Interview with Sven Beiker — Founder of Silicon Valley Mobility
Joining forces — it’s the most in-vogue trend in the race to autonomy. On a weekly, if not more frequent basis, news breaks that two or more companies have teamed up. At this point, the partnership web is so tangled, it’s nearly impossible to keep track of. I recently had the chance to interview Sven Beiker, Founder and Managing Director of Silicon Valley Mobility. Sven has extensive experience in the industry, having worked at BMW, consulted for McKinsey’s automotive practice, and led the CARS center at Stanford. Of the many topics I discussed with Sven, I especially enjoyed his take on partnerships. His recommendation to OEMs to be nimble in forming partnerships seemed spot on. At this point in the game, companies are more about “dating” than “getting married”. If there’s a lot of overlap, it’s normal: nobody knows who to commit to long-term since “the night is still young”. For many, partnerships aren’t only about getting ahead: they are about not being left behind. While some players think they can tackle the moonshot of autonomous vehicles on their own, there are many more who are certain than they don’t stand a chance solo. I am particularly excited to see how the multi-company alliances (3+) unfold. The recent flurry of announcements show that the musical chairs of partnerships is unlikely to end anytime soon.
From when you started in the automotive industry in the 90’s until now, what is the biggest change you have seen?
“The biggest change I have seen over time is the automotive industry’s shift from operating as manufacturers to becoming mobility providers. You can see this in a couple different ways. First, the OEMs that used to be manufacturers of what I call “shoeboxes on wheels”, are starting to see themselves more as providers of mobility. VW has done this with Moia, GM with Maven, etc.
But we are also seeing the emergence of new players in this space. What used to define mobility was the brand of the vehicle and its reputation. Today, mobility is different — it’s not necessarily what you drive. It’s about how you organize your mobility. In many cases, people no longer have a car or even a driver’s license. But, they are still organizing their mobility across many different channels — ride-hailing, car-sharing, etc. We tend to think only of private transportation but public transit is also a major component of people’s daily mobility organization.
Of course, the dominant four trends that we speak of today — autonomous, connected, electric, and shared — were only vaguely talked about when I entered the industry. There has been an enormous shift there.”
With the changing dynamics in the industry, how would you recommend approaching competition and alliances?
“If I was in charge of one of the more traditional OEMs, I would focus on being an active part of the ecosystem and community. I would want to be strategic about partnerships for the business, but I think that building good connections and a network throughout the industry would be even more important right now. At this point, it’s too early to tell who is ultimately going to be successful. We don’t know to what extent sharing will replace ownership. We aren’t sure when, or even if, electric vehicle use will surpass that of gasoline vehicles. For these reasons, I would want to focus on being an attractive partner across the industry, with companies large and small. It does not make sense to commit to a partnership right now until the end of the time. It’s important to be nimble — establish partnerships, but have them evolve or even completely change going forward.
And as the dynamics of the industry have trended towards “frenemies”, I would also want to think about partnering with traditional competitors. With the trends in automation, connectivity, electrification, and sharing, companies need to realize that they can’t do everything on their own — others have better capabilities in some areas. For this reason, I might need to partner with a rival. Even so, there is still the possibility that even two massive players might not be big enough to tackle a certain problem or part of the market. These are really big challenges that require broad capabilities.”
Alliances have continued to multiply and even grow in size — how can these really work with so many different stakeholders involved?
“We’ll only really be able to answer whether these partnerships are successful once the product goes to market. It is intriguing in these large partnerships though… One of these organizations is already complex and cumbersome enough to navigate — why would you spread the work across even more? The realistic answer is that at the moment, especially with regards to autonomy, there are not many alternatives. With autonomous vehicles, there is a lot happening under the hood — the sensors, algorithms, processing power, etc. This is very complex and a huge undertaking and is probably too big of a problem for any one company.
At the same time, the core technology at hand is not that differentiated in the eye of the consumer. The basic algorithm across the industry will likely not be that different. However, the experience for the end user will be. This is where companies will have to make important decisions. The companies are collaborating mainly to save money or even reach their goal at all. Beyond this, the important thing will be to customize and parametrize their product to make it unique. Every single company will need to learn this, just as car companies had to learn how to mass produce vehicles on an assembly line a hundred years ago.”
With regards to autonomy and partnerships, who will hold more power going forward? Is it the OEMs or the companies developing the software / autonomous operating system?
“From a philosophical point of view, power is something that someone holds but it’s also something that is given to someone. It requires an inferior and a superior — someone puts themselves in the inferiority position and thus grants power to the other. If OEMs give up on the software side and acknowledge the strength of the tech industry, they will be giving the power away. On the other hand, we know that mobility requires mechanics, safety systems, and physical vehicles. The auto industry knows it holds the keys in terms of manufacturing and can claim power in this way.
It is not a foregone conclusion that the big tech players such as Apple, Google, or Amazon will hold the power. Does market cap really make one company more powerful than the other? I am not so sure. When we look at some of the tech companies and how they first started in this industry, they have made a shift. Apple and Google have deviated away from own in-house production of vehicles. Obviously Tesla is facing huge challenges getting to scale right now. I wouldn’t be surprised if both sides tried to exercise their power and we have a balanced partnerships, with power being exerted in both directions.”
How do you see the autonomous operating system playing out in terms of open sourced technology vs. close and proprietary?
“This is a difficult question and one that is hard to answer because there is no consistent approach to what “open” really means. Linux is obviously the best example for something that has succeeded when being “open”. That model may be beneficial for some aspects of automotive operating systems.
However, in this industry we have a different expectation for safety. If something goes wrong, you can’t just do a software update — especially if things were to end up in court. When something will go wrong, we will need a clear and specific explanation for what happened. I am skeptical whether the baseline autonomous vehicle can really be crowdsourced.
Another understanding of “open” innovation is that there are open interfaces that a developer community can use to plug their products into the manufacturer’s main product. I can imagine for instance some of the higher level applications being crowdsourced, such as summoning or performance kits. Mechanically, we have had something similar for a long time. People have tuned or converted vehicles to improve performance. I think we could have something similar in the world of AVs, but we would need two things to happen. First, we would need to have some kind of common API that standardizes the approach across the board. Second, we would need to have liability. The automotive industry has figured this out. Today, if your car gets tuned or modified, you lose your warranty but the aftermarket tuner steps in with a new warranty — we could have something similar in terms of software. Still, I do not see something open-sourced controlling the entire operating system for the industry.”
What is the topic in this industry that people aren’t talking about but should be?
“I see too much sandbox thinking and activity in this industry and people forget about something really key: infrastructure. I don’t want to diminish the great efforts going on — there are really smart people and great investments. But, a lot of the big changes, autonomy and electrification in particular, are happening in a sandbox. We don’t really know how to scale these things up. Even ride sharing has been challenging. It only accounts for 1% of all passenger miles traveled in the U.S. today. Some well-respected experts are predicting an increase in this, up to 30%. But how do we get there?
We will need communication infrastructure, both among vehicles and between vehicles and their environment. We also need a legal infrastructure for licensing, permitting, and mandating. The built infrastructure is incredibly important as well. Will these current or new technologies need special areas and lanes? Will we need special parking zones and spots?
The necessary workforce is also a huge question. Having enough drivers who are fairly compensated is an issue we need to figure out. We will also need to retrain professionals for the changes coming with autonomy. Even though many of us talk about all the automation and artificial intelligence at work, we will require infrastructure and a workforce to get us there. We will need these to transition from today’s model to tomorrow’s idealistic scenario — we need to be reasonable when approaching this.”
What are your predictions for 2018 in this exciting industry?
“I believe in 2018 we will see the wheat separated from the chaff. We will start getting a good idea of how successful the pilot implementations of AV programs from the various players are panning out. This year will show whether they will finally be able to eliminate the safety drivers.
Other than this overarching prediction, I have a number of other ones:
- We will see the State of California review their legislation for AVs
- We will gain a better understanding of EVs’ market penetration, whether it is accelerating or slowing
- We will observe whether Uber and other ride-hailing companies can move toward profitability
- We will witness whether Tesla can actually scale production, introduce sharing, and how they move forward with their trucks. Elon promised a cross-country ride by the end of 2017… Maybe that will actually happen in 2018
All in all, it should be a very exciting year!”
