Achtung Tesla! German Automakers Try To Compete With Elon Musk

Volkswagen and other German car companies want to develop their own software systems and thus close the e-car technology gap with Tesla. But success will depend on a cultural change in the established auto sector.

Elon Musk trying out a brand new VW
Elon Musk trying out a brand new VW
Daniel Zwick

INGOLSTADT — It's all systems go in Ingolstadt, where Volkswagen has invested billions of dollars in setting up a new subsidiary. The plan is for the organization Car.Software to soon employ 10,000 people and become the "second largest software company in Europe, after SAP," according to CEO Herbert Diess.

The subsidiary's main aim is for in-house programmers to develop a single operating system for all VW cars, the automotive equivalent of Apple's iOS, used across all its smartphones. Diess also believes the system could be sold to competitors.

It's a nice idea, but it's still unclear whether traditional manufacturers such as Volkswagen, BMW or Daimler are capable of developing the best operating systems for modern cars. And it's make or break: After battery technology, this software is the next most important criterion for future success.

But so far their efforts in this area have been far from impressive. There are already competitors who are years ahead when it comes to building computers on four wheels. And not only Tesla, the favorite of so many electric car enthusiasts. There are new suppliers springing up in its shadow, which have the potential to shake up the industry.

One of them is the start-up Apex.AI, founded by the German Jan Becker in Palo Alto, the heart of California's Silicon Valley. Becker has dedicated the past two decades of his life to developing self-driving cars: He has worked at the supplier Bosch, at Stanford University with pioneering computer scientist Sebastian Thrun, and at the American start-up Faraday Future.

Now Becker's own company has achieved what has long stumped the developers at Volkswagen: a single operating system for cars. "Our system is ready for use," says Becker. "Apex.OS is a complete software system for cars." It is now awaiting certification through the German auditing and certification service TÜV.

Once it has the official seal of approval, Becker plans to offer his operating system to manufacturers as a "white-label" product. "The customer won't necessarily know that their car uses Apex.OS," he says. They will only see the manufacturer's logo on their car's screen.

Established suppliers also want a piece of the pie.

This is similar to how the rest of the car is made: The manufacturer assembles it from a wide range of components made by specialist suppliers. As Daimler chairman Ola Källenius said in February, they don't aim to make every part themselves. "But we conduct the orchestra."

By the end of its own development process, Mercedes-Benz aims to have created a system called MB.OS that will support all the vehicle's functions — even the user interface MBUX, which already allows drivers to control a number of functions through voice commands.

The single operating system should allow the German manufacturer to close the gap on Tesla. At the moment, their cars have hundreds of programs running, and every component is controlled through its own computers and programming languages. This makes it almost impossible to have automatic updates for different functions, or to adapt this system to self-driving cars.

Apex CEO Becker describes it as a "tangle of different software." By contrast, his system would "read the data from all the sensors in the car, process them in real time and issue the necessary commands."

The start-up is breaking into a market where established suppliers also want a piece of the pie. Continental, for example, has set up a new department called "Autonomous Mobility." CEO Nikolai Setzer believes the market will "more than double in the next three years." Industry giants Bosch and ZF also plan to develop car software in the future.

Demand is high. Even with this new software subsidiary, in the long term Volkswagen still expects to source 40% of its programs externally. At the moment that figure is 90%. BMW is also turning to external experts, although the company already employs more than 10,000 of its own programmers and software engineers.

BMW iDrive 8 operating system — Photo: BMW blog

"I would say that, with the external suppliers, we have around twice as many engineers contributing to our system," says head of development Frank Weber in Munich.

The new operating system BMW OS 8, which will be launched this year with the flagship electric car iX, is made up of thousands of individual software components, put together in Munich. "It doesn't make sense to develop these things ourselves when they are already standard in the industry," says Weber. "Our team controls the overall architecture."

In the future, the programmers will take on a larger role in product development. The main advantage of Tesla's cars is that they are built with the driver's experience in mind, going from the starting point of the software — how the product is used — to the hardware, the physical components. In German cars, it's the other way round.

The culture of the car manufacturing is bumping up against software development culture.

To change this, the companies will have to change themselves. Car manufacturers are at a crossroads, says Frank Ferchau, managing partner at ABLE Group, which provides engineering and IT services to all the major German car brands. "The culture of the car manufacturing industry is bumping up against the software development culture, and the two don't go together," he says.

For example, for many in the car industry it is unimaginable for someone to take on a single project as a consultant, rather than wanting a permanent contract, but in the IT sector that is standard practice.

Companies are meeting the software experts halfway. The programmers at VW's Software.Org don't necessarily have to work in Ingolstadt. There are other bases in trendier cities. The same is true of BMW, Daimler and the suppliers. Programmers who want to work from California can do so.

It's not only the culture of presenteeism that has to change. "A car company like Tesla, which is set up like a software company, doesn't work in product cycles of several years. It uses a process of continual improvements," says Becker.

It would be a huge step for the old car manufacturers to transform themselves into software companies. "Not every company will succeed."

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In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

— Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.

It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park


Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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