Software enables new business model for Sweden headquartered car manufacturer
People want freedom of mobility – and till now, the easiest way of fulfilling that want was for them to purchase a car. Lynk&Co, owned by the identical Chinese firm which now owns Volvo, is betting on a new business model that entails a change from being a product firm to a service supplier.
The product is the car, which Lynk&Co manufactures, and the service is mobility, which the corporate offers not solely on a subscription foundation however as one thing individuals can trade with each other. The new model permits subscribers to hire their car out to different individuals, one journey at a time.
The European headquarters for Lynk&Co is in Sweden, the place David Green is chief expertise officer (CTO), accountable for methods, merchandise and provides. The scope of his job extends from early-stage innovation to supply creation for customers, together with connectivity and car sharing.
While the analysis and improvement (R&D) division for the product doesn’t report back to Green, the product definition group does. Green’s group analyses necessities based mostly on a service they need to present. Then they submit an order to an R&D group for a car that meets these necessities.
Car possession is on the way in which out
Green reckons the variety of vehicles sitting round doing nothing is untenable. The drawback is especially acute in tightly packed cities, the place there aren’t many locations to park a car. “Most people still see the car as a thing that you park outside your house to tell people who you are” he says. “They still see the car as a status symbol.”
But Lynk&Co is betting on a future the place autonomy means subscribing to a service that may present you the extent of luxurious and repair that you really want and are keen to pay for. That received’t require a automobile to be completely ready for you in entrance of your own home or in entrance of your place of job.
What will finally drive individuals and societies away from possession is the congestion in massive cities comparable to London that’s inconvenient for people – and costly for society. In town of London, for instance, town’s mayor’s workplace estimates the cost of lost time from congestion to be at £5.1bn per 12 months – which represents the price of not with the ability to transfer items, waste and other people.
“People spend too much money just so that when they want to get out into the country or go to IKEA, they have that freedom of mobility,” says Green. “That scenario is wide open for disruption. Now with new business models, you can pay just for the journeys you need, instead of the whole car. When this really takes off, there will be a dramatic reduction in the cost to the individual.”
“In the future, a car will no longer be something people want to spend a lot of money on. They will spend it on freedom of mobility, sure. But now that they can get that freedom cheaper, the idea of individual car ownership is bound to fade away.”
The new peer-to-peer business model permits individuals to subscribe to a car and share it out to different individuals once they aren’t utilizing it. Someone with an id and a profile borrows from someone else, who additionally has an id and a profile, they usually fee one another to maintain all people straight.
But this new idea is not going to take maintain in a single day. There must be sufficient lenders to make borrowing engaging; and there must be sufficient debtors to make lending engaging. The business model has but to achieve vital mass.
In the meantime, persons are already discovering attention-grabbing methods of utilizing the model on a small scale. For instance, a person in an house constructing decides to be the lead proprietor, however different individuals within the constructing contribute to allow them to use the car now and again. Or an organization shares vehicles with staff.
Lynk&Co hadn’t considered this stuff itself, nevertheless it did present the atmosphere that allowed individuals to get artistic – and that’s precisely the impact that’s desired.
Software has a protracted historical past of working in vehicles
Software will not be new to vehicles. It made its means into the car trade steadily, with out an general plan. Consequently, every of the totally different programs inside a car runs its personal software program, with little or no standardisation within the interfaces. This contains communications and infotainment programs, engine administration, energy seats and sunroofs, and security programs, comparable to traction management and automated breaking.
But these programs must work collectively. The infotainment can’t be remoted from the cruise management or traction management as a result of the instructions that management them are constructed into the infotainment system. When totally different programs are equipped by totally different firms, the car manufacturer provides much more software program to make all of them work collectively.
This sounds messy. But on the constructive facet, all this software program brings numerous effectivity and security – issues the typical individual by no means is aware of is occurring. Software tries to get the car to change between the battery and the interior combustion engine in essentially the most environment friendly means.
At the identical time, different software program tries to ensure the car stays throughout the traces – and when the car begins to deviate, the software program guides it again. And if the car seems on snow and begins spinning round, one other software program system factors it again in the fitting route once more. These are very complicated duties which have diminished the variety of accidents on the street. Most individuals by no means know their car is doing all this – and that’s the way in which it ought to be.
Nevertheless, with a lot software program written independently for every gadget – and a lot software program to combine the totally different programs – the quantity of code has reached an alarming degree. The average car now has more lines of code than a commercial airplane – and that’s by an order of magnitude. This could also be troublesome to imagine at first. But business airplanes are underneath stricter regulation and producers have needed to take a really deliberate strategy to including software program to plane, together with standardisation and high quality assurance each step of the way in which.
One of the methods of reigning all of it in could be to get all car manufacturers and gadget producers to collaborate on requirements, together with integration schemes. But that degree of collaboration may be very troublesome to attain – not solely as a result of the businesses concerned are all fierce rivals, but in addition as a result of there’s an excessive amount of momentum within the trade to get individuals to decelerate and rethink their strategy.
“Imagine the day when you can just buy a peripheral, like an electronic power steering unit, and plug it into the car and know that it will work in the same way that a music keyboard or a camera plug into your laptop,” says Green. “That would be amazing. But we’re not there yet.”
Not solely do vehicles run an extreme quantity of software program, however in addition they course of numerous knowledge, which is handed round among the many totally different programs and is exchanged with entities exterior the car. This is already occurring, and the mobility-as-a-service business model promotes much more knowledge sharing. For one factor, they need to monitor vital car programs for predictive upkeep. The much less regularly the car have to be introduced in for repairs, the higher it’s for each the service supplier and the consumer.
But knowledge can’t simply be transmitted over wi-fi networks with none management. It have to be filtered to keep away from community congestion. Manufacturers additionally take measures to make sure knowledge privateness and safety.
“Data privacy and security are big priorities for us,” says Green. “One of the measures we take is to use physical firewalls to separate some of the systems.”
Another concern is that wherever there’s software program, there’s a threat of bugs. “We take testing super seriously,” says Green. “We have to pass tests and we have to drive cars on test cycles around Europe for a long time before they get out on the market.”
Software will take vehicle trade in additional instructions
Green reckons that it’s attainable that inside 10 years, an enormous change can be introduced on by a proliferation of vehicles with level 4 and level 5 autonomy, particularly if there are areas the place vehicles can function the place pedestrians, cyclists, or manually pushed autos are absent.
“A level 5 car will go somewhere independently, pick someone up and drive them where they want to go,” says Green. “In that scenario, why would you have a car parked in your driveway? Your car could go and earn money for you during the day, or you can borrow someone else’s car, whether it’s from a company or an individual.”
Green says this modification will remove congestion and scale back the price of mobility for the person by greater than 50%. Urban transportation can be far more environment friendly and the affect on the atmosphere can be tremendously diminished. Moreover, extremely autonomous vehicles can be an enormous disruption to the car trade. Companies should resolve in the event that they need to be producers or service suppliers.
In the case of Lynk&Co, the selection has already been made – it aspires to be a service supplier. “For the time being, it’s good for Lynk&Co to have our own car,” says Green. “We can control the specification, do digital keys and control the security, but there’s no reason why it has to be our own car. In an ideal world, we could offer the service with any car. In the long run, we’re not really focused on the hardware as such, which I think sets us apart in the market.”
In the longer term, rivals might be anticipated to come back from all angles. Leasing and car rental firms are already wanting into the mobility-as-a-service car market, and so are tech giants like Google and Uber. A mixture of different firms are additionally hovering across the concept, together with Tesla, however Lynk&Co has taken the primary massive step within the route of being a service supplier.
“We’re optimistic,” says Green. “Nearly 20% of our customers in the Netherlands, our biggest market, have already shared their car out. It’s slowly becoming a movement. And it’s all based on software.”
