With all the current focus on Elon Musk’s Tesla, one of the most important questions may not be whether “we” can beat Tesla. But the question: What other “Teslas” are we planning to do?
A few years ago – long before Vladimir Putin’s current bellicoses began – the newly appointed CEO of one of Germany’s largest energy suppliers made an astonishing confession. When he took the job, he said, he believed our company’s business would be as predictable as the coupon clipping of a fixed-income security.
But then, based on all the new, especially ecological challenges, he had to realize that he should better gear the big tanker to the mentality of a start-up. This is the only way he could cope with the profound change that was suddenly about to take place in his company’s earnings model.
Professor Andreas Herrmann is Director of the Institute for Mobility at the University of St. Gallen, Switzerland
The same applies to the automotive industry today. The various factors of uncertainty in this key industry in our country include questions such as: Which drive will prevail – electric, hybrid, combustion engine or fuel cell? How safe is China as a sales market, on which many German manufacturers (and by no means only VW) have become increasingly dependent? Crucial point software: Can the transformation leap – away from the central role of the motor and towards software – succeed as a factor that is decisive for success?
And will the brand image remain a “unique selling position” for German premium manufacturers in the future? Or will previously unknown or rather subordinate manufacturers from emerging countries, especially China, occupy the field with attractive e-cars, peppered with modern software, especially in the e-car age? In any case, the younger generation of buyers who will be decisive for the future seems ready for this. The parallel is obvious: Leica, Rollei, Zeiss – still the ultimate in photography in the 1960s – are now just a museum memory.
Reason enough to adopt a start-up mentality. In order for this to succeed, the established top dogs must of course be willing to distance themselves from their long-standing formulas for success. On the other hand, anyone who is currently founding a new company, which is less complex in the age of electric drives than in the more than hundred-year-old era of combustion engines, has no problem with start-up thinking.
In addition, some of the best engineers and managers in the western automotive industry, who increasingly despaired over the course of their careers with the cliques and bureaucracy of their corporations, have placed them in the service of Chinese attackers and Tesla for precisely this reason. According to the double motto: Finally a pioneering spirit again. And create something of your own – instead of just being a cog in a wide-ranging personnel mechanism.
In this respect, with all the current focus of the established “players” on Elon Musk’s Tesla as an attacker, one of the most important questions may not be whether “we” can beat Tesla. But the question: What other “Teslas” are we planning to do?
There has long been speculation that there will be an “Apple car”. This challenge and the signs of entering the market are becoming ever clearer. That would be a tough one, because software is Apple’s core DNA. And hardly anyone will doubt the design attractiveness and the high potential of customer loyalty of such a vehicle – even unseen.
If a “player” could bring about a new transformation push, then it would probably be the Apple group. This is all the more true as the onboard entertainment factor is now becoming more important in the hunt for a resilient revenue model.
After all, people spend around 600 billion hours a year in their cars. The logic from the point of view of the car manufacturers, all of whom are under great pressure on earnings: Why shouldn’t we be one when the vehicle is increasingly being driven autonomously and the time spent in the car – like on the train or plane – is taking on more and more leisure character for all occupants cut off a proper slice of this cake? So why leave the online shopping business to Amazon or the video business to Netflix?
In this regard, however, the first question to be asked is whether autonomous driving will spread dynamically enough to create a corresponding demand. So far, the implementation of this trend in this country has been limited to a few luxury sedans. And the ongoing semiconductor shortage isn’t helping the rest of the market.
And secondly, the question arises as to whether customers are at all interested in new, manufacturer-based offers in the entertainment sector. They probably want to be able to access the service they are accustomed to at home in the car – if they do, then they do.
In this respect, it is a very real question as to whether the manufacturers can really charge fees for the service point link. Especially since there are solutions such as importing via the iPhone, not to mention the irritation of the customers because of the potential “penny chasing” of the manufacturers.
In addition, the manufacturers’ apps convince only a few customers. Companies like Renault are therefore already relying on a partnership with Google for their future electric cars. This is not encouraging news for the VW Group in its self-directed experiments in this area. In addition, the expansion of car electronics, from navigation to voice control and additional functions, is proceeding more slowly than expected and is by no means perfect.
What is undeniable, however, is that ongoing digitization also offers advantages, especially when you think of the aging process in society. Here, digital assistants can perform important security functions that relieve the human risk factor.
However, it is becoming apparent that services that can still be marketed as paid additional services today will soon be part of the standard equipment.
Even if car manufacturers will find it difficult to keep up with Apple and Google in the field of IT, the equation for the energy and power supply of electric cars looks more positive for them.
If the car manufacturers concentrate on expanding their existing services related to the electricity business, they can use their market power to negotiate special tariffs for their customers. And also to provide technologies that customers can use to optimize their electricity costs, for example by making the car battery usable as a balancing buffer.
The same applies when it comes to the topic of circular economy. Here, too, the big car companies have enormous advantages. At the core of their business, they are all major logisticians and have a great deal of experience in controlling highly complex, real-economy processes.
In addition, as major material consumers, they also have a major social and ecological responsibility. And at this point – via the switch to electric cars – the battery should prove to be an elementary transformation factor. It’s not just the expensive part from an economic point of view. Resource conservation is also becoming increasingly important due to geopolitical tensions, ever stricter environmental regulations (e.g. for plastic recycling) and from the point of view of reputation management.
In this respect, the serious implementation of the circular economy for the automotive industry is likely to be the central socio-political challenge.
Google and Apple cannot do all this, but a global car company can.