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'How Can a Start-up Succeed in the Automotive Industry?' – AutoTech Online Roadshow
COVID-19 and China
AYO Pitch Club, AutoTech Online Roadshow

Key Takeaways

► Creating an integrated ecosystem is where the AutoTech market will begin to flourish, because the key to enhanced user experience lies within improved interconnected relations between each dependent player.
► Future collaboration between AutoTech and other consumer sectors may generate positive influence for all stakeholders, especially for innovative startups.
► Partnerships between startups and the classic OEM Giants are highly encouraged by the latter, to bring about a more significant influx of innovative plays.


The six startups which joined us were ABUPDAT, NetCar Tech, Levl, Dilu, Hongjing Drive and Open Motors. Together, they cover a diverse range of domains across the Automotive spectrum, including Vehicle Software Design, E2E Solution, Advanced Driver Assistance System, Auto Park Assist, Wireless Identity Management, Keyless Entry System, L3 Automated Highway Truck, Auto-Grade Computing Platform, Battery Sustainability and Battery Swap. Each participant had seven minutes to pitch their innovation, followed by a three-minute Q&A with the jury.

 

Jury Background Information

1) John Li, Partner, Cathay Cartech Fund

15+ years of experience in Auto Industry (both OEMs and components) with a focus on M&A, Strategic Planning, and Partnerships & Alliances.

2) Peter Riedl, VP Head of Technology Office, BMW China

Over 13 years of experience at BMW, currently oversees BMW China’s technology and innovation.

3) Thomas Pieringer, AutoTech Startup Mentor, Exec. GWM, Volkswagen

Experienced Manager in Car Connectivity, with a proven track of success among German and Chinese top Car OEMs.

 

When asked about the AutoTech ecosystem from an investor's perspective, Mr. John Li from the Cathay Cartech Fund mentioned noticing, during his extensive AutoTech career, having invested in 10 companies globally, that there seems to be an underdevelopment of connectivity.

"There is already a lot of Car Connectivity in the investment stage, but the real question is, how can we create an ecosystem for this – as has occurred for the smartphones?" Mr. Li asked.

"A lot of technology supporting Car Connectivity is mature," he added, "yet there exist plenty of opportunities in subsequent development to link the subcomponents together. By connecting the dots in such a way that various players in the AutoTech ecosystem form a synergy, the outcome in the bigger picture is enhanced user-experience and fast-forwarded business progression, both fueled by the technology-connectivity harmony."

"Because the majority of AutoTech startups are still within the conventional framework, they may experience a lengthy period of stagnation with their business development." Mr. Li refers to the often standardized, so-called 'Automotive Value Chains,' where the classic OEM-Tier 1 Supplier bidirectional relationship dominates. The consequence is that, even though start-up technology may evolve very rapidly unless these Innovators are able to jump out of the traditional value chain and create unique value with a different approach, they may slow down their progress of becoming significant players in the ever-changing AutoTech landscape.

"We need to look for adaptive solutions that shift," Mr. Li suggests, those that can make the connection between AutoTech and other sectors, for example, the interplay between high-tech autonomous driving and agriculture or mining machinery, "may be much easier to influence in terms of monetization from wider customer groups." This depicts a win-win situation for both the investors and the startups: for the former, investors would be investing in two sectors instead of one; for the latter, such novel technology applied in a cross-industry manner may be the innovator's alternative approach for creating differentiated value.

Building on this, Mr. Riedl from the BMW Group, reiterated the importance of a unique selling point for startups who are up in competition against established Tier 1 Suppliers and their already developed distribution networks. He explained that there is a strong need for startups to utilize their advantage of malleability in creating potentially disruptive technology.

Regarding BMW's position in the automobile innovation ecosystem, BMW strives to seek an open and global approach: the newer domains of the AutoTech arena are certainly not the classic OEM engagement activity areas, such as data-driven tech and autonomous-driving technologies. For this reason, BMW is partnering up with different entities, including Startups, University Talents, Tier 1 Suppliers and Cross-industry Partnerships. For example, the 'BMW Start-up Garage Program' was launched in 2015 in China, Europe and the US to encourage more opportunities for startups to engage with OEMs. Because BMW believes in the merit of the "early-engagement and immediate-feedback" mechanism for startups to succeed – only when the startups and their influx of novel ideas are assessed at the end-user level might they be able to adapt and develop accordingly with the prospects of creating a breakthrough.

Last but not least, Mr. Thomas Pieringer offered insight on another direction in converging an integration of subcomponents.

"The interplay of Tier 1 Suppliers, OEMs and Startups makes the car industry very colorful" said Mr. Pieringer.

"Take the evolution of the field, from the blooming of cloud computing to autonomous driving, to enhanced connectivity; we are at an ever-changing landscape where the industry is becoming more and more subcomplex. Fast-forward to present time, there has been a drastic shift in paradigm for the OEMs and who they engage with: in the past, it might have been the pure reliance of Tier 1 Supplier solutions; nowadays, with the addition of all sorts of Start-up specialties, the industry has become even more complex. Together with the uncertainty of what the future may behold, newer enterprises should leverage on their flexibility and ability to specialize for more specific domains, thereby having the opportunities of partnering up with the classical OEMs."

With the aforementioned insights into the future prospects of the AutoTech industry, we expect to witness more comprehensive and fine-tuned solutions powered by data-driven technologies, as well as greater Startup-OEM Giant collaboration in the ecosystem.

*Contributor: Lisa Li | Editor: Luke Sheehan
ANALYST
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