German carmakers invest in a digital wave
ONE of the first things Ole Harms did after taking over Volkswagen’s new ride-hailing startup was leave town.
Wolfsburg, Volkswagen’s home, wasn’t the best place for the carmaker to mount a defence against SiliconValley challengers keen to upend the industry, and he needed to move.
He packed up and took his team to new digs in Berlin.
Autonomous driving, electric cars and ride-hailing apps from Silicon Valley are reshaping transportation. Young people no longer feel as compelled as previous generations to own cars. And Wall Street shows scant respect for automakers and their global manufacturing prowess: The market value of Google, which is building a driverless car, is more than double that of BMW, Daimler and Volkswagen combined.
At stake is the fate of the German economy. Germany is as dependent on its carmakers as Michigan is on Chrysler, Ford and General Motors.
Non-German carmakers have embraced SiliconValley through partnerships and investment deals. Fiat Chrysler is working with Google on self-driving cars. General Motors has poured $500 million into Lyft, the ridebooking service. And Volvo, the Swedish automaker owned by Geely of China, provided the chassis for Uber’s recent driverless car tests.
By contrast, Germany’s automotive giants have favored a confrontational approach.
That has been backed by many locals, who have so far rebuffed Uber’s aggressive local expansion plans that have often run roughshod over domestic regulation, and by German politicians eager to please some of the country’s biggest employers.
BMW is working with the chip maker Intel and Mobileye, an Israeli tech company, to develop a self-driving car of its own by early in the next decade. It has also formed a partnership with IBM to use artificial intelligence to allow vehicles to automatically adapt to their owners’ preferences.
To combat the likes of Tesla, the California electric automaker, BMW is planning to expand its i Series line of battery-powered and hybrid vehicles. Since 2014, it has sold 100,000 of the i3 model, which runs on batteries and has a lightweight carbon-fibre body.