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?

- 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.

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

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

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

- So, one thing is those long architectural are life cycles. So the first in the beginning, they had to understand that the customer needs and wants, that that took a while. They are at that point now talking to all the to 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, in that at scale, at that scale. That's, that's one thing. The other thing is that there's a lot of process frameworks around. They're very bulky. Pretty sure you saw that at 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 spies through functional safety, ISO 26262. None of those prevents or prohibits you from doing high high iterative, 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 UNEC as well. It just takes some time for the OEMs to digest that. But if you go through the cycles of from, we don't need that to that interesting to, okay, we need it now, 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 that through some feedback sessions that people also get fatigued, right? So we, we ask some customers, and they say 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 is 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,

- Right!

- Because then I lose the trust in my brand. So customers are currently just starting to to learn this trust. They never, I mean check engine light was the only thing they got and most people don't even trust that one, right?

- So, and 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 I think you can also lose that trust really quickly by messing that up.

- In terms of the talent the industry talent that's out there today. I mean, is it, you know, 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?

- There's definitely a change in the, let me say, demographics of the, 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 on 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? So it, but you know how it is in engineering. If you don't, you know, grow your skillset, you're basically going backwards, that's the case here as well. But the long, the long story or the short, 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 into the same directions. It's extremely impressive what they can do already in in middle school, we didn't do stuff like that when we were graduated.

- So that's true on the embedded side as well as the cloud side, right? You're start, you see growth on both sides. You're starting, you're seeing an influx of talent coming in that's just, companies need to to kind of find the right people that are graduating from these universities, grow them, right?

- [Florian] Yeah.

- And mentor them and make them productive as quickly as possible.

- Yeah. I think companies, especially the leaderships of the companies, they have to understand that they have the need for those people. Yeah. 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.

- Yeah.

- Right? And this ability to, to empower especially the young generation, to have influence to the end product and be, have something to be proud of and, you know solve the problem that is, it's not easy to solve that is what really makes those people enjoy their jobs

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

- Absolutely!

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

- 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.

- 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 kind of what's foreign's kind of view of what's gonna 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?

- I'd like to pull back the phone analogy. 10 years, everybody new 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 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 ADA systems, probably level three. I don't think we will get to level four in that in five years timeframe. But the big thing is the 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 you know, 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.

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

- Yeah, absolutely. They have to change their mindset from software is the stuff that runs the hardware to hardware is, 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, you know, 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, it's a great time to be an engineer in the automotive world right now.

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

- As a EV driver myself and knowing a lot of EV drivers people who ever owned an EV are never or rarely going back to a combustion engine car. I own that too for some reasons 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 it's always empty the tank when I have no time. So, but in general, to answer your question so the EV adoption is, is happening, I mean we see more demand than we see product, but it also it's currently happening on the upper class of of the income level, right? So we will see we will have to see more affordable and those were limited will be limited in their, in their purpose, right? So either shorter range or less acceleration but more affordable vehicles. Not everybody needs three ton SUV just to drive you know, to, to the shopping mall every day. So, but, but long story short, and I, it's very interesting when I talk to people who are not techies like we are, right?

- Yeah.

- 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, right? So everybody who can actually afford buying a car new or or fairly new is seriously considering that. So I, I think it's, it's great to see that adoption. It's so much fun to drive those cars but sure, we, we have, I mean, as engineers we always have a lot of challenges to solve. That's why we became engineers, right? So we are working on it.

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

- I mean, when, when my parents, 70 year old neighbors decided to buy an Ionic five electric.

- [Steve] Yeah. And they are not car people at all. I said, that is a sign, yeah that we have reached the broader masses now.

- Another guest that I had said, once you go electric right? I mean, you don't want to go back, so.

- I totally agree with that.

- [Steve] Yeah.

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

- 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.

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

- 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.