The chairperson and CEO of German auto systems manufacturer Continental AG visited Israel last week. The company is the world's largest supplier and one of Europe's largest industrial companies with 235,000 employees and €44.5 billion in revenue in 2017. The official reason for the visit was inauguration of the new offices of Argus Cyber Security, which Continental AG acquired last year for $450 million. it would be no major surprise, however, if the visit also set the stage for future acquisitions/investments by the concern in Israel.
In the not-too-distant past, the red carpet was regularly rolled out for visits of such high-level corporate officers, with meetings being organized with cabinet ministers and a stream of economic dignitaries paying homage. Today, however, it seems that no one is getting very excited. Since the Mobileye exit, the Israeli auto industry ecosystem has been a magnet and frequent destination for the captains of the global auto industry going all the way up to CEOs.
We are still frequently asked the same question: does Israeli auto-tech have more breakthrough strategic technologies, or is it merely riding the Mobileye wave? This wave is ostensibly subsiding. The older and well-known companies in the sector, some of which were founded only 3-4 years ago, have already filled the coffers of their investors and are now in the advanced stages of commercializing their technologies.
Mobileye itself, despite its Israeli base and the promise of becoming a local technology hub, is rapidly become a multinational whose focus is far away from Israel. For example, Mobileye's chairperson chose to announce the existence of a fleet of experimental autonomous vehicles on public roads in Israel at an Intel conference in California, accompanied by quite a few acerbic comments about Israeli drivers and roads. Smart car startups are also appearing every day in the US, Europe, and China and scooping up huge investments, so are we scraping the bottom of the barrel?
The answer to this question can be read clearly between the lines at the annual Ecomotion smart transportation conference next week in Tel Aviv Port. Six years ago, this conference sparked the backyard revolution of small Israeli auto-tech companies. It has retained its hipster character: beer in plastic cups, noisy music, and splashing waves. Even at staid establishment auto industry conferences in Europe, however, it is hard to find a list of auto industry VIPs as impressive as the list of speakers coming to this year's Ecomotion conference.
The list shows a lot about global focuses of interest in the auto-tech industry. The most glittering representatives are of course the auto manufacturers. Volkswagen, for example, is sending representatives from almost all of its divisions. The business development manager of SEAT and Audi's innovation division manager will be there (the most advanced companies in adopting autonomous vehicle technologies), as will the customers division of Volkswagen, the CEO of Skoda, and others.
Renault-Nissan-Mitsubishi, now the world's largest auto corporation, is represented at Ecomotion by a senior delegation headed by the new CEO of the concern's investment fund, accompanied by the CEO of Nissan's electric car division in Europe. If you want to see a symbolic closing of a circle here, the strategic alliance with Israeli company Better Place at the beginning of the decade cost Renault-Nissan hundreds of millions of dollars, but also gained the concern invaluable experience and a technological and competitive advantage in one of the segments currently marked as the future of the auto industry.
Also impossible to ignore is the official presence at the conference of the CEO of Toyota AI Ventures and another senior executive from the Toyota Research Institute (TRI), who is responsible for the company's smart car development.
The new players
With all due respect to the auto manufacturers, the really big money invested in Israel to date, at least in Israeli startups, has come from tier-1 auto industry suppliers. They, too, are sending senior representatives to this year's conference. The most senior position we found on the official list was Glen De Vos, senior VP and CTO of US auto systems giant Aptiv (formerly Delphi), whose revenue totaled $17 billion in 2017 and which has 147,000 employees. The company has already invested hundreds of millions of dollars in Israeli auto-tech companies, although it has not yet made a headline-grabbing complete strategic acquisition. Given the aggressive competition in the sector, however, we will not be surprised if this changes by mid or late-2019.
Also in town will be a senior VP from the Lear concern, which made a lightning acquisition here of young startup Exo for an undisclosed sum. This executive manages Lear's cyber security department, which is likely to indicate the direction of the firm's next acquisition or investment.
As is usually the case with such events, the list of participants includes a healthy presence from global investment banks and venture capital fund executives. My attention, however, went to several unusual guests, for example the president of British Petroleum's investment fund.
A full barrel
The official list, of which only a very few have been mentioned here, is only the tip of the iceberg. As in the past, quite a few of the most senior decision-makers in the auto industry will attend the event unofficially. Sources inform "Globes" that a very senior delegation from South Korean auto firm Hyundai, a senior member of BMW's board, and others will be present at the conference.
The real stars, of course, will be 100 startups and well-established large players from the Israeli auto-tech ecosystem, who will present their wares. We thought we have seen and heard everything, but we were surprised. More and more companies have quietly emerged from under the radar screens with big promises and ideas that sound a little like science fiction.
Judging by the interest shown in the Ecomotion conference, it appears that the Israeli auto-tech sector is more concealed than visible. We will not be surprised if, security climate permitting, several rather dramatic exits and financing round emerge by the end of the year. This looks more like a barrel-making assembly line than the bottom of the barrel.
Published by Globes [online], Israel business news - www.globes-online.com - on May 16, 2018
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