These are the competitive pressures driving automakers to accelerate new tech adoption

The transformations that companies like Tesla, Uber and Lyft bring to the auto industry are changing more than just the ways car companies think about drivetrains and ownership, and it’s opening doors for new ways of thinking about the entire mobility industry.

That’s the word from some of Israel’s top investors from the stage at our TechCrunch Tel Aviv event.

Every aspect of the auto industry is being reshaped by technological innovation, and it’s opening the traditionally closed supply chains that car makers have relied on for at least a century, creating more opportunities for startup vendors in areas like sensors, software, services and, yes, even electrification.

For Michael Granoff, the founder of Maniv Mobility, Chemi Peres, the co-founder of Pitango and Yahal Zilka, the co-founder of Magma Venture Partners, there are at least four areas of opportunity for startups (especially startups hailing from Israel’s innovation nation) to penetrate the trillion-dollar mobility market.

Artificial intelligence, new business models, electrification and enabling sensor technologies are all areas where Israeli entrepreneurs have launched businesses, and they’re all technologies in high demand from established automakers and the upstarts that would challenge them.

“It’s not just automotive, but what Israel can bring to that,” says Zilka. “The big thing in automotive was the introduction of semiconductors. Over the next 15 to 20 years it’s going to be artificial intelligence.”

How those technologies come to market for mobility used to depend on an established supply chain, where tier 2 technology vendors would sell to tier 1 suppliers and then be integrated into the cars by the big brand original equipment manufacturers like Ford, GM, BMW, Daimler, Toyota and the like.

Tesla’s entrance into the market and the competitive threats that Uber, Lyft, Gett and others pose to the entire automotive business model have pushed these companies to shake things up, making investments in technology for the automotive industry far more attractive.

“Only when your business is affected by the digital wave of internet and connectivity, only then do you start moving,” says Peres.

For Israel, that means a window has opened for enabling technologies like sensors, artificial intelligence, data processing and new business models.

These new companies, with names like Autofleet, otonomo, Innoviz Technologies, Oryx Vision and Via, are already establishing themselves as competitors or suppliers helping to transform the existing order. 

For Peres and the other investors, automakers should expect to see even more radical changes ahead as technologies push further transformations to industrial infrastructure, the urban environment and consumer demand.

“The old generation was that you create a production facility… [and] you create masses of products, but it’s going to be completely disrupted,” says Peres. “You’re going to have much less cars and cars are going to be much more sophisticated in their services.”

Cars, Peres says, are moving to the elevator pitch — where vehicles on streets are used like elevators in buildings. “It will eliminate ownership, reduce operational costs, reduce energy costs and will be able to get a great service and save the over 1 million people that are killed every year and the 50 million people that are injured,” Peres says.

Those changes will impact more than just the auto industry. Manufacturing will be disrupted by additive manufacturing technologies, and, eventually, advancements in nanotechnology that will allow for self-assembling machines.

Eventually, these changes are going to force more action from regulators as they grapple with how to address the increasing demand that will come with cost depreciation, according to Granoff. 

“There’s going to be a pricing mechanism that is going to be required to modulate the use of roadways,” he says. 

For Peres, the future may not be the use of roadways at all. “It doesn’t need to be cars on roads. It can be flying robots,” says the Pitango co-founder.

No matter what the ultimate solution is, given the Israeli entrepreneurial ecosystem, it’s a good bet that at some level there’ll be Israeli technology behind the wheel of each innovation.