- nently maimed. That’s the great news. If you sell auto insurance however, it’s another story. When there are 94 percent fewer accidents on the roads, the $500 billion a year paid in auto insurance premiums

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