Car on the Cloud
Let's get started!
Team 3
Last Updated: January 28, 2012
Screens
Screens
The average American spends 200
hours* commuting
• Aligns with technology (Maps, Search, Places, Wallet,
Traffic Analytics)
• First mover advantage
• Represents the future of automotive
• Safer and more efficient
• $8B in potential revenue in “DaaS”
* (50 minutes per day x 240 days) / 60 minutes per hour
*R.A. How long are American commutes? The Economist. Oct 16. 2011
Conclusion
10-year Outlook
5-year Outlook
Industry Today
Automotive Telematics Today
3G (Limited) Connectivity
Self
Parking
Adaptive Cruise
Control
Proprietary internally developed software
Limited Navigation
Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc.
GPS & Google
Maps
Systems Control
e.g. headrests,
climate control
Car OS
UI (Skinnable GUI
+ NUI)
OBDII Interface
Subsystems
Android
3rd Party
Apps
Today
ECUs, Airbags, ABS, Engine Control & Monitoring
Subsystems
Tightly integrated gCar
platform
Google Car
Android
OS
3rd Party
Apps
Tomorrow
Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc.
UI
(Skinnable
GUI + NUI)
GPS &
Google Maps
Systems Control
e.g. climate
control
OBDII
Interface
Predictive
Analytics
Battery
Optimization
Driverless
Systems
ECUs, Airbags, ABS, Engine Control & Monitoring
How will Google Crack the Market?
By leveraging unique existing capabilities
to add value to the existing market.
Additional functionality to
drivers via the Android UI
Improved driving
analytics and
behavioral data,
stored on the
Google cloud
Free OS lowers
system design and
future maintenance
costs
Predictive systems to
optimize battery
efficiency
System-level
phone
integration,
remote start
& other
systems
controls
No infrastructure overhead for auto makers
Network Effects for Android Telematics
Short term: Mimic smart-phone strategy through free, open-OS,
designed to create customer lock-in
• Phone
integration
• Apps
• Car Efficiency
Consumers
Car
Manufacturer
gCar Platform
• Market penetration
• Ad Revenue
• Data on Driver
Behavior
• Subsidized Software
• Predictive Modeling
• Driving behavior
analytics
• Differentiator
(Customizable GUI,
customizable Android
Market Place for each
manufacturer)
The Cloud is Key
What is a Car on the Cloud?
Cloud Computing gives
consumers access to:
• Optimized car settings
• Software updates (maps)
• Computationally intensive
tasks (voice commands)
• Offloads expensive computer
elements
• Big Data analytics on driving
data for researchers, policy
makers, insurance
companies and city planners
…..Most importantly, it
represents a path to driverless
cars.
Introducing Driverless Cars, powered by
Google™
• Legislation already in place in Nevada to allow driverless cars
• Marketing and PR blitz to introduce driverless cars into the US
• “Vegas, powered by Google” -- Free cab service between casinos
How do we get there?
Necessary Strategic Partnerships
Google  Partner
Partner  Google
Car Manufacturers
New products &
revenue streams
Access to their cars
Cellular providers
$
Data connection
Content Providers
New placement for
content
More content to
monetize w/ ads
Local Governments
Dramatically reduce
road congestion
Legislative help
Analytical data,
capacitance
$, access to their
networks for future
products
Partner
Utility Companies
Unique Value Proposition
Driverless as a Service (DaaS) for $50/month
• 40% revenue sharing agreement with auto manufacturers
• Remaining will be split between cellular data providers, and Google
• Driverless Cars, powered by Google rolled out nationally as
legislation allows
• Platform for future capabilities: mesh networked cars (motes), data
collection for insurance companies (monetization potential), OnStar
like systems, etc.
Ancillary data services revenue
and advertising revenues kept
solely by Google
Competitive Challenges
• Microsoft Sync, represents a potential threat and could leverage into a
driverless solutions
• Apple has more than enough cash to enter this market
• Car manufacturers may want to develop own system internally to
retain control
• Existing subsystem and controls companies have relationships with
auto manufacturers that may be difficult to challenge
• Reliant on communication standards being set between OS and
ECUs
Additional Risks
• Policy: State legislation for driverless cars
• Consumer Privacy: Assurance and controls to protect consumers’
anonymity, unless opted-in
• Security: Encrypted data connection to servers to transmit sensitive
data
• Safety and Liability: Legal liability will need to be established in case
of accident
• Suppliers: Potential for supplier backlash as Google moves down the
stack
Forecast
$9,000,000
16000
$8,000,000
14000
$7,000,000
12000
$6,000,000
10000
$5,000,000
8000
$4,000,000
6000
$3,000,000
4000
$2,000,000
2000
$1,000,000
$-
0
1
2
3
4
5
6
7
Revenue (000's)
Cars paying for DaaS (000's)
NPV = $14.7B
8
9
10
Adjacent Vertical - V2G (Vehicle to Grid)
What is V2G?
V2G or Vehicle to Grid is a method of storing and supplying electricity from
electric vehicles (EVs) directly to the grid/utility.
How does it work?
“Dr. Jasna Tomic of CALSTART
reports that utilities will pay $15
to $55 per MWh for electricity
supplied for frequency
regulation, but the utility does not
want to deal with 100,000 car
drivers. The utility wants one
aggregator in the middle to
provide the power.”
V2G (cont)
Why Should Google Enter the V2G market?
• Charging analytics will work seamlessly with Android enabled electric vehicles
and cloud computing infrastructure
• Expands and strengthens Google as a Platform in automotive
• Fits strategically with Google smart grid initiatives
• Has FERC approval to buy and sell electricity in wholesale markets
• Positive five year NPV of $2.5B
How Should Google Enter the V2G market?
• Partner with Charging Station manufacturers and
infrastructure providers.
Conclusions
• Unique opportunity to capture value in $85B US Auto market
• In the short term, Google needs to replicate the success of the mobile
market to become the core OS of every vehicle. This will allow it to
capture short term revenues from advertising and data analytics, but
more importantly will provide a framework for future driverless car
enhancements.
• In the long term, Google’s success depends on the adoption of
driverless vehicles. In addition to earlier revenue models, Google will
capture additional value by creating a Driverless as a Service (DaaS)
subscription model. This will allow Google to capture revenue’s in
excess of $8B per year after ten years for an NPV of $14B.
• Additionally, market entry into the automotive market will allow
Google to enter new markets such as EV charging and demand
response with yearly revenues in excess of $1B.
• Additional data monetization strategies are plentiful once Google’s
core Car OS is widespread.
Thank You!
Appendix - V2G NPV Calculation
http://cet.berkeley.edu/dl/CET_Technical%20Brief_EconomicModel2030_f.pdf
Appendix - V2G NPV Calculation
Number of EVs sold in the
US
Google Market Share
Number of Google
Controlled Cars
Yearly Utility revenue
saved by EVs
$
% Demand Response
Revenue for Google
Cash Flow
Discout Rate
NPV
$
(1,000,000,000) $
10%
$ 2,535,325,201.90
2015
2016
2017
2018
2019
2020
500,000
750,000
1,000,000
1,500,000
2,250,000
2,700,000
10%
25%
50%
75%
75%
75%
50,000
187,500
500,000
1,125,000
1,687,500
2,025,000
4,000 $
4,000 $
4,000 $
4,000 $
4,000 $
4,000
25%
25%
25%
25%
25%
25%
50,000,000 $
187,500,000 $
500,000,000 $
1,125,000,000
$
1,687,500,000
$
2,025,000,000
Driverless as a Service (DaaS)
Monthly Fee of $50
Allows car to be driverless
Allows car to get on Driverless lanes
Covers content distribution
Car Manufacturer
Cell Network
R&D
Other Costs (legal,
servers, etc.)
Profit
Timeline
Ten Years
Driverless Car
Introduced
$8B+ per year
revenue
$35B NPV
Today
Five Years
$1B in added
revenue
Five Years
- $1B in added
revenue
Financials
Cars
Year 1
Sold per year (000's)
Cumulative Cars
(000's)
6,500
% Driverless
Market Captured
Market Paying DaaS
$
Monthly Fee
$
Ad Rev per Car
2.00
Year 2
6,500
Year 3
7,015
13,515
5%
90%
100%
Year 4
7,324
20,839
10%
90%
100%
$
50.00
$
2.10
Year 5
7,576
28,415
18%
80%
90%
$
50.00
$
2.20
Year 6
7,611
36,026
25%
70%
90%
$
50.00
$
2.30
Year 7
7,623
43,649
35%
60%
80%
$
50.00
$
2.40
Year 8
7,700
51,349
59,049
45%
60%
80%
$
50.00
$
2.50
Year 9
7,700
50%
60%
80%
$
50.00
$
2.60
Year 10
7,700
66,749
50%
60%
70%
$
50.00
$
2.70
7,700
74,449
50%
60%
70%
$
50.00
$
2.80
50%
60%
70%
$
50.00
$
2.90
0.04
Cars Paying (000's)
Yearly fee
293
Total (000,000's)
$
$
(2,000,000)
Google Revenue
(000's)
$
29,320,000
Total (000's)
Percent
Dev Costs (000's)
1,216
Present Value
Total Cars Today
(000's)
9,428
12,324
12,400
14,017
$600
$600
$600
$600
$600
$600
$176,114
$732,486
$1,626,652
$2,695,958
$3,646,552
$5,681,424
$7,427,530
$7,474,895
$8,451,024
$176.11
$732.49
$1,626.65
$2,695.96
$3,646.55
$5,681.42
$7,427.53
$7,474.89
$8,451.02
1%
2%
6%
9%
12%
19%
25%
25%
29%
$
(1,823,886)
$51,073
137,079
6,052
$600
Profit (29%)
$
(2,000,000)
$
14,246,800
4,475
$600
0.00%
$
2,000,000
$
(2,000,000)
2,701
$600
$
46,430
$
(1,091,400)
$
535,253
$
3,231,211
$
6,877,763
$
12,559,186
$
19,986,716
$
27,461,611
$
35,912,635
$212,421
$471,729
$781,828
$1,057,500
$1,647,613
$2,153,984
$2,167,719
$2,450,797
$
$
$
$
$
$
$
$
$
175,554
354,417
533,999
656,624
930,035
1,105,334
1,011,257
1,039,377
10,393,772