The Frankfurt Motor Show saw lots of gorgeous new models (check out the Audi e-tron quattro and Porsche Mission E, for example), but the buzz all week was not about new cars and new trends — it was about what Apple and Google are planning in the next few years. The world of cars is in transition. No longer do carmakers focus on cubic inches, horsepower, or camshafts. Now they talk about connected cars, self-parking cars, and autonomous-driving cars.
Volkswagen CEO Martin Winterkorn told the motoring press, “By the end of this decade we will have transformed all of our new cars into smart phones on wheels.” And who does smartphones as good or better than anybody? Volkswagen? Nope, that would be Apple, the Silicon Valley powerhouse known to have almost 1,000 engineers working on its super-secret Project Titan, which everyone knows is code for the Apple Car.
Google also is pursuing its interest in making autonomous-driving cars. It professes to have no interest in actually building a car itself, but who knows? If the rewards are high enough, it has the financial muscle to enter any field it chooses and be successful.
What has industry executives nervous is the fear that the tech companies could turn them into mere suppliers. Mercedes chairman Dieter Zetsche told the New York Times, “What is important for us is that the brain of the car, the operating system, is not iOS or Android or someone else, but it’s our brain.” (iOS is Apple’s operating system for mobile devices, and Android comes from Google.) “We do not plan to become the Foxconn of Apple,” Mr. Zetsche said, referring to the Chinese company that manufactures iPhones.
Some companies that manufacture sub-systems for the world’s carmakers have already talked with Google. One such company is ZF, a large German auto components supplier that bought TRW in Michigan this spring. TRW provides auto electronics such as airbag systems and has been working on sensors and other hardware for self driving cars.
Stefan Sommer, the chief executive of ZF, says his company would be able to produce a Google- branded car if it works with 2 or 3 other companies that can supply components such as sheet metal stampings. “We would be a partner in that, for sure,” Mr. Sommer says, but insists ZF could not work with Apple under the conditions it imposes on its suppliers.
ZF sees itself as an innovator, not just a supplier. In Frankfurt, it displayed a car with electrically powered wheels that allow the car to turn 360 degrees almost on its own axis. ZF could not agree to demands by Apple for exclusive rights to such inventions, Mr. Sommer said.
To stay ahead in the car business, manufacturers find they need to be more nimble in order to react quickly to changes in the marketplace. For instance, Mercedes reorganized its factories last year, eliminating plant managers and giving control over production to the executives in charge of
different model lines. The change allowed Mercedes to introduce a new version of its popular C Class sedan at four factories on four continents in just six months. Normally, those changes would take twice as long to complete.
Markus Schäfer, head of production at Mercedes puts it succinctly. “This enables us to be more competitive in a world where new competitors come to the table,” he says. “We created the automobile and we will not be a hardware provider to somebody else.” Consider the gauntlet thrown down and in your direction, Apple and Google!