The new world of the connected car is not a straightforward one for many automakers. They simply do not have the required business models to support existing technologies and are not positioned to obtain and utilise the latest advanced software to compete with more agile rivals. In this dynamic, rapidly evolving market, these automakers need to collaborate with new businesses that they may never have considered in the past. However, it is evident that these companies are living by the old expression: “don’t fix what ain't broken.” Well, they may not know what they’re missing until it is too late.
Automakers need to focus on autonomous technology, connectivity and e-mobility if they want to succeed in the future, and these will all be driven by 5G. This technology enables vehicles to communicate with each other, the environment surrounding them and the passengers inside. For this to become a reality, automotive businesses must fulfill this vision through introducing new skills, knowledge and experience from a range of other sectors such as the telematics and consumer industries. One company that works alongside automakers to stabilise the transition into this future mobility is Flex Automotive, which has developed products for over 400 automotive models - from autonomous driving to vehicle electrification for global automakers such as Ford. This is a great example of how collaborative efforts between carmakers and software specialists can enable accelerated innovation through the introduction of technologies adopted from many industries and sectors to benefit a company’s future business outlook.
Michael Mendenhall, Chief Marketing Officer at Flex, tells me that “people need velocity, visibility and regional footprint. An automaker does not come to us to learn about cars, they come and talk to us about other industries to see what we do in areas like the consumer space, connected living, wearable technology and medical centres, relative to things like monitoring as this will become important to the connected car.” It is critical that you have this kind of experience to help these companies because, as you co-innovate and develop products for the automotive companies, you have to ensure great speed and flexibility.
Collaboration, communication and innovation are all fueling the future of the automotive industry. Without collaborations with solution providers and software specialists, OEMs cannot learn and develop certain innovations that have come from outside the industry. Mendenhall explains that the automobile industry has had a very insular perspective in this regard: “designs would change and there would be some improvements, but there wasn't a whole lot of new thinking. Companies like Tesla have been a big wake-up call; people were dabbling and then they started to realise that someone could come out of nowhere and take over. If you look at startups involved in transportation, like Uber and Lyft, we could redefine the automotive industry entirely.”
This adoption is happening very fast and these businesses must not just pay attention to the automotive industry and what competitors are doing, but look at a wide spectrum of other industries. By utilising technologies from external industries, carmakers will drastically improve customer support and services through the connected car. If these players ignore this, they will miss out on new opportunities and innovative ideas. “The industry needs to wake up and realise that it cannot wait around for these innovations without actively monitoring them,” warns Mendenhall.
Integration starts at the top of the organisation. As mentioned, the industry was so well drilled in how business was done in the past that it is difficult for any automotive company to understand how and where they have to innovate and where their business model will shift. “A lot of times you will find executives that have a vision, but they don't support it with enough investment and I think, only when you see commitment from the top to drive the change, these companies become the most successful,” says Mendenhall.
For example, if you want to have autonomous vehicles, you need to have 5G capability, which is going to come from the development of the data telecomm space. This may be an area in which automotive companies have little experience, not knowing how to implement this innovation into the existing business model. “We already know how fast the technology is moving and what technology is needed from intel and others to make 5G a realisation,” Mendenhall tells me. There will soon be complete servers within cars to power all of this data, and so automakers need to understand what the servers will look like and how they will be designed. “We understand this maze incredibly well. Customers realise that we are the guys who make the servers and the networking, which puts us in a very unique position,” he continues. By bringing everything together into a simple, streamlined process, automotive businesses can thrive in the connected era.
Now is the most significant jump we have seen in the automotive industry, yet we are only scratching the surface. We now know how much potential this area has, however it took some time for the industry to fully adopt this progression. It seems extremely stubborn that the industry which pushed this software overhaul away for many years now expects to click its fingers and have it all sorted. This is definitely not how it will happen; a process and plan is needed in order to prevail in the competitive market.
These companies are quickly realising that they run the risk of being left behind at the starting blocks as competitors push ahead. Mendenhall agrees that alarm bells are ringing for the automotive industry, which has now sparked a significant interest in collaboration. “We are finally seeing a trend of businesses wanting to find strategic partners to help design, develop, manufacture and get new products onto the market as quickly as possible. The automotive industry has realised that it cannot wait four years to bring a new model to market as it will become out of date very soon. We have the resources, scale, capability and reliability to help automakers get there faster,” he says.
Five years ago, these companies were struggling with the thought of how they could move forwards with automotive software, connectivity and electrification. However, we are now seeing a number of companies looking into new regions in order to understand this change. Mendenhall is happy that these businesses have decided to relocate to areas such as Silicon Valley, getting as close to the innovation as possible, but stresses that this is not enough. “You cannot just show up in a space and think that you're plugged into global innovation. Innovation is coming from a lot of places, you cannot geographically say that it is coming from one place in the world, so it is important to have several locations around the world.” On top of this, businesses must collaborate with universities, startups and consortiums, which are becoming so important in this era. “Innovation comes from everywhere and these companies need to identify this,” Mendenhall concludes.