Information technology and automotive in the future of private mobility

Truth or fantasy that is, the news leaked a few months ago has entered disruptive among professionals and not only. At the beginning of January in Las Vegas at the Consumer Electronic Show ( better known as CES) the major car manufacturers gave their own innovations for autonomous driving . BMW presented an i3 that ran independently for the large square, Volkswagen the E-Golf with autopilot to park and recharge the batteries wirelessly, Audi brought a car with semi-autonomous driving from Los Angeles to Las Vegas to test the ” normality “of technologies. Even Bosch was no less with its own prototype testifying that the whole industry is moving in this direction. Only a year before Google had launched on the same occasion ‘ Android car’  their version of integrated software including infotainment, navigation and telephony. An alliance that gathered the most important car manufacturers and that represented the answer to the Apple Car, the IOS system that unites Cupertino devices with car cover for towing. Apple this year was not present at CES, but in retrospect it seemed a strategy to go out a few weeks later with rumors that are affecting the debate of the automotive industry . To the point that at the Geneva Motor Show, home of the great news and parterre that sees the presence of the number one of the world gotha, the most frequent questions were: “What do you think of the entry of Apple in the Automotive sector?”, A catchphrase that has involved the same assembly of shareholders of the “Apple” Cupertino, appropriately dribbled by CEO Tim Cook between a joke and a non-response.

To better understand the substance of this news it is good first to frame some premises. There are multiple signs of how the technology industry is increasingly approaching the automotive industry and vice versa. The Silicon Valley , known to all as the technological district par excellence, is being enriched with important figures from other sectors. The Ford has recently opened in Palo Alto the most advanced center of research group, led by Dragos Maciuca, coincidentally just coming from Apple and backed by a degree in mechanical engineering, an MBA and a long experience in Silicon Valley. With him a team of 125 people who will have to bring Ford into the Olympus of technological innovation. BMW, among the first companies in the sector, has been operating for more than ten years the ” Mountain View ” BMW Technology Office based just a few meters from Google, to concentrate research on the human-machine interface to simplify its management (among most famous outputs, the IDrive system), on driver assistance services or new materials and production.

Research density

But in the few miles in which Silicon Valley is developed, other research centers are active in Toyota, Honda, Mercedes, as well as large industrial groups such as Bosch, Continental, Denso and Delphi. None of the major players has remained outside the competitive arena of research and integration between automotive and information technology. In a decade of intense research and development, an ever closer proximity between the big names of the respective sectors can be “normal”. It is no coincidence that Tesla was born right here. A concentration of innovation that has encompassed new scenarios of the automotive industry (such as electric traction technology ) and information technology (connected cars, remote integrated management platforms, etc.), as well as atypical commercial peculiarities for the Member States United (direct sales and not through franchised dealers). Another important element revolves around the industrial financial system. The auto market is coming out of an unprecedented global crisis that in many cases has hampered entire historical groups. The investments in development have focused on cost reduction , safety, and only in recent years, thanks to the recovery of some geographical markets and the demand for emerging markets , the automotive industry shows a dynamism by distant memories.

On the other hand, the technological industry has grown enormously in the last decade with peaks of capitalization from astronomical figures by young start ups or established brands. A “bubble” that has not yet broken out and which continues to find areas of growth in neighboring and integrable sectors. And here is a first element. The great economic availability of the industry has allowed some players to approach an industrial sector such as the automotive sector, which is notoriously based on very high entry barriers. Until now, however, it was about investing in products and components , even complex. Systems that converged mobile technologies  with cars to bring users closer to new ways of enjoying and living the driving experience. But now the barriers have finally collapsed  and while we do not see Ford produce mobile phones and tablets, we are instead facing the Google car. The Mountain View giant is known for investments in highly innovative sectors . The famous GoogleX, a department of the campus dedicated to secret projects, seems to churn out ideas of the most far-sighted: from complex systems, to robotics , to the most unlikely gadgets (as google glass turned out) to autonomous driving, remember, Google has been a reality for many years. More recently, Google presented the small “egg” entirely designed and built in their R & D department. On a recent visit I had the opportunity to see the prototype myself , while testing in an area of the technology campus. From the compact forms, typical of the latest generation of city cars , stood out the unusual interior ergonomics, not yet disclosed as images, but focused on a new way of conceiving space.

Two seats, no steering wheel and a mini “cockpit” with the most important information, projected on a tablet-style screen. Basically the car as a pc . It is not known how the definitive interiors will be developed, but certainly the path of Google is already in the finishing line. But what is the goal of Google ? One thing is to create innovative prototypes, concentrates of technologies useful for experimenting with new forms of mobility. It is different to build a distribution , sales and after-sales service system. The car business is very complex and not just made of technology. The leaders of the Tesla management know this well that in America they have been fighting with the regulations and the lobbies of the distribution network for some years.

The network on the road

And in fact a few weeks ago, Chris Urmson , project leader of Google, announced that the group is looking for partners in the auto industry to bring the car on the streets . And if Audi, Volkswagen, BMW and Ford already have concrete projects, they are in several large groups that could make alliances with Mountain View. Although it is not clear, however, where the first self-driving cars will be regulated . Today we find ourselves in a regulatory vacuum that could soon become a problem for the implementation of pilot projects . Autonomous cars require a legislative framework to define the contents and limits of use of the technologies, in addition to the shared security issues . And so, in addition to California, other countries are taking forward. L ‘ England has recently launched the study to a number of regulations that could allow driverless cars to circulate freely in the streets. The English Transport Commission has formally announced the start of work, with the aim of reducing road fatalities and accidents, especially in urban areas . The path of Apple is very different and there are many reasons why it could enter the automotive business. First of all, Apple has considerable financial resources , estimated at 180 billion dollars, making the company capable of practically any investment in the sector. Secondly, Apple closely monitors the so-called “disruptive technologies” to design future scenarios on long-term horizons.

Many rumors last year gave Apple interested in the 3D Printing business , another very topical issue that is revolutionizing the potential of the manufacturing industry. In that case, the theme concerned Apple’s intention to produce a custom-made 3D printer, as a new product for global distribution. Still under study, the business would integrate well with Apple’s distribution network and a new piece of design in full style Apple could further complete the range of Apple Stores in the world. The investment in this case would be particularly reduced compared to the automotive sector and less complex in the management of the overall supply chain. More difficult to think of an Apple Car parked in the basement of the 5th Avenue in New York, reign of the thousands of fans of the brand that frequent one of the most famous Apple Store as if it were a place of entertainment. The strategic choice of Apple should therefore have a much wider value, with multiple origins. Apple has accustomed us to innovations of great impact in everyday life and the car is certainly one of the most widespread mass goods. But revolutionizing this industry is much more complex as a whole and Apple should therefore concentrate all existing technological efforts. That’s why it is said that Apple car should be electric-powered, self-help, certainly connected with your iPhone (which could even lead it). Of course we could not buy it in normal dealerships, so it would serve a new sales network , in many cases integrated into the Apple Store (maybe to configure the car, choose the different versions or see it through some form of augmented reality). Apple’s technical skills are not lacking in top executives with automotive experience.

Eddy Cue , head of internet and software services, is on Ferrari’s board, Phil Schiller , “head of Marketing”, is notoriously a car enthusiast. Luca Maestri , CFO of the group, Italian origins – extremely affable and professional manager, personally met on a visit to Apple a few months ago – has twenty years of experience in General Motors. Finally one of the most important executives, Joni Ive, designer of the Big Apple, has lived a career alongside the passion for 4 wheels . To these top managers are added several car technicians to the point that there are rumors that there are more than 200 people working on the Titan project . Partners are already ready. It seems that top executives have flown up to Austria in the Magna factories, where already today cars are produced on behalf of third parties and where there are production lines and skills also in the electricity sector. Strangely enough, a few weeks after the rumor, it turns out that Samsung SDI , the division of the Asian multinational dedicated to energy and batteries, had bought all of Magna’s business unit. Synergies or war of suppliers ? Finally, if special expertise is lacking, no expense is paid and some managers have been hired at Apple with entry bonuses in the order of 250 thousand dollars. Many of these managers come from Tesla. So why not buy TeslaMotors directly? This is the great variant of fantafinanza that circulated in the sector. Which can make sense, if viewed from a long-term perspective. Meanwhile, the house of Palo Alto has already made many of the investments necessary and shared with the vision of Apple. Although Elon Musk’s extremely rigid strategy is to achieve everything in-house so as to acquire value and expertise. Therefore all Apple technologies should be reviewed and integrated with what Tesla already achieved with a probable conflict of merit.

Secondly, Tesla today enjoys a great market advantage. The performance of the vehicles produced, the network of recharging infrastructures being installed all over the world and a brand of great value for its customers give the company a potential equal to the giants of the automobile , although selling in proportion to a few thousand cars. But even Tesla is not without flaws, also recognized by customers and admirers. In particular, many finishes, assembly details, interior details, are often considered not to match the value of the car. Sin venial and all in all well supported by customers, let’s say more than anything else “sins of youth” for a new builder. The supercharger , columns of systems designed to deliver up to 125 kW of power to recharge in twenty minutes a Model S, yes today are a great asset, but at the same way do they represent a closed system that is usable only by the customers themselves. Meanwhile, the automotive world has painstakingly found a technological alliance in the charging system called ” combo2 “, bringing in the coming years thousands of “universal” columns for many manufacturers (especially Germans and Americans) to the detriment of the Japanese technology used by Nissan and Renault . In the medium term, therefore, we will find widespread charging systems compatible with many cars , which will also have all the qualities typical of those who produce cars for over a century: then, the “closed” system of the Tesla world can become a limit. There is no further information at the time and Cupertino the mouths are sewn at all levels, with the risk that it is a great media speculation while Apple could easily become a preferred supplier of automotive components, avoiding many problems but ensuring the good margins. But even here the surprises will not miss. Just these days is the indiscretion, not too veiled, of a new player interested in the electric car industry. The tycoon Richard Branson , in the margins of the press conference during the Formula E Grand Prix in Miami, said he was positively appraising his group’s entry into the industry. Will we see a Virgin Car in a while? The challenge is open.

Read More