Ex Audi manager Peter Mertens: “we have been asleep (…) it is getting bloody!” - German article about German auto industry and Tesla version på engelska nedan.
https://www.elektroauto-news.net/2020/p ... ird-blutig
I am writing this article full of anger as a German about the German automotive industry.
The octopus is one of the most fascinating and intelligent animals of our seas. Scientists predict that if they didn't die so early after the birth of the new generation, they would become "the people of the sea" because of their ability to learn, and would dominate all other marine animals, whether small or large, as humans do on solid ground.
An octopus has 8 arms, hence the name Octo, and each arm has its own little brain that controls that arm. These 8 brains communicate with a central brain, and the scientists have not really figured out how the coordination of the brains works and why their arms do not get in their way all the time.
"The established car industry, trying to develop a competitive electric car, has exactly the same challenge. But there, the "arms" are still in the way, are not coordinated and use up the available energy in a vehicle much too fast."
German auto industry is like an uncoordinated octopus
Traditionally, in the last decades and since software has dominated more and more devices in our lives, each small automotive function has been given its own chip, software and computer, but they do not communicate with each other and when they do, their different languages prevent them from doing so. This is how the industry has developed over the last, say, 40 years.
Consider the squid arms in our analogy as different functional segments and subsystems in a vehicle. Each has a well-defined purpose, and as the combustion industry has matured and no real new innovations are taking place, each of these subsystems has been outsourced to suppliers who offer it better, faster and at lower cost. 90% of all VW software and 70% of all parts are now outsourced to suppliers. A real win-win situation. Welcome to the world of low vertical integration and slow innovation.
Depending on the model, up to a few hundred chips today separately manage a complex network in your vehicle, but it is not coordinated or even centralized. Thousands of suppliers are involved, some working together, some independent. What they all have in common is that all the systems only function in their own area and do not communicate with a central computer or, to use my analogy again, the central brain of our octopus.
This was the world in which the German car industry lived undisturbed until Tesla delivered his first electric car. Tesla was the first company to bring a vehicle to market that was developed with a high degree of vertical integration around a central computer that manages and combines all main and auxiliary functions. You can't see this from the outside, so people still don't understand why a Tesla should be so different. However, they learn it the moment they put their foot on the gas pedal for the first time and they learn it quickly.
This design allows you to change the stopping distance, range or acceleration just by a new software update that enters your vehicle through the air, almost magically, just like Harry Potter changes reality with his wand in his hand whispering a spell. It reduces costs, makes your vehicle safer and offers you new functionality and efficiency because someone at the Tesla-Fremont factory in California, USA literally presses a single button.
Tesla changed the rules of the automotive business with a tool called software.
To counter the challenger, the established car industry activated what it does best, namely its supplier base. They asked their thousands of suppliers if they could develop something similar, and the suppliers confirmed convincingly: "Yes, we can", without knowing exactly what they had actually committed themselves to.
Ten years later, the largest and best R&D departments in the automotive industry are unveiling vehicles that are nowhere near the 2012 Model S from Tesla. Peter Mertens, former Head of R&D and Member of the Board of Management of Audi in June 2020:
"I say this with honesty, in my own responsibility we have all slept to a certain extent, and that is not only the automotive industry, but above all the suppliers".
And he continues, "I made the wrong decisions. We trusted too much that the suppliers would somehow make it."
For 10 years, the supplier industry improved and optimized its subsystems in the existing IT and software infrastructure of the vehicles, claiming that if they made enough effort, they could build an integrated digitized vehicle that could do everything a Tesla has done for a decade. The top managers of the German automotive industry decided to use their strength from the world of combustion engines and to work with existing and new suppliers.
The suppliers have improved the vehicle's subsystems instead of starting a completely new 'green field' design with an integrated software architecture around custom chips and technology. Their rationale for this decision is simple: revenue and profit.
Congratulations, dear car managers, you have just asked a 'vampire to manage your blood bank'.
At this point at the latest, I would have expected that car managers would realize that they are asking the wrong person to solve their problem, namely their supplier.
Today, all these managers have left or were left, and their predecessors did not dare or did not know how to come to terms with the past, and for this reason, among others, they have not started a revolution, but are continuing a slow process of improvement; an evolution for which they have no time. It's a task of decades to build up competencies that don't exist and to reduce the number of suppliers but top managers are usually not in their position for that long so why should they start something that only causes problems and costs in the beginning and for whose success someone else will 'take the credit' later on?
Time - the missing commodity of the automotive industry
Time is the most precious and sought-after capital, which the automotive industry does not have in sufficient quantity today. Time is an asset that cannot be bought with all the money the car industry has. You will not solve the software problem by swamping it with money and resources when you run out of time. VW wants to spend 7 billion Euro in 4 years to develop an integrated operating system for its vehicles.
"It will take years before we have reached the level of software know-how necessary to compete at the top," said Herbert Diess, Chairman of the Board of Management of the VW Group in June 2020. And further: "Even today, hardly a line of software code comes from us".
Without software, you lose the most valuable asset you have as a consumer-oriented company: access to your customers.
Without software, you lose the gold of the digital age: customer data.
Without software you are only what is left without it, a company that assembles low profit metal boxes, and low profit metal boxes are an interchangeable commodity.
In the future, the German automotive industry runs the risk of producing nothing but worthless zombies without brains (computers) and blood (data).
Software is made by software developers, not hardware managers!
After 20 years in the software industry, I can confirm that software is nothing magic, but only a technology. To manage software, you need software engineers and a software organization. If you allow hardware managers in a hardware organization to manage your software, how can you expect success?
10 years after the established industry failed to develop a working IT and software operating system for their electric cars, they are still repeating the same mistake of outsourcing the piece of technology that is critical to success, profits and their future.
The planned software cooperation between BMW and Daimler ended before it started, leaving only the option of using suppliers as cost was one of the main reasons for the cooperation approach. Meanwhile, VW announces to invest 7 billion Euro with the help of 10.000 IT employees until 2025 to realize an operating system for their vehicles for which a Tesla needed a fraction of the resources.
Automobile managers who know how to develop combustion vehicles and who have been successful in this environment were and still are responsible for the software organizations of the e-tron, Taycan, EQC or ID.3 and all announced electrical concepts and models. The German automotive industry places its most critical new products, which will determine whether they will survive as companies in their existing structure, under the responsibility of managers who have the least experience and knowledge of this critical part of the value chain.
The attempt by the VW group to centralize 10,000 IT resources in a new organization to solve the ID.3 software problems that 100, maybe even only 50 good software engineers could solve is a testimony to the fact that software is still not really understood today. Herbert Diess lost the important role as CEO of the VW brand because of the software problems with the Golf 8 and ID.3, and other managers will lose their responsibility because it is obvious that they do not know what they are doing and what they are talking about.
(Vet hur jag själv funkar)
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