November 14, 2013 1:56 pm

Bosch wants piece of self-drive car market

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People read newspaper while sitting in complete automatically driving development car by German auto parts supplier Robert Bosch in Abstatt©Reuters

Bosch's automatically driving development car

Do not be alarmed if on the motorway near Stuttgart you notice a driver who has taken his hands off the steering-wheel. Bosch, one of the world’s largest private industrial conglomerates, is testing a self-driving vehicle packed full of its electronics and sensors as it joins rival supplier Continental, carmaker Mercedes-Benz and newcomer Google in the race to bring autonomous driving functions to the road.

Volkmar Denner, a physicist who took the reins at Bosch last year, has already taken several trips in the self-driving test vehicle and wants the German supplier to claim a big piece of the market.

“Driver assistance functions will require many more electronics and sensors in the car. Suppliers are better able [than carmakers] to build the necessary economics of scale,” he explains over lunch at Bosch’s headquarters near Stuttgart.

“We are working at full speed to bring these highly exciting [automated] functions to the market in coming years.”

However, in spite of the current hype around self-driving cars Mr Denner believes the technology will be introduced into mass-produced vehicles step-by-step, at first in low speeds and in predictable environments. Automated parking and motorway traffic jam assist will be among the first automated functions that become widely available, he says.

Although Nissan recently pledged to build a self-driving series production vehicle by 2020, Mr Denner argues that fully automated driving in unpredictable and complex urban environments will not be possible until after 2020. This is partly due to the unclear regulatory and liability implications and because a huge amount of testing and validation will be required.

“A fully autonomous vehicle has to function perfectly under all circumstances. If you want to bring to market a system that allows the driver to relax on the rear passenger seat . . . then the need for back-up systems will be huge. Technicians know this, but I think that element is a bit underestimated in the current public discussion,” he explains.

Bosch’s push into autonomous and connected vehicle technology is just one pillar of Mr Denner’s strategy to drive forward the “internet of things and services” – the connection of the virtual and physical worlds that will allow web-enabled objects to “talk” to one another.

In a world where washing machines turn themselves on automatically when electricity prices are lowest and a domestic digital weather station instructs the windows to close as a storm approaches, many new kinds of web-based services will become possible.

For a company that produces a dizzying array of goods – security cameras, coffee machines, dishwashers, power tools, fuel injection systems, packaging technology and solar panels, to name but a few – networking these devices has obvious attractions.

Mr Denner is aware that if Bosch does not do it, somebody else will. With Silicon Valley itching to pounce, business as usual is not an option: Bosch must foster its own start-up culture and establish smaller, agile development teams.

“We also need a start-up culture but within the company,” he says.

That is not straightforward for a 127-year-old company controlled by a charitable foundation, which fiercely guards its financial independence, refers benevolently to its more than 300,000 employees as “associates” and in the past maintained a rigid hierarchy.

Bosch aims to avoid job cuts

Bosch is battling to avoid cutting jobs at its European plants due to a stagnation of demand linked to the continent’s debt crisis.

In spite of recent growth in emerging markets, Europe still accounts for 57 per cent of sales. European revenues are this year expected to remain below the level achieved in 2007. Factoring in annual improvements in productivity, Bosch is sitting on an excess of capacity.

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The company is exposed to the stagnating European economy and has incurred massive losses on a failed entry into the solar power business.

However, Mr Denner, who is known in Bosch jargon as “G1”, not CEO, says a faster and more agile Bosch that develops exciting new products and responds quickly to changes in the market is already becoming a reality.

For example, Bosch has since 1995 produced tiny electro-mechanical sensors for the car industry to measure pressure, acceleration, rotary motion and the earth’s magnetic field.

But under Mr Denner’s direction in 2005 it began expanding into mobile phones and gaming devices. It took Bosch 13 years to produce the first 1bn sensors, three years to produce the next billion, but only 18 months to reach the 3bn mark. Half the world’s smartphones now use Bosch sensors to identify – for example – which way up the phone is being held or how many steps a jogger has taken.

Similarly, Bosch has built up an e-bike systems business from scratch in just three years which is expected to generate more than €100m in sales this year.

“I believe that Bosch will in the future be a company of differing speeds . . . It will be a company that preserves its old strengths – such as automotive safety technology which requires 100 per cent reliability – whilst also becoming very agile in less predictable fast-evolving areas, which typically are those that have something to do with the internet.”

This also means being open to co-operating with others. In self-driving car technology, for example, Bosch will have to work with providers of advancing mapping data and seek closer links with carmakers and other suppliers.

“I think perhaps everyone will have to work with each other . . . as the moment you drive autonomously then you rely on other cars being equivalently intelligent – so the sector has an interest in co-operating effectively,” Mr Denner says.

In a similar vein, Bosch recently struck a partnership with ABB, Cisco and LG Electronics to create an open software platform that will enable appliances from different manufacturers to talk to one another in a futuristic autonomous home.

We are working at full speed to bring these highly exciting [automated] functions to the market in coming years

- Volkmar Denner, Bosch chief executive

Mr Denner says that even before the public debate about surveillance and web security in the wake of disclosures by Edward Snowden, the former US National Security Agency contractor, he was alert to the danger that the “internet of things” would not gain public acceptance unless manufacturers embed proper security.

Researchers in the US have, for example, shown that it is possible to hack into a modern vehicle using a laptop in order to disable the brakes.

Last year, Bosch responded by acquiring Escrypt, an IT security consultancy that advises automotive customers.

“The moment you begin to network the physical world, then objects that previously did not communicate with one another begin to share data. But it’s clear that in theory one can also break into such systems and cause damage. So very early on we began considering how you make such systems safe,” Mr Denner says.

“One has to take advantage of the opportunities of the networked world whilst at the same time mitigating the risks as far as possible . . . But I don’t think that means you shouldn’t proceed down this path. We remain convinced that the internet of things and services will come.”

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