Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification.
Following Siemens’ recent announcement to acquire Tass International we examine what it means for the industrial giant’s strategy.
- Broad range of capabilities that support advanced driver assistance systems (ADAS) and autonomy now in portfolio
- Tass International to be integrated into Siemens’ PLM business line
- Further acquisitions needed by Siemens to create truly transformational ADAS and autonomous capabilities
At the end of August, Siemens announced it was acquiring Tass International, a provider of simulation and engineering software focused on advanced driver assistance systems (ADAS) and autonomy. Tass will be used to enhance Siemens’ product lifecycle management (PLM) business. This is a smart acquisition for Siemens PLM: one of its core industries is automotive, where it already supports multiple clients with modelling software and electronic design automation from its Mentor Graphics acquisition.
However, if you examine Siemens’ broad portfolio of capabilities, it is close to being a full provider of autonomous vehicle solutions, but some gaps remain:
Why would Siemens become an autonomous vehicle solution or service provider?
Does Siemens want or need to be a full provider of autonomous driving solutions? Does it have the long-term vision to achieve the goal? Typically, Siemens operates as an end-to-end solutions provider in the industries it serves and it is not afraid to make a long-term, sustained commitment to make it happen. Siemens’ drive to re-invent manufacturing with concepts like the “digital twin” has taken 10 years and US$10 billion.
|Component of Vehicle Autonomy||Siemens Solution||Coverage|
|Infrastructure||Siemens Intelligent Traffic Systems (ITS). Siemens is a leading supplier of traffic management, parking solutions and V2X technologies||Full|
|Testing||Tass International simulation and engineering software for safety and autonomous driving||Full|
|Hardware Design||Mentor Graphics provides solutions to design ADAS and autonomous systems||Full|
|Powertrain||Siemens Electromobility provides powertrain and battery technology for cars and commercial vehicles. It also supplies charging solutions||Full|
|Artificial Intelligence||Siemens uses AI in a variety of business lines and has done for several years. However, it does not have dedicated product line/product suite for AI, and does not have automotive experience||Partial|
|Cyber-security||Siemens has a strong cyber-security offering in industrial and grid applications. However, it does not have a specific automotive offering.||Partial|
|Location||Siemens does not have a location solution. Autonomous cars will require a ‘map’ of the physical world that they can interpret||None|
For automotive, the proposed acquisition of Tass International took it closer to being able to offer its automotive customer base the ability to develop fully autonomous vehicles. However, Siemens cannot offer its automotive customers everything (the figure above highlights the gaps). It needs to be prepared to make a sustained commitment.
The challenges to becoming an autonomous car supplier/offering a full autonomous car design and implementation service
- There are numerous companies working on this technology including Google, Apple and almost all automotive OEMs.
- The creation of an autonomous car solution would put Siemens ‘at odds’ with a number of its automotive clients who have similar programs.
- Now, the capabilities that Siemens has in the space of vehicle autonomy are, to a degree, siloed in different divisions. It may be difficult to create a truly compelling solution in this scenario.
- As shown in the above figure, Siemens lacks experience or capabilities with a number of components necessary to offer a complete autonomous vehicle solution.
What can Siemens do?
- It would be risky to pursue autonomous vehicle production. Despite a compelling portfolio of autonomous vehicle solutions, margins remain low in vehicle production and the long-term trend is toward service revenue. Perhaps the only step in this direction would be to create a test fleet from which it could hone its expertise.
- Competitive pressure is unlikely to dissuade Siemens since it confirms the need for autonomous vehicles and, with its broad portfolio of technologies, it has many advantages over companies who can develop only one or two of the components necessary for fully autonomous vehicles.
- If Siemens pursues a fuller autonomous vehicle strategy, an approach that minimises disruption to its existing relationships might be to offer a ‘partner’ approach rather than trying to be an autonomous car manufacturer. For example, Siemens would be able to offer automotive clients an end-to-end vehicle autonomy solution, much as it does in other industries. This would dramatically lower the investment costs that OEMs would need to make in autonomy (a significant benefit to smaller OEMs), and allow them to focus on design, implementation and future mobility models i.e. how the vehicles will actually be used/commercialised. In this model Siemens is helping OEMs to create an infrastructure on which services can be sold.
- From an organisational perspective, since the current capabilities are dispersed, it would be favourable to create an ‘autonomous vehicle’ product line or division which would provide focus, integration and the ability to scale. This would also allow Siemens to be more targeted with investments into the technology.
- Siemens needs to acquire capabilities that it is missing.
- For AI and cyber-security, it could expand its existing capabilities. However, to move quickly and enhance its capabilities it would be better to acquire. Argus Cyber Security, a specialist automotive cyber provider, would be a good fit. For AI, there are numerous start-ups that could prove of interest. Alternative, this could be an area where Siemens could partner with a company such as Nvidia that already has strong competency in this space.
- For location services, an investment in HERE would give it access to location platform that is being used as critical digital infrastructure for autonomous cars. HERE is owned by an expanding consortium of companies including BMW, Daimler, Audi, Intel and Pioneer. The platform contains thousands of location data assets including HD maps and real-time car sensor data.
Will this happen?
It is always difficult to truly divine company strategy, particularly from the outside looking in. However, autonomy of transport systems and the further trends of shared mobility and electrification are too big for Siemens to ignore. Large parts of its business – energy, mobility, industrial automation – are exposed to these trends and it would be foolhardy to ignore them and not develop an end-to-end solution that addresses them in a way that supports its existing product lines. Siemens has shown in the industrial digitalisation space that it has the vision to invest long-term to build up a strategic portfolio. We will watch with interest to see what happens with vehicle autonomy.