From car maker to mobility service provider
Johann Jungwirth, Chief Digital Officer, Volkswagen AG
Reading time: 7 minutes
Automotive companies only make cars? Long gone says Johann Jungwirth. He is certain the industry is facing a fundamental transformation.
Everything will change, believes Johann Jungwirth — at least as far as the world of cars is concerned. In ten years, it will be another world stresses the Chief Digital Officer of the Volkswagen Group. In his view, three key developments are forcing the industry to reinvent itself: “Number one: going from combustion engine to electric drive. Number two: going from human driving to self-driving mobiles. And number three: going from ownership to mobility as a service.”
The number of devices that will be connected worldwide by 2020.
Transitioning from being solely a hardware manufacturer to a hardware, software and service company — a development that, according to Jungwirth, automotive manufactures have to embrace. “Mobility-as-a-service” is his term for the business model of the future. In place of a traditional core business, five basic mobility services will be important. Initially, it needs providers of self-driving systems, the heart and brain of cars capable of driving autonomously. Then automotive manufacturers and fleet managers that make vehicles available and oversee them, as well as mobility software suppliers. In his view the provision of content, such as software for entertainment programs, is the fifth service.
Huge profit potential
Not every automobile manufacturer will be able to provide a full range of services as the expectations are too daunting. According to a Goldman Sachs study big profits however await companies that succeed in transforming. It also predicts that classical car makers will earn $ 14,000 before interest and tax on each vehicle with good self-driving car fleet management and the associated services — in only three years. This demonstrates enormous potential as up until now the profit margin totaled $ 2,000 for the whole life span of the car.
Hours that a person spends on average in a car in his lifetime.
If it was up to Jungwirth, the customer of the near future will be registered with his own profile via a digital platform. No matter which vehicle he gets into — his personal setup is ready and waiting. The seat adjusts itself into the right position, the preferred radio channel is playing and everything else is also optimized. Mobility as an all-in service. “The experience in this ecological system has to be the best in the world,” says Jungwirth.
A living room on wheels
At the same time, owners of self-driving cars can “furnish” their vehicles to suit their preferences and thus turn them into an extended living space. The time spent behind the steering wheel can therefore be utilized more purposely than ever before. “You can equip the interior to be your living room, your gaming room, even your wellness room or lounge, your movie theatre, anything you want it to be.” It all provides car companies with the chance to completely redefine their own brand.
Safety is however still the most important aspect of automated driving for Jungwirth. Worldwide there are 1.25 million road fatalities every year and more than 90 per cent of all accidents are down to human error. “Automated driving can prevent them,” says Jungwirth who also thinks automated driving has other potential benefits — it gives blind people, senior citizens and people with ill health the chance to be more mobile.
34 billion euro
The sum VW invests in the development of electric cars.
Jungwirth does not believe that this all-embracing change process will happen to the detriment of the employees in automotive companies. “Looking at the previous industrial revolutions, the first wave, the second wave the third wave, overall there were always more jobs created than lost and it was still prosperity for society.” It will be a similar scenario for Industry 4.0. This means more jobs, not fewer. “But it will be different skills, it will be different jobs, it will be more about AI, it will be about decentralized computing, it will be about many, many new aspects, many new skills, new studies in university. But overall I am quite positive.”
Johann Jungwirth, 45, Chief Digital Officer, VW
“ Children will also be in a position to call self-driving cars. ”
Johann Jungwirth studied Electrical Engineering in Stuttgart and then worked for Mercedes-Benz, for whom he went to Silicon Valley as CEO of Research and Development in 2009. The move to Apple followed in 2014 and then one year later he took up his position as Chief Digital Officer at Volkswagen.
As mobility is being reinvented, automotive manufacturers have to be prepared for radical changes. The business model goal in the automated and electrical driving era: Mobility-as-a-Service to transport people from A to B. Only people that opt for the future will be able to profit from it.