Shift Magazine - Issue 1 2018 - 22

upstarts

& DOWNFALLS

George Hotz on the TechCrunch
Disrupt stage in 2016 with his
Comma One device

Newcomers to the auto
industry need mentorship
from old stalwarts to negotiate
through regulatory hurdles
BY KATIE BURKE

ll it took was one letter to derail
George Hotz's self-driving car
promises.
In September 2016, Hotz took
the stage at TechCrunch Disrupt, a competition in San Francisco for startups, and
announced he was mere weeks from selling
a device that could turn a regular car into a
self-driving car.
He whipped out a device that looked like
an original Nintendo DS gaming system and
said the Comma One would be "harder to
come by than a pair of Kanye West sneakers."
Six weeks and a lot of media attention
later, Hotz announced that he was canceling the project after receiving a letter from
NHTSA questioning the device's safety and
efficacy and urging Hotz to delay releasing it
until he could prove it would be safe.
"Would much rather spend my life building
amazing tech than dealing with regulators
and lawyers," Hotz tweeted at the end of
October 2016, after announcing the cancellation. "It isn't worth it."
Brash Silicon Valley upstarts such as Hotz
see the auto industry as ripe for disruption.
The industry is slow to change, they say, and
they argue it's time to rethink the ways in
which vehicles are powered, sold and owned.

SAME OLD

But after several years of trying to buck
norms, the disrupters are running into the
same problems that the traditional auto
industry has faced for decades: safety regulators, environmental regulators and consumer protection agencies.
"A car is not exactly like a computer on
wheels," said Kristin Schondorf, global automotive and transportation mobility leader at EY.

shift * may 2018

Automakers, suppliers and the ecosystem
surrounding them have dealt with growthrestricting obstacles for decades, including
regulations, automotive-grade standardization, product liability and affordable mass
manufacturing. As industry disrupters seek
to ensure their longevity, they are running
into these problems for the first time, and
their ability to learn from the past may affect
their future.
"The thing these companies struggle
with the most is, is their product durable
enough?" said Mike Ramsey, a technology
analyst at Gartner Research. "Can you guarantee that you will be around and capable of
servicing millions of vehicles in the future if
something goes wrong?"

AUTOMOTIVE GRADE

It can be difficult to ensure that software in a
vehicle is automotive grade, meaning it can
withstand 10 years of wear and tear.
"From a hardware perspective things are
really measurable," said Walter Sullivan, head
of the Silicon Valley lab for software supplier
Elektrobit. "Software is where it starts to get
more vague. Software isn't as measurable."
This ambiguity leaves companies few
ways to ensure their technology can hold
up in real-world situations or withstand

cybersecurity attacks, Sullivan said.
Automotive startups also face the multifaceted challenge of mass producing their products. Some, such as lidar company Luminar,
work with automakers, such as Toyota Motor
Corp., to bring their processes up to automotive speed.
Others, such as Tesla, choose to forge their
own paths. For Tesla, the result has been a
slow and unsteady road to increasing output
of the Model 3 sedan. The automaker has
already pushed back its target of producing
5,000 Model 3 vehicles a week twice, and
missed its goal of 2,500 a week in the first
quarter of 2018.

HELP WANTED

The ability to mass produce automotive
grade vehicles has weeded out weaker players over the years, said Ron Harbour, a manufacturing consultant with Oliver Wyman.
"It's no different now," he said.
How can Silicon Valley startups get around
this problem? By forging partnerships with
the companies they are trying to disrupt.
"This industry has developed detailed
processes and procedures for a reason,"
Schondorf said. "I'm relatively certain new
entrants don't have that, and if they think
they do, they're short-lived."

Table of Contents for the Digital Edition of Shift Magazine - Issue 1 2018