Automotive Technology and the Future of Mobility
Brolik CEO, Jason Brewer moderates a discussion with Tim Philippo and Nolan Shenai of Jaguar Land Rover, discussing technology in the auto industry, where it’s headed and the exciting progress being made in Jaguar Land Rover's innovation incubator.
Key Takeaways
- Jaguar Land Rover wants to adopt technology that will enhance the driving experience, but there's a lot of tech put into cars that is distracting to the driving experience.
- The auto industry is creating open source platforms to address the different technology interfaces.
- Jaguar Land Rover opened its first technology incubator in Portland, Oregon. In exchange for companies sharing their knowledge, their software platforms, etc., JLR provides money and engineering support to assist with their growth as a company.
Video Transcript
Interviewer: Tim is Product Strategy and Cross Car Line Manager for Jaguar Land Rover. In his role he manages cross car line product functions, including power train, connective car, and driver assistance systems. He also oversees strategy and implementation for all items that touch across JLR's multiple model lines.
Nolan Shenai is Corporate Council for Jaguar Land Rover. Before joining, Nolan was in a private practice in Philadelphia, where he provided legal guidance to young and growing technology companies. At JLR, among other responsibilities, Nolan is responsible for providing legal support to the company's open source technology centers and other in-vehicle infotainment development. In particular, Nolan works closely with Jaguar Land Rover's Portland, Oregon operations, which includes JLR's innovation incubator, the purpose of which is to encourage, promote, and support new software based automotive technologies being built and developed by US technologies startups.
We'll keep it general to start here. Let's talk a little bit about technology in the auto industry. Specifically for anyone who doesn't know in the room, there's a lot of talk about mobility. Can you just start by defining what that means and what's taking place in your industry around that term?
Tim: Yeah. We're trying to decide who takes this hot potato. Mobility is one of those buzzwords that you hear a lot in the automotive space and it really defines...I want to say getting people from A to B outside of traditional car ownership. I think that's really how one would define mobility. So is that shared rides? Is that multimodal transportation? What kind of new technology can we use to enable people to continue to get where they need to go? Because that's really ultimately what we're providing, literally mobility, getting people from place to place.
Interviewer: Okay. I guess I saw some research conducted, I think it was 2015, around the future of connective mobility, and the majority of these experts that were polled said that tech companies are actually going to challenge the traditional OEM's in the marketplace such as yourselves. Can you speak to this? I mean do you think this a truth? How much truth is it to this?
Nolan: I think the truth is actually somewhere in between. I think that car companies as conservative manufacturing companies for a long time ignored tech to some degree, and tech came in with automotive technology. I mean you see a self-driving car, you see what Tesla is doing in the market, and I think that the future direction of the industry is probably that OEM's have to become in large part tech companies. And any tech companies that wants to be an entrant into the market probably need to become a traditional manufacturer as well. I think the companies that do it successfully are going to be companies that are able to draw from these successful elements of the manufacturing base and from the technology base.
Interviewer: So, the tech companies aren't going to try and take over, it's more of a collaboration? You think it's going to be an effort between the two, what's really going to win out?
Nolan: Well, I think that technology and when you look at the rapid development that technology has been going through in recent memory, as well as over the past 30-40 years, it's incredible to see the evolution of technology. But what's also really difficult, that I think people overlook, is that it's really, really hard to build a car. And I think that if the tech company overlooks the actual mechanical engineering that goes into a car, you could have the best software offering that one can offer in a vehicle, but if the car doesn't actually work and it doesn't last and it doesn't run well and it's not reliable, it's not dependable, then the technology...you basically have a massive iPod that sits on your driveway that doesn't work.
Tim: It's an incredibly capital intensive business and you'd have to be an idiot, honestly, to burn your money. If you were Apple and go and decide, "I'm going to build a car factory, I'm going to start making cars." That's not where the money is, that's not where the profit is for them. The easy part is actually probably the software. Even Tesla's powertrain is not that difficult. The really hard part is getting your doors to seal so they don't leak in rain. That's the really difficult part of making a car and that takes a certain amount of expertise.
Interviewer: You would never think that was the thing you'd say. So what are you, just more generally the auto industry right now, where do you think it's heading in terms of technology? What's hot right now? What's on top of mind for JLR and where are you fighting to keep market shares as far as technology goes with your vehicles?
Tim: It's interesting because people have accused the automotive industry for being kind of laggers in the area of technology and I really don't that's fair. I think, like any business, I think automotive has been very keen on technology because anything that we see that gives us a competitive advantage is something that we're going to pursue as hard as we can. What's interesting though is when it comes to technology in the automotive space, we do have to be a little more conservative. There are car companies out there that have a ten year warranty. Now what's the warranty on your iPhone? I don't think it's ten years. I don't think you could name an App that has been around for ten years. So, being able to continue to service that customer for so long and recognizing that there are people inside your product, forces a certain amount of conservatism, and it's the outside that makes us look slow. But I think on the inside what we're being is careful. We're very keen to adopt the technology that we see enhancing the driving experience, but there's a lot of technology that people are trying to put into the car that is distracting to the driving experience or that really maybe doesn't belong inside of automobile. So, you ask what's hot? I think what's hot is being part of the internet of things. The phone, of course, is going to be the center of your life. So, how can your car integrate with your phone? How can your car help you to talk to your house when you're away? So, your lights come on when you're five miles from home. The air conditioning turns on when you're ten miles from home. That your car tells you that your refrigerator is empty and you need to pick up beer and milk on your way home. Those are the kind of connections that we want to make.
Nolan: And I think that ultimately having a seamless connection between and a seamless cadence between the things that you're traditionally used to using on your phone, that when you get into your car start to work in your car, obviously subject to the same caveats that Tim just mentioned about distracted driving. But having that cadence, I think, is probably where people, especially, I know we're going to get to it shortly, but on the point of self-driving cars, as cars become increasingly autonomous on the road, and it's not just the concept of getting into a car and having it take you from point A to point B without you working the accelerator or the brake, but it's also as features within your car start to become more automation friendly. Forward distance monitor when you have speed control on, for instance. When you can kind of be more on auto pilot, you're going to be more aware that you're not active, I mean you should always be actively driving, but you're not actively driving in the sense that we all think of. And so you will start to think about, "I wish I could just push button and have my Spotify playlist come on." Or the kind of seamless transition between your devices and the mobile platforms within which you operate I think is the direction that technology is headed.
Interviewer: Well, we know consumers all want that, they want that seamless experience. But what is holding, maybe I'm the only one that feels this way, but the interfaces, the infotainment, and the connected device capabilities of vehicles right now are really bad. From what I can tell it's one area where the vehicles seem, we're talking so much about technology in vehicles, but it feels like it's 10, 15 years behind. What is holding your industry back?
Nolan: Well, I think that, and this is something that we've talk about at length, the problem is that you have every single auto maker that has created or that is creating and that is contributing to different systems that cross different vehicle lines. And so, one of the ways that the auto industry, and specifically JLR, is working to address the interface, which is always a problem and is a problem across I'd say most automakers, is create an open source platform which the Geneva alliance, which JLR is a part of, is in the process and has been pushing out an open source platform. Geneva, for instance, is a consortium of several different OEM's, tier 1 suppliers like Intel, and software providers as well, where the concept is that if you have an open source platform that's available to and that's used on a large number of vehicle in the same way that you have an iPhone, that development of technology on that platform can occur faster, fixes and repairs and patches to that technology can be pushed out faster, and the interface can operate more like a traditional tech device that people are used to using. The biggest part to combat is the fact the every OEM has a different system. So, if you put everybody or if you put the lion's share of automakers onto an integrated open source system, it will address some of the lagging issues that have plagued the auto industry.
Tim: I also think there's a hint of perception bias in the question actually because we're like, "Well, doesn't everybody want this?" Everybody in this room probably wants it because we have a tech focus. J.D. Power just did a study, they do an annual study, a couple of drive studies, that show actually "no," they don't actually want it. Consumers when asked about do you want Apple car playing android auto, they were like, "Nah, not really." Power or style is more important to them. So we need to make sure it works for the people who want it but we still need to have a relatively simply interface for the people that don't want to be engage with it. But we have struggled with trying to make an interface that is appropriate for use in an automobile. You can't just stick an iPhone on the dashboard of your car. Because that's fine when you're sitting at your desk or not moving, but we've all seen the, well, they're calling them the mombies, the mobile zombies, that are walking down the street texting doing stuff on their phone. If you can't walk and use your phone at the same time, we certainly don't expect you to drive and use your phone at the same time. You have to change that user experience and make it appropriate for a vehicle, which at some levels kind of simplifying and dumbing it down.
We have a system called InControl Apps, which has been on the market for about two years now. It's kind of like an Apple CarPlay, Android Auto-like system. It's device agnostic, it works on both. You plug your phone in, and because we have touch screens in our cars we can replicate the touch screen on your phone. But there are only certain apps that we let you use in that system, because not every app is appropriate for automotive use. I really want to be able to play Angry Birds when I'm stuck in traffic, but they said "No, not a good idea." But navigation, travel, entertainment, news, those are the kind of things that are appropriate for use in an automobile where you do have to keep your eyes on the road. So it's working in steps to get there, where you need to go. You can't just put an iPhone on there and expect someone to drive and do that at the same time.
Interviewer: Makes sense. All right, let's move on. We're going to talk a little bit about...so I think Jaguar is known for the driving experiences and Land Rover more for the off-road ability, and they're core to the company's overall identity right now. How do you keep those relevant in the self-driving future? Let's talk about that.
Tim: Yeah, everybody is kind of envisioning five years from now we're all just going to have transportation pods that whisk us around. It's not going to happen in that timeframe. We're not even close. It's a lot farther off than the press would have you believe. There are a lot of technological challenges that need to be overcome before then. So we had a lot of time between now and then and probably thirty years or more before there's a critical mass of vehicles. But it's something that we need to think about. Also what it comes down to for us is brand. Our customers are probably going to be less interested in sharing an automobile. There's already a share economy for a lot of things. Let's say your washing machine, there is a great shared economy. There are laundromats that you can go to where you don't have to invest in this infrastructure. You can go and do your laundry some place in a community shared model. You'll be hard pressed to find any Jaguar Land Rover customer that goes to a Laundromat. They like having their own stuff and they don't necessary like sharing. So I don't think they're going to participate in the sharing economy aspect. So when they have a self-driving car, it's probably going to be one they own themselves, and when they do the brand really matters. You go into a shoe store, shoes are essentially a commodity, it's something you put on your feet and you walk around, but we're willing to spend hundreds of dollars to get shoes that set us apart. For better or for worse, brands define who we are. We use brands to define who we are. So you're going to have the luxury of a Jaguar or the capability of a Land Rover. A Range Rover can ford two and one-half feet of water. That's a function that most consumers are never actually going to use when they have one, but they like knowing that they can. So they're going to want to have the self-driving car that they can get them so their mountain top retreat in the winter time so they can go skiing. That they can pick up the kids. But it's going to have that utility and that function. So even if they're not the one necessary behind the wheel, if there even is a wheel, I think the brand and what that intangible benefit offers is going to be important to these people still.
Nolan: And I also think that, to add on to that, that day when self-driving cars have a critical mass, is going to be a day when people pay much more attention I think to the appoint of the interiors of their cars, the comfort of their cars. When you're always sitting in traffic, when you're stressed, when you're cursing out the guy in front of you, you're not so worried about the quality of the seat that you're sitting on. But when you're sitting on a chair and you're being whisked around town, the chair that you're sitting on all of a sudden becomes a lot more important to you.
Tim: And I have to say it but you're still going to want to impress your friends with your ride. So when you're taking your friends out to dinner in your self-driving car, you're going to want them to sit and go, "Oh, feel that leather." It's still going to matter. There's going to be a sensory luxury experience for our customers.
Interviewer: Okay. I was telling you, Tim, earlier, my grandfather always would talk about Jaguar. That's how I remember the brand. I'm thinking about the younger customer and I know you reach the younger customer with the Land Rover brand. But with this push into technology, how much is that a result of you wanting to reach a younger audience specifically with the Jaguar brand I guess?
Tim: Yeah. First and foremost for a young customer is price. We have to address that first. We're introducing in a week or two our new Jaguar XC and F-Pace are going to go on sale. The XE starts mid-$30,000 range, it's going to open to a whole new category of customers, so that's the key. The first key is having something you can afford. If you're young, you're probably not going to be able to afford a $90,000 Jaguar F type. Unless you're working for a tech startup, in which case I'll give you my card. So price is the key and I think once you've gotten past that barrier, then I think you can start to wow them with technology.
We actually, it was take your kids to work day last week, and so we asked the kids "What do you want in your next car?" Well, I guess actually in their first car, in their parent's' car. In addition to jet packs and trampolines in the back seat, it is pretty standard tech stuff. I want WIFI. I want to be able to connect. I want TVs in the back seat. I want to be able to plug my game system in. I don't think it's a mystery what is going to attract people, I think the key is going to be the person who can execute it the best and at a price that is affordable to someone who's coming out of college with a ridiculous amount of debt.
Nolan: Yeah, I think the point that Tim raised earlier is that car companies do have to walk a pretty fine line. Because you do have younger customers who are excited about the technology offerings that vehicles are starting to come out with, but at the same time you have older customers, and in some cases your core customers, who are not particularly swayed by those elements of the car and want a simple interface that they can use. So the technology that's in a car has to be both capable but also easy to use and easy to navigate. It is fine line that automakers do have to walk. Because you don't want to go exclusively after young customer and alienate your older customers or your less tech savvy customers or vice versa.
Interviewer: Okay. I want to move on to be more specific about JLR now as far as what you currently doing and how you're bringing new technology to the core of the company. So my first question, I want to get to this incubator. I want you to tell me what JLR's doing with this incubator out in Portland and why is that different from just a regular tech incubator?
Nolan: Sure. Jaguar Land Rover in I guess it was January of this year, entered its first class into its technology incubator in Portland. And for a car company, and for a company that's looking for new technological offerings that we can offer to our customers that we can use to improve our vehicles, access to technology is our biggest priority when it comes to our incubator. The Portland incubator is taking in classes of three companies, three to four companies, every quarter of the year. What it does is that in exchange for those companies sharing with JLR their know how, their software platforms and things like that, so that JLR can learn from that and those companies can assist JLR with the actual development of production technology. In exchange for that, we extend to the company, in a traditional incubator format, we extended to them some money to assist them with their growth as a company. But where we differ from a traditional B.C. incubator is that we also provide them with engineering support. So we have JLR employed engineers who are available essentially full time for companies to be able to use to develop whatever products they're working on exclusively for themselves. For tech startups one of your biggest costing and one of your biggest capital draws, is employees. For a period of four to six months, depending on how long they choose to stay in the incubator, they essentially in most instances had two full-time engineers exclusively devoted to their development of their technology. And so the JLR incubator, from our perspective, we think it's a good opportunity to JLR to get access to new technology and to see where the market is headed. Because being able to get a barometer of the tech market is one of the hardest things for a company to do. Because the tech market and the preferences and predilection of customers is changing so rapidly, being able to have the kind of weather vane or barometer of where the industries is heading, what technology consumers are looking at, and what innovative people are looking at to be the next step in existing technology, is I think where the future of automotive technology is really going to be made.
Interviewer: So give me an example, highlight one of the companies that come through the incubator?
Nolan: So we have a company, the name of the company is ParkiT. What they do is that they take existing infrastructure within parking garages to use the existing cameras that are in parking garages to identify open spots in that garage and then interface, hopefully once the technology is perfected, interface with your vehicle to direct you to that open spot in the parking garage. Now what exists currently and what's on the market, if you've gone to an airport you'll see that when you pull into the parking garage, you'll see 6 green spots and 250 red spots, and then you'll have drive down that aisle to look for the open spot. The downside to that system is that they're incredibly expensive, which is why you only see them on buildings that were funded by the government, but they're also really cumbersome to install. Here, using existing security cameras, the interface will be able to direct your car to an open spot. That's one example. Another example, and this is where I think the incubator is particularly useful to JLR, when people think of cars and in-car technology, they think of almost exclusively what kind of technology will interface with your car and allow you to drive better or enhance your driving experience. But one of the companies in the incubator is called Baby Bib, which is a wearable monitor company for children, where if your child's temperature or heartbeat or any vital signs appear to be impaired that obviously you have an app on your phone where notifications are pushed to your phone. But if you put your purse in the back seat or if you've left your phone at home, the notifications are pushed directly to your car. So you think about it as wearable biometric monitoring for a child and automotive technology. You would think that been those diagram don't overlap at all. Where, in fact, these are the types of things where that seamless interaction and transition between home, mobile device, and car are important. Because you don't want to have to think, "Well, maybe may push notification are only going to one of my devices," but instead they're going to all of your devices including your vehicle.
Interviewer: So it's definitely not an equity play here at all. You guys really what you're looking for is access to new technologies. You want to be informed and then, I mean looking at the scenario, it became something that you role and it's your proprietary technology in the future, correct?
Nolan: Right. I mean obviously there's an equity component in the traditional incubator sense, but I think what you would find compared to a traditional venture equity model is that the equity that corporate incubators generally take is lower than what a venture incubator would take. The reason for that is exactly what we've been talking about, it's the benefit that companies get from access to technology.
Interviewer: Okay. So, for a tech founder developer in the crowd here, what kind of advice do you have? Talk more about the open source. What do they have access to and how can they get connected and potentially become part of your incubator?
Tim: I think the first piece of advice even is solve a problem, it's identify a need. And again, don't just think about the way that you use cars, because everyone's like, "Oh, yeah, Uber is the future." It is among your group of friends but the majority of America doesn't live where you live. So think about the people who are using cars and what are the problems that they have. In urban areas they're having problems parking, at a suburban shopping mall probably less so, so what is the problem that you can solve there? There's another technology that we're working with where you can actually get package delivered to the trunk of your car at your office. You order something on Amazon and instead of having it sit at your doorstep in front of your house, the UPS guy shows up at your car in the parking lot and throws it into your trunk using a one-time digital key. That's a problem that's going to be unique to more of a suburban customer, not an urban customer who lives in a doorman building.
So think about a need and how you can solve it. It really is a needs based business. And then it's getting access to our start up working with people in Portland. I think it will help you kind of bring out the best way to integrate that to automobile. Not every idea works and the majority, as you guys know, won't. The car you see on the screen there is a beautiful example of a wonderful dead end. The CX 75 concept car is a hybrid electric, but instead of a piston engine it has two shoe box sized micro turbine jet engines in it. We thought it was a jet powered super car. It's highly efficient, it's very low emissions. The problem is your exhaust comes out about 2,000 degrees, and how do you manage that is a bit of a challenge. But we believe in the technology so much that we bought Bladon Jets, the company that made the turbines. And so there's going to be a place for that technology, but it's probably not going to be in a moving object at ground level.
And I think practically speaking, and this is a wearing the lawyer hat, practically speaking when you are looking at incubators, whether it's VC, corporate, JLR, it's important to make sure that you have invested early on in your company in getting your corporate house in order. Because the first thing that any venture or corporate incubators going to ask for are things like your bylaws, your operating agreements, and the impression that a good set of corporate documents for your company makes is tremendous. And if you're competing with other companies to enter an incubator, looking like you have your stuff together, proverbial stuff, is a significant benefit to you as your company. And I would say the other piece of that is also to make sure that you always have an updated capitalization table ready to go to share with a venture firm, private equity, incubator, angel investor, because that's another one of their top three things that the second that had any interest in your company, they're going to look at your CAP table. Making sure that your CAP table is accurate, understanding, dilution, all of those fantastic thing that go into a CAP table are things that are going to set you apart from any other company that is of your age and sophistication when you're looking to enter into a VC, angel, or incubator deal.
Interviewer: So it's not just how cool your idea is?
Tim: Unfortunately, Nolan is the downer here. You've got to run it like a business.
Nolan: Well, that's the thing though, a cool enough idea will make a company work.
Interviewer: You can help them basically.
Nolan: Yeah. Yeah. Absolutely.
Interviewer: All right, thank you. Nolan and Tim will be hanging out for a while I believe. So if you have some other questions, feel free to approach them.