Will the Valley win?

June 26, 2017
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Holger G. Weiss

In the automotive industry, a drama is unfolding. One that could dominate also German car makers, some of the most highly regarded in the world: Software eats car. Silicon Valley have a drastically different idea of the future of the automotive industry, and they put it under intense pressure.

I have recently spent some time in Silicon Valley. If you have a connection to the world of technology, you have to do this from time to time. There is no area in the world where you can find innovators, disruptors, nerds and investors in such a large concentration. The trip started with the summer expo day of Plug and Play Technology Center - a kind of a institution in the Valley, where startups and corporates have a platform to meet.

The rules have changed

German Autolabs were selected to be part of a special program for mobility and automotive. There were a lot of car companies around. There were also a lot of traditional companies with their own labs in the area. The reason is simple - the Silicon Valley is the nucleus of where the next mobile revolution will happen. Being an automotive startup founder, these are my thoughts:

 

  • The sheer dynamic of the Silicon Valley will drive massive innovation in mobility over the next decades.The combination of talent and capital is unique. It's about digitalization of mobility. The Valley is the digital center of the world.

 

  • The hottest topic is about autonomous/self-driving cars (and about AI of course). It's not so much about building cars, but building the OS for the self-driving cars. 2 years ago the first startup, Cruise, was sold to General Motors for 1 billion USD - ever since there has been a gold rush. Many of these companies are still in stealth mode, i.e. working without any notice from outside. The big bet here that there will be only very few OSs for self-driving cars.

 

  • Driving around in the area, one can see many cars with sensors on the roof and around. So it seems that regulation is allowing self driving systems to be tested on official roads. A prerequisite which is difficult to realize in Germany or Europe.

 

  • Talking to investors in the Silicon Valley, the excitement surrounding everything automotive is huge - each and everyone wants to put money into it. However, it seems that the understanding of this industry is not very deep. For many years auto-tech was not interesting to venture capital due to the long innovation cycles. It appears that the assumption is now that the industry will turn within the next 4-5 years completely. What many people I talked to still underestimate are the dependencies in this sector. And the totally different nature of a car to, lets say, a mobile phone.

 

The rules have changed in the industry. Software eats the car. That's why we see this impressive hype for automotive and mobility innovation. Silicon Valley is the epicenter of software technology in the world and naturally they will play a major role in the revolution. However, the rules might turn out differently than what the majority of Silicon Valley is anticipating today. The complexity of adopting the way humans are mobile, of turning societies into autonomous driven ones and the velocity of change due to existing cars on the road, might come as a surprise to some of the biggest enthusiasts.

 

 

 

Holger G. Weiss
CEO & Founder at German Autolabs
https://twitter.com/travlrhttps://www.linkedin.com/in/holgerweiss
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