The next generation of cars will essentially be smartphones on wheels. So it’s no surprise that Apple and Google are building technology for in-car navigation, communication and entertainment, and both have openly speculated about driving further into the auto business.
Tech giants could end up dominating the auto industry because cars, like mobile phones, are becoming software platforms. And the risk is that automakers end up like mobile phone companies — low-margin hardware makers — while the Silicon Valley giants grab the most lucrative part of the market.
So car manufacturers are turning to app developers and start-ups to arm themselves for battle. Israel is among their first stops.
Automakers are following in the footsteps of big tech companies like Intel, Cisco, IBM, Microsoft, Google, eBay and Orange, all of which have set up operations and/or start-up programs in Israel.
As cars become more sophisticated, “Israel’s capabilities in image processing, radar, silicon, cyber security, IoT and communications are becoming very relevant,” says David Abraham, an investment principal in the Tel Aviv office of Robert Bosch Venture Capital, the venture arm of Germany’s Bosch, the world’s largest supplier of auto components.
For starters, car makers are taking a different path to autonomous driving than Google, and Mobileye, an Israeli computer vision company, is helping them do it.
Google’s approach to self-driving cars is what Mobileye co-founder, chairman and CTO Amnon Shashua described as “store and align” during a speech earlier this year at the 2015 Deutsche Bank Auto Industry Conference. Google’s idea is to store huge amounts of data and later do real-time driving and match it to the stored data. If the data is rich enough it is not necessary to do much sensing.
Rather than recoding data Mobileye uses a car’s sensors in real time to determine how to drive.
Israeli Start-ups Targeting The Transportation Sector
The company is a world leader in Advanced Driver Assistance Systems for cars, which use vision-based camera technologies to identify vehicles, pedestrians and road hazards and execute collision avoidance maneuvers and automatic braking. It has relationships with over 20 automakers and is developing its EyeQ system for more than 250 models of cars that will be on the road by 2016, manufactured by the likes of GM, Ford, Tesla, Honda and BMW. Mobileye is also positioning itself to be a leader in technology for self-driving cars. Its 2014 initial public offering on the New York Stock Exchange was the biggest for an Israeli tech company, raising over $1 billion at a company valuation of over $5 billion. Since then the company’s valuation has more than doubled to $12 billion.
The advanced battery developer has so far raised $66 million in venture capital, including an $18 million Series C round in August which included Samsung Ventures, Norma Investments Limited and existing investors. After demonstrating that its flash battery can recharge mobile phones in minutes rather than hours StoreDot is now focusing on developing an electric car battery that would fully recharge in six minutes, allowing a driver to travel 300 miles without worry. The company expects to have the battery on the market by 2021.
Think of it as a Waze-like navigation app for buses, trains and the subway rather than private cars. The start-up, which makes an app that helps users avoid delays and more smoothly navigate public transport systems in 600 cities across 55 countries, raised $50 million in a Series C funding round earlier this year from investors that include BMW i Ventures, Keolis (the largest French transportation group), and Sequoia Capital.
Everyone knows what a nightmare it is to find a parking space in cities. City Transformer has patented a design for a foldable car. The quadricycle is designed as an electric two-seater that folds down with the press of a button from 1.6 meters to just one meter in width. Since the car is only 2.2 meters in length, once folded, it will fit neatly into a motorcycle parking spot. The car is designed to weigh only a fraction of that of conventional cars and have far fewer moving parts, making it more efficient and economical for urban use. The founders are currently trying to raise between $1.5 million and $3 million to build a full prototype of the car.
Mobileye, which went public on the New York Stock Exchange in 2014 and currently has a valuation of over $12 billion, specializes in vision-based technologies that execute safety features, from collision avoidance maneuvers to automatic braking. It already has relationships with over 20 automakers — including GM, Ford, Tesla, Honda and BMW — that will use its EyeQ technology for over 250 models of cars that will be on the road by 2016.
The car companies have already started developing technology that will monitor driver interaction with the steering wheel and detect when the driver is not responsive (i.e., not handling the wheel). Mobileye says its emergency steering technology can take over the vehicle and guide it safely once such a situation is detected.
The company believes the move to self-driving cars will be a phased process over a number of years, starting with autonomous driving features for highways, followed by country roads and later city roads, which are the most complex. During these phases the driver will remain in the loop and be responsible for the vehicle, but will slowly become more passive. Eventually the vehicle will go from A to B on its own. But getting to that stage will take time, says the company, because drivers, roads, governments and insurance companies need to be ready.
Battery Life Biggest Barrier To Electric Car Adoption
Mobileye will supply vision-based and other technology to support such driving, as it argues that the camera is the sensor that provides the richest source of real-time information from the road.
The company says it is already working with 13 car makers to support their autonomous driving programs.
While the software is getting more complex the hardware is getting simpler, thanks to the shift from internal combustion engines to electric engines. However, battery life is still an issue. Enter StoreDot, an Israeli start-up that has raised $66 million in venture capital and hopes to parlay its success in slashing the time it takes to charge mobile phone batteries to develop an electric car battery that would recharge in just six minutes.
“Battery life is the number one barrier for adoption of electric cars,” says StoreDot CEO Doron Myersdorf. “Our vision is you can have the same experience as the driver of a car that fuels at a gas station. In the future you will be able to stop at a charging station and in the time that it takes to buy a soda get charged up enough to go another 300 miles. Once you can get that type of experience the interest in electric cars will increase. We believe this will be a major change for the car industry.”
Cyber security for autos is another hot space. Four Israeli start-ups — Argus, Arilou Technologies, Security in Motion and TowerTec — are targeting the market. Their systems are currently being tested by car manufacturers, which are under pressure to step up security after high-profile hacks of connected car models.
A quarter of a billion cars are expected to be connected to the Internet in the next few years, according to consultancy Gartner, and the assumption is that all will be equipped with cyber security software.
And while Google snapped up Israeli traffic navigation app Waze before automakers like Ford could strike a deal with them, BMW’s iVentures and French public transit operator Keolis have invested in Tel Aviv’s Moovit, which offers the same type of service for public transport.
Better Place Gone To A Better Place
Tel Aviv is also home to EcoMotion (part of the Israel Innovation Institute), which has been aiding the development of the transportation ecosystem in Israel since 2012. It operates one of only three accelerators in the world dedicated to start-ups targeting the transport sector. Its backers include French rail operator SNCF, Tel Aviv University and the Israeli Prime Minister’s office. Eleven start-ups have passed through the accelerator, including Tel Aviv-based City Transformer, which is working on an urban car that folds when you park it, and Security in Motion, one of the cybersecurity start-ups. When EcoMotion, which is accepting applications for the next cohort until October 8th, organized a conference last spring, some 700 participants, including start-ups and investors, showed up — proof of the growing interest in the transport sector, says Boaz Mamo, EcoMotion’s executive director.
While Israel does not have its own auto manufacturers it has not been shy in its attempts to play a pioneering role in the car industry’s future. As far back as 2008 electric car company Better Place, which was founded by Israelis, announced an ambitious plan to revolutionize the auto industry by reducing the world’s dependency on oil.
Israel, and later Denmark, were Better Place’s test markets for developing nationwide networks of charging and battery-swapping stations that it hoped would eventually spread globally. But there were multiple delays and market penetration was far lower than predicted; the six-year-old company folded in May 2013 after burning through $850 million.
The Drone Ranger
Israel, which exports the majority of the world’s military drones, is now gunning for leadership in commercial applications.
Tel Aviv-based Flytrex says it is the first to market with a cloud-connected delivery drone for consumers and businesses. The Flytrex Sky, which can be tracked and controlled via smartphone, sells for $549 plus shipping and comes with a loading bay to carry lightweight items.
Flytrex’s system will work right out of the box as long as the sender and receiver have iOS or Android smartphones loaded with the app. “I tell you I want to send you my drone, you click ok and mark your location on the map,” says Flytrex CEO and co-founder Yariv Bash, a scheduled speaker at DLD Tel Aviv 2015. “The drone starts traveling towards you and once it reaches your location you approve the landing.”
Consumers might use it to send a friend a bottle of beer or a birthday present. But businesses can make good use of it as well. Flytrex has already been contacted by an organization in Africa that wants to use the drones to deliver medicine to remote areas and by an East European company that plans to use the drones to deliver documents, says Bash.
How the Flytrex Sky is used will depend on local laws. Several businesses, including Amazon, are experimenting with delivery drones but have delayed wide-scale launch plans due to regulatory and technical issues. “The large-scale solutions at the corporate level are still not there,” says Bash. “We have taken a different approach which is easy to use and affordable.”
Another Israeli start-up, Sky Sapience, is taking a novel approach to drones. Founded by Gabriel Shachor, a retired Brigadier General who served in the Israeli Air Force for 28 years, and led the IDF’s UAV fleet, the five-year-old start-up claims to be the first on the market with tethered drones, which can be launched in seconds, offer real-time aerial surveillance and have the advantage of not needing any regulatory approvals.
The company scored its first contract a year ago with the U.S. Department of Defense but has since developed a number of commercial applications aimed at airports, oil rigs, nuclear power plants, ships and explorers. Its HoverMast tethered drone deploys instantly from a vehicle or ship to heights of up to 100 meters, remaining airborne and relaying data for an unlimited period of time. It can carry up to 18 kilograms, allowing it to be configured with cameras with three channels (day, night and radar), and transport a communications payload, Shachor says.
After it filed for bankruptcy in 2013 about a dozen people on Better Place’s core team — including Chief Technology Officer Barak Hershkovitz — were hired by GM’s Advanced Technical Center in Israel. The team is responsible for designing and implementing a new version of the automaker’s OnStar telematics and connectivity system for 2015 GM vehicles in Europe. The new system includes an LTE connection that turns the car into a mobile Wi-Fi hotspot and a RemoteLink mobile app that allows car owners to use their smartphones to view oil levels and tire pressure info, lock or unlock their vehicles and send destination addresses to the on-board navigation system.
Technologies that will power autonomous vehicles including smart sensing, vision imaging and human-machine interfaces are also being developed at GM’s Israel research facility, says Gil Golan, the managing director of GM Israel.
Working With Start-Ups New For Automakers
It isn’t just the American automakers scouring Israel. BMW Startup Garage, the BMW Group’s incubator for early-stage automotive start-ups, requires start-ups to come to Munich, so it has no plans to set up operations in Israel. However, it is interested in integrating Israeli technology into its cars. “We look for outstanding technologies and start-up teams. Israeli engineers have a very good reputation for top-quality technology with strong entrepreneurial spirit,” says scheduled DLD Tel Aviv speaker Gregor Gimmy, co-founder and head of the BMW Startup Garage.
So what is BMW seeking? “Any technology that improves significantly the driving experience,” Gimmy says. “This can range from new materials for premium comfort to better software and sensors for autonomous driving. We like to be that open because this will generate stronger innovations. The power of start-ups is to solve problems nobody has thought of before.”
Openness to working with start-ups is new for big automakers, which have long lead times for incorporating new technology into their cars, thanks in part to safety regulations.
“What is happening now — which is radically different from even three or four years ago — is the level of engagement between car manufacturers and developers and young technology companies. It is just skyrocketing,” says Scott Lyons, who leads the SYNC AppLink European Business & Partner Development initiative within automaker Ford’s Connected Services and Solutions Organization.
Lyons, who previously worked for mobile phone manufacturer Motorola, says he is one of a number of tech industry executives hired by Ford because they “understand developers and speak their language.”
Ford, which already has two scouts assigned to Israel, is organizing its first start-up event in Tel Aviv on October 11th and 12th. “We are targeting two different types of groups: people who have an engineering background who maybe already have apps out on the market, and non-techie people who maybe have a good idea and want to develop it further with our business teams,” says Lyons. Ford is interested in making iOS and Android apps work with its Applink technology.
How Do I Connect My Phone?
The reasoning? “Customers are walking into dealerships and instead of asking about the tires and the engine their first one or two questions are, ‘how can I connect my phone?’ and ‘which apps work in this car?’.”
While some hail as progress the fact that car makers are now allowing consumers to use their own phones to connect rather than expecting consumers to learn and adopt clunky proprietary systems, some are skeptical about the automakers’ attempts to control too many software functions.
“It’s now pretty easy to look at a car and say ‘this should be a smartphone’ somehow,” Benedict Evans, a partner at Silicon Valley venture firm Andreessen Horowitz wrote in a recent blog. “It also seems likely that the right way to do that is with software companies, not engineering companies, and that it should be driven by the software-powered device that you replace every two years and not the car that you replace every ten years,” he writes. “To the extent that you add smart to a car it should really be from the smartphone, with the car dashboard itself being ‘dumb glass’ just like a connected TV. … The valuable place to add smart is to the driving control and displays. That might be Apple’s CarPlay or Google’s Android Auto or it might be this universal standard for adding smart to a car.”
It is far too early to say who will win. What is clear, says Robert Bosch Venture Capital’s Abraham, is “suddenly there is a huge clash between traditional automotive and ICT players and every clash of titans creates interesting new opportunities.” And the start-up nation seems well poised to seize them.