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Jan Hellåker Programme Director at Drive Sweden

"Bigger than when smartphones changed everything"

When the internet went mobile and Apple launched the iPhone, people's lives and the business logic of most industries was changed forever. But what we're seeing now in Gothenburg's automotive industry is even bigger.

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"I've used a quote from Bill Ford very often the past year, because I find it so apt. 'The way people and things move around will change significantly the next few years, and that change will be as dramatic as the switch from horses to automobiles'."

Jan Hellåker, Programme Director at Drive Sweden, a national mobility programme, has a better grasp than most Swedes of a trend that first gained momentum 20 years ago. In 1999 he was involved in founding Gothenburg-based Wireless Car, a company that realised early on the opportunities offered by connecting vehicles to the internet.

The telecom and automotive spheres had in fact already begun merging at the beginning of the 1990s. Jan was involved back then as well, helping bring connectivity to Volvo trucks via text messages.

This trend is now one of the Gothenburg region's true competitive advantages. Much of this is centred on Lindholmen Science Park, where the Drive Sweden programme is also located.

"It's great that so many of us are sitting within a few hundred metres of each other. In this building alone there are hundreds of people moving the entire Volvo Group's telematics development forwards. When we eat lunch together with people from Ericsson and CEVT… ideas can spring to mind over lunch simply because you happen to sit next to the right person."

Is there anything like this elsewhere in the world?

"Not with this concentration. If you go to Detroit, all the different actors are there, but they're not gathered together in the same way."

At Lindholmen in Gothenburg, for example, Volvo Cars and Autoliv are establishing their major engineering venture Zenuity to develop software for self-driving cars. This compact piece of Swedish real estate is a global centre for the extremely major transition currently under way throughout the automotive industry. Here in Lindholmen and in California's Silicon Valley is where it's all happening.

"In Gothenburg, not everyone has understood just how highly we're ranked in the world. We're right up there with the very best," says Jan.

With his years of experience to fall back on, Jan also warns of the financial bubble he sees developing around the new technology.

"One indication that the hype has got out of hand is the valuations of companies within self-driving vehicles. It's gone beyond reason. I've seen this first hand before, when the IT bubble burst. I think it will be set right; things have just moved a little too quickly."

So it's not the technology shift itself that's been exaggerated?

"No, I don't think so, but we need to consider things in the longer term. How much automation can we actually achieve? It will take a very long time to reach level 5."

That's when you could sit in a car without windows and be transported in an urban environment?

"Yes, in principle, with no pedals or anything, it can find any destination in the world, at any time and in any weather conditions. That will take time."

"I have a good friend, one of the world's foremost researchers at Berkeley, California. If he's having a good day, he says 2075, if he's not having such a good day, he says 2085. That's a long way off, but a lot will happen at the lower automation levels, and even at the higher levels, but within limited scenarios."

What sets the limits?

"If there's a harsh, heavy snowstorm, conditions aren't optimal for a self-driving car to cope on its own."

"Many people believe that the cars use their GPS units to navigate, but in actual fact there are a great many sensors on the cars that register fixed known objects in the surroundings. If there's a large snowdrift covering an otherwise visible telephone pole whose location the cars know to the nearest millimetre, we lose some of that accuracy."

"The entire infrastructure changes if half a metre of snow falls. And if it's ploughed to the roadside, this just makes matters worse."

But those kinds of things happen all the time, changes to our surroundings?

"The cars gather data and upload it more or less in real time to the cloud, so that the next car can receive an almost immediate update as to the exact details of the new map. However, these things have only been tested on a small scale so far. It will take some time before the technology is found in every car, with accepted business models that enable a Mercedes to receive this type of information from a Volvo."

Volvo Cars is talking about level 4 already in 2021.

"I think that's very much a possibility. It's based on a relatively controlled environment – such as the ring roads around Gothenburg – and the existence of a traffic control function that can close roads if there's been an accident and Älvsborg Bridge is closed."

"It needs to be controlled per car or segment. If you're one of the test drivers, you might normally be able to drive between Åbro Junction and Älvsborg Bridge. But when you get to the E6 motorway, maybe an articulated lorry has jackknifed across the road."

Driverless cars can't handle the entire city?

"A likely situation is that this will be designed for a closed environment – such as only within a newly developed part of the city. This is kind of our vision for the Gothenburg area and Sweden, that we'll be able to demonstrate this in one of the new areas being developed along the banks of Göta älv. Urban development is required to utilise this type of traffic."

"Take Frihamnen as an example, where there'll be very few parking spaces. That's somewhere you could have a system with self-driving cars."

What we're talking about now is only part of the transformation faced by the automotive industry. Is this as big as when 3G networks were built and Apple released the iPhone and changed everything? Even business logic, altering the fundamental roles of different actors?

"I think it's bigger than that."

Who is this a big change for?

"For everyone. For consumers, for auto manufacturers, for the new players who are taking the opportunity to break into an emerging market."

This must have the traditional major players, those with strong brands, a little worried?

"Definitely. Today, essentially every major auto group in the world has realised what's happening and has created some form of sideline to investigate this trend and find ways of getting involved. It's fascinating to see how they are transitioning from being conventional car manufacturers to mobility providers."

This brings to mind all the other industries that have undergone the same type of transformation. The companies know that they have to change, but just the same they're too afraid to disrupt their usual operations to embrace it fully. Will the same thing happen now?

"I'm convinced that they're all struggling with this. Even if the executive chairman of Ford, with all his authority, stands up and says it, I know from my own experience that it's not always so easy. There are many links in the chain that need to change and many simply want to continue as they've always done. It'll be extremely interesting to see who succeeds at this now."

And the major trends are connectivity, self-driving, electrification and the sharing economy?

"Perhaps the strongest trend right now is transitioning from owning things to wanting access to them instead."

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Jan Hellåker, Programme Director, Drive Sweden.

This means that things we used to consider important become simply conduits for different services. So auto manufacturers must need to find new business opportunities as service providers?

"If the regular auto manufacturers lack action plans, then within a few years some of them will become simply volume manufacturers of the entire outer shell, with someone else selling the service."

"A service provider such as Google or Uber will need to buy a complete car, which isn't possible today. You can buy a complete instrument panel or a powertrain of some type, but not an entire car."

And how will that outer shell be branded?

"That's an interesting question. It's more likely to say Google than Fiat."

This is a dramatic change. It could say Uber instead of Volvo?

"Exactly."

Maybe we're being biased in assuming that one of the big brands from the digitised world, Apple, Google or Uber, will take home the prize. But it could be a completely new brand?

"Completely new brands could most certainly emerge. The uncertainty lies in how soon that will happen. But we shouldn't get hung up on self-driving vehicles alone. The programme I direct, Drive Sweden, wants to see mobility as a service. This can be something as simple as having a Västtrafik public transport card that also covers car sharing, rental bikes and other services. But packaged differently."

So it's not an issue of how the cars work, but rather how to transport people and goods? Gothenburg has a pretty clear focus on this, right?

"I'm not certain that you can say Gothenburg has such a focus. A few years ago, we had a project in which 70 families had to forego at least one car and subscribe to a package of other transport services. Everyone involved loved it, but the business model failed. It was based on someone being able to buy public transport tickets from Västtrafik in bulk and repackaging them to resell. Preferably, it should work on a national level. Then it's a question of which operator is to manage it all."

Haven't we seen the same thing in the telecom industry? Will the public transport companies SL and Västtrafik become like the telephony companies Telia and Telenor? Will they sell each other's services and which roles will they play?

"This is a perfect analogy to the telecom industry's roaming problem. Another comparison is that Telia is both a network owner and a network operator. Then we have Halebop and Hallon, which piggyback other companies' networks. We've only seen the tip of the iceberg so far. But the telecom industry works with considerably larger margins. Public transport is not a profit-making endeavour."

Could the large car brands assume such a position?

"They most certainly could. It's interesting that Ford is the only brand so far to have used its regular branding on its mobility service operations."

The big question, as always, is who will have the relationship with the end customer?

"That's the million dollar question. That's the battle everyone wants to win. And who will have access to the data."

Yes, who will own the data, because that's big business?

"In five or ten years, Volvo and other car manufacturers will most certainly have offerings in this area, and I'm sure that companies like Google and Uber will have them too. The consumers will decide who wins."

"We do, however, have legislation that will govern the data issue. The actors themselves cannot decide who owns the data."

But that data will be priceless. You'd be able to sell it as is, but also develop new ideas from the data to sell as services?

"That's very true, on all three points."

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We often say that Gothenburg is a world leader in mobility and can take on Silicon Valley companies, those that are perhaps starting out in a garage now, but are we really that good?

"If we're honest with ourselves, we have an extremely good position in the automotive segment and even within the associated connectivity field, but we haven't achieved the most in the world when it comes to mobility. We're not as much to the fore in that area, even if we have well-developed public transport. I'd like to see more startups working with mobility."

So what's preventing that development?

"Nothing, I think it could happen quite soon. Within Drive Sweden, we're trying to help get things in motion by placing our assets in an open cloud environment where others can use them to develop new services."

"We have an amazing position within the automotive segment and development. The future looks very bright. The work being done at both Lynk & Co (CEVT) and NEVS is an extremely exciting complement to Volvo Cars' world-leading initiatives."

Can we call ourselves world-leading?

"I've long believed that the Gothenburg area has the largest number of automotive engineers per capita."

Will the Gothenburg region be competitive when this development gains momentum?

"I'm confident that we have the potential to be competitive at a world-leading level. And we mustn't forget that we have Ericsson and other actors of this type within the region."

How will jobs in the automotive industry change?

"That change is already under way. The Volvo of today has an infinitely larger share of software developers than when I started out there 30 years ago. That change has already taken place."

"Maybe it will affect production, if the new mobility approach makes it big. However, that's in the very long term. But I do think that all auto manufacturers need to work at more quickly updating their software. Like with the iPhone or Tesla. Not all manufacturers are properly equipped to handle this."

Does the world need to agree on standards?

"There are three headaches when it comes to the standardisation issue. One is that on a global level it leads back to the Vienna Convention and the Geneva Convention, which haven't been ratified by all countries. It's about to what extent the driver is to be in control. There's currently a rift, with Sweden and Volvo on one side, in principle together with Ford and Google, and the German automotive industry on the other. The Germans don't want to go beyond level 3 at the moment. This doesn't bode well for the future."

So we don't even share the same view within the EU?

"No, and the other big issue is data collection and personal integrity. Today in Sweden, it's very difficult to get a permit to use cameras and sensors of the types used for self-driving cars. I find the regulations a little old fashioned in a society where people use their phone cameras all the time. So I don't understand why a reversing camera on a car should be a problem. Circumstances are a little special in Sweden in this respect."

"The third issue is tax regulations and the sharing economy. If sharing cars between people, with some form of underlying business model, is going to be widespread, then these matters need to be worked out."

So it's not simply a case of harmonising regulations in Sweden?

"Preferably not."

Are there any technical standardisation issues that also need to be considered?

"No, those will be sorted, given a little time and some good engineers."

In Gothenburg, we often pride ourselves on the fact that there are so many opportunities to try things out to stimulate construction and that decision makers have a positive attitude to testing things. But how good are we at this really?

 "In an international comparison, we're world class. If we're to choose something to highlight, then it's our openness to collaboration. We can sit down with our decision makers from both local and national level and find solutions. I see this when socialising with my colleagues around the world."

Is that our greatest competitive advantage, even greater than our expertise?

"I think I'd say so. Although it's not always a walk in the park here. We have to work on this continually and need the energy to do so. It's no secret that Gothenburg Municipality is on its knees a lot of the time because there's an unbelievable amount of work to do with so many projects on the go."

Per Österström

The big question: who owns the data?

In May 2018, the EU will introduce its General Data Protection Regulation (GDPR), which will apply as law in Sweden and replace the Swedish Personal Data Act (PDA), with major changes and some completely new provisions.

"The so-called Article 29 Working Party, comprised of all data protection authorities in the EU/EEA, is currently working on guidelines on a European level," says Per Österström, Business Region Göteborg's expert on development within the automotive cluster.

With the new regulation, sanctions of up to EUR 20 million, or 4 percent of an organisation's total turnover, can be imposed if an organisation mismanages its processing of personal data. Within the automotive industry, discussions are under way concerning the interpretation of what is personal data and what is technical data.

"What is vehicle data and is owned by the vehicle manufacturer, what does the driver own and can share – or demand removed? For example, are GPS position, seat position, passenger seat use, speed, music choice and braking system use personal data?"

 

Färgbox

Facts

Drive Sweden is a strategic innovation programme started on the initiative of the Swedish government. The programme is financed by the Swedish Energy Agency, the Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning (Formas) and VINNOVA, the Swedish government's innovation agency. Lindholmen Science Park is hosting the programme.

Drive Sweden promotes development towards a transport system based on automation, digitisation and servitisation; a system that will create a sustainable society and strengthen Swedish enterprise.

Levels for autonomous driving

Level 0
Automated system issues warnings but has no vehicle Control.

Level 1
Driver and automated system shares control over the vehicle

Level 2
The automated system takes full control of the vehicle, accelerating, braking, steering. The driver is monitoring the driving beeing prepared to intervene at any time.

Level 3
The automated system is in control and the driver can safely turn attention away from driving tasks. the driver must be prepared to invervene in case of emergency.

Level 4
The car is self driving, no driver attention is required for safety. Self driving is supported only in geofenced areas. Outside these areas the driver needs to take control.

Level 5
No human intervention is required.

 

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