Volkswagen sees opportunities, competitors in Silicon Valley

Google, Tesla and much else besides; as a fast-track into the world of disruptive, auto-industry tech, a one-day immersion tour of Silicon Valley was just the tune-up  Volkswagen Ireland needed.

For the top executives and dealership heads who made the visit, it was an eye-opening experience. Concepts once abstract were suddenly brought to life: artificial intelligence, automation and the sharing economy all came together. A look at what competitors are up to didn’t do any harm either.

Startup engagement was also high on the agenda. Like many global corporations, Volkswagen is grappling with digital transformation. Looking to partnerships with early stage companies as a means to accelerate that process of innovation is key to its strategy.

Silicon Valley delivered all this, and more.

Social rides, electric cars

No trip to the Valley for car industry heavyweights would be complete without a stop at Tesla. The Volkswagen team took test drives of the Model 3 and Model X. This provided plenty of food for thought, with Volkswagen also manufacturing a range of electric vehicles.

VW is also reported to be working on driverless vans, in partnership with Apple. Tesla, meanwhile, remains a key player in the race toward autonomy on four wheels. It describes its Full Self-Driving Capability as “able to conduct short and long distance trips with no action required by the person in the driver’s seat…at what we believe will be a probability of safety at least twice as good as the average human driver.”

The other major player in robotic vehicles is Waymo, otherwise known as the Google self-driving car project. A visit to Google by the Volkswagen team provided insights into the internet giant’s plans for the automotive industry. Although there have been a few bumps in the road, Waymo is aiming to launch a self-driving ride-hailing service this year.

At Waze, meanwhile, Volkswagen saw another side to tech disruption of transport and logistics. Through the Waze app, a community of some 100-million strong users crowdsources information to create driving maps to avoid traffic. Waze is also building up its carpool functionality to connect drivers and passengers heading in the same direction.

This rise of the sharing economy has not passed Volkswagen by. In fact, the company has its own ridesharing offering in the works. Known as MOIA, it will use human drivers, electric vehicles and a smartphone app to bring together passengers traveling similar routes. Slated to launch this year in Germany, it bills itself as “the new mobility concept of the future.”

Innovation or stagnation?

Achieving digital transformation is not just down to utilizing new technologies. It also requires innovative thinking. But for big corporations, that’s much easier said than done. Too often, well-established people and processes get in the way.

To overcome these internal obstacles, many companies look beyond their own borders. By establishing partnerships with startups they can jumpstart the innovation process.

At Silicon Valley Innovation Center, the team from Volkswagen learned that Silicon Valley is still the world leader when it comes to the creation of disruptive startups. For incumbents everywhere this is a double-edged sword; both a potential source of collaboration and a threat to business.

A visit to Menlo Park Ventures, meanwhile, put Volkswagen in the hot seat. The team heard pitches from early stage companies at the cutting-edge of the latest technologies. Computer vision did battle with customer service automation, as the startups vied to win attention and investment. The process was two-way, with Volkswagen having a chance to ask founders their thoughts on the future of the automotive industry.  

With experts predicting that all corporations need to be more entrepreneurial to survive digital disruption, the session proved to be an excellent chance to put that advice into practice.

The road ahead

Startup engagement doesn’t necessarily mean bringing in outside partners. It can be a case of fostering more innovation from within. That’s intrapreneurship, a concept which, as Volkswagen found out, is key to the Silicon Valley ethos.

Bottling up that idea and taking it back to Ireland was perhaps one of the biggest takeaways for the carmaker.

Such knowledge is sure to prove pivotal in the face of global trends like falling car ownership and the rise of the sharing economy.

For today’s carmakers there is no single solution to survive such disruptions. In the years to come, some will flourish, whilst others may cease to exist.