Smart Cars Mean Automakers Need To Think Like Startups

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The advent of smart cars means that automakers have to figure out how to collaborate closely with tech companies—and that means making changes to their business models.

During a panel at this week’s TechCrunch/TechNode Shanghai event, Juergen Bauer, who manages the Audi-Tongji Joint Lab in Shanghai, asked a panel of representatives from car companies about how the auto industry can handle the transition.

As Bauer put it, this can trigger a “fight of the titans” as automakers and tech giants like Apple, Google, and Samsung negotiate for control over what goes into vehicles.

The smart car market is expected to be worth $274 billion by 2017, according to Strategy Analytics, and car companies will have to spend more on electronic components.

Vehicles connected to the Internet will also become valuable sources of information about the weather and traffic, and companies will have to negotiate for control of that data.

First, however, the two industries have to find better ways to integrate autonomous features into cars they aren’t confusing and difficult for drivers.

“We consider this a holistic question. Of course in the car, we have lots of opportunities to build things which you can integrate into the whole design and interior of cars. One thing is a very nice heads up display, which you can’t really reproduce in other ways now,” said Carsten Isert, the head of BMW Technology Office China. “On the other hand, we want customers to have the latest software and functionality, which you get from the big IT companies and startups, so again, we have to think about safety, which is a critical issue especially since many severe accidents are caused by using phones or texting while driving.”

“That’s why we are working on solutions to the best way to provide value to customers and be safe,” he added. “As automakers we want to keep control. How things are displayed, there are questions right now at the moment on different options to integrate third-party apps while giving automakers ways to control what’s in the car.”

For tech companies, drivers with longer commutes are dream users, but the challenge is figuring out exactly what they want out of smart car. This means that automakers “can’t see the car as a vehicle anymore, but as a big moving mobile device,” said Francis Man, the head of Interior Electronics Solutions in China for Continental Automotive.

As customers demand more connected services for their cars, PSA Peugeot Citroen’s David Allard believes automakers will have to learn from startups about creating a flexible management structure.

“i think as automakers the challenge is more organizational than anything,” said Allard, who works with third-party app developers in Shanghai as PSA Peugeot Citroen’s open innovation manager.

“That is the main thing we can get from startups. If we want to integrate the outside world into cars, we need to connect to the outside world. If we want to put social media in cars, we as automakers cannot set up a new social network. We have to integrate ones that are already there, connecting points between the world and automative standards.”