What’s a company to do when, after over 100 years at the top of its game, it finds itself under increasing pressure from start-up companies barely old enough to remember life before the iPhone?
As the evolution of the tech industry continues to gather pace, this is a problem increasingly faced by traditional corporations. Tech startups have infiltrated almost every sector, from banking to online shopping, challenging the status quo and leading household names to re-evaluate their performance.
And it seems that the £7 billion automobile sector is not exempt. The industry is teeming with tech start-ups hoping to disrupt the success of giants such as BMW, and the race to see who can develop their technology faster is the real challenge; it could well be that the industry is just not built to evolve fast enough.
The pace at which the car industry works fundamentally inhibits its ability to compete with new technology. It takes seven whole years just to launch one car model – within that same seven year period Apple’s range of devices has evolved so fast it has revolutionised the entire way we consume information.
Can traditional companies compete with new technology?
According to Peter Schwarzenbauer, Member of the Board at BMW, the big question is this: are tech companies faster at learning how to build cars than car companies, or are car companies faster at becoming tech companies?
Speaking in Amsterdam last week as part of Start Up Fest Europe, Schwarzenbauer was honest about his answer. “The race is open”, he said. “I just don’t know.”
Rise of car-sharing
One of the biggest challenges comes from car sharing start-ups such as Car2Go and Enjoy, which have tempted consumers to shun their own cars in favour of quick, cheap rentals directly from their iPhone. Widely acknowledged to be one of the biggest trends in the industry, it’s easy to see why their popularity has grown so fast: statistics show that cars are sat parked for 96 percent of their life and cost on average £20 a day – why own a car, when you can share one?
For BMW, taking a stake in the latest tech trends is important to ensure their future success. In partnership with Sixt, BMW’s DriveNow service offers users the chance to rent a BMWi or Mini through the app, and pay by the minute.
Autonomous driving: the next big thing
Mapping the trends in the automotive sector is key and according to BMW, one of the most important is autonomous driving. Whether you love or hate the idea of cars driving themselves, the unanimous opinion of experts at the Start Up Fest in Amsterdam was that driverless cars are coming – it’s just a question of when.
Whilst not everyone is convinced by the merits of the driverless car, Schwarzenbauer says BMW’s focus on the automobiles is the right move. There will be “no need for traffic lights, signage, on street parking and there will be zero accidents , zero noise, and zero emissions – the potential of this technology will, in my eyes, will transform cities.”
In another nod to new technology in the sector, BMW’s new connected system, already installed in 10 million cars over the BMW and Mini lines, offers a remote service for users to control elements of their cars on the phone. This includes real time traffic advice and on-street parking information, combining vehicles and technology in one of the most intelligent ways on the market.
BMW + startups
BMW have put developing relations with the most promising start-ups in the industry at the heart of their strategy for the future, allowing them to combine their signature engineering with cutting edge technology. Their trio of initiatives, including i Ventures, the BMW Start Up Garage and Urban X, provides opportunities for startups to participate in incubators and obtain funding to make their dreams reality in partnership with one of the most well-known automakers in the world. And these collaborations are as important for BMW as they are for the startups themselves – they may well be the only thing that keeps them at the top of their game for another generation.