Tesla doesn’t seem to be putting on the brakes: its stock is on a constant rise, it claims autonomous driving is just around the corner – all while other OEMs are shelving vehicle launches. Can Tesla still be overtaken?
Opinions differ on whether Tesla’s announcements are always realistic. But it is unambiguously clear that all the other automotive OEMs are in a tight spot: in a difficult market, they have to get rid of their old technical legacies and leftovers and achieve a successful transformation towards a reliable software capability.
But falling into the usual reaction patterns is dangerous: 'the more, the better' is not always a good slogan especially in terms of software development. And 'launching taskforces' will not eliminate the 'legacy' trap. Structures in vehicles have aged and necessary basic functions such as 'OTA' (over-the-air updates) or 'Shadowing' cannot be achieved in a scalable fashion.
So, is it mainly the software that is lagging behind?
Up to a point, it certainly is. All OEMs are working on strengthening their software competencies. But the challenge is more fundamental than that. It needs a paradigm shift, as: 'architecture leads'. The consistent end-to-end architecture of the business model is the central lever to ensure the survival of the automotive industry consolidation. And now, the individual vehicle projects above all, must be subordinate to this 'architecture'.
What do you mean by 'architecture leads'?
The fundamental precondition for this paradigm is the consistent design of existing technological components across all models and series. It must extend from E/E through the system, functional and vehicle architecture, to the infrastructural and cloud architecture.
Then, we can come to the actual purpose of 'architecture leads' as a new paradigm, which is to answer the following question: what points are particularly important for you to be able to achieve your business model? After this, you need to be rigorous in making sure that these 'control points' are properly mastered in your internal value add.
The example of Tesla is a good illustration of this: They have a master plan, which is being implemented over the long-term across different models and series. Software and hardware are decoupled but both are implemented in-house, separately. The same goes for battery development. In addition, there are apparently small details, such as individual DCUs (Door Control units) or ECU (Engine Control Unit) housing. And if it is necessary for the business model, connectivity can be ensured by their own satellites up in space.
How does Tesla do things differently?
Up to now, automotive OEMs have mainly been thinking in terms of the vehicle and its components. So, for decades, they have been optimising each component for itself. This has led to innovation only taking place in a 'separate mode', within the different historical structures. Consequently, the overall structure lacks flexibility.
A simple example: heating and cooling. Usually, there are three systems to ensure these functions – one for the battery, one for the electronics and one for the interior air-con. Yet, in the new Tesla models, these are gathered in one single system for all: the 'super-bottle'.
However, it is even more important to think beyond the individual vehicle - to find approaches that only pay off over an entire fleet.
For example?
If the individual components are designed in a consistent manner, then the architecture can be interconnected the way you want it to be. For example, the sensors in one vehicle can be used to optimise its 'OTA' braking behaviour – and thus the wear and tear of the entire fleet. You can even build new business models on this treasure trove of data, such as offering your own personalised insurance, or introducing the upcoming trend of personalised mobility behaviour.
Tesla’s AI chip for autonomous driving is also exemplary. It has been installed everywhere but is nowhere near being fully exploited. The model behind this is one that will only pay off as a revenue stream via the digital lifecycle of the fleet, and the potential shuttle operation. These examples will lead to a massive shift in the total cost of ownership.
Could German OEMs not just copy this?
In order to keep up with Tesla, you really need to have your own master plan. This systematic mindset will lead to other structures.
Each OEM has a different situation to start with, and must answer for themselves the question of how their organisation could be successfully renewed.
These kinds of transformation, i.e., the path to reach the target picture, range from very laborious ad-hoc metamorphoses, through cooperative models involving chip or software manufacturers, all the way to step-by-step alterations in the core performance of individual domains. All three manifestations have their own challenges.
What role is umlaut playing in this transformation?
umlaut has gathered all the competencies needed to shape all the transformation processes vertically throughout. Our consulting projects therefore range from defining target pictures and drawing up a master plan, through to product and technology roadmaps - including business plans - to achieving the appropriate organisational and operational structure. On top of that, we define collaborative models for cooperation and alliances.
This interview first appeared in Automobilwoche Spezial 'Automotive Consulting 2020'.
