Rarely in the long history of the automotive and transportation industries have they been as open and vulnerable to change as they are today. Car-sharing, ride-hailing, electrification, connectivity, the rapid emerge of autonomous vehicles in passenger and industrial transportation, and the demand for mobility-as-a-service are potentially as disruptive as the switch from horse and cart to the car and the railways. Trains, planes and automobiles will never be the same again.
Tom Whitehouse, commissioning editor at Global Corporate Venturing and master of ceremonies at its Corporate Venturing and the Future of Mobility and Automotive Technology conference last month started off with a nice perspective on the circularity of disruption.
Using a picture of an early American car waiting to be fuelled from a horse-drawn tanker, he compared the passing of one age of mobility to the current discussion of electric vehicles being shared, replacing the current model of owner-driven cars powered by an internal combustion engine. His question to the audience was to ask where they were in the industry as it reformed around the new trends and technologies.
And time to work out such a place in the new landscape is short, judging by data presented in a GCV Analytics report published at the event.
Ian Simmons, vice-president of business development, corporate engineering and research and development at Magna – “the largest company you have never heard of with more than $30bn in sales” – summed up general original equipment manufacturer (OEM) and tier-1 supplier consensus that the 2030s were the key decade in which autonomous vehicles become a majority of cars on the road. He added: “Vehicle-sharing is going from 10 million miles today to an 80% increase by 2030, while there will be 54 million self-driving vehicles by 2035.”
This creates a huge challenge for incumbents to move from a vertical to a horizontal business model, with few parallels for success from other industries, such as IT, that have already gone down this route, according to Abdul Guefor, director at Intel Capital, who quoted scientist Charles Darwin’s maxim: “ It is not the strongest that survive, but the most adaptable.”
Jonathan Tudor, managing director at BP Ventures Mobility, said his firm was finding and creating new value in mobility through looking at user needs, such as quicker and easier oil-changing technology, as developed by Nexcel, winner of Global Corporate Venturing’s Best Corporate Innovation Award 2016.
Groups are using corporate venturing and open innovation to attract and retain new skills and employees. Anthony Headlam, chief technology officer at Jaguar Land Rover, asked the question: “Why is a former Vodafone executive now chief technology officer at Jaguar Land Rover?”
His answer – because car companies and suppliers are remaking themselves as technology and digital businesses.
But putting users first requires an understanding of what they really want as their own needs evolve. Whitehouse referenced Henry Ford, whose apocryphal comment on the original car revolution he helped engineer was: “If I had asked people what they wanted, they would have said faster horses.”
Instead, with a sweep of changes, such as the continuing shift of people from rural to city environs, younger millennial generation people apparently preferring to share rather than own cars and other fixed goods, development of the internet of things, cybersecurity and data, intermixed with moral and regulatory issues, there are few certainties.
Roy Williamson, new head of mobility at BP and former head of Castrol InnoVentures, said consumers and users behaved differently in rural and urban environments – about 50% of the world’s population live in cities, and the proportion is rising. In addition, regions behaved differently, with China having 650,000 low-speed electric vehicles in 2015 and a forecast of 40 million e-bikes by 2018.
Quoting novelist William Gibson, Williamson said: “The future is already here – it is just not very evenly distributed.” He added that to be part of the future, BP would “roll up its sleeves and help startups”.
A similar tack was taken by Sohaila Ouffata, investment principal at BMW i Ventures, who discussed why the Germany-based car maker had quintupled its corporate venturing unit’s second fund to €500m ($530m) towards the end of last year. She then introduced entrepreneurs looking to capitalise on the changes.
On business models and services, Kaj Pyyhtia, co-founder and chief experience officer at Maas Global, examined the concept of mobility-as-a-service, while Felix Leuschner, CEO at Drover, explained how the Castrol InnoVentures-backed business was capitalising on the ride-sharing economy by taking inventory from car salesrooms and renting them to Uber ride-hailing drivers. Gregory Duconge, CEO of Vulog, followed up with a look at the trends powering the new generation of car-sharing in France and other countries.
On the hardware side, Chris Harris, CEO of Yasa Motors, explained its novel electric motor topology, and Alexander Schey, CEO of Vantage Power, discussed advanced hybrid and electric powertrains for heavy-duty vehicles.
Robert Schuessler, vice-president of Europe at Bright Box, tackled the need for integrating software and hardware for the connected car. Blending both, Anthony Ashbrook, CEO of Machines with Vision, looked at position-mapping technology for the autonomous vehicle, and Peter Baldwin, CEO of Myrtle Software, explored deep learning and efficient hardware for autonomous vehicles.
Other startups, GoOpti, Teraki and Third Space Auto, pitched for funding. But disruption often comes with disrupted companies.
Shiva Dustdar, head of innovation finance advisory at the European Investment Bank (EIB), said the bank needed to adapt the way its €77.5bn loan portfolio was risk managed. Currently, the bank lent and priced debt based on vertical parameters, but in future it would need to understand startups and, effectively, external disruption.
Given 22% of €12bn invested by the EIB over the five years from 2011 went to auto suppliers and OEMs, losses could loom if the OEMs and suppliers were disrupted over the next few decades, although for the overall EIB loan portfolio, this was actually a small proportion, Dustdar said.
Ben Luckett, managing director at Aviva Ventures, the corporate venturing unit of the UK-based insurer, asked if automation took away the driver, who would need and pay for insurance? These were “holes on the road to autonomy” and venturing helped the insurer gather the data and insights to price the market better, he said.
In a similar vein, Adam Sanitt, head of disputes knowledge at law firm Norton Rose Fulbright, considered the moral intricacies surrounding a software algorithm that might be used to decide how to crash a car if that crash were unavoidable.
One way to look at the future is to find leading-edge examples. Dominic Riley, chairman of bespoke car maker Morgan and also of Mawsonia, publisher of GCV, chaired a debate on how Formula 1 and luxury car brands are shaping the future of mobility and smart cities.
Iain Bomphray, chief technology specialist of lightweight structures at Williams Advanced Engineering, which raised a corporate venturing fund last year, looked at radical options in personal mobility and the flat-pack car, while Geoff McGrath, chief innovation officer at McLaren Applied Technologies, showed how the company’s data-driven design and analytics had been helping a range of industries beyond cars.
Disruption, rather than just “faster horses”, often comes through cross-sector ideation, whether taking ideas from retailer Ikea or Formula 1 pit-stop strategies and applying them to air traffic control.
The next session of the GCV Autos event series will be held in California at the Global Corporate Venturing & Innovation Summit on January 25-26, where car makers will mingle with other sectors to help pollinate more of these ideas.
Our thanks to speakers, attendees and sponsors Denso, Castrol InnoVentures, Magna and Bright Box.
