At the Bloomberg Future of Mobility Summit last week, I argued that it will take five key pieces for any company to succeed as the provider of the new age vehicle service. If we summarize all the hype (there is more than enough) and all the facts (there are some) the new age vehicle can roughly be defined as the autonomous electric pod with comfortable interior space that is totally connected and likely shared. It is basically a minivan with the cabin of a private jet, the sensors of a military drone and the computing power of major banking institution.
For now, let’s limit this ‘savior from driving boredom’ to two-dimensional roads although there is no reason it will eventually autonomously fly you to your destination. Either way, the winning company in this future reality will need to assemble and combine five fundamental core competencies that no entity has today:
Vehicle software technology; the ability to compute vast amounts of data from sensors continuously reporting in 3D space. This is huge as we know. So much data so little time. Even the merits of rules-based computing vs. ‘learn-as-you-go’ computing are still being evaluated.
Hardware technology; the hardware surely includes processors, memory devices and sensors. But, neglect ‘bending the sheet metal’ at your own peril. The OEMs know it and as of this writing, Tesla is in self-proclaimed, “production hell”. Building a desirable vehicle, fully validated, and at rate is a daunting challenge but someone must do it. Without those ‘so last century’ automotive practices, there is no autonomous car.
Customer interface; this is the customer facing software that makes the transaction work conveniently. How one summons vehicles, tells it where you are going and takes care of all the transactions is a key part of the system. This is so fundamental that these core competencies are now basic entry points for the new age vehicle game for firms like Uber and Lyft, seemingly overnight.
Brand value; Brand is often dismissed in the land of ubiquitous cars summoned at will. But, if I have the means to call up a premium branded vehicle or engage a premium service, I will. Humans do that. Without a great brand, a great competitor in the new age vehicle space may lose out, one transaction after another.
Lots of capital; I repeat, lots of capital. The automotive industry is a slow bet. A dumb place for capital if you are looking for any speedy returns. To play in the automotive game, the table stakes are in the billions of dollars. Now pile on mounds of R&D investment for the new age vehicle that will not have any real market share for one to two decades and you have many angel investors running for the door.
The new age vehicle development is not a marathon, it is a pentathlon. That’s right, five different sports. How can any single athlete be a global leader in so many disciplines? Indeed, how can a company compete on all five fronts listed above in the new age vehicle economy?
Waymo, Alibaba, GM, Aptiv, Tesla, Apple, BMW…no one company has it all and everyone is scrambling to assemble the combined core competencies. The big companies may eventually acquire the little companies to create the pentathlete. However, in the near term, it will have to come from skillful partnerships.
That’s why we see tech and data companies paying attention to the OEMs, the OEMs paying attention to Silicon Valley and everyone wondering who will emerge as the company with the best talent in as many of the five disciplines. If you like competition, the pentathlon is a grueling and rewarding race.
Thanks to my Bloomberg New Energy Finance host, Colin Mc Kerracher and my fellow panel members, Vincent Cobee of Renault-Nissan-Mitsubishi Motors, Claus Ehlers of Daimler AG, and Tony Posawatz of Invictus iCAR.
Recent Comments