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Tech tie-ups driving auto companies to innovate - Automotive News

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Business model innovation is critical for the industry and requires cooperation between traditional auto companies and tech companies, industry leaders said in the last of a three-part series of virtual Automotive News PACEpilot events.

The Thursday, June 25, event focused on new ways to make a profit and create value and the benefits of aligning with other organizations to drive innovation.

"With the future of mobility, there's new thoughts and ideas around how I sell my product, my service. And does it evolve beyond just a one-time transaction of owning a vehicle or leasing a vehicle?" Jason Coffman, U.S. automotive consulting lead at Deloitte, said in last week's webcast.

"The supply base is changing. We have a lot of high-tech companies that are now leaning in outside of traditional Tier 1s, so how does the software industry, how do other chip manufacturers, come in and innovate? And how do we combine all that together into one solution or one capability that can thrust us forward?" he added. "Additive manufacturing, 3D printing, other back-end, enterprise solutions can really transform and drive efficiencies that can give you a competitive advantage."

The startup community and tech companies play a large role in the industry's pathway to innovation, said Meir Arnon, chairman of EcoMotion Week. EcoMotion, which went virtual this year, serves as a bridge to connect automakers, suppliers and investors with the numerous smart mobility startups in tech-laden Israel. But there have been barriers to entry for startups, Arnon said.

"It took many years to understand that the smart answer not necessarily lies within your company and acquiring solutions is, for some companies, very difficult," Arnon said. "The industry is now much more of the opinion that they can adopt technologies from others and actually even strengthen it because all the budgets of OEMs now call for less in-house innovation, more joint ventures or purchase of technologies."

Tech companies hold the platforms that traditional auto companies need to transform, especially into the mobility services-based business model, said Sanjay Ravi, automotive industry general manager at Microsoft.

"We look at our role in terms of providing the right technology platforms that can empower these organizations as they evolve and transform," Ravi said.

"In many ways, the automotive organizations are becoming more and more digital software companies, and the road we have is to provide the digital platforms that they would need, leveraging data, to get insights to support these new business models." Some startups can become successful without the backing of an automaker or major supplier.

"In this kind of environment, you can actually achieve great things without huge or tremendous investment and partnership," said Tal Babaioff, vice president of mapping and localization and co-general manager of road experience management at Mobileye.

Others, however, say it's ultimately best to partner.

"We could never do it alone," said Mathew Vachaparampil, CEO of Caresoft Global. "We don't think we could have done it without our customers and without our partners."

Regardless, today's ecosystem holds "table stakes," especially for automakers and suppliers with technology-focused portfolios, Marcus Holzer, automotive leader, financial advisory at Deloitte, said.

"We're seeing automotive players from all aspects of the ecosystem — Tier 2, Tier 3 suppliers, retailers, etc. — participate in Silicon Valley and in Israel and engaging with these startups," said Holzer.

"I think from a broad perspective, these ecosystems bring a number of benefits to the automotive incumbents."

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