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'The automotive industry needs a new paradigm in which architecture takes pole position'

How can European car manufacturers catch up with Tesla? Managing Director Dennis Röhr talks about a new way of thinking about vehicles and fleets and how to get out of the 'legacy trap'.

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 OEMs are in a tight spot: in a difficult market, they have to get rid of technical hangovers and relics and achieve restructuring with the aim of software capability.

But falling into the usual patterns of reaction is dangerous: “more is better” is a particularly bad slogan for software development in particular. And launch taskforces will not get rid of the “legacy” trap. Structures in vehicles have aged and necessary basic functions like OTA or Shadowing cannot be realised in a scaled fashion.

So is the deficit in software above all?

Up to a point, yes. All OEMs are working on strengthening their software competence. But the challenge is more fundamental than that. It needs a paradigm shift: architecture leads. The consistent architecture of the business model is the central tool to ensure survival of the consolidation of the automotive industry. The individual vehicle projects, above all, must be subordinate to this “architecture”.

What does “architecture leads” mean?

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 on to the purpose of “architecture leads”, which is to answer the following question: what points are particularly important for realising my business model? After this, you need to be rigorous in making sure that these “control points” are properly mastered in your internal value add.

You can see this particularly well by Tesla’s example: there, they have a master plan that is brought into being over the long-term across different models and series. Soft and hardware are decoupled but both are implemented in-house. The same goes for battery development. To this we must add apparently small details like individual DCUs or ECU housing. And if it is necessary for the business model, connectivity can be provided by proprietary satellites up in orbit.

How does Tesla do things differently?

Up to now, OEMs thought principally in terms of the vehicle and its components. Thus, over decades, they optimised each component in and of itself. This has led to innovation taking place only separately, within historical structures. The overall structure lacks flexibility.

A simple example: heating and cooling. Mostly there are three systems for this – for the battery, the electrics and the interior air-con. In new Tesla models, on the other hand, there is a single system for all: the “superbottle”.

It is even more important to think beyond the individual vehicle, however. To find approaches that only pay off when you think of the entire fleet.

For example?

If the individual building blocks have been laid consistently, the architecture can be networked with itself however you wish. Thus, the sensors in one vehicle can be used to optimise its braking behaviour OTA – and thus the wear experienced by the entire fleet. Or you can build new business models on this treasure trove of data, such as offering your own insurance or introducing the current trend of personalised mobility behaviour.

Tesla’s AI chip for autonomous driving is also a good example. It is installed everywhere but is nowhere near being used at present. The model behind this is one which will only pay off over the digital lifecycle of the fleet and taking account of potential shuttle operation as a revenue stream. These examples will lead to a massive shift in the total cost of ownership.

Could German OEMs not just copy this?

To keep up with Tesla what you really need is your own master plan. This systematic mode of thought will lead to other structures.

Every OEM has a different starting situation and must answer for itself the question of how its organisation can be successfully renewed.

These kinds of transformation, the path to reach the target picture, run from very laborious ad-hoc metamorphoses through cooperative models involving chip or software manufacturers all the way to step-by-step alteration of the core contributions of individual areas. All three of these offer their own challenges.

What role are you playing in this transformation?

umlaut has gathered together all the competence needed to shape thorough, vertical transformation processes. Our consultation projects thus stretch from defining target pictures and drawing up a master plan through product and technology roadmaps, including business plans, to organising the corresponding structures and processes. On top of this, we define the collaborative model for cooperation and alliances.

This interview first appeared in Automobilwoche Spezial "Automotive Consulting 2020".

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Dennis Röhr

Dennis Röhr

Managing Director – Automotive & Strategy Advisory


+49 163 7533734