Suppliers and OEMs embrace collaboration in tech-heavy vehicle race

Something was different. Here was Marelli CEO David Slump to introduce the Italian supplier’s technology offerings at the CES tech event in Las Vegas, but alongside him were representatives from Amazon’s AWS automotive cloud services division, chip maker Qualcomm and QNX, the operating system from Blackberry used by many car companies.

CEOs didn’t used to share the limelight, but a shift is happening in the supplier sphere that reflects one also occurring among car makers. 

As the development of the car progresses from a system designed to create harmony from moving parts to one where software now controls those parts, so traditional suppliers are having to open up the opaque ‘black box’ of their hardware to tech companies to solve problems they couldn’t do on their own. 

“Collaboration now goes deeper for us than just our customers. We can’t do it without partners,” Slump said.

The shift is being forced by the imperative from car makers to speed up development, along with the knowledge that as a supplier your part will in the future have to communicate seamlessly with an increasingly powerful central computer. It also needs to be improved over time with over-the-air updates and if it could unlock future subscription revenue too, well, that would be great.

“In the past, it was a value chain. Now you have more of a value network of partners talking on eye level,” said Christian Sobottka, president of automotive for Samsung-owned infotainment specialist Harman and former chief technology officer at mega- supplier Bosch.

This requires a change in process at both car maker and suppliers, and that’s not easy. “To a certain degree, it’s a technical challenge, but a much, much larger challenge is the cultural transformation in the industry,” said Sobottka. “The cooperation model of the automotive industry from the past is not good to lead us into the future.”

In the past, that meant car makers defined a set of requirements to suppliers who got on with the task to a set deadline. “This mechanism doesn’t work in the transformation challenge. Certain OEMs were trying to apply the old industry model to the new challenge. I think over the last two years, some of them have struggled and failed,” Sobottka said.

The Volkswagen Group’s Cariad software division is held up as the cautionary tale of how not to go about the software transformation. “They try to do everything by their own, but they’re more humble now to say, ‘okay, we need to work more with what is existing out there from the key suppliers’,” said Siggi Dirr, head of global engineering services and technologies for Continental’s Elektrobit division. “There is a huge partnership needed.”

Suppliers too are guilty of being complicit in the inflexibility of the industry, argues consultancy firm Deloitte. “Long contractual commitment prohibits transparency and control of the software stack and can lead to ‘black box’ development,” the company wrote in a paper on software-defined vehicles, published in September. “This results in complex supplier orchestration, contract management with long lead times, and the inability to change code in-house.”

Suppliers, even some of the more tech-focused ones, have been forced to become more flexible. Driving assistance sensor and software specialist Mobileye launched its DXP operating system at CES in response to demands from car makers, who had baulked at taking an increasingly sophisticated semi-autonomous system whose parameters were entirely set by the Intel-owned supplier. “It really satisfies the main pain point of the car maker,” said Amnon Shashua, Mobileye managing director. “When you have something so extensive, the car maker wants to own the differentiating elements.” The DXP system allows car makers to set their own preferences for how it operates – for example, how aggressively the car accelerates after an obstacle clears.

Mobileye was reacting to competition from rivals Qualcomm and Nvidia, on which car makers are relying to deliver the computer chips able to handle the vastly increased data created by the modern car. Those rivals were giving car makers much more of a hand in the creation of the look and feel of the final product, whether that was ADAS or infotainment. It was hampering the roll-out of Mobileye’s new SuperVision system, which evolved ADAS into something approaching the hands-off, eyes-off goal. 

Mobileye’s control of its market-leading EyeQ chip and ADAS sensors was one reason for the formation of Cariad, former head of the VW software unit Dirk Hilgenberg claimed at last year’s CES. “That is why Cariad was founded, because we are not having access,” Hilgenberg said. “We wanted to gain access and have our own data-driven development process.”

A lot has happened since then, resulting in this year’s automotive CES focus on cooperation and ‘eye to eye’ collaboration. Perhaps the most complete incarnation of this attitude is the new Sony-Honda car brand Afeela, which rather than sit atop a pile of unnamed suppliers actively celebrates its partnerships, perhaps because the brand itself was born of a partnership intended to meld Honda’s car-making skills with the entertainment strengths of Sony. 

The car maker talked of its connections with suppliers in both camps, including Epic Games, graphics specialist Unreal Engine, Continental’s Elektrobit, Qualcomm and others, as it works to create an electric saloon defined more by its software experience than its hardware.

This desire for open collaboration isn’t all extensive. Suppliers like Marelli, Continental and others will continue to rely on tier two suppliers and below for elements of innovation that they won’t credit, just as car makers will mask the contribution of traditional tier ones in the continuation of the great automotive game. But the new humbleness to admit that players like Amazon, Qualcomm or Google can do the software stuff in ways they can’t promises a new phase in car development. Whether that’s enough to solve all the challenges the new software-defined world will bring remains to be seen.