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Case03FutureoftheAutonomousAutomobile.docxIntroduction
Norbert Riedheim, the head of BMW’s Future Car group in its global research and development (R&D) division, has just been informed that three automakers have received California permits to test an on-road autonomous automobile: Google testing on a Toyota car, Volkswagen’s Audi, and Mercedes-Benz. BMW did not apply for the permit because the company was in the process of developing a relationship with Baidu, the Chinese Google-like Internet company, to start testing similar automobiles in Shanghai and Beijing. Given the rapidly changing scenarios, he wonders what position BMW should aspire to, and what their strategy should be.
Riedheim has been in Silicon Valley and knows all those companies well, and enjoys friendly relations with management and even selective partnerships with Google. He knows that in the era of “co-opetition” new technologies and new alliances can change the chessboard of innovation very quickly. In order for the company to remain relevant for the next 20 years, he and his colleagues need to be vigilant and stay on top of the latest developments in the ecosystem of autonomous driving. BMW is focused and committed to developing autonomous vehicles, as evidenced by CEO Harald Krueger revealing at a BMW’s recent shareholder meeting that the company is gearing up to launch its first autonomous vehicle by 2021: “… the BMW iNEXT, our new innovation driver, with autonomous driving, digital connectivity, intelligent lightweight design, a totally new interior and ultimately bringing the next generation of electro-mobility to the road.”
He goes back to his desk, and reviews the facts once more.
A Brief History of BMW
The automaker got its start as a manufacturer of aircraft engines in Munich, Germany, in March 1916 and turned into a motorcycle and automobile company in 1928. Since then, BMW has manufactured motorcycles and cars. It is most well known for its high-quality cars in the upper segment of the market. After WWII the company had to restore its manufacture and reputation. The first car that started a new era for BMW was the 501 model, a famous classic today that quickly established the company as a producer of high-quality, technically advanced cars. Most prominent among its superior engineering capabilities are its engines, which many experts attribute to its early legacy in aero-turbines (“turbine” still being the nickname of its 6-cylinder car engines). In 1973 the factory in Munich started building the BMW 2002 turbo engine. This was the same year that the first oil crisis hit the western world, which had become dependent on cheap gas. Sales of gas-guzzling volume-produced performance cars slumped and BMW started to develop a strong skillset in more fuel-efficient turbo-diesel engines.
In 1990 the Bavarians, leveraging their competency in making high-agility, precision steering, introduced a new kind of rear axle that allows the rear wheels to turn a few degrees in the same direction as the front wheel. This improved car stability in turns at high speed, as well as the fun of the driving experience by a BMW driver, which is central to BMW’s value proposition. Since then, few other manufacturers have managed to match this active handling experience, which today is a hallmark of the BMW brand.
In 2001 the company built another competency, this time pioneering cutting edge electronics: a new kind of “head unit” (the control and entertainment console that sits in the center of a dashboard). It was called “iDrive” and it allowed operating the unit easily with a joystick-like knob giving tactile feedback to the driver, without having to take his or her eyes off the road. iDrive had been developed in collaboration with BMW’s Technology Office in Palo Alto, at the heart of Silicon Valley. After an initial period of drivers’ adjustment to the new technology and user interface, the iDrive and various iDrive-like derivatives quickly became a common feature in luxury and performance automobiles of many brands.
Finally, on January 8th 2014 during the Consumer Electronic Show in Las Vegas, BMW demonstrated its first fully automated car prototypes based on its regular car models. The car uses 360 degree radar technology, as well as a set of other sensors including cameras and ultrasound to accelerate, steer, and brake without driver intervention. The company also demonstrated another feature called “Emergency Stop Assistant,” which will pull the vehicle to the side of the road, stop, and activate an emergency call in case the driver experiences an unexpected health condition, such as fainting, a heart attack or a stroke.
These advancements demonstrated the ability of BMW to stay on top of the new technology.
A litany of prizes and awards recognized BMW’s strengths:
· Brand reputation: BMW is acknowledged worldwide as a successful carmaker. In 2012, Forbes elected BMW as the most reputable business in the world, and in 2016 it became the second most valuable brand in the automotive industry, with a market value of $26.4 billion.
· Handling, engines and traction motors: BMW was able to become a market leader in the production of engines, which led the company to win several ‘engine of the year’ awards, in an industry where technology is a top priority and competition is fierce.
· Information technology integration: BMW was able to integrate technology innovation in its vehicles, winning international prizes such as the Berthold Leibinger Innovation award in 2014 for its laser-light technology and the Autoblog’s 2014 Technology of the Year award for the whole technology suite working together on the BMW i8.
· Environmentally friendly vehicles: BMW researched dual fuel engines, hydrogen-driven cars, and hybrid electric cars. Furthermore, 80% of its automobiles are made from recycled and recyclable materials. The Brand won the World Green Car of the Year Award in 2015 at the New York International Auto Show
and at the 2014 Los Angeles Auto Show, BMW was presented with the Green Car of the Year Award from the Green Car Journal for the BMWi3.
The Ecosystem of Autonomous Driving Today
The idea of cars driving themselves has existed for a few decades, since the early days of Tsukuba Lab in Japan in 1977 and the European EUREKA Prometheus project in 1987. But only recently, with the advances in computer technology, has it become a reality. The 2004, 2005, and 2007 Urban Challenges conducted by the Defense Advanced Research Projects Agency (DARPA) in the U.S. yielded significant advances, with cars eventually completing a 132-mile course successfully as exemplified by the winner of the 2005 DARAP Urban Challenge: Stanford University’s VW Touareg “Stanley.”
The domain of autonomous driving promises stunning prospects as well as some key uncertainties. It is at the intersection of large opportunity and the uncertainty of a number of future trends that could affect the domain to take a turn in one direction or another. According to Navigant Research, annual sales of autonomous vehicles could reach nearly 95 million by 2035. Morgan Stanley analysts also believe that self-driving cars will change the auto industry.
At the core of the self-driving car is state-of-the-art microprocessors, i.e., computer chips called Central Processing Units (CPU) or Graphical Processing Units (GPU). GPUs are CPUs that have special capabilities related to processing imagery or graphics. Two major players in the microprocessor technology market are working on the hardware for self-driving cars—Intel, maker of CPUs and NVIDIA, maker of GPUs. Recently, through cooperation with these Silicon Valley stars, car manufacturers globally have obtained processing technology that powers critical components to allow them to build self-driving cars. Several companies and research centers
are working on an even more powerful type of processor—Quantum Computers that will be able to handle massive computational tasks in parallel—a quality essential for the artificial intelligence needed for autonomous driving. With Google recently joining the effort,
the prospect of creating one (quantum computer?) becomes more realistic.
There are different levels of self-driving, which means ‘autonomous automobile’ can mean different things to different people. For BMW to craft a more nuanced strategy, the company will need to draw the distinction between the different modes of the car’s autonomous assistance for the driver:
· Self-parking: A car with this feature can park itself without driver intervention. This is primarily a convenience feature for most drivers, but can also aid drivers that are physically impaired. It can help avoiding fender-bender accidents that may increase car insurance costs.
· Lane control: Helps the driver to steer though curving highway roads. This is mainly a security feature that helps drivers to avoid potentially dangerous accidents like the car driving into oncoming traffic or veering off the road.
· Speed control in heavy traffic: This feature goes a bit further by allowing the driver to let the car navigation system accelerate and slow down the vehicle when the car moves in a traffic jam. This adds the driver some relief to an otherwise tiring journey through tough traffic conditions.
· Fully automated car: The highest level of automation is achieved when the car can drive itself in any conditions, including driving through crossroads and crosswalks with or through traffic lights, making turns, changing lanes, keeping distance with other vehicles, and responding to any kind of emergency situations. In this case the driver inputs the destination into the navigation system and allows it to drive. This feature has been widely discussed as the future of mobility. Most drivers would spend their time being entertained, being social, or being productive in their cars.
Exploring the Future
Through his work with design consultancies over the years, Riedheim has learned that this exploration first requires a clear view of all the uncertainties that could combine to pivot the market and ecosystem in one direction or another.
