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The Smartest Places on Earth

27 June 2016

Fred Bakker
Journalist and author; former editor-in-chief and CEO of the financial newspaper Het Financieele Dagblad

Until recently car manufacturers worked in splendid isolation. But new competitors like Tesla, Uber, Google, and Apple put their industry upside down. Mobility, safety, and durability have to be addressed from a completely different perspective. Not the car, but the integrated information platform on which it will operate, will be the basis of the business model.

A new car model was seen for too long as a top secret affair. The supply chain was only informed shortly before the introduction of the car at a glamorous event. The financial crisis, the introduction of Tesla’s all electric car and Google’s autonomous vehicle changed the sectors perspective dramatically.

The automotive sector was on the wrong track. A century long focus on the combustion engine, design and mechanics led to a tunnel vision. The new competitors link their proposition to a new trend: sharing instead of owning a car. Uber does not own a single car, but their concept put the global taxi business upside down.

Isolation was not so splendid after all. In our recently published book, The Smartest Places on Earth, Antoine van Agtmael and I come to the conclusion that interdisciplinary collaboration between universities and companies is no longer a luxury but a necessity. Technology is too complex and too expensive to be turned into new innovative products on your own as an OEM. This is especially true for the automotive sector.

In the dozens of regions we visited in the US and Europe (in the book we ultimately selected 10 of these) we saw collaboration between companies and technical universities in the field of chips and sensors, new materials, and life sciences. What we also noticed is that technology is more and more seen as a means to solve pressing challenges of the 21th century. And one of them is mobility.

Car producers heard the wakeup call, but they lag in the field of information technology and battery expertise. Some companies acted accordingly and head for a change of track. After the financial crisis Ford adapted its mission statement, and the company sees itself now as a mobility provider. 

In 2013, in line with their new strategy, Ford opened a battery research lab at the campus of the University of Michigan where engineers from Ford and university professors do joint research on a new generation of batteries. Suppliers are invited to join the project. In Aachen (Germany) and in Silicon Valley the company has exceeded its number of programs with the technical universities, with the focus on the autonomous car.

In our book we also show how BMW started a collaboration on new materials, by taking a minority stake in the Swiss startup Kringlan. ETH researchers developed a way to commercially produce thermoplastic wheels, that are significantly lighter and more sustainable than the actual steel ones.

But the big question is whether this change of attitude to modesty and collaboration, is enough to catch up with the newcomers in the sector? Can the traditional companies develop their own integrated software platform for the all-electric, autonomous car, or will they be forced to buy the intellectual property from the newcomers? The jury is still out.

The Smartest Places on Earth by Antoine van Agtmael and Fred Bakker