Last week we attended the NMW Digitaltage in Berlin, which was opened by VDA President Bernhard Mattes in his keynote on the change in value of mobility, where different forms and different offers in mobility are changing the market by forcing OEMs, manufacturers and suppliers to adapt much quicker and invest in new innovations.
This was highlighted in the roundtable “Race Boat vs Tanker – Changes in Cultural Structure of Corporates”, with Jürgen Bilo (MD, co-pace), Daniel Heidrich (EBK Krüger & Leitart), Tom Kirschbaum (MD, door2door), Dr. Jonas Moßler (CEO, Susi & James), and Felix von Nathusius (Shareholder, IFA).
The speakers argued the various pros and cons of the industry, and which advantages both startups and corporates bring with them. At the moment, some of the larger automobile companies see their business in relative safety as they are betting on selling their products to new economies such as Asia, but if digitalisation does happen at a greater pace the industry will need to adapt by being more progressive. Here startups and corporates are approaching one another: corporates work with a high degree of certainty, but also need a lot more time to develop and apply new ideas. Startups have the freedom of being agile and adapting quicker, but also have a high degree of uncertainty and risk.
Additionally, software can be developed at an accelerated pace, and minor faults can be fixed after launching. Here reputation if of no consequence – it is the users’ feedback that is of most value to building a great product. This is not possible for large manufacturers: Mercedes cannot afford a mistake because the risks are much higher. Manufacturers work with certainties and calculations that are put in place on purpose, and they cannot afford to put their reputation or their legacy on the line.
Daniel Heidrich added that historically, key developments have been driven by governments, such as the internet originally being developed by the military or Israel feeling under constant threat and thus pushing for advanced technologies, which can then be applied in the everyday. He thus says that cultural change does not head up innovation, it is more the threat to an industry that forces it to adapt. An example here is e-mobility: private companies will not be the ones bankrolling the needed adaptations – the government will have to be more involved to create an adequate charging grid as such an endeavour won’t be financed privately. Furthermore, consumers are confused: should they be betting on e-mobility or stick to buying the Golf that still uses Diesel? If there is no clear decision from the government, policy-makers, and big manufacturers, we don’t know in what direction we should be heading.
The question of financing was also debatable during the roundtable. Whereas the one side sees the US ecosystem and the enormous bets they make on companies such as Uber, Tesla, or Bird, as unrealistic for Germany, the other side argues that at times an idea simply needs money and research in order to become something big, and with conservative investments in Germany being what they are some of the ideas are stifled before having a chance to become something big, or choose to go to the States/Israel/China for investments.
German investors might be more risk averse, but German startups also need to pull up their socks according to Jürgen Bilo: many don’t have a clear strategy or knowledge of how their solution can be applied successfully, which hinders big investors. Thus growth is only incremental.