Venture capital is one of the smart weapons of modern enterprise. It allows companies to invest inside and outside their traditional sphere of influence, gaining access to ideas, technologies and markets for the future. A new $1 billion investment fund will help three automakers hedge and position themselves for the increasingly automated, connected and data-focused future, driving innovation, and managing disruption.
Every car is a technology investment
Over the past 10 years, automakers have heavily aligned themselves with technology companies. Most vehicles now support Google’s Android or Apple’s iOS in their in-car display systems. BlackBerry, the company that failed in the smartphone business, survived by developing car technology that is now being used for self-driving systems.
Deeper inside the vehicles, every system on higher-end models now report data back to the maker, helping improve reliability, to detect faulty parts or batches, and ensure vehicles are serviced and running at their most efficient. Many models come with their own 4G radios to create a constant connection, allowing for tracking and live updates of usage statistics, something that will become more common in the coming 5G era.
The use of silicon and sensors, communications, cloud technology and AI to monitor trends or provide self-driving systems are as much a part of the car market as they are in the data center or digital office.
But, disruption for the car market is only just beginning. While it adopted battery and hybrid technology relatively smoothly, augmented or replacing the traditional engine, we see self-driving cars becoming legal in more countries, a rise in Uber and car-sharing, car-lending or rental apps, vehicles that double as a mobile office, flying taxis and other changes on the horizon. Compare that to threats from decades gone that were nothing worse than a new color or styling trend, or the surge in popularity for SUVs, then smaller SUVs and compacts.
Partnering the Renault-Nissan-Mitsubishi Way
Renault and Nissan have worked in a cross-sharing partnership since 1999, when the Japanese company was near bankruptcy. This helped to stabilize both companies during turbulent times for the market.
Nissan’s controlling interest in Mitsubishi from 2016 helped to bring the second Japanese brand into the picture. The combined three sell around nine million cars a year, and have sold over half-a-million electric vehicles.
The strategic partnerships helps the companies learn the best from each other’s operations and techniques, while sharing innovations and knowledge, yet competing on the forecourts and dealerships.
Operating across Silicon Valley, Paris, Yokohama, and Beijing, the Alliance 2022 Ventures is seeking partners offering business model innovation in electric vehicles, autonomous systems, car connectivity and new mobility services.
The partnership represents 10 auto brands and operations in 200 countries, highlighting how wide and far the market operates, and how even a small saving across the chain can have major benefits.
Getting investment in your business
The French and Japanese marques will, as the venture title suggests, seek technologies for the 2022 to 2025 timeline. They will invest in startups, spin-offs and technologies that can bring mobility and help open innovation to the automotive vertical. Any business able to demonstrate innovation could be a candidate.
This won’t be limited to cars, trucks and their factories, but across the entire supply chain. In combination, technology will ensure their businesses remain as efficient as possible, meeting the needs of a new generation of technology-savvy customers.
As with advances like Blockchain (the technology behind Bitcoin and other cryptocurrencies), the ideas are great, but there needs to be a concerted effort to work them into a market or type of business. Blockchain helps create ledgers and prove ownership digitally, something that could be used for stock databases to ensure only genuine vehicle parts are used. Blockchain could also replace the log book or other forms of ownership to help monitor the used car markets and help governments better manage vehicle tax legislation and structures. That could make selling second-hand cars easier.
Across the industry there will be many innovative use cases that perhaps this venture capital surge could fund or help develop, bringing as yet unimagined ideas. These might include automating insurance claims using car and other data, or offering microtransaction benefits for safe driving.
More pragmatic is investment in big data companies that can help automakers develop ways to handle the huge amounts of digital information coming out of modern vehicles. Cloud storage, data centers, predictive analytics and ways to monetize that data are high on the automotive agenda.
By having a hand in the companies bringing what comes next in cloud/data, AR/VR, smart city, smart car and other services, they should have their finger on the pulse to drive profitable and efficient use of any companies they invest in that hit gold.
The 2022 landscape and beyond
Gartner’s most recent Hype Cycle for Connected Vehicles (subscription required) highlights “how connectivity will fundamentally change the way vehicles are designed, engineered, manufactured, sold, serviced and used.” Investment from the automakers to help new companies drive these changes will encourage understanding of the key technologies as market evolution accelerates.
Among those technologies are hyper-personalization of vehicles, something Nissan is already trialing, offering personalized 3D-printed parts for customized cars, greater choice of styling and color, along with the possibility to update styling over the life of the car to keep it current.
In-car services may link in other business partners or services like insurers, local repair garages all the way out to hotels and tourist destinations, as the vehicle better understands destinations and can factor in road or weather conditions for longer drives. More practically, this can speed up finding for and paying for parking in smart cities, a development that automakers must closely align to.
Through these investments and other means, cars early in the next decade will most likely be 5G-connected systems that talk more than the children in the back. They will proactively assist and protect the occupants while maintaining the car at its highest operating potential.
At the other end of the scale, micro self-driving city cabs will whizz people around town, and perhaps link with other transport networks (trains of car pods?) to get commuters around faster, while they work on the go.
Some innovations will be so imaginative we won’t see coming, but through imagination and investment the likes of Renault, Nissan and Mitsubishi will help bring that future to business and car buyers faster.