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Transportation Industry Ripe for Disruption

While autonomous vehicles are the ultimate destination for cars’ transformation, there will be plenty of waypoints along the road — and interim ways for drivers to benefit from new technologies.

(TNS) -- Cars are getting smarter, more connected and closer to a future where they can drive themselves. Against that backdrop, an array of technologists, investors, car executives, transit experts and others convened at San Francisco’s Dogpatch Studios on Thursday for a conference delving into changes in how people get around.

“Technology is transforming transportation in the same way it’s transformed media, music, you name it,” said Doug Newcomb, president and co-founder of the C3 Group which sponsored the C3 Connected Mobility Summit. “Society is ready for it and the industry is ripe for disruption.”

Sudipto Aich, manager for mobility solutions at Ford Research and Innovation in Palo Alto, put it like this: “We’re on the verge of expanding from personal ownership to shared mobility services.”

Ford is running two dozen experiments worldwide to be ready for that shift. Two major examples are in the Bay Area: its purchase last month of commuter-shuttle operator Chariot, whose services it plans to expand nationally and internationally, and a partnership with bike-sharing firm Motivate to disperse 7,000 bikes for hourly rentals around the region.

While autonomous vehicles are the ultimate destination for cars’ transformation, there will be plenty of waypoints along the road — and interim ways for drivers to benefit from new technologies.

Monali Shah, director of intelligent transportation at Here, a Berlin mapping company purchased by BMW, Audi and Daimler for $3.1 billion last year, talked about how its digital maps and data are applicable in today’s world as well as tomorrow’s. Already, they underlie most U.S. and European car-navigation systems.

“We’ll need a whole new level of accuracy and freshness” in generating information for automated cars on factors such as weather, construction and traffic, she said.

Investors thrashed out whether autonomous driving is already an overhyped industry.

Au contraire, said Jim Scheinman, founder and managing partner of Maven Ventures, repurposing a John Doerr quote about the Internet.

“The autonomous vehicle driving industry is underhyped,” he said. “It’s one of the most game-changing platforms we’ll see in our lifetime. I believe it’s happening much faster than most people think and it will change everyone’s life in a massive way.”

That attitude has already been rewarded in spades. Maven was an early investor in San Francisco’s Cruise Automation, which is developing a kit to make cars self-driving. General Motors bought it for north of $1 billion this year. The company had raised only $18 million, and even that was hard going.

“We shopped Cruise to every single great VC investor and we got noes from 30 people,” Scheinman said. “The problem is a lot of these early-stage deals look insane. But if you do rational thinking all the time, you’ll miss some of these deals.”

Another example: San Francisco’s Otto, which is working on self-driving trucks, was entirely self-funded by its founders, and sold to Uber this summer for $700 million.

Zach Barasz, a senior associate at Kleiner Perkins Caufield Byers, pointed to the market potential for all sorts of transportation innovations.

“In the U.S. today, only 15 percent of people have ridden in an Uber or Lyft,” he said. “Less than 1 percent of vehicles sold are electric. One-third of people have not even heard of Uber or Lyft. Only two companies are in (public) trials of autonomous vehicles, Uber in Pittsburgh and NuTonomy in Singapore. It’s hard to stress how much more is still to come.”

But meanwhile, some investors are looking into a persistent old-world transport issue: parking.

“Parking is an enormous problem,” said Quin Garcia, managing director of Autotech Ventures, which focuses on investments in ground transport. “It’s an inverse with autonomous vehicles; the more autonomy, the more the problem diminishes. But it will be a number of years with privately owned vehicles and this problem.” Autotech has tracked 57 parking startups without finding a suitable investment, he said. “The space is really crowded because it’s such a big and obvious problem, but it’s hard to achieve success outside of local regions.”

The conference wound up with what one attendee called a “Debbie Downer” panel that looked at potential unintended — and negative — consequences of self-driving cars. They included continued erosion of the middle-class if jobs like truck driver and cabdriver go away; an increase in urban sprawl as people potentially commute longer distances; an over-reliance on artificial intelligence without an ethics framework; and people’s driving skills atrophying.

Still, said Karl Brauer, executive publisher of Kelley Blue Book, it will be a gradual transition.

“Millions of human-controlled cars won’t disappear overnight,” he said. “There will be a long time frame of cohabitation of autonomous and human-controlled vehicles. It will be interesting to see the interplay between them. We could get in situation where the autonomous cars never get in accidents but take three times as long because they play it safe. People will have to decide between taking longer to get somewhere and or driving themselves and risking an accident.”

©2016 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC.