The Lamb Lays Down with the Lion to Avoid Being Eaten by the Wolf
Earlier this month, European automotive original equipment manufacturer (OEM) leaders BMW, Mercedes Benz, and VW announced an agreement to collaborate in the development of an open-source shared software platform for electric vehicles (EVs). This unlikely collection of competitors has decided to join forces to stave off the heated competition from the Chinese automotive EV OEMs.
In a recent interview updating my predictions for the automotive market for 2025, I highlighted the point that BYD, a Chinese automotive OEM, today ships more EVs annually than Tesla. It’s not just BYD’s momentum alone that has the German OEMs concerned; the Chinese EV market is exploding as evidenced by the more than 100 new EVs that were introduced by various Chinese OEMs at this year’s Shanghai International automotive show. In short, China is dominating the “new energy” vehicle market segment, leading to the German OEMs taking drastic measures to stave off the stiff competition.
In principle, collaboration among the major OEMs to address a global competitive threat makes sense. In practice, achieving this objective can prove to be tricky, if not impossible. While some of the key underpinnings for success are in place—such as the collaboration focusing on areas that don’t establish a vehicle’s brand or differentiated value—as recently as two years ago, 10 of the major Japanese automotive OEMs formed a similar consortium with a similar set of objectives and constraints, only to disband this effort after just six months.
The 10 “J OEMs,” named so in recognition of the 10 Japanese automotive OEMs that banded together to address global competition, collectively came to the realization that establishing a common hardware platform was not tenable because of the very different market segments the different OEMs addressed, which spanned from very low-end to very high-end.
While one of the key motivations of the software defined vehicle (SDV) is to abstract away the underlying hardware such that high-end vs. low-end hardware platforms appear similar in nature, it’s not always clear what software features and capabilities establish brand identity and differentiation—especially given the nascent nature of this evolving market.
To that end, the smartphone is often cited as a good illustration of the concept of a software defined platform, a good parallel to the SDV. Today’s smartphone operating system, which addresses a wide range of underlying hardware combinations, raises the question—what are the critical differences between an Apple iPhone and a Samsung Galaxy? Is it the software, or is it the hardware? I believe the answer is yes….it’s both. So, developing a universal software platform that provides significant industry momentum while allowing different OEMs to retain differentiation and brand identity will prove to be a bridge too far, unfortunately, is my prediction.
It’s been said that the best way to determine if a strategy will succeed is to execute that strategy. In this case, however, there have already been multiple industry-wide collaborations that have spectacularly failed as the industry grapples with this new world order of self-driving and new energy cars with an ever-increasing number of new entrants and business models that stand to challenge, if not eliminate, the long-term incumbents.
That said, there are also parallel efforts to the recently announced initiative by the German OEMs, including the SOAFEE SIG (Scalable Open Architecture for Embedded Edge special interest group), an industry-led initiative focused on defining a new open-standards-based architecture for SDVs. Similarly, a key goal of SOAFEE is to enable software to be developed and deployed across different hardware platforms, simplifying development and reducing the need for platform-specific code.
SOAFEE is a collaborative effort involving worldwide automakers, semiconductor companies, software providers, and cloud technology leaders and has been established since 2021. It’s unclear how the efforts of SOAFEE compare to those of the recently announced German OEMs, but again, time will tell.
And to muddy the waters just a little more, the Autonomous Vehicle Computing Consortium (AVCC), which also comprises many industry-wide automotive OEMs and solutions providers, is also focused on establishing open-source solutions to help accelerate the development of and deployment of SDVs. How these all differ from one another is a task left for the reader.
As the title of this blog states—the lamb lays down with the lion to avoid being eaten by the wolf. The competition is fierce, and there are too many irons in too many fires with significant R&D investments that will ultimately lead to spectacular losses. It’s a brave new world in the automotive industry, and while the industry seems to recognize as much, there don’t appear to be many clear or sound strategies to navigate this evolving landscape.
Earlier this month, European automotive original equipment manufacturer (OEM) leaders BMW, Mercedes Benz, and VW announced an agreement to collaborate in the development of an open-source shared software platform for electric vehicles (EVs). This unlikely collection of competitors has decided to join forces to stave off the heated competition from the Chinese automotive EV OEMs.
In a recent interview updating my predictions for the automotive market for 2025, I highlighted the point that BYD, a Chinese automotive OEM, today ships more EVs annually than Tesla. It’s not just BYD’s momentum alone that has the German OEMs concerned; the Chinese EV market is exploding as evidenced by the more than 100 new EVs that were introduced by various Chinese OEMs at this year’s Shanghai International automotive show. In short, China is dominating the “new energy” vehicle market segment, leading to the German OEMs taking drastic measures to stave off the stiff competition.
In principle, collaboration among the major OEMs to address a global competitive threat makes sense. In practice, achieving this objective can prove to be tricky, if not impossible. While some of the key underpinnings for success are in place—such as the collaboration focusing on areas that don’t establish a vehicle’s brand or differentiated value—as recently as two years ago, 10 of the major Japanese automotive OEMs formed a similar consortium with a similar set of objectives and constraints, only to disband this effort after just six months.
The 10 “J OEMs,” named so in recognition of the 10 Japanese automotive OEMs that banded together to address global competition, collectively came to the realization that establishing a common hardware platform was not tenable because of the very different market segments the different OEMs addressed, which spanned from very low-end to very high-end.
While one of the key motivations of the software defined vehicle (SDV) is to abstract away the underlying hardware such that high-end vs. low-end hardware platforms appear similar in nature, it’s not always clear what software features and capabilities establish brand identity and differentiation—especially given the nascent nature of this evolving market.
To that end, the smartphone is often cited as a good illustration of the concept of a software defined platform, a good parallel to the SDV. Today’s smartphone operating system, which addresses a wide range of underlying hardware combinations, raises the question—what are the critical differences between an Apple iPhone and a Samsung Galaxy? Is it the software, or is it the hardware? I believe the answer is yes….it’s both. So, developing a universal software platform that provides significant industry momentum while allowing different OEMs to retain differentiation and brand identity will prove to be a bridge too far, unfortunately, is my prediction.
It’s been said that the best way to determine if a strategy will succeed is to execute that strategy. In this case, however, there have already been multiple industry-wide collaborations that have spectacularly failed as the industry grapples with this new world order of self-driving and new energy cars with an ever-increasing number of new entrants and business models that stand to challenge, if not eliminate, the long-term incumbents.
That said, there are also parallel efforts to the recently announced initiative by the German OEMs, including the SOAFEE SIG (Scalable Open Architecture for Embedded Edge special interest group), an industry-led initiative focused on defining a new open-standards-based architecture for SDVs. Similarly, a key goal of SOAFEE is to enable software to be developed and deployed across different hardware platforms, simplifying development and reducing the need for platform-specific code.
SOAFEE is a collaborative effort involving worldwide automakers, semiconductor companies, software providers, and cloud technology leaders and has been established since 2021. It’s unclear how the efforts of SOAFEE compare to those of the recently announced German OEMs, but again, time will tell.
And to muddy the waters just a little more, the Autonomous Vehicle Computing Consortium (AVCC), which also comprises many industry-wide automotive OEMs and solutions providers, is also focused on establishing open-source solutions to help accelerate the development of and deployment of SDVs. How these all differ from one another is a task left for the reader.
As the title of this blog states—the lamb lays down with the lion to avoid being eaten by the wolf. The competition is fierce, and there are too many irons in too many fires with significant R&D investments that will ultimately lead to spectacular losses. It’s a brave new world in the automotive industry, and while the industry seems to recognize as much, there don’t appear to be many clear or sound strategies to navigate this evolving landscape.
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