The decade-long race to build autonomous vehicles shifted into high gear a few years ago when Daimler CEO Dieter Zetsche declared that his industry won’t get fooled again by Alphabet and Apple. “What is important for us is that the brain of the car, the operating system, is not iOS or Android or someone else, but it’s our brain,” he told reporters at the Frankfurt International Motor Show. “We do not plan to become the Foxconn of Apple,” he added, referring to the Taiwanese electronics giant that manufactures the majority of iPhones but keeps little of the profits. He and his peers would not repeat the same mistakes, he promised.
The irony is that the automakers themselves sit atop a trillion-dollar business largely comprising multibillion-dollar suppliers you’ve likely never heard of. Magna, for example, provides the engines, powertrains, electronics, and brakes that Daimler assembles into a Mercedes—the Foxconns to Daimler’s Apple.
The difference is that consumers today feel less inclined to kick the tires based on analog features such as horsepower. The imminent arrival of electric, connected, and autonomous cars, coupled with the rise of new mobility services such as Uber and Lyft, has conspired to scramble the traditional alliances, partnerships, and rivalries that defined the auto business. No one can blame Zetsche for defending his turf, but he and Daimler can’t do it alone—no one can.
To give you an idea of how much autonomy will transform the industry, Harman has even coined a new metric designed to dislodge mpg and rpm from the minds of customers. “Experiences per mile” (EPM) describes how much media, music, entertainment, and communication can be consumed over the course of a journey when a driver is largely freed from operating the vehicle, rather than the time and fuel elapsed between points A and B. “The creativity of these experiences per mile is the new frontier versus worrying about hardware or miles per gallon,” says Tom Rivers, vice president of global marketing for the connected car arm of Harman International, which was acquired by Samsung in 2017.
A future in which EPM is the measure by which mobility is judged is very different from today. The same trends that first drove PCs and later smartphones to consolidate around one or two platforms will soon be brought to bear on vehicles as well. Automakers will be forced to choose between continually investing tens of billions of dollars in new designs and manufacturing, or standardizing around a common platform and competing in new arenas. “The differentiators will come from each brand’s user interface, design, and the experiences they offer,” Rivers says.
This not only means the self-driving “brains” of autonomous vehicles, but also the attendant hardware, software, networks, and services required to support them, including sensors (e.g. Innoviz), mapping (Here, Waze, Google), 5G networks (AT&T, Verizon), fleet maintenance (Hertz), customer service (Uber, Lyft), and integrators to tie it all together (Harman). Each of these players has, in turn, struck deals, courted investment, formed consortiums, and acquired rivals to defend their positions in the stack.
An archetypal example is the Open Automotive Alliance, created by Google to make Android the default OS for in-car experiences. Launched four years ago with only a handful of partners, today it encompasses dozens of automakers (GM, Honda, Volkswagen), consumer electronics brands (Sony, Panasonic), and technology vendors (Harman, Nvidia, Delphi). Rather than struggle to supplant Android as customers’ computing platform, members are instead racing to build new features atop it. Harman and Samsung, for instance, have completely redesigned a Maserati to create a “digital cockpit” combining curved OLED screens, touch controls, and a virtual assistant to reimagine the dashboard.
How these collaborations come to market will depend on the business models underpinning them. Who owns the customer? The automakers? Uber? Waymo? Or another category altogether?
Audi, for instance, is sharing the manufacturing platform of its new electric SUV with Volkswagen Group stable mate Porsche, while investing in autonomous features internally, rather than creating or investing in an external startup (such as GM’s Cruise or Ford’s Argo). Speaking at the Fast Company Innovation Festival in 2017, Volkswagen of America CEO Scott Keogh described Audi’s strategy as one of increasing “access” to vehicles, whether through personal ownership, leasing, or future subscription services. “Literally anywhere you go with your phone,” he said, “you can get that level of connectivity in an Audi.”
Meanwhile, Uber and Waymo are racing to deploy autonomous ride-hailing services. Uber has the advantage of its user data and customer base, while Waymo is widely credited with having the most advanced software. The latter has partnered with Jaguar and Fiat-Chrysler to supply vehicles for its wholly owned fleet, while Uber has struck similar deals with Toyota and Volvo. In both cases, the experience is delivered through the software; the vehicles are of lesser importance.
And that’s just the beginning. The economic forces driving standardization at every level of the stack will eventually have an impact on autonomy, too. Whether the first movers (Waymo) or fast followers (Ford) triumph is ultimately beside the point; more important is that autonomy will also become a commodity. When that happens, Rivers argues, brands technically having nothing at all to do with mobility will offer their own experiences. Ikea, for example, has already proposed “spaces on wheels“—essentially a collection of autonomous rooms.
“I think this is the game changer,” Rivers says. “Consumers will migrate to the brands they love the most.” Automakers seem to realize this. Last year, Toyota unveiled the e-Palette, a fully autonomous electric vehicle that can be configured for ride sharing, package delivery, or delivering pizza. (One of its launch partners was Pizza Hut.)
Things will only get stranger from there. Expect celebrity brands to follow, says Sarah Kaufman, associate director of New York University’s Rudin Center for Transportation. “There will totally be a Kim Kardashian Escalade,” she says. Specialized services will also emerge, such as autonomous ride hailing for the elderly and disabled.
The common thread running through all of these scenarios and at every level of the autonomous vehicle stack is data from sensors, systems, and, especially, occupants. Historically, this level of analysis has been missing. “The automotive business is one of the few industries where you can buy a $70,000 asset and walk away with it immediately,” Keogh said. “People have more connectivity to their Spotify than they do to their automobile.”
How that data is monetized, and by whom, is the defining question for all these shifting alliances and business models. Ford CEO Jim Hackett raised eyebrows this fall when he suggested leveraging the company’s treasure trove of credit applications. “We know where they work; we know if they’re married,” he told Freakonomics Radio. “We know how long they’ve lived in their house.”
Learning how to collect, share, and price that data while still protecting privacy and delivering value to customers is a must to make this future a reality. “We spent nine months negotiating with Subaru on which data points to share—how do we price them?” says Jamyn Edis, CEO of the connected car startup Dash. “There’s no Nielsen for this.” For another project on behalf of the auto supplier Johnson Controls, Edish says Dash harnesses user data to predict battery failures with 90% accuracy. But how do companies communicate that value to consumers?
As a device supplier and integrator, “Harman is right smack in the middle” of the data, Rivers says. Last year, the company partnered with J.D. Power to collect real-time consumer vehicle data on an opt-in, anonymized basis, which they will then aggregate and analyze using Harman’s cloud-based platform. The results, they hope, will spur automakers to discover flaws, fix mistakes, and please customers faster than they might have otherwise.
Several years on, Zetsche’s vow that Daimler and its peers would own the “brains” of autonomous vehicles seems premature, but that may not matter if owning the thoughts, dreams, and experiences inside those vehicles turns out to be vastly more valuable instead.
This article was created for and commissioned by Harman.