March 21, 2018 - From the March, 2018 issue

Dan Sperling on the ‘Three Revolutions’ Transforming Cars and Transportation

UC Davis Institute of Transportation Studies Director & CARB board member Dan Sperling joins TPR to discuss his new book Three Revolutions, which highlights the transformative opportunity inherent to the convergence of shared mobility services, automation, and electrification. Sperling outlines how, with integrated planning and aligned investments, these three areas of innovation could bring about increased access to mobility, more affordable transportation, and major reductions in greenhouse gas emissions. He also warns of the questions and challenges on the way to this “heaven scenario”—including the need for strong state and local support, the ability of major companies to pivot to new business models, and the public’s willingness to adopt new technologies and habits.


Dan Sperling

"All of a sudden, the transportation industry is seeing sweeping innovations that have the potential to be transformative—not just for transportation, but also for our cities, energy systems, and climate." - Dan Sperling

Your new book Three Revolutions focuses on the transformations taking place today in the transportation sector. What are those revolutions and what is the book’s underlying thesis?

Dan Sperling: The transportation sector, for the longest time, has seen little innovation. My entire career has been spent in transportation, and frankly, it had gotten rather boring! But now, all of a sudden, we are seeing sweeping innovations that have the potential to be transformative—not just for transportation, but also for our cities, energy systems, and climate.

The “three revolutions” are: 1) sharing, or pooling; 2) electrification; and 3) automation. These innovations, if integrated together, will positively impact our futures. We could see lower infrastructure costs for parking and roads; greater access to mobility for many more people, bridging the gap between haves and have-nots; and cheaper options for individual travelers, which is good for consumers. These innovations are also positive for the environment, as they could lead to a major reduction in greenhouse gases.

That’s what we call the heaven scenario.

The societal concern is that there’s also a hell scenario. If these major innovations are not integrated—if we had automation without clean energy, for example, or if people owned clean cars individually, as they do now—we could end up in a future with more vehicle miles traveled, more vehicles on the road, and more sprawl. That would undermine the public transportation institutions and future opportunities for mass transit, and lead to more greenhouse gas emissions and energy use.

The first of the transportation revolutions you’ve identified is pooling, or sharing. What’s the opportunity here?

Vehicles are among the most poorly utilized assets in our economy and our society, and that creates a lot of costs and problems. We need to increase utilization of our vehicles.

The single-passenger services operated by Lyft and Uber are an important first step in that direction. But those services, while great for individuals, create a societal cost: They lead to a (small) increase in vehicle miles traveled and also create some congestion, especially in downtowns and near airports.

The challenge is to move from single-passenger services to multi-passenger services. It won’t be easy; it will require more engagement by government through policy.

In the past, despite spending tens of billions of dollars on HOV lanes, we actually saw a loss in carpool market share. That reflects the challenges of getting people to pool. But the difference today is the advantage of modern technology, including smartphones: The transaction costs are much lower, and it’s much more accessible.

Today, we need an approach like that of Lyft Line, UberPOOL, and various microtransit services that operate on-demand without fixed routes or schedules. These provide people more access at less cost than conventional transit services. 

What incentives or disincentives are governments providing to encourage a transition from single- to multi-passenger services?

Local and state governments are not doing anything right now, and we need them to. That’s part of what motivated my book.

Many cities are doing this wrong. Chicago, for example, has imposed a large fee on transit network companies like Lyft and Uber, and Via, a microtransit company. The fee is assessed on a per-rider basis—so, three riders is three times the fee—therefore providing no incentive for pooling. What the city should have done is reduce the fee for multiple passengers to incentivize the use of pooling. People respond to prices.

Pricing is an important near-term strategy. The big potential for change is over the longer term, when we move to automation.

Address your second revolution: electrification of transportation.

Electrification of vehicles is going to happen.

The policies are being put in place, and the automotive industry is committed. Uber and Lyft are both incorporating increasing numbers of electric vehicles into their fleets, even using human drivers. It’s now a question of how fast it will happen and where it will happen first.

Pooled automation is both a pathway and an opportunity for electrification. Electric vehicles are well suited to mobility service applications because they tend to last longer, require lower maintenance, offer more reliability, and cost less when used intensively (or at least, they will soon, as battery costs continue to drop). They are also well suited to automation, because it is grounded in an onboard electric infrastructure.

The one downside is the limited range of battery electric vehicles. We could get around that problem with fuel-cell cars, or by linking the charging and maintenance of cars with the times people stop driving. The future of transportation is going to be data-driven, and we can plan to manage these cars in a smart way.

How does automation—the third transportation innovation addressed in your new book—impact your heaven scenario? 

The big question is whether autonomous cars will be individually owned, or operated as pooled services by mobility companies. From a societal perspective, we would very much want the latter, because it would lead to a dramatic reduction in vehicle use at the same time as a large increase in mobility access.

It won’t be easy, because it swims against the stream of Americans’ preference for our own cars and for not sharing rides. But everyone has a price, and I think with good incentives and disincentives, there’s a high probability this model could be successful.

Moreover, there are many attractions to pooling automated cars. First, of course, we’d get to be chauffeured. Second, the cost of travel would go way down. I estimate that the cost of a pooled, automated service would be 10-20 cents per passenger mile. A 10-mile trip, in that case, would cost $1-$2. That’s a much lower cost than owning and operating a car, or any other mobility service available to us now.

Third, if we created a suite of mobility services, you would have access to more types of cars—rather than being stuck with the one or two vehicles in your driveway, as we are now. You could use the pooled automated vehicle some or most of the time, and in cases when you need, say, a pickup truck to deliver a bed to your child’s apartment, or an SUV to go skiing in the mountains, or a sports car to take a little drive, you would have access to all of those vehicles. 

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In metro Los Angeles, sizable investments are being made in public transit. How will these transportations revolutions interface with, or leverage, the buildout of new rail and bus service and infrastructure?

From a transit perspective, there is both a huge risk and a huge opportunity.

Transit operators in this country are in big trouble. They’ve been losing riders at a pretty steady rate for a number of years—in part to Lyft and Uber, but also for other reasons. They also have very high costs, one reason for which is that they have a lot of bus routes that go into low- or medium-density areas, which is very costly to provide.

One thing they can do to increase ridership is provide first- and last-mile access through Lyft Line, UberPOOL, or other microtransit services. Once these services are automated, the costs would go way down. But even before then, they provide a big opportunity.

As Los Angeles builds rail lines, a partnership like this would help people access the new stations as part of a long trip. A service like Via, which uses vans and small buses, could also be used in areas that are not well served by buses or rail—much more cheaply than LA Metro or any transit operator could.

Having said that, there are challenges for transit operators in these partnerships. These agencies are very siloed systems, and they don’t have a lot of experience partnering with others. Then there is the question of how the financing will work, since transit is heavily subsidized, and they’d be working with private services. There are lots of challenges, but huge opportunities also.

Elaborate on the equity aspect of public transportation.

Transit plays a hugely important role in our cities and our society. From a social equity perspective, it provides a safety net and an essential service for low-income and disadvantaged people. It also plays a very important economic function, in that it is the most efficient way to move large numbers of people in high-density areas.

We need to preserve transit for both of those reasons. But we have to figure out how to provide transit in a more cost-effective and higher quality way. 

You’ve hosted the biannual Asilomar Conference on Transportation and Energy at UC Davis for decades—drawing together car OEMs, state regulators, digital technologists, environmental leadership, and transportation planners. How are these stakeholders responding to the three revolutions highlighted in your book? 

From a stakeholder perspective, the transportation revolution is hugely disruptive. We’ve already seen its impact on taxis, and it’s now becoming disruptive to the rental car industry. It will soon become disruptive for insurance companies, and especially disruptive for car companies.

Car companies are struggling to come up with a strategy to deal with these changes. Are they going to build the cars that are used in pooled automated services? The driving experience will no longer be important, so the vehicles will become commodities; the high-value-added components will be taken over by Silicon Valley tech companies. Are the manufacturers going to let that happen to them? Or are they going to become the service providers themselves?

Currently, auto manufacturing companies see returns of about 10 percent; service companies tend to see higher returns, of 20 percent or more. That is a big opportunity, and all the major car companies now have subsidiaries or divisions devoted to providing mobility as a service. Still, they are struggling with it; it’s like turning the Titanic.

Another threat to the auto industry is lower oil use in the future—partly because of electrification, and partly because of reduced vehicle miles traveled. The industry is starting to get involved in charging infrastructure, including hydrogen, which fits their business model better than battery electric. Could they steer the electrification revolution toward hydrogen? They are at the beginning of figuring out how they are going to invest in the transformations coming to the transportation industry. 

Does the recent fatality involving a self-driving Uber vehicle in Tempe, Arizona have consequences for your optimistic projections regarding autonomous technologies? 

The fatality caused by the Uber AV is tragic—and it highlights that this technology is not ready for commercialization. Hopefully, Uber will release the car’s data from the few seconds just before the crash, so all AV makers can learn from this.

This technology will never be perfect. But we should not let the perfect get in the way of the very good. The lesson here is that more deliberate testing is needed, and companies should not overpromise. Robot cars will ultimately be much safer than anyone driving while drinking, smoking, texting, or simply drowsy. However, we hold corporations to a higher standard than we hold ourselves.

Lastly, having served on the California Air Resources Board since 2007, how do you see CARB using its powers and authorities to incentivize an integrated transportation revolution in California?

Like most government agencies, CARB is trying to figure out what’s going on, what role they will play, and how they will change policies, mechanisms, and incentives going forward. They think about the transportation revolution in terms of vehicle use and vehicles themselves.

CARB’s main focus right now is on decarbonizing vehicles, particularly through electrification. A secondary focus is dealing with vehicle miles traveled in cities, largely through a law that essentially calls for a reduction in vehicle use (SB 375). They also have performance standards to reduce the greenhouse gas emissions from vehicles, the zero-emission vehicle mandate, and the Low-Carbon Fuel Standards.

The Low-Carbon Fuel Standard is particularly interesting, and I believe it’s going to be an unsung hero in the transportation revolution. Essentially, it will lead to a reduction in the cost of electricity used in vehicles by about 10-15 cents per kilowatt-hour. That will cover most, if not all, of the energy cost of electric vehicles.

CARB has a lot of policy influence that could help with electrification, and it is increasingly figuring out how to reduce vehicle use.


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© 2019 The Planning Report | David Abel, Publisher, ABL, Inc.