Mercedes-Benz EQS at the Shanghai Auto Show 2021
The software determines the success of the brand.
Düsseldorf Voice control, lane departure warning, pulse measurement on the steering wheel: what reminded you of science fiction films ten years ago is now a reality in some cars. In the meantime, the software decides the success of a car brand, because it is an important selling point for many customers.
This is shown by a study by the consulting firm McKinsey: 37 percent of car buyers say they would buy another brand’s car for better digital offers – among those who buy premium vehicles, which are so important for German brands, the figure is as high as 47 percent.
The automotive industry is increasingly understanding “that connectivity solutions not only generate additional sales and cost savings over the entire life cycle of the car, but can also bind customers to the brand much more closely,” explains Timo Möller, partner at McKinsey and co-author of the study.
Meanwhile, the pressure of competition is growing for the German manufacturers, because the American tech companies are not sleeping. Google is pushing its way onto the market with an operating system that has been specially developed for the automotive industry and is continuously updated wirelessly “over the air”. Tesla has also equipped its fleet with its own operating system.
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When it comes to software, German carmakers have to “rely on the latest technical standards” in order to be able to hold their own against IT competitors from Silicon Valley, explains Alexander Koster, partner at the Boston Consulting Group. At the moment there are mainly deficits in the areas of connectivity and autonomous driving.
Meanwhile, the manufacturers are reacting to the US competition and announcing innovations. With these ideas, the automakers Google and Tesla are declaring war – an overview.
VW: 27 billion euros in digitization
VW will invest around 27 billion euros in digitization by 2024. CEO Herbert Diess wants to develop the group into a technology company and bring it on a par with Tesla and Apple. “Digitization is a revolution, for us as an industry and for our customers. Cars will drive themselves in the future. This will fundamentally change the business model, ”Diess told the Handelsblatt.
Computer programs for autonomous driving should be installed in every vehicle, not just in the luxury classes. For this, VW needs a powerful operating system. According to Diess, the processor for this is to be developed by the software subsidiary Cariad. “We are building up these competencies and we are trying to do it as quickly as possible,” said the VW boss. The group wants to accelerate the process through cooperation with the tech companies Mobileye and Nvidia.
Diess also wants to change the look of the Volkswagen vehicles of the future after the first electric model, the ID.3, was subjected to severe criticism last year: too much plastic, too little detail, digital breakdowns.
The second electric model, the SUV ID.4, is intended to enable software updates “over the air” and is also visually different from its predecessor: the twelve-inch touchscreen replaces most buttons and switches, and the digital display behind the steering wheel has been reduced in size.
BMW OS8: New operating system will be released this year
From 2025, BMW wants to convert all vehicle models to electromobility with the “New Class” and equip them with new software and battery technology. “The New Class is the nucleus for us to rethink the car from the ground up,” said BMW CEO Oliver Zipse in March of this year. To fend off the attack by US competitor Tesla, BMW wants to bring the electric SUV “iX” and the electric coupé “i4” onto the market this year. The new software system “OS8” should also be built into it.
This is intended to reduce the amount of information for the driver because the software uses artificial intelligence to select the relevant data. Around 2.5 million vehicles are networked with one another via the operating system, and data is exchanged for the first time via the 5G mobile communications standard, which is intended to enable software updates on a large scale “over the air”.
Technical changes in the vehicle should accompany the new operating system. The number of buttons in the cockpit has been reduced by half and replaced by expanded voice control and a central display. For customers, the voice control should make operation easier and the interior clearer, says BMW. Drivers can already open their car via smartphone and connect the navigation system to the cloud. In the OS8, BMW integrates third-party apps such as Spotify, Apple Music, the Apple voice control system Siri and Google Maps.
Daimler MBUX: Hyperscreen in the new EQS electric sedan
Daimler also wants to win customers primarily with digital features. The Group revised the “Mercedes-Benz User Experience”, or MBUX for short, and presented it in the new EQS electric sedan in mid-April. This is only one model in the Daimler vehicle fleet; however, it shows where the group is in the areas of technology and software.
50 vehicle functions are to be activated “over the air” via updates, the “Drive Pilot” controls the vehicle autonomously in slow traffic. The microsleep warning uses a camera in the vehicle display to analyze the driver’s blinking and prompts them to take a break if it detects drowsiness. If there is a cyclist in the blind spot, the danger indicator is activated as soon as the driver moves his hand in the direction of the door handle.
With a 1.40 meter wide hyperscreen, Daimler wants to meet “the desire for more digital interaction,” said Britta Seeger, member of the Board of Management and Head of Sales at Daimler, at the presentation of the new electric car. The curved glass surface connects three displays and extends over the entire cockpit.
The system should remember the preferences of up to seven drivers and use artificial intelligence to suggest functions that the driver might need. There are a total of twelve sensors under the touchscreen that trigger a vibration when the finger touches certain points on the display. Despite the many extras, its own operating system “MBOS” will not be available until 2024, before that Daimler will use external software.
Like numerous German car companies, Daimler is also resisting cooperation with US tech companies. “We define the standards and maintain control over the integration of all systems and software,” explained Sajjad Khan, Head of Technology at Daimler.
Polestar: “Tesla from Sweden” relies on Google
Polestar takes a different approach. The Swedish electric car manufacturer relies entirely on Google’s Android operating system. In 2017, Polestar presented a sports car with hybrid drive, of which around 500 were built per year. With the Polestar 2, the Volvo offshoot, which belongs to the Chinese Geely group, goes into mass business.
The operation of the electric car is, similar to Tesla, simple: the driver has access to the voice assistant “Google Assistant”, the map service “Google Maps” and the app store “Google Play” via a screen. All Polestar customers automatically receive updates from Google “over the air”. Polestar boss Thomas Ingenlath explains: “Android has huge operating advantages from the customer’s point of view, the voice assistant alone is unmatched in the auto industry.” Google has more data than any other company and can improve voice assistants or maps faster than Polestar itself.
Experts agree that the German carmakers need help with the software. “Only three or four car companies have the skills and capacities to do it themselves,” said Stephan Keese, auto expert at Roland Berger, the “Wirtschaftswoche”. “But that is only worthwhile if the functions are brand-differentiating – in other words: you can set yourself apart from the competition with your own solution.”
According to industry experts, German car manufacturers are way ahead in terms of design and technical innovations. But they have some catching up to do with software, especially in the areas of communication and entertainment. Nevertheless, the ideas of Daimler, BMW and VW are a challenge to the American competition.
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