Data, Digitization and Mobility

Policies to Future-Proof Germany's Automotive Industry until 2030, Part 2 of 3

Aug 05, 2021

This is the second segment on the necessary regulatory and sufficient economic conditions to protect and promote the triangle of competitiveness, sustainability and good employment in the German automotive industry.
The third segment will address progress – the secret sauce to getting anything done.

In the first segment we discussed, why the switch from one ubiquitous system (fossil fuels/ICE cars) to an evolving alternative (renewable electricity/BEVs) simply can’t happen via market forces. Calls for a level playing field are nothing but calls for the status quo. Without robust and sustained incentives and regulations, BEVs, or any other alternative, will remain an arcane oddity. Hence, governments have to take the drivers’ seat, and especially regarding infrastructure.

Luckily, different to electric mobility, there’s an actual, real, premium-paying demand for digital services: advanced driver-assistance systems (ADAS), automated and connected functions, provide direct safety and comfort benefits to the individual owner. And, as decades of ADAS like ABS to ESC have shown, these technologies over time trickle down from premium to the mass market, making everybody safer.

If this were all there’s to it, the German car industry would do just fine inventing its way out of legacy systems and into the brave new world of the digital age – and paying for it through their handsome profits along the way. The route from ADAS to a future fully automated, integrated intelligent transport and mobility system would be one smooth road.

But there’s a reason that new solutions, and those that provide them, are increasingly found in Silicon Valley (e.g., Nvidia, Microsoft, Intel, Waymo) and Israel (e.g., Mobileye, Gett, Moovit). Germany, the self-proclaimed Land of Ideas, doesn’t lack talent. But it severely lacks in infrastructure and, as a result, in widespread digital competencies.

Half as fast, four times as costly…

Germany’s broadband Internet connections are, on average, only half as fast, but four times as costly, as Rumania’s.

The speed of household internet connections in Germany have been a matter of stoic despair for many years. The average consumer gets about half the speed of their Rumanian counterpart – not an unfair benchmark, to put it mildly. To add insult to injury, Rumanians pay about a quarter compared to Germans.

How, as a world-leading economy, or as the largest European society, become a leader in digitization when the very basis – infrastructure is lacking? Infrastructure is the foundation of innovation, technology, demand and solutions. That digital divide we keep talking about – Germany as a whole is on the wrong side of it. (Few other industrialized countries used fax machines to track Covid-19.)

… and only a third as powerful.

75% of US population, but only 25% of Europe’s population, has access to 5G.

Industry becomes future-proof, competitive, creates employment and added value, through digital innovations. For this, we need a top-performing infrastructure. The German automotive industry needs an environment – customers and workforce – with digital competence, expectations and aspirations. In short: a highly competitive market.

In this field, the German government falls short, despite digital infrastructure since 2013 being the domain of the Federal Ministry of Transport and Digital Infrastructure. (Yep, it’s right there in the name.) The upside: a powerful, high-performing digital infrastructure wouldn’t only benefit the car industry. It would benefit everything and everyone. This makes it particularly sad that we seem to be so content without one.

A future application of the upcoming Mobility Data Space? Photo: Bosch

Putting the cart before the horse

While the foundational digital infrastructure in Germany is as necessary as it is deficient, the government gaily charges ahead with some promising projects:

Gaia-X – an initiative to design the next generation of a federated European data infrastructure, intended to create a digital ecosystem to ensure that companies and business models from Europe can be competitive.
Digital Motorway Test Bed – an upgraded stretch of 140 km freeway intended to offer providers of connected and automated driving or intelligent infrastructure the opportunity to develop and test technologies.
Mobility Data Space – an initiative to create a data marketplace where equal partners in the mobility sector can exchange data in a self-determined manner to enable innovative, environmentally and user-friendly mobility concepts.

A commonality to all these projects: they try not to step on anybody’s toes. The list of what Gaia-X should not be (not a cloud service provider, not a cloud management platform, not a competition to existing offers), is at least as long as the list of what it should become (see above). The “test bed” is just that: a laboratory to enable industry and research to test and develop technologies. It does not foresee any ambition or role for the state beyond this. And then there is the Mobility Data Space (MDS).

The Wise Men of Gotham

The MDS is obviously loosely linked to the Gaia-X project, and is, at first glance, one of the most promising initiatives1:

Germany, and the EU, is packed with diverse mobility data from train and transit authorities, cars and buses, MaaS and other mobility providers, cell phones and other sources.
Germany, and the EU, sport the world’s leading consumer privacy protection legislation: GDPR. It’s been emulated in California and elsewhere.
Germany, and the EU, could use a boost of world-leading, people-centric mobility tech – last, but not least, as home to the world’s leading car brands.
Germany just reformed the Passenger Transportation Act, granting cities more power over urban mobility, and obliging any commercial carrier (public transit, taxi, ridesharing etc) to share their data.

In short: Germany has all the resources, and should have all the motivation, to prove that GDPR is no hinderance for great, world-leading products and services in mobility and beyond. The key word here is should.

Because it doesn’t. The MDS, by its own words, “is supposed to be a sharing community for all stakeholders who want to help shape the mobility of tomorrow. … Users have unique opportunities here to participate in the value creation potential of their data.” It’s the most vanilla, most unambitious proposition conceivable.

Also, before even getting off the ground, the government just undermined the very law obliging companies to share data: Now, public transit authorities only have to share their schedules, but no dynamic data. In Germany, this is called a “Schildbürgerstreich”. In England, the wise men of Gotham feigned idiocy to avoid the consequences of a royal visit.

In October, in time for the ITS World Congress in Hamburg, the Mobility Data Space is scheduled to be “implemented2”. Maybe, all will come to fruition, and MDS will fully live up to its potential. But, as of now, I’m doubtful.

We can do better …

To future-proof Germany's automotive industry until 2030, the government

needs to ensure a top-performing digital infrastructure. It doesn’t need to built it, but it does need to take all measures to fix this asap. This is a necessary condition – for the entire country, and not only in economic terms.
should seize the opportunity of the upcoming Datenraum Mobilität – but with entrepreneurial ambition and the concrete goal to reinvent public transport. This would create the sufficient condition for future mobility innovation.

In short: the country has to stop playing pretend, start taking digitization seriously, and become fiercely ambitious and competitive about it.

I’d like to end on a more positive note: A lot has been about innovation conditions in Germany and Europe, or rather the lack thereof. The good news: they are improving. 25% of annual mobility startup deals are now happening in Europe. That’s still lower than the shares of Asia and North America, but it’s a move in the right direction.

… and some of us are

25% of annual mobility startup deals are now happening in Europe. That’s still less than Asia’s or North America’s share, but it’s also the only one rising for two years in a row.

Still, German tech startups today rarely make it to the scale their international counterparts do: most DAX 30 companies hail from the 19th century Gründerzeit3. But, for once, I’m optimistic: Venture capital will eventually flock to Europe as soon as Europe’s governments become as ambitious as their US or Chinese counterparts. Because, as NASA, DARPA and others have shown: ambition begets ambition, opportunity, prosperity.

But that’s the topic of the upcoming third segment. Thank you for reading.

Please feel free to let me know why I’m wrong.

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