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differentiator in product and in intellectual property is the level of expertise developed by various
companies around what is actually an incredibly complex piece of machinery," says Johan De Nysschen,
a consultant who formerly was president of multiple automakers - GM's Cadillac division, Infiniti
Global Ltd. based in Hong Kong, and both Audi of America and Audi Japan. "What happens if the
internal combustion engine and the transmissions and all of those things that make up today's car is
suddenly replaced by a far more simplified series of electric motors and a standardized battery," he
says. "Your ability to differentiate technically the product substance is far morwe limited. And so, your
hundred years of heritage that you've built up suddenly counts for
very little, because everybody's at the same starting line. And that
explains why there are so many startups in this field," he says.
5G, artificial intelligence, self-driving capability and new
Some automakers were quicker to perceive this shift and bring
mobility services induced by burgeoning megacities.
needed expertise in-house, and they now have the early mover
"The real money in the future is going to lie downadvantage, De Nysschen says.
stream of the factory gate, and auto companies have to
"Other companies have clearly recognized now the level of dislook no longer at selling the car, but rather at a business
ruption that is impacting the auto industry is going to separate
model where they are generating revenue from every
the winners from the losers very rapidly," he says. "Everybody is
mile that the vehicle is utilized, whether it's by one owner
rushing to try to tap into these various nuclei of expertise that are
or by 500,000 owners across the lifecycle of that vehicle
popping up everywhere."
- and that gives you an idea of what is motivating the
Of course, certain regions of the world will transition to elecauto companies to get into these startups and new ventrified vehicles at a faster rate than others, but "automakers
tures," De Nysschen explains.
don't make cars for one geography. They make for a global
Mike Ramsey, senior research director for automotive
market," De Nysschen says. Therefore, they will develop cars
and smart mobility at Gartner points to the increased
for their existing portfolio while they also invest in technoloinvestment. "Ten years ago, there was not a lot of investgies for zero emissions vehicles, rapid advances in connectivity,
ment capital going into the auto industry. Now there's a
lot of money chasing it, and that's going to lead to innovation," he says. It's mostly driven by fear of disruption,
Ramsey says. "Most of the technologies they think will be
important in the future are not mechanical. They're software-based technologies, where the auto industry has
traditionally been weak, and they have to acquire because
they can't develop - not right now."
Meanwhile, Jeremy Alicandri, managing director of
Maryann Keller and Associates (MK&A), a global automotive strategy consultancy envisions a future where cars are
"increasingly commoditized." He says, "We're seeing an erosion of the traditional attributes that distinguish automakers
and link to their profitability, like brand and performance."
"Why automakers are investing in startups is, they want
to have a say in the future, but they don't want to put all of
their R&D dollars and research and talent into doing that,"
Alicandri says. "No one really knows what's going to prevail,
so they're trying to spread and minimize that risk - and
also [cast] a wider net, [such] that whatever does prevail,
maybe they have a little piece of it."
This also explains automakers'
partnerships with one another and
Auto companies have to look
with larger "Tier 1" suppliers, Alicandri
no longer at selling the car,
notes, pointing to Tesla's joint venture
but rather at a business model where they are
with Panasonic in a battery
generating revenue from every mile
"Gigafactory" in Reno, NV.
In 2009, Volkswagen, Daimler and
that the vehicle is utilized.
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i3 - September/October 2019

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