Your Next Car May Anticipate Your Needs
Automakers are developing intelligent vehicles that spot motorists’ wants and let them subscribe to options after the sale.
Automakers are developing intelligent vehicles that spot motorists’ wants and let them subscribe to options after the sale.
The next time you buy a car and fret about whether or not to splurge on that snazzy new feature, fear not: Chances are you’ll be able to download it later.
In the past, the ordeal of deciding which features you could afford and which you could live without may have been painful and time-consuming, mainly because you would be stuck with whatever suite of options you chose until the time came to buy another car.
Those days are quickly fading as cars morph from vehicles to get around town to artificial intelligence-enabled, smartphone-like connected devices packed with software for work and play. In the near future, cars won’t only be able to constantly update and adapt to situations months and years after the time of purchase, they will be able to use AI to anticipate the needs of drivers and passengers and tailor their offerings accordingly. This also has the potential to create a new business model for automakers, with car owners paying on-demand fees or monthly subscriptions to get access to new features.
Automakers like General Motors Co., Ford Motor Co., Volkswagen AG , BMW AG and Mercedes-Benz are shifting from banging metal to software-centred design with which they hope to make money even after they have sold you the car.
Tesla Inc. has been doing this for years. Early on, it took control of the software development process, from chip design to AI systems. The company is already collecting huge amounts of data from customer vehicles that it uses to improve the car’s systems through over-the-air updates, which automatically and remotely update the car’s software, just like with a smartphone. Tesla offers subscriptions for what it calls “Premium Connectivity,” which covers things like video streaming and live traffic visualization. Chief Executive Elon Musk has raised the possibility that Tesla could offer its advanced driver-assistance package as a subscription but has not launched that yet.
If the smartphone experience holds lessons, analysts say, it is that people do take advantage of the opportunity to allow technology to help them personalize their experiences. Inside the car, digital assistants and sensors that observe passengers allow the car to learn about them and adapt to their routines.
“In shared mobility you will be able to port your mobile world,” says Mark Wakefield, global co-leader of consulting firm AlixPartners’ automotive practice. “Even things like sound isolation where you can be in a [vehicle] with other people and you can’t hear them, you only hear your own music.”
Subscription features aren’t limited to personal preferences. Data generated in traffic in real time could also be turned into a business, making certain information available for paying customers.
A host of safety and advanced navigation features could come standard or available with a premium subscription as cars become more connected and exchange real-time information directly, instead of routing the data through a cloud, says Giovanni Lanfranchi, chief technology officer of Here Technologies, a digital mapping company owned by a group of big auto makers.
Here is working on a pilot project that uses car-to-car communication to predict traffic situations just five minutes ahead, using AI and machine learning to achieve up to 95% accuracy.
“This is something that only a machine can understand,” he says. “I’m learning about you to offer a better experience.”
—Rebecca Elliott contributed to this article.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: July 7, 2021
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Competitive pressure and creativity have made Chinese-designed and -built electric cars formidable competitors
China rocked the auto world twice this year. First, its electric vehicles stunned Western rivals at the Shanghai auto show with their quality, features and price. Then came reports that in the first quarter of 2023 it dethroned Japan as the world’s largest auto exporter.
How is China in contention to lead the world’s most lucrative and prestigious consumer goods market, one long dominated by American, European, Japanese and South Korean nameplates? The answer is a unique combination of industrial policy, protectionism and homegrown competitive dynamism. Western policy makers and business leaders are better prepared for the first two than the third.
Start with industrial policy—the use of government resources to help favoured sectors. China has practiced industrial policy for decades. While it’s finding increased favour even in the U.S., the concept remains controversial. Governments have a poor record of identifying winning technologies and often end up subsidising inferior and wasteful capacity, including in China.
But in the case of EVs, Chinese industrial policy had a couple of things going for it. First, governments around the world saw climate change as an enduring threat that would require decade-long interventions to transition away from fossil fuels. China bet correctly that in transportation, the transition would favour electric vehicles.
In 2009, China started handing out generous subsidies to buyers of EVs. Public procurement of taxis and buses was targeted to electric vehicles, rechargers were subsidised, and provincial governments stumped up capital for lithium mining and refining for EV batteries. In 2020 NIO, at the time an aspiring challenger to Tesla, avoided bankruptcy thanks to a government-led bailout.
While industrial policy guaranteed a demand for EVs, protectionism ensured those EVs would be made in China, by Chinese companies. To qualify for subsidies, cars had to be domestically made, although foreign brands did qualify. They also had to have batteries made by Chinese companies, giving Chinese national champions like Contemporary Amperex Technology and BYD an advantage over then-market leaders from Japan and South Korea.
To sell in China, foreign automakers had to abide by conditions intended to upgrade the local industry’s skills. State-owned Guangzhou Automobile Group developed the manufacturing know-how necessary to become a player in EVs thanks to joint ventures with Toyota and Honda, said Gregor Sebastian, an analyst at Germany’s Mercator Institute for China Studies.
Despite all that government support, sales of EVs remained weak until 2019, when China let Tesla open a wholly owned factory in Shanghai. “It took this catalyst…to boost interest and increase the level of competitiveness of the local Chinese makers,” said Tu Le, managing director of Sino Auto Insights, a research service specialising in the Chinese auto industry.
Back in 2011 Pony Ma, the founder of Tencent, explained what set Chinese capitalism apart from its American counterpart. “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share,” he said, according to Fast Company, a technology magazine. “In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”
Thanks to that competition and focus on execution, the EV industry went from a niche industrial-policy project to a sprawling ecosystem of predominantly private companies. Much of this happened below the Western radar while China was cut off from the world because of Covid-19 restrictions.
When Western auto executives flew in for April’s Shanghai auto show, “they saw a sea of green plates, a sea of Chinese brands,” said Le, referring to the green license plates assigned to clean-energy vehicles in China. “They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”
Manufacturers of gasoline cars are product-oriented, whereas EV manufacturers, like tech companies, are user-oriented, Le said. Chinese EVs feature at least two, often three, display screens, one suitable for watching movies from the back seat, multiple lidars (laser-based sensors) for driver assistance, and even a microphone for karaoke (quickly copied by Tesla). Meanwhile, Chinese suppliers such as CATL have gone from laggard to leader.
Chinese dominance of EVs isn’t preordained. The low barriers to entry exploited by Chinese brands also open the door to future non-Chinese competitors. Nor does China’s success in EVs necessarily translate to other sectors where industrial policy matters less and creativity, privacy and deeply woven technological capability—such as software, cloud computing and semiconductors—matter more.
Still, the threat to Western auto market share posed by Chinese EVs is one for which Western policy makers have no obvious answer. “You can shut off your own market and to a certain extent that will shield production for your domestic needs,” said Sebastian. “The question really is, what are you going to do for the global south, countries that are still very happily trading with China?”
Western companies themselves are likely to respond by deepening their presence in China—not to sell cars, but for proximity to the most sophisticated customers and suppliers. Jörg Wuttke, the past president of the European Union Chamber of Commerce in China, calls China a “fitness centre.” Even as conditions there become steadily more difficult, Western multinationals “have to be there. It keeps you fit.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual