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Per Österström Business Region Göteborg

”Something big is happening”

The world's automotive industri is about to turn upside down. And Gothenburg is at the forefront conducting world leading research. This conversion is, at the same time, a great opportunity and a fate for the Gotheburg region.

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Hotter than Spotify, that's how the automotive industry in Gothenburg has been described as the sector shifts towards connectivity, automation, digitisation and electrification, forming an engine that's helping power the region's development surge.

"Something big is happening in the automotive sector and in the Gothenburg region. What's more, the sector has completely different skills needs compared to how things have been traditionally," says Per Österström, Group Manager Transport and Automotive at Business Region Göteborg.

The Drive Me project is the most well-known example, wherein Volvo Cars is currently recruiting test families to use the self-driving Volvo XC 90. The first cars will take to the roads during the latter half of 2017 in a large-scale pilot project in autonomous driving. Within a 50-kilometre long commuter loop around central Gothenburg, the test cars will be able to drive themselves in real traffic, referred to as Level 4.

Another example is the Drive Sweden innovation programme in Gothenburg, which aims to push development towards sustainable transport systems built around automation, digitisation and servitisation.

"Drive Sweden is a fantastic platform that has its programme office stationed in Gothenburg. It's a strategic innovation programme within a field that will revolutionise the entire transport sector with Gothenburg as one of the world-leading nodes. Researchers, development engineers and behavioural scientists are relocating here to help shape the transport systems of the future," says Per.

According to the latest figures from Statistics Sweden, the automotive industry in Region Västra Götaland employed some 31,000 people in 2014, working at about 150 companies. If we also include those working at electronics, IT and technical consulting companies with the lion's share of their goods and services production geared towards the automotive industry, then employment within the sector is just over 40,000 people at roughly 200 companies. In recent years, this figure has been boosted by several thousand new recruitments in the sector. The percentage working within the automotive industry in Västra Götaland is almost three times that for Sweden as a whole.

"Within the automotive sector, Gothenburg has had a tradition of automotive development for almost a century. We also have very strong traditions within the IT and telecom sectors where some actors, such as Ericsson, are global market leaders within mobile data transmission systems. When these two sectors meet, together with countless other companies, completely new types of business arise along with new opportunities."

So what is it that drives this development? Market needs? Environmental requirements? Safety requirements?

"If we look at self-driving vehicles, there's already a behaviour for which current vehicles are not suited. Commuters sit in traffic jams texting or doing other digital tasks and this is a traffic-safety concern. So self-driving vehicles fulfil an existing market need; that's what's driving development in this area. And car manufacturers are investing in differentiating themselves and making the most traffic-safe product. By 2021, all new vehicles will incorporate some form of self-driving technology, everything from parking solutions to tailback systems. And things are moving pretty fast," says Per.

Take electrification within the automotive and transport sector, where development is driven based on a sustainability perspective and, in the longer term, economic incentives. On the one hand, some countries are struggling with such high emission levels that they desperately need to deal with the issue now. And on the other hand, many countries want to become independent of external fuel producers, with China as a prime example. And this is where electrification comes in.

"The transport solutions that benefit from transitioning to electrical operation will do so. The Swedish government's FFF (fossil-free fuel) study published a few years back underlined urban buses as the vehicles that could be transitioned most quickly. Electrified buses have proven to be considerably more energy efficient than their predecessors."

Being part of this is a question of survival for automotive manufacturers and there will be stiff competition between bus and car manufacturers to see who can make the fastest progress.

"China is extremely successful at increasing volumes and when they do, innovation follows shortly after. I've seen this with my own eyes. Shenzhen is a city with 16,000 fully electric buses. What's more, they have a plan for converting their taxi fleet."

"I'd also like to say that dieselgate, wherein Volkswagen cheated on its emissions data, really pushed development. Now they are saying that 20-30 percent of their new cars will be electrified by 2025."

Great benefit in terms of tax income

Here in Sweden, we'd need to introduce one million electric cars by 2025 to reach the COP 21 goals adopted in conjunction with the climate change conference in Paris – and this is not the trend we're seeing as of yet. We need to take a completely different approach to strategies, regulations and incentives in order to meet these goals, Per explains.

"By investing in these technologies we can also benefit greatly in terms of tax income. At a conservative estimate, the automotive industry and all the companies associated with it generate an average of 3–4 percent of the total tax base in Region Västra Götaland. That's equivalent to about half the costs of all public transport throughout the county. So there's an enormous welfare volume involved in helping this industry in various ways."

By 2021, experts expect electrified cars to cost no more than conventional cars. If many people today find the decision to buy an electrified car difficult and expensive, in just a few years' time it will be considerably easier. This will require a more widespread network of charging stations. For individuals, for apartment blocks, for communities.

"About 80 percent of car journeys in Sweden cover less than 40 kilometres, which is also the standard range of hybrid vehicles. If everyone transitioned to hybrid cars today, the desired effects in terms of lower environmental impact and urban noise would be achieved. However, if longer ranges are an argument to get people to buy electric cars, we'll start seeing cars with very different ranges in the next few years," says Per.

"Today's vehicle fleet, however, will remain on our roads for another 15–20 years and in this respect I'd like to mention Preem's initiatives within renewable fuels. They've invested some SEK 700 million in the region and as Sweden's largest oil company with two refineries, one in Gothenburg and one in Lysekil, they hold a leading position within renewable fuels with 50 percent renewable content, including tall oil in their diesel fuel. Biogas and natural gas also dominate certain markets and here we can look to companies like Westport in Gothenburg, which converts vehicles to gas-powered."

Since electric cars contain fewer components than conventional models, auto manufacturers won't make the same earnings from aftermarket sales and service. Consequently, they'll have to find other sources of income and one way is to offer different types of digital services and to share information that the cars gather with other industries – such as the insurance industry, which could base premiums on driving style.

Creating an ecosystem for the aftermarket

Auto manufacturers will not want to let go of a customer following a car sale. Instead, they'll want a continued relationship in order to sell new services and to create ecosystems for aftermarket initiatives. So anyone buying a new car in the next few years can expect it to be connected to the internet and to gather information. We'll need to make active choices when it comes to what we want to share and whether we want to try new services for direct feedback.

Several companies in the region work with the so-called user experience, that is, the human-machine interface. Interface designs and available applications will be one way for automotive manufacturers to profile themselves, as will enhanced traffic safety aspects. Having a personal profile that can be directly uploaded via the car's centre console and sitting on the sofa at home configuring the car's interface could become as common as creating playlists for Spotify, according to Per

"On the other hand, the option to drive yourself will remain for a very long time, perhaps indefinitely, until we have systems that function at all levels everywhere. Such a need won't exist, rather solutions will be adapted to market needs and those will probably encompass commuting, transport and perhaps parking," says Per.

"Property companies, for example, will have the flexibility to arrange parking spaces more closely together, thanks to self-driving technology. Financial savings will be made in terms of efficient space use. This will also apply to future multi-storey car parks, and they won't need to be heated or illuminated."

Ownership of the field of safety

In other words, a revolution is under way in the automotive and transport sector and at the centre of it are a number of actors in the Gothenburg region. Why does Gothenburg have such a strong standing in this area?

"If we consider self-driving vehicles, this is an area where actors in the automotive sector in Gothenburg want to take ownership of the field of safety. If we want to remain a world leader in traffic safety, which we've been for a very long time, then it's the human factor that limits us in reaching the next level. This is where automation comes in," says Per.

"When it comes to electrification, Volvo Cars was electrifying vehicles some 30–40 years ago, but the market wasn't mature enough and Volvo isn't a company with the kind of product volumes of, say, Volkswagen. But in the transition that we're now seeing, they're very much to the fore, as the research and knowledge has been there for a long time. Geely's investments in the region shouldn't be underestimated either, as regards both Volvo and CEVT."

What's more, Sweden, the region and Gothenburg have long positioned themselves within sustainability issues, says Per. Sustainable mobility has been a mantra of sorts for the region, in the public sector as well as in academia and trade and industry.

"Sustainability requirements have gradually increased over the years and within the transport sector it's no longer enough to simply work with vehicle design. The next level is to create a sustainable transport system, which requires connected systems for optimal efficiency. Since the issue of sustainability has been important, connectivity came quite early to the Gothenburg region as a natural progression," says Per.

Per Österström

 "Within heavier transport, for instance, connectivity between vehicles can be used to create convoys, thereby saving energy by travelling close behind each other. Heavier vehicles can also receive information about road conditions, changes in elevation and when to brake and accelerate in order to drive as energy efficiently as possible. For heavy machinery operating in mines or in rugged terrain, connectivity can allow the vehicles to be controlled remotely, that is, with no need for anyone to sit in the actual driver's cab."

Another factor behind the Gothenburg region's strong position is the progress made since the 1980s and 1990s in telematics solutions, that is, automated communication between vehicle computers and desktop computers. Telecom networks have been expanded, as has sensor technology.

"The technology has been refined, in terms of both gathering information and processing it to make logical decisions. Should the car accelerate or brake? Which tyre pressure should be used in this situation?"

"Then we have a tradition of working very much with system solutions regardless of industry. This is totally unique in the world market. Many work separately with vehicles or energy systems or urban development – but we're good at linking them together, that's our major competitive advantage."

Why is that?

"We're a small country with limited resources, so we have to work together to deliver products. When we're visited by overseas delegations, many ask how we managed to create arenas for collaboration in which different stakeholders act so openly. What did we do to achieve this? And it's difficult to explain, but it's some form of culture that we've created here. There are not many other places in the world where different parties collaborate in this way."

Yet another component that explains the success of the Gothenburg region is a traditionally highly mobile workforce, says Per. In many European automotive clusters, people are more likely to work for a single product company and stay there. Here we have a workforce that is flexible and moves between different companies, bringing knowledge and refining it in new contexts.

"This makes us stronger when it comes to innovation and developing new solutions; people are influenced in another way. Broadly speaking, the same programming languages are used in the automotive industry as in the telecom sector, so enormous synergies are being created now when these two industries are coming together. What's more, it's easier for someone who wants to invest or establish operations in the Gothenburg region as they can benefit from the existing, very high-quality workforce. There's no need to start from scratch," says Per.

Need for more study places

But it's not all a bed of roses. As in many other sectors, human resource planning is a major challenge for the automotive cluster.

"More people need to be trained. By 2020, for example, there'll be a shortfall of 900,000 IT engineers in Europe. Trade and industry is recruiting increasingly more from the international market when needs cannot be met by the local workforce. Expertise is needed throughout the automotive industry – from expertise in energy through ICT and vehicles to urban development. We must get more young people interested in engineering and programming," says Per.

"At Chalmers University of Technology, named the most international university in Sweden, 30 percent of master's students are from overseas, but less than 60 percent of them remain in the region after three years. Being able to integrate them with trade and industry in a completely different way is important; what we're seeing today is a waste of resources beyond compare. Our assessment is that they are all needed, along with another couple of thousand study places within fields such as electronics, software development and battery engineering. The Gothenburg region is red hot, and we're confident that we'll see more establishments within this sector in the region. This is why reliable human resource planning and housing issues are high on the agenda."


Levels 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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