The Journal The Authority on Global Business in Japan

In recent years, mobility has been transformed by three innovations: automation, electrification, and ride-sharing. A fourth—connectivity—will usher in a future where cars communicate with each other and the surrounding infrastructure.

Often summarized as connected, autonomous, shared, and electric (CASE), these advances are set to bring about a shift in the way we commute. And that’s not to mention the myriad new business opportunities that will follow in their wake.

To find out more, The ACCJ Journal spoke with leading industry players, including corporations, startups, and startup ecosystem builders.

For insight from government, we sat down with Hiroshi Ishikawa, director of the automotive industrial strategy office at the Ministry of Economy, Trade and Industry (METI). Ishikawa’s office is part of the ministry’s manufacturing industries bureau.

GOVERNMENT ONBOARD
Since the advent of CASE, around 2016, METI has held high-level committee meetings to formulate new policies for the automotive industry. The meetings gained pace in 2018, and have been attended by chief executive officers of automotive companies, original equipment manufacturers, and industry experts.

For Ishikawa, there is concern that Japan’s automotive industry, which has led the world for decades, will undergo a disruption similar to that which happened in the semi­conductor industry. In that case, Japan gave way to the United States as the dominant player in the 1990s, followed by new market entrants Taiwan, South Korea, and China.

To avoid a repeat, METI’s high-level committee has put forward new initiatives to utilize CASE.

One aspect is to consider mobility as connected to the energy infrastructure. This is the electrification component of CASE.

Ishikawa said that METI wants to promote the utilization of electrified vehicles as solutions for back-up electric generators, vehicle-to-home, and vehicle-to-grid solutions.

It is the ministry’s hope that an integrated ecosystem of mobility and energy will be realized, taking advantage of the power generation and storage capacity of electric vehicles.

RURAL CASE
Another component is focused on solving transit challenges in rural areas, where a decrease in demand and manpower has led to the closure of transportation services.

In those places, new technologies such as on-demand shuttles and self-driving vehicles are being tested. These experiments take advantage of technologies such as the Internet of Things (IoT) and Big Data.

And that’s not to mention that a plethora of new business opportunities will emerge from CASE-generated Big Data. Part of the METI committee’s task is to draft a framework to govern how such data is used.

With regard to the automation compo­nent of CASE, the committee is drawing up a roadmap with a focus on mobility services, truck platooning, and private cars.

Automation Ahead

METI has conducted pilot projects for automated cars since 2017, Ishikawa noted. Last year, truck platooning—the linking of two or three trucks to form a convoy—demonstrations were conducted on expressways.

Initially, the trucks had a driver inside to act as a monitor, but trials of driverless trucks are moving forward.

This year, the ministry is conducting longer duration trials of up to six months, with two locations chosen as demonstration grounds. Fully autonomous vehicles will be tested, and, by 2020, demonstrations for automated private cars will start.

As for the shared component, METI has this year launched a shared mobility challenge intended to usher in diversity in transit services.

Diversity in mobility matters because transit challenges are not the same in rural areas as in urban ones.

In collaboration with other ministries and local govern­ments, METI has identified 28 projects across Japan, with trials to begin on automated cars, IoT infrastructure, and other advanced technologies.

It is their hope that these initiatives will not only lead to the creation of best practices in the industry, but also smooth deployment of CASE in the future.

ROAD TO CHANGE
Ishikawa noted that, in the current Diet session, the government
passed amendments to the Road Traffic Act.

This will permit Level 3 automation under regular driving conditions in Japan. This means that a human driver is still necessary, but all safety-critical functions can be transferred to the vehicle. The human driver can take control if necessary. Such legislation is ahead of many countries, he added.

Japan faces a variety of social issues, from a declining population to labor shortages to aging. However, Ishikawa believes that these challenges will lead to new innovations.

“We can deploy new technologies to solve these new kinds of problems,” he said. “So, we hope American companies, working with Japanese companies, can participate in these solutions.”

CASE activity exploded in 2016, with tech giants such as Apple Inc. and Google LLC as well as automobile titans such as Toyota Motor Corporation and Ford Motor Company leading the way, James Kuffner told The ACCJ Journal.

A pioneer in the mobility industry, Kuffner is CEO of Toyota Research Institute—Advanced Development (TRI-AD), Inc.

By 2017, he noted, there were more than 270 companies worldwide engaged with one or more aspects of CASE, from safety and security to in-car intelligence assistance platforms to automation.

“The reality is that every automotive company is a software company—they just don’t admit or realize it yet,” Kuffner said.

The amount of software in a car is growing at a rapid pace, he explained. This means a new approach to product development is needed, one that is agile and maximizes efficiency.

To this end, TRI-AD was established in 2018 as a joint venture between Toyota, automotive components makers Denso Corporation and Aisin Seiki Co., Ltd.

TRI-AD—and its sister organization, the Toyota Research Institute, which was established in 2016—is gathering leading researchers in artificial intelligence (AI), automated driving, and robotics at its base in Tokyo’s Nihonbashi business district.

SILICON VALLEY, JAPAN
TRI-AD is creating cloud-based tools for testing and developing
software for automated vehicles, leveraging advances in ma­chine learning, mapping, and simulation tools. Developer, deployment, and data management tools are part of the mix.

The cloud-based simulation environment will be used to test, verify and validate the onboard software of their real-world test vehicles and robot platforms.

The company will seek to do something unique, tapping into Japan’s illustrious manufacturing tradition while introducing Silicon Valley-style approaches to software development.

“The traditional waterfall approach to developing cars or hardware doesn’t apply or scale well to software. Studies have shown that agile, scrum-based software development is a better way to build complicated software systems at scale.”

A roboticist by training and a former member of Waymo—Google’s self-driving car project—more than a decade ago, Kuffner’s challenge is to figure out how to build a “Toyota production system for software.”

TRI-AD is set to launch its first product, Team Mate, in 2020. “It will be the most powerful supercomputer on wheels that you can buy, and the most complicated car Toyota has ever built.”

RISE OF THE MACHINES
Former Silicon Valley-based management consultant Masayuki
Ishizaki knows a thing or two about innovation and taking on new challenges.

In 2016, he founded Ascent Robotics Inc., an AI software venture based in Ebisu, one of the centers of Tokyo’s startup ecosystem. Ascent is developing AI software that enables machines­—with a current focus on industrial robots and vehicles—to be adaptive and responsive in their autonomy.

Given Japan’s labor shortages, the industrial robots the company is powering with their software are intended to take ever greater control of repetitive and subtle duties currently performed by humans.

“Manufacturing isn’t just about routine work. There are many subtle, detailed, or miscellaneous tasks that take place, and that’s where labor shortage is,” Ishizaki explained. “Our robot solutions will work side by side with humans, and basically become additional labor.”

Such increasingly adaptive automated solutions, he argued, will be used by large manufacturing companies, small and medium-sized enterprises, and even startups for tasks such as assembly, customer relations, and cooking.

Ascent’s self-driving environment, described as “an AI environment to train AI,” will be able to create its own simulated examples of driving conditions and teach itself how to navigate them.

For Ishizaki, companies have little choice. If they are to remain competitive, they must deploy adaptively autonomous technologies. Ascent’s simulation technology for auto­nomous vehicles will start being integrated by car manufacturers in early 2020, and their AI for industrial robots will be on display at iREX International Robotics Exhibition later this year at Tokyo Big Sight.

ON DEMAND IN REAL TIME
When it comes to sharing, CASE in Japan is manifesting itself in a number of ways. For mobility services provider Via Transportation, Inc., on-demand ride-sharing has been their entry into the market. The company has entered a partnership with trading company Itochu Corporation and property developer Mori Building Co., Ltd.

“We launched an employee shuttle in August 2018 and were able to prove that people really did like the real-time, on-demand concept—and we can do it legally,” CEO Cariann Chan told The ACCJ Journal.

Called HillsVia, the on-demand shuttle service in Tokyo’s Minato Ward allows Mori’s employees to hail rides between the real estate giant’s properties using the HillsVia app, developed and powered by Via Japan.

For Chan, the partnership with Mori made sense because the realtor has for decades been at the forefront of innovations related to lifestyle solutions, and that includes how people move around their communities and to important transportation hubs.

Itochu’s investment in the partnership, meanwhile, will leverage an understanding of user experience and the lifestyles of Japanese customers.

To date, Via Japan has run four HillsVia shuttle vans—all high-end Mercedes-Benz vans configured to carry up to six people. Elsewhere around the world, Via works with vehicles of every size, even larger double-decker buses.

MOBILITY ECOSYSTEM
In the era of CASE, automobile manufacturers are becoming
more digitalized. The challenge is how to manage the transition.

In Japan, the company is looking to expand its operations across the country, including in rural zones where transportation is lacking. Globally, Via has more than 80 launched and pending deployments in nearly 20 countries, partnering with public transport agencies, as well as bus and taxi companies, to provide more than 60 million rides.

Often, large automobile companies rely on their own research and development divisions or work with traditional partners in the industry. Increasingly, however, they are entering partner­ships with startups via open innovation collaboration.

Plug and Play Japan, a startup incubator, is an open innovation company facilitating such collaborations, said Shingo Ehara, director at Plug and Play Japan Mobility. Located in Shibuya, the company is bringing together mobility startups and large companies such as Nissan Motor Corporation, Denso, and Aisin.

Plug and Play Japan Mobility made possible an ongoing collaboration between NearMe, a Japanese carpooling service startup, and real estate giant Tokyu Land Corporation. Tokyu’s portfolio of companies includes offices, commercial facilities, residences, and resorts.

“We’re working on three projects right now. One is for autonomous driving testing in Kiminomori, a housing estate in Chiba, which is ongoing. And we are planning a ride-pooling collaboration with NearMe in Chiba, and proof of concept experiments in Shibuya,” said Hidetoshi Ito, a senior manager in Tokyu’s town management and startup promotion group. His office is part of the business strategy department, a sector of the company’s urban business unit.

In the upcoming collaboration between Tokyu and NearMe, the real estate company will use the startup’s on-demand car-pooling app to transport groups.

In this case, users will be able to take rides together to Tokyu’s destinations outside the city, such as golf courses in neighboring Chiba Prefecture.

CASE OPEN
Whether it’s a tech giant or an automobile goliath, an ac­claimed constructor or an aspiring startup, the argument for CASE is stronger now than it has ever been. The upshot? Companies across industries are jostling for position for fear of missing out.

John Amari is a writer and editor from the UK who specializes in articles on startups, entrepreneurs, science, tech, and business.
More than 270 companies worldwide [are] engaged with one or more aspects of CASE.