Autotech ahoy!

vehicle technology  image: Shutterstock - ASAP Creative

With the timetable for commercializing autonomous cars getting longer, Israeli autotech companies are looking at parallel markets - shipping, for example.

Anyone following statements in recent weeks by auto industry leaders, especially in Europe, could not help noticing a more cautious tone between the lines concerning the timetable for an autonomous electric car. In early September, Bloomberg quoted an internal memorandum by Volkswagen group chairperson Herbert Diess on the budget for developing an autonomous electric car: "The burden for our company…will be higher than expected.”

Two weeks later, Klaus Frohlich, responsible for research and development at BMW, which is perhaps now the car maker furthest along in its plan for commercializing a self-drive vehicle, gave an interview to "Automotive News". He called on the auto industry to unite in the development of self-driving technology in order to share the risks and costs, saying that the industry was starting to understand the seriousness of the technical and financial challenges facing auto manufacturers trying to independently develop such vehicles, and that the trend towards collaboration was gaining momentum

Regulators around the world are in no hurry to formulate regulations for autonomous cars on public roads. Even the senior management at Mobileye, the standard bearer for autonomous vehicle technology, are taking a wary approach now, saying that at least in the next few years, the autonomous vehicle market will focus on luxury vehicles and robo-taxis (driverless public transportation on specific routes).

Global hype on the scale of that surrounding the autonomous vehicle naturally does not subside overnight. Auto manufacturers and investors are still feeding the hype with money, fancy display models, imagination-stirring technologies, and announcements of high-profile cooperative efforts. IT companies are also keeping their foot on the accelerator and still treating the sector as a strategic direction. Only last week, Intel's global senior executives landed in Israel in a rare event in what turned out in retrospect to be a serious demonstration of support for Mobileye.

The lengthening of the implementation horizon for the smart car does not in the least detract from the importance and economic potential of the technological breakthroughs currently accompanying the smart car vision in all its aspects: sensors, artificial intelligence processors, vehicle sharing and traffic streamlining software, electrical propulsion, and so forth. These have made Israel a global hub for such technologies. We will see the continued momentum in this reflected by the end of the year in quite a few impressively large strategic financing rounds.

Autonomy goes to sea

Nevertheless, below the surface and behind the scenes, there are also those in the sector who are starting to think about Plan B and "verticals" that will make it possible to generate substantial revenue from the technological building blocks of the autonomous vehicle if things do not go as planned in the auto market.

The terms "vertical" and "vertical market" are high-tech slang for a potential separate market in which there is demand for technology or products that a company is developing for its main market. There are companies, especially major rich and well-financed IT companies, that are turning over every stone in the search for those concealed verticals and pursuing them in order to maximize the return on their existing investments.

New startups, however, in any case lack personnel and management resources. For them, expansion into a parallel field, however promising and seductive, constitutes a problem. They are therefore being forced to choose or gamble on which field they should focus and which to leave to their competitors or for activity in the future. It's like diamond miners who discover a rich vein of gold but have to abandon it in order to reach their original goal.

Some verticals, however, are very hard to ignore. This is the case with the international shipping industry, which is currently undergoing an evolution similar to that of the auto industry at the beginning of the decade.

The shipping industry is a communications technology, computer, navigation, and control-intensive sphere, but it is still conservative and slow-moving, with a basic concept of machines requiring control in almost every operational aspect and real-time supervision by a human crew. The obvious next stage is installing technologies on ships with independent decision-making capabilities based on data from sensors, or at least computer supported decisions that can significantly compensate for human error and save on personnel, and eventually lead to completely autonomous ships.

This is not science fiction. Yesterday, for example, Intel announced that it would cooperate strategically with Rolls-Royce with the ultimate aim of launching autonomous ships within six years. Early this year, Rolls-Royce unveiled a system, which it called "Intelligent Awareness," designed to help support decisions by ship crews.

Despite the different scales, the system's technology is very reminiscent of that developed in Israel and elsewhere for an autonomous vehicle. A battery of laser sensors (LIDAR) and optical sensors with machine vision algorithms serve as a ship's "eyes," giving real-time alerts about proximate and remote risks. Sophisticated processors combine and process the information from all of the sensors. High-speed communications infrastructure sends, receives, and processes masses of data on the cloud. AI systems support decisions, and so forth.

Rolls-Royce's system is already undergoing field trials on a number of ships around the world. Cooperation with Intel will make it possible to commercialize the system on a large scale. In a joint announcement yesterday, Intel noted the impressive economic potential of the shipping industry, which is still a relatively virgin market with respect to autonomy, citing the shipping of goods worth almost $1 trillion annually, aggregate profits of billions of dollars made by the companies in the market, etc.

Very high profit margins

The potential ecosystem of the smart and autonomous shipping sector is not confined to ships. It involves a long, complex, networked logistical chain that includes shipping cargoes by truck and railway, loading, handling, port management, billing and monetary transfers, accident prevention, etc. This entire chain creates and will continue to create an enormous quantity of data requiring integration, management and commercialization in real time, massive cyber defense, and the like. The players in it will be able to derive substantial bonuses from advanced technologies now being developed in Israel for the autonomous vehicle.

From the perspective of the Israeli companies working in this area, the potential sales volumes in shipping are not as large as in the auto industry, nor does this industry have the auto industry's glitter. The potential profit margin, however, makes up for the quantity.

Almost all of the developers of technologies for the autonomous vehicle, both in Israel and elsewhere, are facing heavy pressure to cut costs and make their technology accessible for mass auto production.

This requires a great deal of effort and many compromises (production in China, for example), and even this is justified only if the goal is the sale of hundreds of thousands or millions of units a year. With ships costing tens or hundreds of millions of dollars, the existing technologies can be marketed at worthwhile profits that can pay back the investment on development far more quickly.

They are all here already

The latent potential of the smart car in the local ecosystem has not escaped the eyes of the shipping industry, the logistics companies providing it with services, and the IT companies searching for new verticals. Mobileye, for example, is a natural candidate for supplying Intel with supplementary machine vision technologies for its autonomous shipping venture. Although the company says that it is currently not involved in the new venture, it will be no surprise if something is taking place in this area behind the scenes.

Several incubators of the shipping industry and international logistics companies have already been founded in Israel in the past two years, although most of them are nurturing startups aiming specifically at the shipping market. There is also participation, on a minor scale so far, of shipping companies in investment rounds of auto-tech companies.

This, however, is only the beginning. An entire fleet of senior executives from the shipping industry will attend the Prime Minister's Conference for fuel substitutes and smart transportation at the end of the month. There will be senior representatives of the MSC Cruises shipping company; a manager from Marlink, a major satellite communications company for shipping fleets; and senior executives from the Grimaldi and Maersk shipping companies; to cite only a few examples.

This is only one example of the potential of auto-tech technologies, in areas such as medicine, defense, intelligence, security, aviation, and who know what else. The bottom line is that technological progress is unstoppable; if breakthroughs run into obstacles on one route, they frequently find other routes that sometimes are even more profitable.

Participants in the Prime Minister's Conference for Fuel Substitutes and an event by theDock innovation hub for marine technology, which will take place simultaneously, will include senior representatives from shipping, ports, and marine logistics companies Maersk, MSC Cruises, Wartsilia, Lloyd's Register Marine and Shipping, DSV, Grimaldi, Marlink, Damen Shipyards, Singapore Port, Barcelona Port, Fameline, One Sea, Cogoport, and others.

Published by Globes, Israel business news - - on October 18, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

vehicle technology  image: Shutterstock - ASAP Creative
vehicle technology image: Shutterstock - ASAP Creative
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