The Internal Transformation of the Automotive Industry - Part 2 (Roadblocks for OEMs)

Florian Rohde, Managing Partner at iProcess, is back on Point B to conclude his discussion on the internal transformation of the automotive industry. What roadblocks are stopping startups and legacy automakers from ensuring continued success in the automotive industry? Is there really a lack of engineering talent in the industry? What do OEMs need to consider in the realm of connectivity and software-defined vehicles?

0:39 Roadblocks for OEMs to achieve full-vehicle OTA

3:31 The importance of talent to the  internal transformation of the auto industry

6:50 Five year outlook for the automotive industry

8:55 Adapting to a software mindset 

9:34 The pace and motivators of EV adoption

Announcer: 

Welcome back to another episode of Point B, a Sibros podcast where we interview industry experts about the latest innovations and trends in automotive technology and the connected vehicle industry. Tune in to learn about topics ranging from the next generation of electric vehicles to advances in connectivity and micro-mobility.

Steve Schwinke:

I'd like to welcome back to our Point B podcast Florian Rohde, Managing Partner of iProcess. Florian, thank you for coming back to our podcast and talking more about the transformation of the automobile industry.

Florian Rohde:

Thanks for having me again. I'm sure we'll have a great follow-up.

Steve Schwinke:

What's the roadblock for a lot of these OEMs? Why don't we see more companies having OTA? I mean, they talk like they have it, but then it doesn't seem like they do have it or they can't do it for the whole vehicle. I mean, what's going on here?

Florian Rohde:

So, one thing is those long architectural life cycles. In the beginning, they had to understand the customer needs and wants, and that took a while. They are at that point now – talking to all the big OEMs – they all understand they need it, but they have to wait for their next-generation platform to actually hit the market, to really go full throttle on that. Because what they have on the market right now, and probably what comes next as well, is not ready for that, at that scale. That's one thing. 

The other thing is that there's a lot of process frameworks around it. They're very bulky. Pretty sure you saw that with one customer or the other. That makes it very hard to act in that way. But as a matter of fact, I mean we are working with a lot of processes from Automotive SPICE through functional safety, ISO 26262. None of those prevents or prohibits you from doing highly iterative software life cycles or over-the-air updates. And matter of fact, there are now some regulations for OTA updates out from the UNECE as well. It just takes some time for the OEMs to digest that. But if you go through the cycles from we don't need that, to that interesting, to okay we need it now and we have to work on it. That's where we are right now. But we are not at the point that they say, “Okay, we have it.” 

We actually, back in Tesla, we learned through some feedback sessions that people also get fatigued, right? So we ask some customers and most of them say, we don't want to have a software update every three days because then I have the feeling something is wrong with my car all the time. And the same thing with those messages and alerts. Preventive maintenance is great but it has to be the real thing, right? So I don't want to have false alerts, because then I lose trust in my brand. So customers are currently just starting to learn this trust. They never… I mean the check engine light was the only thing they got and most people don't even trust that one. So, now they have to start to trust that which can be easily gained by a few real good performances. And if you drive a software defined vehicle, you get used to that really quickly, but you can also lose that trust really quickly by messing that up.

Steve Schwinke:

In terms of the talent that's out there today. I mean, I hear a lot about it. Is there a real deficiency in terms of being able to acquire the right talent in order for this transformation to take place? Especially around software developers?

Florian Rohde:

There's definitely a change in the, let me say, demographics of the talent and what people are going towards. But I see that actually there is a good pool of new talent coming to the market. Of course, you have to give them a chance. I was always extremely impressed when I get fresh graduates into my team, or even interns that haven't graduated yet. Those guys, this is awesome what they can do with computers. So we have to give them a chance. Granted, there is currently a surplus of mechanical engineers, which might have to look a little bit into adjusting their goals. Or their, I wouldn't say they're profession, but they're their skillsets, right? 

But you know how it is in engineering. If you don't grow your skillset, you're basically going backward. That's the case here as well. But the long story or the short answer to your question is, I think there is a good amount of talent pool coming because the kids these days, they see what we are doing and they are going in the same direction. It's extremely impressive what they can do already in middle school. We didn't do stuff like that when we graduated.

Steve Schwinke:

So that's true on the embedded side as well as the cloud side, right? You're starting to see growth on both sides. You're seeing an influx of talent coming in, it’s just that companies need to find the right people that are graduating from these universities, grow them, right? And mentor them, and make them productive as quickly as possible.

Florian Rohde:

Yeah. I think companies, especially the leadership of the companies, they have to understand that they have the need for those people. So the people are there, but right now they are probably getting pulled more into those, what you call the West Coast or Silicon Valley areas, but they are needed also in Motor City or somewhere in Germany. And the leadership of the companies have to do the shift in mindset and say, “Okay, we have to hire software guys and we also have to hire software guys in our management positions so that they make the right decisions to make software defined vehicles a thing.” 

I mean, engineers are all the same. We are all the same kind of people, right? We like to solve problems and we like to see our work out there. And this ability to empower, especially the young generation, to have influence on the end product and have something to be proud of. And solve the problem that is, it's not easy to solve, that is what really makes those people enjoy their jobs.

Steve Schwinke:

I would say it's making a difference. Are they learning, and do they like the people they work with?

Florian Rohde:

Absolutely!

Steve Schwinke:

And you know, money aside, those three things are the most important things.

Florian Rohde:

Money doesn't keep you happy in the long run. It pays the bills, but you will not go to work for 30 years just for the money.

Steve Schwinke:

So tell me what you think. What's the future look like five years from now? I mean, this industry's changing very quickly, you know. What’s Florian’s view of what's going to be happening over the next five years? I mean, this industry moves very slow in one year increments and super fast over five years. That's probably true of a lot of different things, but how do you see this industry evolving?

Florian Rohde:

I'd like to pull back the phone analogy. Ten years ago, everybody knew Nokia as the market leader and Nokia will be the market leader forever. Today, I don't think Nokia has even their own company anymore, and nobody buys Nokia phones. So my five to 10-year outlook is all our cars will have some, I mean, all cars that come to the market will have some sort of integrated connectivity: V2V, V2X, or just an internal server. It will have some sort of over-the-air communication in and out of the car. So software in, telematics data out. It will have some sort of integrated or advanced ADAS systems, probably level three. I don't think we will get to level four in that five years time frame. But the big thing is that companies should not just rest on their success of the past, like what Nokia did. They have to be very careful not to get lost, either by the new players on the market overtaking them. Or there's also, we see a lot of mergers and joint ventures and new partnerships coming up. So if you don't have the right vision right now your company is in some heaps of trouble.

Steve Schwinke:

To me, the term is lean all the time, right? And that's what I associate with the West Coast is that lean innovation. Being very quick, very nimble. I think the software defined vehicle that kind of term that's out there, can be used however you want to describe something. But to me, it just says that you're going to be nimble and adapt very quickly to new market conditions.

Florian Rohde:

Yeah, absolutely. They have to change their mindset from, software is the stuff that runs the hardware, to hardware is the stuff that hosts the software that brings all those features to the car. And you see, or we see, as I say, some of those players are adjusting more than others. I'm very curious where the industry will go in the next five to 10 years. But I think it's a great time to be an engineer in the automotive world right now.

Steve Schwinke:

Yeah. And do you think EV adoption is going to happen faster or slower than what people are thinking? How, how are you seeing that EV adoption? I mean, you worked at Tesla, right? You were leading the charge in this area, no pun intended, but certainly everyone's on board now.

Florian Rohde:

As an EV driver myself and knowing a lot of EV drivers, people who owned an EV are never or rarely going back to a combustion engine car. I own that too because some cars are not made in an electric fashion yet. But it is, for me personally, it's so annoying when I take my jeep out for the fun of it and I have to stop at a gas station. It's like, I don't want to stop at a gas station. You know, my electric car is fully charged in the morning. I can go wherever I want. So I find that super annoying and its tank is always empty when I have no time. 

So, in general, to answer your question, the EV adoption is happening, I mean we see more demand than we see product, but it also, it's currently happening on the upper class of the income level, right? So we will have to see more affordable, and those will be limited in their purpose. So either shorter range or less acceleration, but more affordable vehicles. Not everybody needs a three ton SUV just to the shopping mall every day. 

But, long story short, it's very interesting when I talk to people who are not techies like we are, right? So talking to friends and family who have nothing to do with the automotive industry, they all already made a transition. At least halfway through, they're all at plug-in hybrids. So everybody who can actually afford buying a car new, or fairly new, is seriously considering that. So I think it's great to see that adoption. It's so much fun to drive those cars, but sure, we as engineers, we always have a lot of challenges to solve. That's why we became engineers, right? So we are working on it.

Steve Schwinke:

I think it's happening very quickly. I think, as insiders like ourselves, we're missing the outsider’s perspective. And it is that adoption is taking place. I know my son's next car is going to be an EV. He's already told me that. So he's excited.

Florian Rohde:

I mean, when my parents’ 70 year old neighbors decided to buy an Ionic five electric – and they are not car people at all – I said, that is a sign that we have reached the broader masses now.

Steve Schwinke:

Another guest that I had said, “Once you go electric, you don't want to go back.”

Florian Rohde:

I totally agree with that. While there's other mobility, we have to figure out what can or will not be battery electric. That's a different topic, right? So heavy duty trucking and stuff like this, and travel, all this kind of stuff. So there's a lot of interesting stuff to look into. But, I think we should start with the “low hanging fruit.” Quote, unquote. Let's electrify city cars.

Steve Schwinke:

Well, Florian, thanks again for joining us on the Point B podcast where we've explored a lot of topics around the transformation of the automobile industry. Thank you for joining us today and looking forward to seeing you at trade shows in the future.

Florian Rohde:

Yeah, thanks for having me, Steve. Great talk as always.

Steve Schwinke:

Thank you for tuning in to Point B. Join us next time for more auto tech innovations and trends. Point B is brought to you by Sibros.