From a vehicle IT perspective, an area for which the brands themselves are responsible for rather than the group, greater in-house expertise would also help to reduce procurement costs. The share of software in an electronic control unit, for example, makes up 25 percent of the cost, and that figure is expected to increase.
Further costs come from integrating ECUs and time is spent removing the inevitable bugs. VW aims to reduce that by developing the software and hardware separately. That way replacing one doesn’t force VW to change the other. In Davos, Diess added that VW Group will separate software and hardware development at the board level to “really speed up the software focus” at the automaker.
To better control vehicle IT as automobiles become connected, VW Group recently spent about €110 million ($124 million) to buy a controlling 75 percent stake in truckmaker Volvo Group’s WirelessCar unit.
Acquiring tech companies, however, can entail high execution risk. Valuations can soar, negotiations can break down, or other bidders can join the fray. For that reason, simply buying economic interests in several providers is not a viable strategy to master the transition. The core business needs to adapt too, and software expertise must be developed in-house if automakers are to remain competitive.
To ensure that their employees think more like workers at tech companies, the entire mindset has to change.
That’s where people such as Ludwig Maul enter. Formerly an engineer at Porsche, this digital evangelist joined a Daimler subsidiary created to marshal the combined ingenuity of the company’s entire work force to help with the tech transformation.
“At Porsche, I built up a small virtual community of 200 employees where we discussed technical issues, and I loved the idea of encouraging others throughout Daimler to get involved and spur technical innovation,” said Maul, who worked at [email protected] until late 2018. He is now with toy maker Lego.
DigitalLife aims to link employees with entrepreneurial ideas to coaches at the company’s startup incubator, Lab1886, to help bring their concept to fruition. DigitalLife also performs outreach in the programming community, sponsoring 24-hour hackathons. One promising team wanted to help advise customers configuring a new Mercedes X-class pickup. Using a popular program called C-Sharp, they created an online chatbot, a digital assistant capable of teaching itself how to better answer customer queries.
Volkswagen has taken a somewhat different approach, founding late last year Faculty 73 to teach employees who have completed vocational training at VW how to develop software if they exhibit an affinity for IT.
The best programmers, after all, share a key trait with automotive engineers and mechanics: They have the mind of a tinkerer, said Pablos Holman, a futurist invited to speak at the Me Convention in Stockholm. Given a device, whether it’s a smartphone or engine block, they don’t ask what it does but instead pick it apart to find out what problems they can solve with it.
“No one ever invented anything by following the instructions,” Holman said.
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