At the CAR Management Briefing Seminars held in Traverse City, Michigan recently just-auto’s Calum MacRae met with Dr Detlef Juerss, Vice President Engineering & Chief Technology Office, Adient to discuss the changing automotive environment, future seating requirements and how Silicon Valley methodologies ares helping Adient reduce product development times.
just-auto: Do you think it’s fair to say that if tier one and tier two suppliers don’t have a CASE strategy or an ACES strategy, that they’ll struggle to survive?
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When we’re talking about Level 5, fully autonomous robot taxis, I think that is a totally different industry…seeing the industry converting more to an airline kind of model
Detlef Juerss: I would say yes, but I’d go a little more granular. First of all, you have to have a clear platform strategy that would enable electric or plug in electric platforms. Does everybody already think about the full scale autonomous version? There, I would be a little more cautious because when we’re talking about autonomous, we see two different industry models currently arising. We’re seeing the normal car industry today, more focusing on what we will call a ‘Level 3’ maximum full highway autonomous capabilities to enable normal cars, owned cars, to give you a little bit of more freedom and more safety on long distances. When we’re talking about Level 5, fully autonomous robot taxis, I think that is a totally different industry. Today, I think it is industry consensus that, for privately owned vehicles, a Level 5 or Level 4 vehicle is just not affordable. There is no business case for somebody to own a car and pay that kind of money just to ride freely by themselves. That industry will get shared. That’s what we’re actually seeing the industry converting more to an airline kind of model where the carriers – the Deltas, the British Airways of the world – are physically configuring their airplane. Buying the plane from X, buying the engines from Y, buying the seats and interiors from Z, and putting that all together and paying somebody to service those planes to be available 24/7. That kind of business model, I don’t think every OEM has in their strategy yet or are even wanting to have in their strategy.
j-a: Do you have any booked business for Level 5?
DJ: Maybe! We’ve shown a number of concepts and know what we’re talking about! The requirements for robot taxi seats are totally different from the ones you would drive in your car. We’re talking 24/7 usage. We’re talking design for serviceability. We’re talking sensor technology that will see if the seat is damaged or if the seat is filthy or if you left something on your seat in order to provide that service. We’re talking about seats that would be remotely heated and cooled in order to have the seat ready to your configuration if you enter that robot taxi when you ordered it with your own profile. We want to be ready for that technology. We have reached out to a couple of players that are looking to enter this field in order to understand the specifications. It all depends on the use case of these robot taxis. If those robot taxis just carry you from uptown to downtown Manhattan all you care about is that these seats are clean, that they don’t smell, that this thing works, and that it’s there fast and reliable. If you’ve ordered one that takes you from Birmingham to Heathrow Airport it’s a different story. We’re talking S-Class limousine levels of convenience, ventilated massage seats, tray tables etc. We are seeing the same bandwidth we have in airplanes, from 1st class at the front to economy at the back…
j-a: I hope it doesn’t get that bad!
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By GlobalDataDJ: They’ll need the same kind of durability, serviceability – eg take out the cushion if it’s broken, take out the seatbelt within five minutes between landing and takeoff – these are exactly the requirements we’ll be seeing in that kind of industry.
j-a: With Level 5, do you think anyone can make money out of that business model?
DJ: The only way you can make money under that kind of a business model is if you add additional services because the investment in those fleets will be huge. The only business cases are basically A, to take out the driver and B, to then add additional services during the journey. As a seat supplier we’re just looking at enabling potential services, for example enabling sensor services that could monitor your health so you can order a remote doctor checkup while you make the journey.
j-a: If you just look at the fixed asset investments in the cars that have to be made – there’s talk of utilisation levels going to 90% in these cars against Car2Go’s current 15% I think – but then you look at the use cases it’s mostly rush hour it’s difficult to see the pathway to a return on the investment…
DJ: I think you’re absolutely right. If you just add in these services today in the congested New York, London and Shanghai of today, that will not work. That’s why legislation will play such a major role. If London was to say ‘From tomorrow only share autonomous vehicles will be allowed in the city’ that will drive everything at a much faster pace.
j-a: Do you think there is going to be an effect on total industry volume with Level 5 adoption?
DJ: Yes. But we’re still optimistic for the current automotive market because in none of the use cases will there be any significant autonomous shared cars within the next 10 years just because of pure legislation hindrances. With one caveat though – and that’s that no major city intervenes with legislation as mentioned earlier. Our long-term projections at the moment do not see any significant decrease in total vehicle volumes. On the contrary, we’re still seeing a continuous rise for our strategy planning horizon of 10 years.
j-a: If all suppliers are cognisant of the industry megatrends how does a company like Adient differentiate itself?
DJ: At the end it’s just taking wanting to be ready if these megatrends manifest themselves fully. So, thinking about service models already. And thinking about partnering to adapt to the challenges – entities likes consumer electronics companies, AI companies, sensor companies etc. We’re already partnering with Autoliv to keep people safe in all of these crazy seating positions or non-seating positions of the future. With partnerships we’ll be making some pretty cool announcements in Q1 2019.
j-a: Evermore content is going into vehicles either driven by legislation or consumer demand so there’s less headroom in a vehicle’s bill of materials to make money, so how are you helping the OEMs to maintain profitability?
I think the role of the systems integrator will become much more important because the OEMs now really have to focus on their body-in-white and what is their vehicle architecture
DJ: It’s exactly the systems approach. That’s where system suppliers really play a major role because just getting a consumer electronics partner, just getting a new safety partner, just getting somebody that does thermal management, heating and cooling is not enough; this all has to be packaged in an intelligent manner. I think the role of the systems integrator will become much more important because the OEMs now really have to focus on their body-in-white and what is their vehicle architecture when it comes to electric. So for example, they look at how is the whole outside sensoring going to work or how is the networking going to work? This is the R&D development focus for the OEMs, they don’t want to waste their time elsewhere.
j-a: Going back a few years when there was talk of tier 0.5 suppliers doing complete systems there was push back from OEMs because they didn’t have any cost transparency. What’s changed?
DJ: Simply the cost transparency is now as detailed as it can get – down to every nut and bolt. It’s changed on where as an OEM you can add value – and the answer for them is in systems know-how, how all these things work together. Reusing some of that technology between OEMs is exactly the cost benefit that the industry then will have. If every OEM develops their own front end module with the electric motors inside and if everybody develops their own battery casing, the industry will fail. That’s crystal clear. We’re already seeing that today on a smaller scale. Seat structure is being shared between OEMs, so non-visible parts.
j-a: The tariff situation in the US – what effect do you think that’s going to have on the US supplier base and the global supplier?
DJ: We’re not really in a position to comment on tariffs, but we’re not changing any of our operations and strategic plans for short-term tariff topics. It’s just not what you should do. Will we see maybe some little bit of shift between manufacturing between Mexico and the US if special tariffs prevail there? Even that, it’s probably not the overarching topic. I think the overarching topic is more, what will the products and the manufacturing technologies look like in the next generation? Will there be more automation, manufacturing automation to just reduce the amount of labour cost that is driving manufacturing in Mexico or in Eastern Europe? Will we see a pendulum swing back to the physical on-site locations? That’s what we’re more seeing because transportation costs, regardless of tariffs, will increase. We just have to make sure that that isn’t the case of low cost country labour is still a low cost country in five years from now. I’m not talking Industry 4.0 that’s a more holistic approach, I’m talking more about continuous improvement in automation and manufacturing. There’s a big leap to go from where we are today into real 4.0 where everything is fully connected including feedback from the market into engineering and manufacturing. There are pockets of it everywhere in automotive already. We have a pilot plant in Sunderland, UK, where we’re trying a couple of lines. I’ll call it, “Industry 4.0 Light.”
j-a: It seems to me there’s a lot of players in the industry looking at market caps of Silicon Valley companies and thinking I’d like some of that and leading to spin-offs of technology arms of suppliers. Do you think that’s driving strategy too much?
We’re using scrum and agile today to get faster from one milestone to the other. It’s helping us cut development times by 30% against our more traditional development time of two years
DJ: I don’t think so. You’ll always have that a Facebook is worth more than the biggest auto OEMs in the world or whatever. For Adient, when we think about Silicon Valley we look at their more agile product development and how we can be more customer oriented in the development processes. So we’re using scrum and agile today to get faster from one milestone to the other. It’s helping us cut development times by 30% against our more traditional development time of two years. The whole simulation is getting better and better. We’re pretty close as an industry, to be able to prototype free production tooling kickoff. Not every OEM and not every customer is ready for that yet because they do want to see prototypes and their bosses want to see.
