The car of the future, as you sometimes hear in the car world, is actually a computer on wheels. What that means was made clear last week when Tesla’s production figures were presented.
While the global auto industry is still trying to get through chip shortages as best it can, the American electric car maker presented good production figures for 2021 on Monday. Tesla had made 936,000 cars – a record.
At that time, the main Seat factory, near Barcelona, had been shut down for days. The large Opel plant in Eisenach would reopen after a few months of closure. In total, many car makers produced about as much in 2021 as in disaster year 2020 – a bad result, that is, the result of the completely overstrained market for chips. On Friday, Mercedes warned – at the presentation of poor sales figures – that it is completely unclear how long the situation will last.
How can Tesla be so immune to the chip shortage? That has to do with the fact that it is not a ‘normal’ car company, analysts concluded. With its digital roots in Silicon Valley and the consequent emphasis on software, it was able to quickly rewrite computer programs to work with other types of chips that were available. And it needs fewer chips for some applications such as speech recognition: a matter of good design.
The observation that Tesla has managed to get through the chip crisis reasonably well with its software and electronics tricks is a painful one for the car world. It shows how far ahead the company is in this area. And that while in the coming years the car world will not only be about further electrification of cars, but also about making vehicles more digital.
This involves making the electric motor work, but often also giving the vehicle some degree of automatic control. The most modern cars recognize traffic signs and adjust their speed accordingly, or park themselves after identifying a parking space. With speech recognition, commands can be given, for example to play music.
In the innovation ranking determined every quarter by the German Center for Automotive Management, Tesla is often at the top of these kinds of tricks. For example, the cars have relatively advanced driving assistants.
The past week also made it a lot clearer how the other ‘traditional’ car brands want to keep up with these developments. Traditionally, these companies are actually metalworkers, or even mainly assembly companies: they put together what suppliers have made for exhausts or seats. The engineers are masters at perfecting the fuel engine – not code language.
Becoming a digital company is a transition that cannot be underestimated, especially when combined with electrification. The approach of the big brands is simple: spend billions. Many companies have previously announced major investments, such as Volkswagen (owner of Audi, Seat, Skoda, Porsche, among others). Lately, the announcements have been tumbling over each other again. Two weeks ago, latecomer Toyota signed up, with $70 billion over the coming years. Volkswagen presented a new investment plan of 89 billion euros. Stellantis, the only one-year-old merger family that includes Peugeot, Citroën, Opel, Fiat, Alfa Romeo and Chrysler, came in early December with 30 billion euros.
A large part of that money goes to the further development of battery technology, but also to the hiring of software personnel. Stellantis aims to employ 4,500 software developers by 2024. They want to put it to work in special, hip ‘hubs’.
In fact, the big car brands in Wolfsburg, Ingolstadt or Stuttgart are trying to create their own Silicon Valley culture with a lot of money. Not always easy, in the often somewhat conservative car world. Volkswagen CEO Herbert Diess, who regularly expresses his admiration for Tesla on Twitter, is more or less permanently at odds with the powerful works council. He denounces his constant hammering that everything at Volkswagen (660,000 employees) has to be faster, more efficient and better, and that everything at Tesla would be so brilliant.
Also read this profile of the Volkswagen boss: At Herbert Diess it is always waiting for the next conflict
It is significant that many brands also explicitly seek outside help. Volkswagen has been collaborating with Microsoft for some time now. Stellantis is trying to develop new chips with Apple supplier Foxconn.
It also announced Wednesday that it will make cars equipped with Amazon software. The futuristic plans paint a picture of consumers who already switch on the heating in the car from their living room with Amazon voice control tool Alexa. The press release in which Stellantis announced the partnership also explicitly mentions training a “new generation” of software developers.
Stellantis and Amazon
For example, the tech world and the car industry are slowly becoming more and more intertwined. In Teslas, Spotify, YouTube and even Netflix are often already standard on the huge screen.
Stellantis announced its plans with Amazon this week at the CES trade show in Las Vegas, a technology event where cars are playing an increasingly prominent role.
The fair also showed that some tech companies see their own chance, now that cars are becoming more and more digital products. The Korean Sony announced that it also wants to build a car. It even presented a prototype, the Vision-S – which looks just like a Tesla. Apple has also been running a mysterious car project for years.
Whether the world will ever see the familiar apple as a logo on the front of cars remains to be seen. Before Tesla was taken seriously, it had struggled for years to set up mass production — at one point, it even built cars in a marquee. The same is happening to other newcomers like Rivian, an investor-loved start-up that wants to make pickup trucks. It gets large-scale production but not off the ground. The stock price fell sharply on Thursday and Friday, after Amazon announced that it would buy vans from Stellantis.
It had previously made such a deal with Rivian, but those vans are not being delivered. Canoo, a van start-up, has also briefly let go of plans for production in Europe – at VDL Nedcar, the only car factory in the Netherlands. It’s going to focus on helping the American factory get going.
It is not easy for traditional car companies to make software; otherwise it is not easy to make cars. Ultimately, you also need to know a lot about metal, tires, aerodynamics and series production.
With the latter, Tesla is also getting better and better. The amount of cars it builds is still relatively small. But the company is about to open a massive new factory south of Berlin – right in the backyard of the German auto industry. In Shanghai it is again working on an expansion of a factory. The competition has only just begun.
With the cooperation of Geertje Tuenter
A version of this article also appeared in NRC Handelsblad on 8 January 2022
A version of this article also appeared in NRC on the morning of January 8, 2022
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