The Automotive Sector Hits Speed Bump on Road to Transition

Forbes.com

March 29, 2019

By Simon Flowers


The transition in cars has begun. The future of light vehicles is electric; in time, perhaps autonomous (AEVs). Today, there are about 5 million electric vehicles (EVs) on the road globally, less than 0.5% of the 1.2 billion light vehicle fleet. That will change as EVs become competitive without subsidies in the 2020s, building an ever-rising share of the global car fleet that itself is set to grow by 50%.


The range of possible outcomes is wide. We forecast 300 million EVs and AEVs on the road by 2040 in our base caseone in six light vehicles and rising. Disruption by EVs is a key factor behind our prediction that oil demand peaks in the mid-2030s.


But the disruption wont be quick, and the rise of the EV wont be linear. What suits the automakers and consumer preference will all affect the pace of penetration. Linda Giesecke, Research Director, Macro Oils, points to unexpected trends unfolding in the big five car markets that will account for 90% of EV sales.


First, the U.S which will be home to almost a quarter of EVs by 2040. The Tesla Model 3 led to EV sales jumping by 80% in 2018. There are now 1 million EVs in the market, just 0.4% of the fleet. Yet the rate of growth is set to slow this year as tax credits for some models end.


The bigger story is soaring demand for gasoline-fueled SUVs. Sales of SUVs were 8 million in 2018, almost half of U.S. auto salesup from a third in 2015although a shift is underway from the biggest SUVs to more fuel-efficient cross-over or mid-sized SUVs. We still expect U.S. oil demand to fall 5% by 2025. But SUVs are impairing progress in fuel efficiency and making it tougher for automakers to meet the Environmental Protection Agencys greenhouse gas emissions standard.


Second, China, now the worlds biggest EV market. Sales almost doubled in 2018 to 1 million units, against the trendoverall car sales fell 4% to 24 million units as consumer finances dried up. EV sales should be buoyant again this year ahead of subsidy cuts in 2020. We expect Chinas EV stock to reach over 90 million units by 2040, 20% of Chinas total car fleet.


But SUVs are in the ascendancy with the growing Chinese middle class. A sideline a decade ago with 7% of the market, SUVs captured 42% in 2018 with sales of 10 million units. As in the U.S., the weighting of SUVs in the mix is bullish for oil consumption, which we expect to grow by 25% through 2025.


Third, India, where two-wheelers are the hot segment. The EV stock is minuscule today and reaches just 13 million in 2040. Sales of motor bikes and scooters in contrast are booming, up 19% in 2018 as Indias youth and rural dwellers take to the road. One in seven Indians now owns a two-wheeler, more than own cars. The car fleet, too, has much growth potential as living standards improve. We expect fuel demand from the two combined to grow by 0.4 million b/d, over 50%, through 2025.


Fourth, Europe, fast becoming a scrap heap for diesel cars. Amid concerns over the effect of fumes on health, policy and consumer sentiment have turned anti-diesel. Only one in three cars sold in 2018 was diesel, down from 1:1 three years ago. The law of unintended consequences? Diesel engines are more efficient; the renaissance of gasoline cars will make achieving the EUs 2021 fuel-efficiency target much harder. Even so, we expect fuel demand in Europe to fall by 10% to 2025, with diesel declining at a faster rate.


Last, Japantransitioning fastest and with only limited help from EVs. Improving fuel efficiency is the goal and its working; the 2020 target is already in the bag. Consumers lust for hybrid EVs (HEVs) and mini-gasoline fueled internal combustion engine cars (660cc or smaller) is like no other market. HEVs are now mainstream, making up one-quarter of the 4 million cars sold in 2018.


These trends show that the road to decarbonization in the automotive sector will have many twists and turns. ICE vehicles will hang on for some time yet.


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How AI Is Contributing to Improvements in Healthcare

Health Data Management

March 29, 2019

By Simon Beaulah


A recent trade news article suggests that current artificial intelligence applications in healthcare may not be sexy, but plenty of solutions are having a positive impact on healthcare delivery and operations.


Natural-language processing, for example, is an AI technology helping healthcare providers extract key information from unstructured text to glean quantitative, actionable insights. About 80% of clinical information is unstructured text, making a vast amount of rich patient data difficult to access for clinical decision-making or research studies.


NLP tools, however, make unstructured data usable by facilitating queries for the identification and extraction of key concepts from large volumes of data. Findings can then be transformed into structured data for analysis, visualization or integration with structured data in data warehouses.


Health systems, payers and pharma currently leverage NLP in a wide variety of use cases to advance quality of care initiatives, streamline operations and accelerate drug discovery and development. What follows are a few specific examples of NLP and AI deployments making a positive impact on the industry.


St. Louis-based Mercy includes more than 40 acute care and specialty hospitals, plus 800 physician practices and outpatient facilities. As part of a collaborative project with a global medical device manufacturer, Mercy has analyzed cardiology measures from physician data and other clinical documentation for about 100,000 patients going back to 2011.


Because some core measurementsincluding ejection fraction measures and symptoms such as dyspnea, fatigue and dizzinessare not typically stored in discrete fields, Mercy relies on NLP tools to extract relevant details. The data is then analyzed to evaluate heart failure device performance, which helps the device company improve its implantable products and enables Mercy clinicians to analyze the impact of different therapies and medications, and make more informed treatment decisions.


Without NLP, Mercy researchers would need to spend many years extracting the same information manually. Based on the success of the cardiac study, Mercy recently announced a new collaboration with another global medical device organization to leverage Mercys real-world data and NLP capabilities to improve regulatory decision-making and health outcomes.


Atrius Health, a not-for-profit health system with 30 practice locations and 900 physicians across eastern Massachusetts, leverages NLP to identify at-risk patients and close care gaps, enabling the organization to increase efficiencies, improve patient care and capture additional revenues.


To satisfy Accountable Care Organization reporting requirements and facilitate care initiatives, Atrius Health uses NLP to access information stored in narrative form in the EHR.


For example, Atrius Health analyzes unstructured echo reports to analyze heart pump function and identify high-risk heart failure patients. In 2017, Atrius Health identified 92 otherwise undocumented congestive heart failure and chronic obstructive pulmonary disease patients. This has enabled Atrius Health to take proactive measures and close care gaps, as well as advise payers that these additional patients required risk adjustment for care-budgeting purposes. This also generated additional risk-adjusted revenue to support these individuals care.


In addition to advancing safety-net initiatives, Atrius Health relies on NLP to facilitate quality metric reporting and to ensure clinical documentation accuracy.


Payers also utilize NLP technologies to extract member insights from unstructured big data to improve population risk stratification.


One top-5 payer has implemented NLP within an automated workflow to ingest data from Hadoop systems, which improves their ability to stratify risk for individuals with congestive heart failure. The payer uses NLP to mine risk factors such as mentions of disease and disease severity such as body mass index, along with lifestyle characteristics, like smoking and social determinants of health factors, such as social isolation. Data is extracted and transformed to a structured format that is uploaded into Hadoop HIVE to create detailed insights for population risk stratification.


Payers can easily extend the use of NLP to support other such as HEDIS quality measurement reporting.


In the future, look for AI technologies for healthcare to become increasingly sophisticated. For example, Secure Exchange Solutions (SES) is developing a platform that leverages NLP technology to improve patient care by streamlining current bottlenecks in the prior authorization and medical review process.


SESs solution uses NLP to extract both free text and codified data from EHRs, compares the data with current policy guidelines, then offers recommendations on acceptability of procedure, treatment and medical device authorization requests. The aim is to reduce manual processes and inefficient workflows between payers and providers and facilitate the rapid delivery of appropriate patient care.


Current and future AI technologies offer great potential for improving health outcomes and reducing operational and care delivery costs.


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BMW Creates 2,000 Jobs as It Starts Production of New Autonomous Electric Car

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BMW Warns Profits Will Fall Due to Costs, Trade Uncertainty

Associated Press Financial Wire

March 28, 2019

By David McHugh


German automaker BMW said Wednesday that profits in 2019 will be well below last years and it will cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology.


The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates.


The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs.


The company forecast a profit margin of 6 to 8% for its automotive business, short of the long-term strategic target of 8 to 10%, which it said still remains the ambition for the company given a stable business environment.


BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, MINI and Rolls-Royce brands are to get a single sales division.


Chief Financial Officer Nicolas Peter said that given the headwinds to earnings, we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions.


The company said the measures were needed to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future.


Automakers around the world have faced heavy up-front costs for technology expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo.


BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17% from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules.


BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S. President Donald Trump has also threatened to impose auto import tariffs that would hit EU automakers, but has held off for now. BMW could also suffer disruption if Britain leaves the European Union without a negotiated departure agreement to address trade issues.


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Amazon’s Cloud Will Connect Volkswagen’s Vast Factory Network

CNN Wire

March 28, 2019

By Ivana Kottasov


Volkswagen and Amazon are teaming up to develop cloud computing that should make the German carmakers vast factory network more productive.


The companies announced Wednesday that they are undertaking a project to combine data from all machines, plants and systems from 122 Volkswagen plants around the world.


The project could eventually connect the carmakers entire global supply chain, which includes 1,500 suppliers and partners at over 30,000 locations. The value of the deal was not disclosed.


Amazon Web Services, the cloud computing division of the U.S. tech giant, will provide Volkswagen with a team of developers and data scientists who will examine data from the project and make recommendations.


The goal is to make Volkswagens operations more efficientfor example by adjusting delivery times, reducing waste or identifying gaps in production. The system could launch before the end of the year.


Andy Jassy, CEO of Amazon Web Services, said in a statement that the cloud project will reinvent [Volkswagens] manufacturing and logistics processes.


Volkswagen is investing heavily in new technology as it seeks to catch up to competitors in the transition to electric vehicles and turn the page on its diesel emissions scandal.


Company executives have acknowledged that productivity issues are harming its bottom line. In September, Volkswagen set itself the ambitious goal of increasing manufacturing productivity worldwide by 30% by 2025.


One crucial step is to standardize production, machines and systems across its factories. Volkswagens plants are currently operated in different ways, preventing the smart integration envisioned by the deal with Amazon.


The agreement is also a big win for Amazon. The cloud business has grown into a major revenue source since its founding 14 years ago, generating sales of $7.4 billion in the final quarter of 2018.


Amazon Web Services claims a third of the global cloud market. Its customers include corporate heavyweights such as Comcast and Pfizer, tech startups like Airbnb, and even the U.S. government.


This is not the first time Volkswagen has turned to the cloud. Last month, the company struck a major deal with Microsoft to develop an Automotive Cloud that will integrate third-party apps into its cars.


The system will allow drivers to continue to listen to the same music at home and in the car, make calls, check a calendar for appointments and pay for parking.


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Electronic Health Records: Useful Information or Bad ‘Aligatorithms’?

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