Google, Tesla, and BYD Update

Google AV news (August 2016)

  • The self-driving car project is expected to be transformed into a standalone company sometime this year. The project’s first general counsel was only just recently appointed.
  • To date, the project has logged over 1.8 million autonomous-driving test miles in the states of California, Texas, Washington, and Arizona.
  • A few months back, Google announced a partnership with Fiat Chrysler that will see a fleet of ~100 autonomous driving minivans built, and tested.
  • Following 7½ years of work on the project, one of the top executives on Google’s self-driving vehicle initiative, Chris Urmson, will be stepping down.  Urmson was quoted earlier this year as saying (regarding AVs): “I’ve gone from hoping this would happen to thinking it might happen to knowing it will happen.”

Tesla EV/AV news…

Level 4 autonomous driving will be possible within only 2 years.  Add another for regulator approval…

Level 4 autonomous driving will be possible within only 2 years, according to Tesla CEO Elon Musk — as quoted by Fortune in a recent interview. This comment comes as something of a contrast to some (but not all) of Musk’s previous statements on the matter — most of which placed fully autonomous driving off a couple of years further into the future.

Despite the apparent conviction that the technology will be possible within only 2 years, Musk did note in the recent interview that it will take (at least) another year in order to get regulators on board for approval.

“The point at which it becomes statistically clear that an autonomous car is safer, I think, regulators will be comfortable with allowing it,” as he put it in the interview.

Gas 2 provides more:

During that year, the software will operate in “shadow mode,” comparing what it is programmed to do with what actually happens in real world driving. Using artificial intelligence algorithms, it will teach itself how to deal effectively with what Musk calls “corner cases.” Those are the millions of unknown and unknowable situations that human drivers face every day. The distracted pedestrian who dashes into traffic unexpectedly. The skateboarder who completes a perfect Ollie but lands in the middle of a crosswalk. The moment when a car runs a stop sign or slips sideways on an icy road.

Tesla has already turned its cars into one of the most advanced artificial intelligence networks in history. All of its cars with the Autopilot suite of sensors and software installed learn from their daily driving experiences and share that knowledge with each other. If there is road construction in Terre Haute, your Tesla will know about it, even if you live in Walla Walla and are driving in Indiana for the first time. That’s exactly the kind of learning Musk expects Tesla’s Level 4 systems will do while working in “shadow mode,” waiting for regulators to turn them loose on public roads. He expects the network to provide the data regulators will rely on when deciding Level 4 autonomy is safe.

Fleet Vehicles

Fleet vehicles are measured on factors including the following:

  • Initial capital cost
  • Labour effort for maintenance
  • Parts costs for maintenance
  • Fuel costs
  • Fit-for-purpose range
  • Fit-for-purpose power
  • Safety
  • Liability
  • Mean time between failures

Fleet vehicles are much more assessed on total cost of ownership (TCO) than personal vehicles. And the TCO for fleet vehicles is in favour of electrics today, and will be increasingly so in the future.

In general, electric vehicles require much less maintenance, have many fewer parts to replace, have longer-lasting drivetrains, are safer, have excellent torque characteristics, require fewer brake jobs, etc. Basically, they can be depended on to be on the road earning money a greater percentage of the time for a lower overall cost.

Tesla is getting into truck manufacture, and utility pickup trucks owned by fleets are likely to do very well for Tesla.

The remainder of this post is a Tesla update.


What Tesla is saying about bus transit has a few parts:

  • Buses will be autonomous
  • Buses will have varied routes based upon varying demand and will bypass areas with no demand
  • Buses will be callable
  • Buses will be smaller

Tesla minibus

Image by Jalopnik

Really, what they are saying is that buses (on some routes, at least) are going to turn into autonomous, semi-scheduled, Uberpassenger vans. Uber is already successfully doing Uber Hop and Uber Pool in major cities, with vans providing almost exactly this service but with human drivers. They are so successful that transit authorities are considering suing them in Toronto for providing transit services.

This is a proven and growing market and an autonomous small bus for semi-fixed routes would work brilliantly at lower cost. Tesla isn’t saying that it wants to replace diesel city buses with electric city buses (which BYD and Proterra are doing) — it is saying that huge buses are likely going away in many cases to be replaced by a different model. As Uber is already cutting into bus use in San Francisco and elsewhere, this disruption is already starting. How far it reaches is a matter of hot debate.

In my opinion, Tesla’s master plan is on point for where a large segment of future transit will be.

Freight Vehicles

Here, again, there’s a path to be followed.

The first obvious thing to say is that single-unit trucks — not tractor trailers — travel about 70 billion miles in urban areas in the USA annually, and about 40 billion miles outside of urban areas.

70 billion miles. 64% of all miles traveled by this class of vehicle in the USA.

The average distance traveled by this class of truck is well within the range of current battery capacities at economically viable prices. They travel about as far annually as the average commuter car (13,476 miles), or maybe 60 miles on the average workday. The vast majority of these trucks operate, at most, two shifts a day, and loading of these trucks takes time when they could easily be hooked up to charge with simple under-loading dock charge connections at depots. This is a trivial market with current technology.

Fleet managers for this class of vehicle struggle with having enough torque to get up hills with heavier loads vs the smallest and most economical engine that they can possibly get. Electrics square that circle. If payback can get down to 3 years, it will become a no-brainer. Given that most payback assessments for Tesla Model S vehicles currently run to several years, that would be a challenge. However, the Tesla Model 3 is already in that range according to two different ways to analyse the question. It bodes well.

And a big part of the cost of these vehicles is associated with professional drivers — as opposed to more poorly paid loaders and unloaders — and liabilities related to hitting things in urban areas. Trucks that drive themselves reduce both of those costs substantially.

Electric freight trucks in urban areas are an obvious win for multiple reasons and for a very large part of the market.

Tesla is going to win big with this category.

(Note, again, that BYD is already in this market, with a range of new delivery vehicles and trucks unveiled in May, and being bought in places like California.)

Combination trucks — tractor trailers — travel 76 billion miles annually in urban areas and 99 billion in rural areas (aka, between cities). They are much more likely to travel extended distances with an average annual mileage of 69,000 miles.

Long-distance haulage electric trucks, autonomous or not, are likely in the “too hard” category today. But not in a few years.

Going after long-haul semis would be like starting with the Tesla Model S in the truck space instead of the Roadster. It doesn’t seem like the right incremental choice. I think they could start with single-unit urban trucks, then urban-area tractor trailers, then long-haul tractor trailers. Tesla, according to some interpretations, has committed to unveiling a tractor-trailer product next year, but as there is a two year cycle between announcement and delivery, that still gives them 3 years to achieve the right range mix for at least medium-haul duties. After all, long-haul trucking has the same infrastructure problem long-haul driving does, and the Supercharger network is very poorly positioned to support tractor trailers. Transforming long-haul trucking will require remarkable range and new infrastructure, whether of battery swaps (proven Tesla technology) or freight-scale Superchargers. It’s not a trivial problem.

It is worth pointing out that those ubiquitous signs in urban areas about trucks avoiding the use of engine braking will slowly disappear as more trucks shift to electric. Regenerative braking is very quiet by comparison.

So, in heavier road vehicles, Tesla has obvious incrementalist paths for most categories. It’s going to be easier than anyone thinks and have an excellent impact on urban air quality and noise pollution, followed by a reduction in long-distance freight haulage emissions of all types. But US consumers aren’t likely to buy many of their pickups.

Elon Musk’s Master Plan, Part Deux envisioned a future where Teslas are used for each type of terrestrial transport, from passenger vehicles to buses and trucks, supplemented by a seamless suite of solar-and-storage products.

This vision was probably best captured in Tesla’s announcement of its offer to acquire SolarCity: We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.”

The plan then gets to the part where Musk explains what this has really been all about:

However, the main reason was to explain how our actions fit into a larger picture, so that they would seem less random. The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing — it matters for everyone.

By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.

Tesla’s numbers today

Tesla already enjoys advantages of scale over its rivals. It expects EV sales to rise from 50,000 last year to 80,000 this year, for a 60 percent annual growth rate. At 100 kilowatt-hours per vehicle — a slight overestimate — Tesla will have consumed 5 gigawatt-hours of batteries in 2015 and 8 gigawatt-hours in 2016. These volumes dwarf those of its well-known competition.

Though Tesla did not break out its energy storage sales in Q2, it deployed 25 megawatt-hours across four continents in Q1.

Meanwhile, GreenTech Media writes: Tesla Is Playing Catch-Up With China’s BYD in Nearly Every Business Category

As for solar panels, SolarCity expects its Gigafactory to continue installing equipment through Q3 2017. If commissioning proceeds smoothly, it could clear 1 gigawatt of production in 2018.

Tesla likely won’t commercialize its bus or long-haul trucks before 2020, as it will want to focus on the Model 3 and Model Y. Cars are a far larger market than buses and transport trucks, so it would be ludicrous to go for the latter first.

It’s hard to put a timeline on Tesla’s autonomy efforts, given Mobileye’s termination of the two companies’ relationship, but at least the company can spread the effort across its approximately 15,000 employees. SolarCity would also bring a further 13,000 employees into the fold.

BYD versus Tesla

When comparing the two companies head to head, the data shows that in almost every relevant dimension, BYD has gone further and is growing faster.

Passenger vehicle EVs: BYD not only outsold Tesla last year, but its planned growth this year is higher. (It’s on track to meet those projections, too, with BYD China having sold 47,000 electric passenger cars through Q2.)  The Model 3 could help Tesla catch up to BYD in 2018/2019 if it executes to plan. Unfortunately, doubts linger about Tesla’s ability to do so, given its struggles with even modest levels of mass production. BYD already offers 10 automotive models, so ramping up future EV programs should entail relatively low levels of risk.

Battery use: BYD produced 10 gigawatt-hours of lithium-iron phosphate (LFP) batteries last year in its 10-gigawatt-hour factory, and it is now building a second manufacturing facility. It expects to produce 16 gigawatt-hours in 2016, keeping pace with Tesla’s growth rate.

Despite Tesla having half the battery scale as compared to BYD, it probably has a lower cost per kilowatt-hour, because iron phosphate has perhaps two-thirds the energy density of Tesla’s NCA (lithium nickel cobalt aluminum oxide) battery chemistry. And though BYD has improved its batteries’ energy density 30 percent in the past few years (likely by adding manganese), other chemistries have advanced as well.

LFP does have substantial advantages, the biggest being its dimensional stability when charged or discharged, heated or cooled. This allows BYD to recharge its buses at 300 kilowatts without a battery cooling system. (It also relegates Tesla’s superchargers to being the world’s second-fastest charging stations.)

The advantages carry over to durability; BYD buses come with a 12-year battery warranty, and many of the earliest generations of BYD e6 taxis — still in use — have surpassed 500,000 miles per unit on their original battery packs.

Energy storage: BYD claims to dominate the North American energy storage market and had deployed more than 295 megawatts/295 megawatt-hours across 66 countries at the end of Q2.

PV: BYD’s photovoltaics division reached 1 gigawatt of annual production in 2014. While its panels aren’t particularly high-efficiency (18 percent compared to SolarCity’s target of 22 percent and SunPower’s current 22.8 percent), its use of dual-sided glass encasing around panels lengthens operating life and reduces the risk of electrical fires. The panels presumably primarily serve to allow seamless solar-and-storage shopping for the utility-scale installations on which the company is focused.

EV buses: BYD has four electric-bus manufacturing facilities and shipped its 10,000th unit this year, with a further 7,000 units on order. Recently, its winter trial for EV buses successfully concluded in Edmonton, Canada (average daily January high: 17º F). A multi-bus/solar panel/1-megawatt energy storage project (geared toward limiting demand charges) with another city even farther north may soon emerge.

EV trucks: BYD has offered electric delivery vans since 2014 and has expanded into short-haul trucks; it has also entered the construction market with its first electric cement mixer. Though less of a head start than with buses, the lead is large and growing with each purchase and product line extension.

Autonomy/employee count: It goes without saying that Tesla has an autonomy advantage over the rest of the auto industry. That said, BYD has 16,000 R&D staff members — greater than Tesla’s total headcount — which demonstrates the bandwidth that can be brought to bear on key technologies. It would be remarkable if the company wasn’t working feverishly on its own autonomy efforts.

Final thoughts

BYD is ahead — and in some cases far ahead — of Tesla in every dimension of Elon Musk’s grand vision. Autonomy is the only category where BYD is not winning. As such, every one of Musk’s incisive insights about the transformative power of electric vehicles, solar photovoltaics and battery storage, and the cost advantages enjoyed by the biggest giga-scale producers, now work more in BYD’s favor than in Tesla’s.

Musk is playing catch-up in a game he thought he had just invented.  In a nod of acknowledgement to BYD’s 180,000 worldwide employees — and to correct our overly Silicon Valley-centric perspective here in North America — we would be well served to give BYD’s CEO Wang Chuanfu his due. He clearly won round one.

Of course, the fight has only just begun.