Car industry gets competition – who will build the car of the future??

 Car industry gets competition - who will build the car of the future??

CES 2020 race for the car of the future: the auto industry gets new competition

Alexander Demling is a reporter in the Agenda section of the Handelsblatt newspaper

Martin Murphy

 Car industry gets competition - who will build the car of the future??

Daimler shows off the futuristic AVTR concept car. Source: AFP

Daimler shows the futuristic concept car AVTR.

Las vegas, dusseldorf ola kallenius has enlisted the support of hollywood for the big performance. the daimler boss appeared on stage at the CES technology trade show in las vegas at the MGM hotel together with hollywood’s legendary director james cameron. Both, they affirmed, share a vision: that of a mobility future in which the environment is no longer polluted and the car is networked with people.

Cameron has been working on this for years. With films like "avatar," he says he tries to make his viewers aware of the harmonious connection between nature and technology. But the environmentalist and the car boss – how do they fit together??

For kallenius, this is very possible. Between the two men on the stage stands a car that is supposed to unite both worlds and set new standards. The tires glow, the interior consists largely of recycled materials. the concept car was designed in collaboration with the makers of "avatar" by director james cameron. The "vision AVTR" is intended to demonstrate the possibilities of interaction between man, machine and the environment – a motif that also plays an important role in the film released in 2009.

The battery that supplies the electric car with electricity is particularly revolutionary. "it’s one hundred percent recyclable," says kallenius. Neither cobalt nor lithium or other rare earths will be needed. This will save costs and protect the environment when the battery goes into series production in about 15 years.

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This promise does not only apply to daimler. Other automakers and suppliers are also working on the car of the future that protects the environment and communicates with it. As in the films of the successful director Cameron, vehicles are to merge with people – and it is no longer just the traditional car manufacturers who are shaping this future.

A look at the inner workings of Byton's new M-Byte electric smart car. Source: imago images/UPI Photo

A look at the inside of the new M-byte electric smart car from byton.

(photo:&#160imago images/UPI photo)

Newcomers from China, such as the electric car manufacturer byton, or Japan’s electronics giant sony, as well as the US software giants microsoft and google, are also entering the automotive market. They present concept vehicles and IT solutions that are intended to make cars more than just means of transport.

For automotive expert stefan bratzel of the center of automotive management, the automotive market will be divided into two worlds in the future. "one is about hardware, i.e. bodywork, engines and components, the other is dominated by software. numerous new competitors such as google, apple and alibaba are getting involved," bratzel tells the handelsblatt newspaper.

Daimler’s study, meanwhile, offers a glimpse of a future in which these two worlds will merge and automakers will have to master both – the software and the hardware. "it’s more of a living being than a car," kallenius said. It recognizes the driver by his heartbeat and pulse and adapts to him. Even if the daimler boss doesn’t address it directly, he touches on the dominant theme of the CES: it’s the IT infrastructure in the car. What sounds like a topic for a select audience of professionals will in reality be decisive for who will ultimately lead the industry.

CES as a turning point

The swede has spent his entire working life at daimler, but since the middle of last year he’s been the boss. He took over the job from Dieter Zetsche – but outsiders did not really see him in his new function. Its balance sheet is meager: in addition to a profit warning, it includes a modest appearance before investors, to whom it had to present a further erosion of earnings.

The turnaround should now succeed in las vegas. Kallenius presented a car of the future and a clear message: his company is ready for this future. The fact that competition will not become any easier is also evident in las vegas. In the city with countless casinos, the most important companies from the technology sector have gathered – and many of them want to make money from the car business. CES runs until friday.

"software is the sore point for car manufacturers and suppliers," says bratzel. "they know that this will be the formula for success in the future, but german companies are not yet well positioned here. VW, Daimler, BMW, but also bosch and Continental have to make strong gains and catch up with competitors such as Google and Microsoft."until now, manufacturers and suppliers have been content to add every function to the existing system.

Ferrari's Reality Display Screen shows what drivers could see in the future. Source: ddp images/Ferrari Press

ferrari’s reality display screen shows what drivers could see in the future.

(photo:&#160ddp images/ferrari press)

In addition to a processor for engine control, there are some for the entertainment or safety system. As a result, automotive IT has become increasingly complex, which had led to delays in the introduction of new models such as the VW golf.
many car managers focused on design or engine performance, electronics were secondary. But the demands of new assistance and entertainment systems and, above all, the introduction of self-driving cars are overtaxing existing IT systems and sharpening managers’ awareness of this long neglected topic.

Volkswagen, for example, is now developing its own IT platform, which CEO herbert diess also wants to open up to third parties. To tackle this mammoth task, the corporation is bundling the experts from the individual brands (VW, audi, porsche, seat, skoda) into a dedicated unit. Diess attaches great importance to the project – with the corresponding budgets. The development of these new systems is costing the group a mid-single-digit billion euro sum.

At the CES, the suppliers are now following suit. One after the other, ZF, bosch and continental announced their intention to develop their own IT platforms for vehicle control. Like VW, they want to develop the operating system for cars and thus ultimately also compensate for the slump in traditional business.

Suppliers build up IT expertise

Continental is initially working on standardizing its software. The code is to be standardized and programming partially automated via an online platform. The supplier is also working on the prerequisites for the development of digitally networked vehicles that no longer rely on numerous individual control units, but instead on a central computer.

The companies are still dependent on the production of components for diesel and gasoline engines. But with electrification, the business is falling away. German companies are hardly represented in the battery sector, where the koreans, japanese and chinese are leading the way. Even the production of electric motors would only minimally cushion the drop in sales in the core business.

Bosch was therefore also keen to make a powerful appearance at CES. The event hall was larger than ZF and continental, and management emphasized the importance of IT for the company. According to head of research michael bolle, several tens of thousands of software developers already work for the company, which is also active in the fields of household electronics, home technology and the manufacture of industrial equipment. bosch wants to incorporate these insights into the development of its operating system.

With the gradual departure from combustion engines and the growing importance of IT, the interplay between manufacturers and suppliers could be reorganized. "this will lead to huge shifts in sales," said one auto executive. at an internal event, VW boss diess had already said a few months ago that bosch, conti and other heavyweights would soon no longer be the dominant suppliers. These are the roles that newcomers such as microsoft and sony will be stepping into.

Sony President Kenichiro Yoshida shows off the Japanese electronics giant's first electric car in Las Vegas. Source: AFP

Sony president kenichiro yoshida shows off the japanese electronics giant’s first electric car in las vegas.

The electronics group from Japan probably caused the biggest surprise at the CES with the presentation of its own electric vehicle. the concept vehicle was developed in collaboration with austrian company magna steyr and the three major german suppliers bosch, conti and ZF, among others. The prototype, called vision-S, is intended to demonstrate the possibilities inherent in the technical developments from the sony company, said group CEO Kenichiro Yoshida. This includes software, sensors and safety technology as well as a complete entertainment system. "this prototype embodies our contribution to the future of mobility," yoshida said.

sony was cagey about production plans. car expert bratzel would be surprised, however, if the group were to enter the carmaker market. "With the showcar, sony is not likely to pursue the goal of becoming a car manufacturer. Rather, the group is aiming to establish itself as a supplier."in the field of driver assistance systems and autonomous driving, for example, sony could offer its own camera systems to vehicle manufacturers and suppliers.

Byton, on the other hand, is expected to sell its first vehicles this year. At CES, the electric carmaker from China showed its near-production electric vehicle, in which oversized displays dominate the interior.

the presentation of the "M-byte" at the CES was probably one of the first in the history of the auto industry to focus hardly at all on the car itself: performance figures such as acceleration or engine output, long the holy grail of the industry, were hardly discussed by the byton boss in las vegas; entertainment electronics and the services that run on them took up almost all of the room. Byton’s core target group, high-earning millennials, are simply more important, kirchert told the handelsblatt newspaper. The car is becoming a living room on wheels – a paradigm shift for the industry.

To convince app developers to adapt their applications to the big screens, byton unveiled a developer platform in las vegas on sunday. According to the chinese company, it already has 60,000 reservations. Initially, the vehicles will be sold in China; from 2021, the first Byton cars will also be available in the USA and europe.

Huawei rivals conti and bosch

It’s these new competitors that worry the established companies the most, as one car executive said in las vegas. While microsoft tends to partner with corporations and take over their data management, others are being more aggressive. This is how the Chinese technology group huawei intends to penetrate this business. If huawei is developing an it platform for cars, it has to be taken very seriously, said dirk abendroth, who is responsible for technical development at continental automotive.

In other areas, huawei has shown that it can manage complex processes and take a leading position. An example of this is the development of new cell phones and telecom networks. the asians are among the top suppliers in both fields. the german automotive industry should keep an eye on huawei’s advance. Because the group explicitly declared conti and bosch rivals in the business.

daimler boss kallenius has less to worry about with huawei, as the chinese won’t be taking any sales away from him. But he is well aware of the importance of a new operating system. The stuttgart-based company is also working on a new IT platform that will be used in the new s-class from the end of the year. This is more compatible with the company’s self-image as the world’s leading manufacturer of luxury cars than with its shrinking profits.

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