PETER SCHWARZENBAUER, a mem­ber of the BMW Group’s man­age­ment board, on the fu­ture of mo­bil­ity.

Bulletin - - Contents - By Steven F. Althaus Photo: BMW Group

First, let’s start with a quote from over 100 years ago: “Au­to­mo­biles are a pass­ing phe­nom­e­non,” said the Ger­man Em­peror, Wil­helm II. “I be­lieve in horses.” To­day, you have to ad­mit that maybe the Kaiser, who was greatly in­ter­ested in tech­nol­ogy, was right from a long-term per­spec­tive, and the per­sonal au­to­mo­bile is a pass­ing phe­nom­e­non.

You could, of course, ac­cuse me of prac­tic­ing a cal­cu­lated op­ti­mism, but I'm see­ing the ex­act op­po­site. Nowhere in the world are in­di­vid­ual mo­bil­ity needs on the de­cline, and, mea­sured in terms of miles per per­son, they're ac­tu­ally in­creas­ing. I think the de­sire for the free­dom to be able to go from point A to point B is part of our DNA. And un­til the day that trans­porter tech­nol­ogy is a re­al­ity, we will need hard­ware to get around.

In ad­di­tion, au­ton­o­mous driv­ing rep­re­sents the next great rev­o­lu­tion in mo­bil­ity.

Rev­o­lu­tion? Is the im­pact of au­ton­o­mous driv­ing r re­ally com­pa­ra­ble with the ad­vent of the rail­roads?

Ab­so­lutely. It will al­low us to or­ga­nize trans­porta­tion in com­pletely new ways. Imag­ine a large city with no traf­fic lights or traf­fic signs, no cars parked on the side of the road. And most im­por­tantly, one with no traf­fic jams. The num­ber of traf­fic ac­ci­dents will also de­cline dra­mat­i­cally. It will en­tirely change our qual­ity of life and make our cities much more liv­able. Mo­bil­ity op­tions will be avail­able through­out the city, and so­ci­ety as a whole will ben­e­fit sub­stan­tially.

You talk about the ben­e­fits for so­ci­ety, but mil­lions of peo­ple around the world earn their liv­ings driv­ing trucks, buses and taxis. How would you ex­plain to these peo­ple that it is bet­ter for a com­puter to drive their ve­hi­cle?

You can't view these de­vel­op­ments in black and white. New mo­bil­ity op­tions like au­ton­o­mous driv­ing will ex­ist along­side cur­rent mod­els. I be­lieve that in the long term such changes usu­ally present more op­por­tu­ni­ties than risks.

Au­ton­o­mous driv­ing will fur­ther boost the shar­ing econ­omy. Peo­ple P will use cars as in­di­vid­u­als, but they won’t nec­es­sar­ily have to own one. That doesn’t trou­ble you?

No, we rec­og­nized this trend early on, and we es­tab­lished our own car­shar­ing ser­vice seven years ago that now has more than one mil­lion mem­bers. Of course, our pri­mary goal is to sell cars, but we will also play an im­por­tant role in the over­all in­di­vid­ual mo­bil­ity chain of our cus­tomers – well be­yond per­sonal ve­hi­cles. We are now the world's largest provider of in­no­va­tive dig­i­tal park­ing ser­vices, and we have the largest net­work of charg­ing sta­tions in the world. We want to ad­dress all of the mo­bil­ity-re­lated pain points our cus­tomers feel and to pro­vide an op­ti­mal, in­di­vid­u­al­ized mo­bil­ity of­fer­ing.

Some­times it feels like the world has start-up fever. BMW has in­vested 500 mil­lion eu­ros in a ven­ture cap­i­tal fund. No other car­maker has made as many y start-up deals. Why W are you so in­tent on this ex­ter­nal path to in­no­va­tion?

The car in­dus­try is un­der­go­ing a sig­nif­i­cant trans­for­ma­tion. The range of top­ics we now deal with goes well be­yond the au­to­mo­tive in­dus­try. Start-ups are of­ten used here as an ac­cel­er­a­tor, es­pe­cially due to their com­pletely dif­fer­ent mind-set. They are ac­cus­tomed to think­ing in quick prod­uct cy­cles, and they tackle is­sues very dif­fer­ently than a large cor­po­rate group does. We have now made about 30 in­vest­ments, but we looked at well over 1,000 start-ups. But young com­pa­nies also ben­e­fit from our ex­pe­ri­ence and our net­work as an es­tab­lished, global player. So it's a win-win sit­u­a­tion.

In ad­di­tion to au­ton­o­mous driv­ing, g, elec­tri­fi­elec­tri­fi­fi­fi­fi­ca­tion is the other big trend in the in­dus­try. But the Ger­man au­to­mo­tive in­dus­try is of­ten ac­cused of hav­ing missed the “Tesla rev­o­lu­tion,” just as Ko­dak missed the rev­o­lu­tion in dig­i­tal pho­tog­ra­phy. How do you re­spond to that?

I can only speak for us, and at the BMW Group it was clear early on that elec­tric cars could be a so­lu­tion for megac­i­ties, where mo­bil­ity must be as emis­sion-free as pos­si­ble. That's why we brought the BMW i3 to mar­ket in 2013, soon fol­lowed by the BMW i8. We have de­vel­oped com­pletely new ve­hi­cle con­cepts, and cer­tainly this was one of the bold­est de­ci­sions ever made in the au­to­mo­tive in­dus­try. I think we've done some pi­o­neer­ing things here.

Most ma­jor man­u­fac­tur­ers now say the fu­ture of auto-mo­bil­ity will plug in to a wall. But elec­tric ve­hi­cles sales still ac­count for a low sin­gle-digit per­cent­age of over­all sales. Why?

In ret­ro­spect, it al­ways seems like new tech­nolo­gies like the in­ter­net or the ra­dio ap­peared overnight – but that's not the case. When the tele­phone was in­tro­duced to the mar­ket, it took 35 years for just 25 per­cent of the US pop­u­la­tion to use one. And don't for­get that a car is the sec­ond big­gest in­vest­ment a fam­ily will make, only fol­low­ing buy­ing a home.

Shouldn’t you in­vest in elec­tric cars?

Oh yes, of course. But we all grew up with com­bus­tion en­gines. We are fa­mil­iar with them, and we feel con­fi­dent with them. With elec­tric en­gines, many peo­ple are still not sure if things are go­ing to pan out. The dis­cus­sion about range comes up time and again, although most peo­ple don't ac­tu­ally drive very far – this is more of a psy­cho­log­i­cal is­sue. In ad­di­tion, the net­work of elec­tric charg­ing sta­tions is still not ex­ten­sive enough. Work­ing to­gether with cities like Ham­burg, we hope to pro­mote elec­tric mo­bil­ity by adding a larger num­ber of BMW i3s to our Drivenow fleet while si­mul­ta­ne­ously ex­pand­ing the num­ber of charg­ing sta­tions.

Let’s turn to the next mega­trend: How will ll dig­i­tal­iza­tion a af­fect cars?

Car man­u­fac­tur­ing pro­cesses are be­com­ing more dig­i­tal and more au­to­mated – as is the case in many other in­dus­tries. In ad­di­tion, dig­i­tal­iza­tion will en­able us to have more di­rect con­tact with cus­tomers. Over the last 100 years, our strat­egy has re­lied on large-scale ad­ver­tise­ments to at­tract at­ten­tion. The dig­i­tal world al­lows for a much more fo­cused sales ap­proach. Dig­i­tal­iza­tion en­ables us to in­te­grate cars more into the dig­i­tal lives of our cus­tomers. They be­come “smart cars.”

As part of the on­go­ing dig­i­tal­iza­tion process, au­to­mo­bile man­u­fac­tur­ers seem to have dis­cov­ered the CES con­sumer elec­tron­ics show in Las Ve­gas, where the DVD, Tetris and the Xbox were all un­veiled. New car mod­els are now in­tro­duced there as well. Why?

We are very much in­spired by the gam­ing in­dus­try in par­tic­u­lar. What do mil­len­ni­als like in video games, and what don't they like? We try to trans­late these pref­er­ences into our world. You can al­ready ex­pe­ri­ence the new X2 en­tirely vir­tu­ally. There are also po­ten­tial ap­pli­ca­tions in the car's con­trols and in­ter­face.

Next trend: The e growth of the mid­dle class in emerg­ing mar­kets?

For a premium man­u­fac­turer like the BMW Group, this is ob­vi­ously a huge op­por­tu­nity. In con­nec­tion with the afore­men­tioned tech­nolo­gies, I am very cu­ri­ous to see whether there will be a leapfrog ef­fect, as was the case with mo­bile phones, where cer­tain coun­tries pre­vi­ously had no land­lines, but in­stead tran­si­tioned di­rectly to mo­bile tech­nol­ogy. In the same way, I could imag­ine cer­tain emerg­ing mar­kets adapt­ing to au­ton­o­mous driv­ing more quickly than in­dus­tri­al­ized coun­tries.

Fi­nally, a look ahead: If we meet again in four years, which mo­bil­ity trends will we be talk­ing about?

Pas­sen­ger drones are loom­ing on the hori­zon. Trans­porter tech­nol­ogy prob­a­bly still needs a lit­tle more time.

Pas­sen­ger drones are loom­ing on the hori­zon.

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