Published on August 25, 2014

Continental shifts high-tech strategy

Continental A.G. photos
Continental CEO Elmar Degenhart said the hiring of Seval Oz is “an excellent example of our strategy to make the car an integral part of the 'Internet of Everything.'”

DETROIT (Aug. 25, 2014) — Ever since it went public with its self-driving car in 2010, Google Inc. has often been the one snapping up outside talent to bring autonomous cars closer to reality.

German supplier Continental A.G. turned the tables last week by picking off Seval Oz, Google’s head of global strategic partnerships for self-driving cars, to lead Continental Intelligent Transportation Systems L.L.C.” a new business unit to be headquartered in Silicon Valley.

The move underscored the auto industry’s intense interest in building a presence in the global capital of the computing industry, close to companies such as Google.

It also showed a shifting strategy by Continental, which historically has made most of its money selling commodity parts such as tires, sensors and instrument clusters but now sees specialized software and services as increasingly crucial to its future.

“This step is an excellent example of our strategy to make the car an integral part of the ‘Internet of Everything,’” Continental CEO Elmar Degenhart said in a statement on the Silicon Valley project and Ms. Oz’s hire. “Our key objectives include eliminating road accidents, minimizing energy consumption, maximizing comfort and usability of vehicles, and enabling them to exchange information with each other in real-time.”

Ms. Oz, 53, will have an immediate chance to use her business development skills at Continental, which plans to roll out autonomous features during the next decade.

Mercedes-Benz offers a “traffic-jam assist” system in its flagship S-class sedan that lets the driver relinquish the steering wheel and pedals for a short period.

Steffen Linkenbach, Continental’s director of engineering systems and technology for North America, told Automotive News in a July interview that the company sees these traffic-jam assist systems gaining wider use in 2016, followed in 2020 by highway-only autopilot systems. A third wave would follow in 2025: a full automation system that drives a car from point A to point B under computer control.

 

These features rely as heavily on software as on sensors, which makes them appealing to Continental and other large Tier 1 suppliers, experts say.

Global competition and a new crop of Chinese suppliers have put pressure on profit margins for hardware, but suppliers can command a higher price for software and data services that are more specialized.

Thilo Koslowski, an analyst for technology research firm Gartner Inc. in Santa Clara, Calif., said Continental is already a leader in self-driving technology. He said Ms. Oz’s main goal will be to look beyond that for ways to expand Continental’s use of vehicle-to-vehicle communications, cloud computing and big data.

“We’re moving away from a hardware-centric world to a software-centric world,” Mr. Koslowski said. “Suppliers like Continental will define their fate based on whether they embrace it or not.”

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This report appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.

 

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