by Nada Welker | Jun 10, 2024 | Artificial Intelligence
Despite the promise of AI, there are serious challenges to overcome. Data protection, ethical concerns and the potential for abuse are just some of them. It is essential that we take a serious look at not only the opportunities, but also the risks of AI, and take appropriate measures to address them. But first, let’s look at the potential of artificial intelligence from a mathematical perspective. Dr. Julian Feinauer, founder of Pragmatic Industries and Pragmatic Minds, explained very clearly at the event “Artificial Intelligence – Opportunity or Challenge?” initiated by Dr. Natalie Pfau-Weller in Kirchheim unter Teck in April 2024, what artificial intelligence actually is from a mathematical perspective, what its potential is and what artificial intelligence has to do with energy.
Linear Regression and Artificial Intelligence
Most people are familiar with the concept of linear regression from their 8th grade curriculum, which involves the simple formula Ax+B. However, in the world of artificial intelligence (AI), this concept expands exponentially. Instead of just two axes of coordinates, as in linear regression, we have countless axes. The result is no longer a simple line, but a dynamic, moving surface. With models that have over 400 billion or even 700 billion parameters, it becomes clear just how complex and powerful AI can be. From a mathematical point of view, this is the essence of AI.
AI application examples
Artificial intelligence offers endless opportunities for progress and innovation. From automating work processes to developing personalized solutions, AI has the potential to transform almost every aspect of life. With the ability to recognize patterns, make decisions and solve complex problems, AI is paving the way for all kinds of new possibilities. Here are some of the examples Dr. Feinauer used in his presentation to illustrate how AI is already being used today.
Image generation with artificial intelligence
Generated images have attracted a lot of attention recently, especially in relation to the question of which of these images are real and which are not. It is fascinating to see how AI models such as VASA A1 are able to generate complex visual and auditory content from a single photo and a soundtrack. But how exactly does this work?
If a very noisy image is presented to an AI for denoising and the AI is repeatedly instructed to enhance the image, it will most likely recognise and filter out certain patterns. For example, a cat in a very noisy image can be uncovered by repeatedly instructing the AI to denoise the image. This demonstrates the AI’s amazing ability to recognise and reconstruct complex patterns.
The technology behind AI-based image generation is developing rapidly. The next step in image generation is AI video generation. Just recently, Microsoft introduced VASA A1, one such tool.
AI video generation from photos and audio: impressive progress
AI conquers video editing
With tools such as VASA A1, it is now possible to create a realistic animated video from a single photo and a soundtrack. The results are amazing. The AI can animate faces realistically and even synchronise lip movements with the audio track. The result is a smooth and natural video that is almost indistinguishable from real film footage at first glance. Despite this progress, there is still room for improvement. In some cases, small errors can occur, such as slightly slipped teeth when speaking. The AI-generated environment also still looks a little artificial at times.
Basically, AI video generation follows the same principle as image generation and can be seen as a kind of de-noising. Based on the photo and the audio track, the AI “removes” blurriness and inaccuracies and fills the gaps with realistic details.
Development is progressing rapidly. It can be assumed that AI video generators will deliver even more precise and realistic results in the near future. This could fundamentally change the way we create and consume videos.
Potential fields of application
There are many potential applications for AI-generated video. For example, they could be used in film production, advertising, education or even social media.
Ethical concerns
However, the new technology also raises ethical concerns. For example, AI video generation could be misused to create deepfakes, i.e. videos in which people are portrayed in a manipulated manner. It is therefore important that this technology is used responsibly.
AI video generation is still at an early stage, but offers enormous potential. As the technology develops, we can expect even more amazing and realistic videos in the future. However, it is important to be aware of the ethical concerns and use the technology responsibly.
Language models with artificial intelligence
Another area that is developing rapidly is large language models such as ChatGPT. These models are based on the principle of probability calculation, where each word is assigned a specific number and the probability of the next word is calculated based on the previous context. By training with huge data sets, the AI can learn to generate realistic-looking texts and even respond to questions. However, Dr. Feinauer shows in his presentation that the answers are not always accurate using an application example with ChatGPT. He asked ChatGPT for Dr Natalie Pfau-Weller, CDU member of parliament for the Kirchheim unter Teck constituency, and received a humorous answer.
In the world of artificial intelligence, Dr. Pfau-Weller is a hit star. She has even released resounding hits and delights her fans on tour.
This apparent reality reveals a crucial weakness of language models. The use of tools such as ChatGPT or Gemini can undoubtedly make life easier by automating complex tasks and saving time. However, it is essential to always use common sense to check whether the results generated correspond to the actual truth. Despite these weaknesses, language models can be useful tools if they are used responsibly. However, it is important to be aware of their limitations and to recognise their weaknesses.
The weaknesses of language models
- Prejudice and discrimination: Texts can be discriminatory or offensive.
- Lack of factual accuracy: Texts can be grammatically correct but not correspond to reality.
- Manipulability: Texts may contain fake news or propaganda.
- Lack of common sense: Texts may be correct but not make sense.
- Lack of creativity: Texts often resemble training data and are not really creative.
Additional limitations:
- Size and computing power: High demand on computing power for training and use.
- Data availability: Large amounts of data required for training in new languages or domains.
- Cost: Training and utilisation can be expensive.
- The energy demand resulting from the high computing power requirements of AI applications.
Where do we actually get the energy for AI applications?
A single ChatGPT query consumes around 3000 watt-hours of energy, the equivalent of 21 cups of coffee or driving around 1.4 kilometres in an electric car. It is interesting to note that the energy consumption of a single ChatGPT query is equivalent to the energy consumption of 1000 Google searches. Assuming that each of ChatGPT’s 100 million active users makes only one query per month, this would correspond to a total energy consumption of 2.1 billion cups of coffee.
According to a study by Joule magazine, the energy consumption of AI-related computing could exceed 134 terawatt-hours by 2027. 134 TWh. To put this in perspective, all German households together consume just over 100 TWh per year.
When we talk about training AI models, the energy requirements of these models often exceed the energy consumption of many households. Everyone should be aware of this when using AI models. It is more important than ever that we find sustainable ways to meet this immense energy demand, which will only increase in the coming years. AI is here to stay, and models will continue to be developed and used. That takes energy.
Ethical issues and social impact
The introduction of AI also raises important ethical questions, particularly in relation to its impact on our society. Issues of justice, equality and transparency need to be carefully considered to ensure that AI is used for the benefit of all and not to the detriment of some. When we consider the likely response to the question of how authoritarian states might use these developments, we conclude that it is of the highest priority to monitor ethical responsibility in the use of AI models.
Regulation for AI applications – EU AI ACT
With the growing influence and proliferation of artificial intelligence (AI) in various areas of the economy and daily life, the need for appropriate regulation to make the use of this technology safer and more ethically responsible is also increasing. In this context, the European Union (EU) has recently proposed the AI Act, a landmark legislation that aims to establish clear rules for the development, use and monitoring of AI applications. The AI Act is currently at an advanced stage of the legislative process. Extensive discussions, consultations and assessments have already been conducted to scrutinize the various aspects of the Act and ensure that it meets the needs and requirements of both industry and society. Although the exact timetable for the adoption of the AI Act has not yet been finalized, there is every indication that the EU Member States and the relevant institutions are determined to move the process forward and improve the regulation of AI applications in the foreseeable future.
A summary of the main contents of the EU AI Act
- Risk-based classification: AI systems are categorised based on their risk potential, with strict requirements for high-risk systems.
- Data protection and human rights: The AI Act protects privacy and personal rights by preventing invasive or discriminatory use of AI technologies.
- Transparency requirements: Clear transparency requirements apply to certain AI systems, such as chatbots, to educate users about AI interactions.
- Technical requirements: The act requires the development of AI systems that respect human autonomy and avoid harm.
- Prohibited practices: Certain applications that could undermine the free will of users are explicitly prohibited
Opportunities
- Process optimization: AI enables a significant increase in process efficiency through automation and more precise control of business processes.
- Data-based decision-making: AI helps companies gain valuable insights from large amounts of data, enabling them to make informed decisions and increase their competitiveness.
- Personalized customer approach: AI enables companies to develop customized marketing strategies and products that are better tailored to customers’ needs and preferences.
- More efficient supply chain management: AI helps optimize supply chains by improving forecasting and tracking of deliveries, resulting in lower costs and faster delivery times.
- Increasing operational safety: AI can help to increase safety in the workplace by monitoring and predicting potential hazards, especially in the manufacturing industry.
Risks
- Data protection concerns: AI systems that process large amounts of company and customer data harbor the risk of data breaches that can jeopardize customer trust and compliance with legal regulations.
- Decision bias: If AI systems are trained on the basis of biased or incomplete data, they can make erroneous or discriminatory decisions that pose legal and reputational risks.
- Security vulnerabilities: AI-based systems can be the target of cyber attacks that jeopardize not only IT security, but also the physical security of automated or autonomous systems.
- Overdependance on technology: The frequent use of AI systems can lead to strong dependency and the associated loss of critical thinking and decision-making skills, which is particularly risky in crisis situations.
- Regulatory compliance: The rapid development of AI technology can lead to uncertainties in complying with existing and future regulatory requirements, which poses legal challenges for companies.
by Nada Welker | Jun 3, 2024 | Artificial Intelligence
The AI application areas
The use of AI can be divided into 7 different application areas. However, in view of the continuous development of AI technologies, this is only a snapshot of the current situation.
[infobox headline=”At a glance”]
- Integrating AI can make businesses more efficient and unlock new avenues for innovation.
- A tailored strategy, analyzing the business model and identifying market opportunities, is crucial.
- A thorough examination of the competitive landscape and organizational adjustments are necessary to successfully implement AI.
- Leveraging AI-driven tools enables comprehensive optimization of business processes and the value chain.
[/infobox]
The areas of application for artificial intelligence (AI) are diverse and range from image generation and coding to language processing and 3D modelling.
In the field of image generation, AI enables the automated creation of images, including for commercial purposes, which saves time and money and supports the creative process.
In coding, AI models are used to generate code, which speeds up software development and increases developer productivity.
Text generation is another area of application where AI models can create text based on specific inputs, which can be used for content creation, translation and other applications.
In the video sector, AI enables the creation, editing and optimization of videos. This in turn simplifies the production of content.
In speech processing, AI models can convert text to speech, analyze and synthesize speech, which is used for voice assistants, subtitling and more.
AI also has applications in 3D modelling and research and development, where it can simulate, analyze and optimize complex models to gain valuable insights and drive innovation. Artificial intelligence in research, for example, accelerates knowledge gain through data analysis, predictive modelling, optimization of experiments, laboratory automation and the discovery of new drugs and treatments.
The selection of AI tools is differentiated depending on the area and use case, whereby the use of AI tools from a single category or from several categories may be required. The market for AI tools requires continuous monitoring and analysis.
Future-proof: How to implement AI in your company
In the fast-paced world of technology, it’s essential that organizations equip themselves for future-facing technologies such as Artificial Intelligence (AI). Integrating AI can not only increase efficiency, but also open up new opportunities for innovation and growth. But how can you ensure that your company is optimally prepared for these changes?
In his presentation on “AI – opportunities and risks of artificial intelligence”, held on 19 April 2024 as part of an information event initiated by Dr Natalie Pfau-Weller, member of the state parliament for the Kirchheim/Teck constituency, Dr Michael Müller makes the following recommendations:
- Discover new business models
- Win against the market and competition
- Develop innovative products and services
- Strengthen your corporate structure
- Optimize your value chain
A comprehensive strategy
A crucial step is to develop a comprehensive strategy that is tailored to the specific needs and goals of your organization. Here are some key points to consider when developing your AI strategy:
Analyze the existing business model
Before you start integrating AI, it is important to thoroughly analyze your current business model. Identify potential AI application areas to optimize processes or open up new business opportunities.
Competitor analysis
Analyze how your competitors are already using AI and what benefits they are deriving from it. Also take a close look at what mistakes your competitors are making or have made in this regard. This can help you understand how AI is being used in your industry and what opportunities and risks are associated with it. Gain a competitive advantage over the competition.
Develop innovative products
Develop innovative products and services: Use Artificial Intelligence to develop innovative products and services that fulfill your customers’ needs and differentiate your company from the competition. Make data-driven decisions and implement more efficient processes.
Review your organization’s capabilities and structures
Ensure that your organization has the necessary skills and structures in place to successfully implement and use AI. This can include training employees, introducing new workflows and adapting the organizational structure. For new hires, make sure you hire professionals with AI skills and foster a culture of innovation to support the successful use of AI.
Identify innovative business ideas
You should also identify innovative business ideas for your company that could be realized through the use of AI. Evaluating the financial feasibility and precise implementation strategies of these ideas is essential to prepare your company for the challenges and opportunities of the future. By acting early and developing a sound AI strategy, you can ensure that your company remains successful in an increasingly digital world.
Optimizing the value chain
Check where in your company you can use AI to improve efficiency in production, logistics, sales or customer service.
Example of using artificial intelligence in your company – process mining
After you have already implemented robotic process automation (RPA), enterprise service management (ESM) and ERP automation, increase your use of process mining to automate business processes. Process mining analyses existing processes and identifies potential problems before they occur. It supports process optimization by correlating data flows. Tools such as
- Celonis Execution Management System,
- Kofax Insight,
- IBM Process Mining,
- Signavio Process Intelligence
- UiPath Process Mining
provide a solid basis for these tasks. We will soon be publishing a separate blog article about process mining on our website.
XaiTeck Solution
At XaiTeck GmbH, we have developed a holistic pyramidal approach to improve the effectiveness and efficiency of a company through artificial intelligence.
Level 1- Monitoring of legal requirements & trends and macroeconomic factors
- AI-supported text analysis: Automatic extraction and analysis of relevant information from text sources such as news articles, legal texts and economic reports.
- Sentiment analysis: identification and evaluation of sentiment in texts to recognize potential risks and opportunities at an early stage
- Predictive analytics: Forecasting future developments based on historical data and current trends in order to make informed decisions.
Level 2 – Monitoring & optimization of business models
- Process mining: Analyzing business processes using event logs to uncover inefficiencies and potential for improvement.
- Simulations: Modelling business models and simulating different scenarios to assess the impact of changes.
- Machine learning: Automatic identification of patterns and correlations in company data to find optimization opportunities.
Level 3 – Consolidation and optimization of supplier networks
- Clustering algorithms: Grouping of suppliers according to similar characteristics to optimize the supply chain.
- Network optimization: Automatic identification of the most efficient supply paths and routes.
- Negotiation support: AI-based tools for analyzing negotiation data and developing optimal negotiation strategies.
Level 4 – Management and refinement of specific assets, services and products
- Predictive maintenance: Forecasting maintenance requirements and optimizing maintenance intervals to reduce downtime.
- Recommendation systems: Personalized product recommendations for customers to increase customer satisfaction
- Chatbots: AI-supported customer support tools for answering customer questions and solving problems.
Level 5 – Monitoring and refinement of organizational processes
- Workflow automation: Automation of repetitive tasks to increase efficiency and reduce errors.
- Robotic Process Automation (RPA): Use of software robots to automate processes that were previously carried out by humans.
- AI-supported decision-making: Supporting managers in decision-making by providing relevant information and analyses.
Level 6 – Monitoring and optimization of specific process steps
- Anomaly detection: Identification of deviations from the norm in process data to recognise potential problems at an early stage.
- Root cause analysis: Automatic identification of the main causes of process errors.
- Optimization of processing times: Reduction of the time required to complete processes.
XaiTeck Solution’s approach shows how a holistic pyramid approach can improve the effectiveness and efficiency of an organization. From monitoring and analyzing legal requirements to optimizing supplier networks and refining organizational processes, this system offers a comprehensive range of AI-powered solutions. Automated text analyses, predictive analytics, machine learning and robotic process automation are used not only to optimize current processes, but also to predict future developments and initiate appropriate measures. This holistic approach paves the way for the transformative further development of companies in an increasingly digitalized world.
The market volume for AI will grow rapidly in the coming years
The increasing use of artificial intelligence (AI) in companies promises a wide range of benefits and opportunities for the future. From the optimization of processes to the creation of personalized customer experiences, new opportunities for growth and innovation are opening up. The market volume for AI is expected to grow rapidly in the coming years.
However, this development is also associated with risks and regulatory challenges that need to be overcome. There are also ethical concerns. In the next article, we will take a closer look at these aspects and examine how companies can seize these opportunities while minimizing the risks and meeting ethical requirements in order to make the most of AI’s potential. Feel free to contact us right here if we can support you with the implementation of AI solutions or if you have any further questions.
by Nada Welker | Feb 19, 2024 | Artificial Intelligence, Electrification, Future Trends, Know-How and inspiration, Market development & Trends, strategy in change
Electrification plays a crucial role in sustainable wine production, facilitating the modernization of vineyard operations to enhance energy efficiency, reduce environmental impact, and actively support energy transition goals.
In Level 5, focusing on vineyards and grapevines, electrical technologies offer diverse opportunities for optimizing grape varieties, cultivation methods, and maintenance practices to reduce environmental footprint:
Electric technologies contribute to improving energy efficiency by making traditional processes more efficient and resource-friendly. Reducing environmental impact is achieved through the use of eco-friendly electrical devices throughout the wine production cycle.
Areas of application for electrical technologies in viticulture include
Irrigation for sustainable wine production
- Electric pumps enhance irrigation by ensuring efficient and resource-friendly water supply.
- The electrical technology optimizes water usage and contributes to sustainable irrigation practices.
Soil cultivation for sustainable wine production
Electric devices preserve the soil during cultivation by offering specific advantages compared to conventional, fossil-fueled machinery:
- Reduced soil compaction: Electric devices are often lighter than their conventional counterparts. Their lower weight leads to reduced soil compaction, meaning the soil is less densely packed. Reduced compaction promotes better water permeability and facilitates plant root growth.
- Precise control: Electric devices enable more precise control and adjustment during soil cultivation. This precision allows winemakers to better regulate the depth and intensity of soil cultivation, thereby minimizing soil disturbance.
- Pollution prevention: Electric devices do not emit exhaust gases on-site. This reduces air pollution in the work environment and minimizes the deposition of harmful substances in the soil, contributing to healthier soil quality.
The use of electric tools minimizes soil compaction and erosion, thereby improving soil quality in the long term and contributing to sustainable agriculture and wine production.
Pruning for sustainable wine production
Electric devices enable efficient and precise pruning of grapevines, optimizing maintenance processes by:
- Precision and control: Electric devices often offer advanced technologies for precise pruning and control. This allows winemakers to tailor the pruning exactly to the needs of the vines to ensure optimal growth conditions.
- Preservation of vines: Precise pruning prevents healthy parts of the vines from being accidentally removed. This helps maintain the health of the vines and maximizes grape yield and quality.
- Increase in efficiency: Electric devices are often more powerful than conventional ones, allowing for faster processing of large vineyard areas. This increase in efficiency leads to time and resource savings in vineyard maintenance.
- Comfort of work: Electric devices are generally lighter and easier to handle than manual tools or heavier conventional machinery. This makes the work of winemakers easier and contributes to a more pleasant working environment.
This precision contributes to the health of the vines and promotes sustainable wine production.
Fertilization for sustainable wine production
Electric devices support efficient and precise fertilization, enabling more effective resource utilization.
- Electric fertilizer spreaders and dispensers are often equipped with advanced dosing technology. This allows for precise control over the quantity and distribution of fertilizers. Winemakers can dose the exact amount of nutrients required by the plants without excess.
- Variable fertilizer application: Electric devices can be equipped with variable rate systems based on data such as soil analysis and plant requirements. This enables customized fertilization, adjusting the quantity of nutrients supplied to different areas of the vineyard or even individual vines.
- Real-time monitoring and adjustment: Electric fertilizer spreaders can often be monitored and adjusted in real-time. This allows winemaker to respond to changing conditions during the fertilization process to ensure optimal nutrient supply.
- Minimization of environmental impact: Precise dosing and application of fertilizers help avoid over-fertilization. This reduces the risk of nutrient loss, minimizes water pollution from excess fertilizers, and contributes to reducing environmental impact.
Resource-efficient wine production – The Harvest
Electric harvesting machines contribute to efficient and resource-efficient harvesting by offering various advantages:
- Precise control and selection: Electric harvesting machines enable precise control during the harvesting process. This ensures that only ripe grapes are harvested, while unripe or damaged fruits are sorted out. As a result, the quality of the harvested grapes is improved.
- Efficient working speed: Electric harvesting machines are often able to work at a constant and efficient speed. This leads to faster harvesting and allows for efficient utilization of labor and resources.
- Reduced physical strain: Compared to manual harvesting methods, electric harvesting machines reduce the physical strain on workers. This contributes to improved working conditions and the health of the harvesters.
- Energy efficiency: Electric harvesting machines can be more energy-efficient than their conventional, fossil-fueled counterparts. This helps reduce overall energy consumption and minimize the ecological footprint of the harvesting machines.
- Minimization of losses: Through precise grape capture and handling, electric harvesting machines minimize the loss of harvested produce. This helps maximize overall yield and conserve valuable resources.
Overall, these factors contribute to increased overall efficiency and resource-efficient harvesting in viticulture through the use of electric harvesting machines.
Example: Digitization in Harvesting and Winemaking – BlueCircle Cloud Platform
At level 5, encompassing harvesting and winemaking, the BlueCircle Cloud Platform stands out as a pioneering example of utilizing digitalization technologies in viticulture. This innovative platform combines advanced Artificial Intelligence (AI) with optimization functions to enhance control over the entire wine and grape supply chain, while attracting and educating top-notch viticulture talents.
Key Features of the BlueCircle Cloud Platform
AI-based software for comprehensive control:
- The platform offers a software solution that enables precise control over all processes of the wine and grape supply chain.
- By implementing advanced AI, data-driven decisions are promoted, and optimization opportunities are identified.
Optimization of S&OP (Sales and Operations Planning):
- The software supports Sales and Operations Planning (S&OP) through accurate forecasts year-round.
- Improved S&OP allows for efficient planning and alignment of operational processes with sales objectives.
AI-driven real-time alerts:
- Utilization of AI for real-time alerts on unpredictable weather and other conditions affecting yield, quality, ripening, and harvest.
- Data-driven harvest scheduling to prepare for changing environmental conditions, ensuring harvest security.
- A continuous learning process enables all users to benefit from the latest developments and best practices.
The BlueCircle Cloud Platform stands out as an example of innovative digitalization in viticulture by not only increasing efficiency but also improving the quality of wine production through data-driven decisions and continuous optimization. By integrating state-of-the-art technologies into harvesting and winemaking, a forward-thinking, sustainable approach to viticulture is facilitated.
Electrification in viticulture is thus more than just a technological advancement. It enables sustainable practices for resource-efficient wine production, reduces the ecological footprint, and actively contributes to the energy transition. Winemakers who integrate these technologies into their operations not only benefit from efficiency gains but also contribute to making viticulture more sustainable and future-proof. Contact our experts for professional exchange. We are happy to advise you.
by Nada Welker | Feb 24, 2023 | Automotive Cyber Security, Automotive Industry, Cyber Security Management, Future Trends, Internet of Things, Market development & Trends, New Mobility, Smart City, strategy in change
The automotive industry is in a constant state of transformation due to the constant evolution of existing technologies and innovations, as well as new ones being added. In recent years, autonomous driving capabilities and many other vehicle and software features designed to make our roads safer and traffic more efficient have evolved more rapidly than in several decades prior. Along with this rapid change comes a number of new trends emerging in the industry. In this article, we at Magility GmbH summarize what is currently going on in the automotive industry and which megatrends you will encounter in the future.
[infobox headline=”At a glance”]
- China is the world’s largest automotive market; sales of electric vehicles doubled in 2021
- UN regulations on emissions and automotive cyber security are already partly active or will soon come into force in many countries
- Technologies and trends that were once dreams of the future are already significantly shaping activities in the automotive industry – including convergence, autonomous driving and e-drives, 3D printing, new battery technologies, among others
- Magility identifies eight megatrends that will significantly shape the activities and future of the automotive industry in the coming years
[/infobox]
Interesting data and facts
Source: Statista – Largest automotive markets worldwide in 2021, based on new registrations (in millions)
- The global market for autonomous vehicles reached a size of nearly US$106 billion in 2021. This market is forecast to reach a size of over 2.3 trillion US dollars in 2030
- In the first quarter of 2019, 61.88% of car buyers opted for a used car
- In 2021, nearly 15 million cars were sold in America
- Toyota Motor generated nearly $250 billion in revenue in 2020
- Tesla broke record by delivering over 936,172 electric vehicles in 2021
UN regulations leave a lasting mark on the automotive industry
As the automotive industry continues to grow, it is becoming increasingly important to consider its impact on the environment. For this reason, many countries, as well as automakers including General Motors and BMW, support Tesla’s call for carbon regulation.
Source: Automotive World, 2020
If the regulations are adopted, this should trigger a new wave of innovation in the industry in favor of the environment. Fortunately, this issue is being taken seriously by policymakers. During the World Environment Day celebrations, the UN announced its plan to push for stricter carbon regulations. This could have a major impact on the future of the automotive industry. In addition, governments around the world, including the U.S. and China, are planning new policies to encourage the adoption of electric vehicles and promote the use of public transportation.
The three UN regulations 155, 156 and 157 are particularly important for all companies in the automotive industry in the coming years. They are there to ensure an international standard for cyber security and software updates.
UN Regulation 155 addresses cybersecurity and cybersecurity management systems, while UN Regulation 156 addresses software updates and software update management systems. Finally, UN Regulation 157 addresses Automated Lane Keeping Systems (ALKS) and the security risks associated with them. These regulations provide a foundation for automotive companies to ensure that their vehicles are adequately protected against cybersecurity risks. According to the United Nations Economic Commission for Europe (UNECE), the regulations will play an important role in mitigating cybersecurity risks in vehicles as well as updating automated driving systems. Japan has already announced that it will implement the regulations, and the European Union also plans to make them mandatory. In addition, the regulations contain a number of standards that must be met to ensure the safety of road vehicles. These are taken from the ISO/SAE 21434 and ISO 26262 standards.
Former technologies of the future are already a reality in the automotive industry today
The transformation of the automotive industry is a complex and ongoing process that involves a shift from traditional manufacturing to the development of software-defined vehicles. This shift has been driven by increasing competition from new entrants, such as technology companies like Tesla and Waymo, and growing demand for electric and autonomous vehicles. Many technologies were dreams of the future for deployment just a few years ago; by 2022, many of them became real.
In 2022, we have seen more traditional automakers invest in electric and autonomous vehicle technology, and companies such as General Motors and Ford have announced major investments in these areas. This trend is likely to continue as automakers try to keep up with the industry’s changing environment and meet the demands of consumers who are increasingly interested in sustainable and high-tech vehicles.
We have been providing regular updates on the coming and ongoing changes in the automotive industry on our Magility blog for the past few years. Digitization and connectivity will play an increasingly important role, with vehicles becoming more connected and intelligent than ever before. This will lead to a shift from selling vehicles to selling mobility services as automakers seek to provide customers with a more holistic transportation experience.
Finally, the road to the software-defined vehicle is also an important topic in the industry, as advances in technology are leading to a new generation of vehicles that are more software-driven than ever before. This means that software development and engineering will become increasingly important in the automotive industry, and automakers will need to develop new capabilities and skills to keep pace with these changes.
Overall, change in the automotive industry is an ongoing process driven by a variety of factors, including technological progress, changing consumer preferences and increasing competition.
Convergence of industries
The convergence of the automotive and technology industries is turning vehicle manufacturers into software companies. As vehicles become more connected and intelligent, the importance of software development and engineering in the automotive industry continues to grow. In addition, the importance of customer involvement in the development of services and apps is also becoming increasingly important in the automotive industry. As vehicles become more connected and intelligent, the demand for personalized services and apps that cater to individual needs and preferences will increase. This means that automotive manufacturers will need to involve customers in the development process to gather feedback and suggestions and ensure that the services and apps they develop meet the needs of their target group.
Over the course of the last year, major mergers, acquisitions and partnerships have been almost on the agenda in the automotive industry. These deals range from the very big ones, such as Ford’s acquisition of Argo AI, to more niche collaborations, such as the partnership between GM and Lyft. Automakers have also been making efforts in the area of customer engagement, offering more services and add-ons, some of which are integrated into the vehicle environment. For example, Ford’s new service, which makes it much easier for consumers to integrate new functions or even repairs for their vehicle. In addition, automakers are increasingly relying on customer engagement to boost sales and brand loyalty. BMW, for example, offers an “Owner’s Circle” program that gives customers access to exclusive discounts, events and seminars. Volkswagen offers an “Online Owner’s Manual” that helps customers navigate their car’s features, decide when maintenance is due, and even set up their car’s Bluetooth connection. Ford’s Sync Connect app allows customers to remotely connect to their vehicle and start the engine, monitor the vehicle’s status and even control climate settings. Toyota’s “Toyota+Alexa” program lets customers ask Alexa to start their car, unlock and lock the doors, or flash the headlights with simple voice commands. Nissan has a “Carwings” app that gives customers access to real-time and historical data about their vehicles, such as speed, location and fuel level. The possibilities are endless as automakers continue to explore innovative ways to engage their customers.
Autonomous driving and electric drives
New features and technologies for autonomous driving have been introduced and launched, such as Tesla’s full self-driving option. In addition, numerous automakers’ plans have been made public, such as Volvo’s to offer a Level 4 autonomous driving feature in the not-too-distant future. Thanks to new technologies and in particular the rapid development of artificial intelligence (AI), self-driving vehicles will have a steep development curve. Over time, the majority of new vehicles will be self-driving or at least have self-driving features. AI is already being used in vehicles today for functions such as automatic braking and collision avoidance. Google’s self-driving cars are a good example of this. These cars are equipped with a variety of sensors that allow them to detect obstacles in their environment, such as pedestrians and other cars, and use the internal communication system to adjust driving behavior accordingly.
Automakers are preparing to put more self-driving vehicles on the road. Ford, for example, has been testing autonomous vehicles on Pittsburgh streets for the past year. This also shows that automakers and technology companies are making great efforts to translate the technical possibilities that already exist in theory today into practical solutions.
OEM interest in the emerging electric vehicle market is also very high, with many manufacturers announcing plans to launch new e-vehicle models in the coming years.
Electric vehicle sales have continued to rise in recent years as more consumers opt for sustainable and environmentally friendly vehicles. According to our Magility research, electric vehicle sales have actually doubled in 2021, despite the economic downturn caused by the COVID-19 pandemic and increasing supply chain difficulties. This trend is likely to continue as automakers invest more in electric vehicle technology and consumers become increasingly aware of the environmental benefits of these vehicles.
[infobox headline=”EV sales doubled in 2021″]
- More than 6.5 million e-vehicles sold worldwide in 2021
- Sales growth in 2021 based on e-vehicle sales alone
- Tesla has achieved the status of a mega-tech company; many new e-vehicle manufacturers followed since
[/infobox]
The automotive industry relies heavily on suppliers to obtain the parts and components needed for vehicle production. Currently, the industry faces a number of challenges related to suppliers and their ability to deliver parts on time.
A major challenge is the shortage of semiconductor parts, which are essential for the production of modern vehicles equipped with advanced technologies. The COVID-19 pandemic has disrupted global supply chains, resulting in shortages of these critical components. As a result, automakers have had to adjust production schedules and curtail production, impacting the entire supply chain.
In addition to the semiconductor shortage, there are other challenges facing suppliers and the automotive industry. These include rising raw material costs, trade conflicts and increasing demand for components for electric vehicles.
To meet these challenges, automakers and suppliers are looking for new ways to improve the supply chain and ensure parts are available on time. This includes investing in new technologies, improving communication and collaboration between suppliers and automakers, and developing alternative supply chain strategies.
3D printing in the automotive industry
One of the technology trends that has taken hold in the automotive industry is 3D printing. Some car manufacturers are making considerable investments in the further development of 3D printing technology. Audi and also Porsche have integrated 3D printing into the production of their vehicles. By using 3D printing, long lead times in manufacturing can be reduced and manufacturers can get their models to market faster. Many automakers, including Toyota and Honda, are currently experimenting with 3D printing parts for autonomous cars.
Batteries: From lithium to LiFePO4 and new developments
There have also been developments in battery technology that could have a significant impact on the future of the industry. First there was a lot of hype about lithium-ion batteries. Lithium-ion batteries are lightweight and easy to produce, which argues for their use in autonomous vehicles, for example. But while they may still be a good choice, automakers are exploring other battery types. This includes the use of rare earth minerals, as in lithium iron phosphate (LiFePO4).
LiFePO4 batteries are best suited for Tesla cars because they have higher overvoltage tolerance during charging, longer shelf life, better cold resistance, and are cheaper compared to other lithium batteries. In addition, LiFePO4 batteries are safer and more stable than lithium-ion batteries, and they combine high energy density with long run times and consistent discharge voltage, making them ideal for use in UPS systems. Disadvantages of LiFePO4 batteries include low voltage rating, high self-discharge rate, lower energy density, poor performance at low temperatures, and difficulty charging in some devices. In addition, LiFePO4 batteries must be protected from overcharging and aging.
A new type of battery that uses nanomaterials to store more energy could have significant implications for the future of the auto industry. This type of battery is called a nanomaterial-based battery. It has been researched several times and is used in some applications, including electric vehicles. This type of battery has the potential to revolutionize the automotive industry by providing the necessary energy storage capacity for the entire industry. The nanomaterial-based battery could also reduce the cost and environmental impact of conventional lithium-ion batteries due to its higher energy storage capacity. In addition, this type of battery could enable the development of smaller, lighter and more efficient vehicles due to its high power-to-weight ratio.
Outlook – Megatrends in the Automotive Industry
At Magility, we have identified eight megatrends that are already having a lasting impact on the entire automotive industry and all its manufacturers and suppliers, and will do so even more so in the coming years:
- OEM transformation from pure vehicle manufacturer to software company
- Vehicle development towards the software-defined vehicle with use in automated driving, for applications with artificial intelligence or connectivity
- Lifecycle Management – Development of various Diagnostics as a Service
- Conversion to smart factories
- Challenge of charging infrastructure for EV manufacturers
- New requirements for battery management – with increasing sales and use of EVs
- Vertical integration in EV production
- Sustainability in the product lifecycle – ESG issues become essential
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by Nada Welker | Jul 18, 2022 | Automotive Industry, Future Trends, Know-How and inspiration, Market development & Trends, New Mobility, Startups, strategy in change
The startup industry is currently at a crossroads. Founders have long complained about how difficult the issue of financing has become. While young companies were able to quickly raise a lot of venture capital until last year, many of these founders are now facing the challenge of sustainably financing further growth. Last but not least, the pandemic and the war in Ukraine have also contributed to the increasing pressure for venture capital-funded tech startups. In Stuttgart, the national and international startup scene met for the 12th Startup Autobahn Expo Day, to discuss, among other things, where startups and the financing industry are headed in the future.
Are the golden years for tech startups over?
Plunging share prices, waves of layoffs – the current crisis on the global markets is hitting even supposedly successful companies. Whether it’s Klarna, Gorillas or Tesla, startups and large tech companies alike are currently struggling with major turbulence worldwide. Venture capitalists prefer to hold back the previously cheap money, startups are no longer looking at the next big leap in growth, but at whether they will survive the next half year. According to the tracking site layoffs.fyi, about 50,000 employees have been laid off in the startup industry worldwide since the beginning of 2022. Even in Israel, the country with one of the biggest startup scenes in the world, the big boom seems to be over. While investments in tech startups were still at $25 billion in 2021, the pace has dropped significantly this year. A trend that, by all accounts, looks set to continue. Rising interest rates, the Ukraine war and, above all, the shortage of skilled workers in the software sector are taking their toll on Israel’s flagship industry. Many startups are cutting back on spending, and investors have become more selective.
And although Germany has a large network of investors and business angels, which is now also recognized worldwide, startups in the early stages in particular have found it increasingly difficult to generate sufficient capital to scale. Due to the increased risk in the early founding phase, traditional bank financing is not available to most startups – they then have to access venture capital. The German market has developed a lot for this in recent years, but in an international comparison, Germany still only ranks in the middle. The majority of financing is provided by foreign investors from the USA and Asia. And even in later financing phases, they are usually ahead of the pack; a development that is causing the current German government a major headache in terms of innovative strength and safeguarding know-how and jobs in Germany.
The startup ecosystem in Germany has developed rapidly: already in 2020, almost 400,000 people were working at a startup. By 2030, that number is expected to double. And in terms of venture capital, Germany was also ahead in a European comparison in 2021: 15 billion euros were invested in startups. If there were 25 so-called “unicorns” (startups with a market valuation of at least one billion U.S. dollars) in Germany in 2020, this number is to be doubled in Europe by 2030. The German government is working to ensure that this can be realized: Europe and Germany are to be maintained and developed as a strong tech startup location. Based on the “EU Digital Decade 2030,” an initiative of the European Commission led by Commission President Ursula von der Leyen, Europe and Germany are to be made fit for the digital transformation. In addition to the implementation of digital services and the expansion of high-speed Internet in rural and urban areas, strengthening Europe as a location for start-ups is at the top of the agenda. To this end, the German government has announced a 10-point plan that is part of a consistent startup strategy:
- Strengthen funding for startups
- Make it easier for startups to attract talent and make employee ownership more attractive
- Ignite startup spirit, make startups easier and more digital
- Strengthen female startup founders and diversity
- Facilitate startup spinoffs from academia
- Improve framework conditions for public benefit-oriented startups
- Mobilize startup skills for public contracts
- Make it easier for startups to access data
- Strengthen reallabs (test spaces for innovation and regulation)
- Put startups at the center
This strategy is expected to be approved by the federal cabinet in the summer, followed by implementation and regular monitoring. However, it remains to be seen how the situation in the industry might have worsened by then.
The startup scene is reinventing itself
The fact that the current crises in the world and on the financial markets are preoccupying all industries was also noticeable at the 12th Expo Day in Stuttgart, which finally took place again this summer on site at the Wizemann Areal in Stuttgart. There, more than 1,000 interested people and 27 startups met on three stages to exchange information about current projects and future topics. Startup Autobahn powered by Plug and Play is an open innovation platform for tech startups from the automotive, mechanical engineering, health and enterprise industries, with now more than 30 renowned industry partners (including Mercedes-Benz, Webasto, Bosch or Deutsche Post). The aim of the Accelerator is to develop joint pilot projects, which are then presented to the general public at the Expo Day, which takes place twice a year.
The focus of the opening keynote by Ola Källenius, head of Mercedes Benz Group AG, was “Transformation and Innovation at Mercedes Benz” with two major challenges: Decarbonization, i.e. achieving CO2 neutrality, and digitalization in the vehicle. With the development of the Vision EQXX concept vehicle, he said Mercedes is at least 10 years ahead of the industry, which is committed to a holistic overall approach to CO2 reduction in the supply chain, production and the vehicle itself. He predicts a 100% electric future for the Stuttgart automaker, which should become a reality by the end of 2030 at the latest. On the subject of the digitized vehicle, Källenius spoke about the coexistence of software and hardware and the immense potential for innovation in this area. Here, innovation often comes through cooperation – many tech startups were also involved in the Vision EQXX, which developed from pilot projects at Startup Autobahn, such as UBQ materials from Israel or Ventus from Stuttgart. “Efficiency is the new currency of the EV area,” Källenius says, and this can only be realized by challenging the status quo as often as possible.
Tanja Rückert, CDO at Bosch, talked about the fact that collaboration with tech startups brings great benefits for both sides in her panel. Of course, the strategic fit must first be clear, especially from the customer’s point of view. But what concrete advantages do startups and companies have when they join forces strategically? For startups: resources, processes and scalability, for companies: Agility and streamlining of innovation cycles.
Saori Dubourg (MoB BASF) brought a completely new perspective on sustainability in startup financing to the stage in her presentation “The future needs a better design”. Until recently, the goal was to invest as much as possible (“volume”) – in the future, the focus, in all areas, but also in financing, is on the sustainable use of resources (“value”). Worldwide, investments in ESG funds have risen to an incredible 2.57 trillion US dollars – so future investment strategies will focus more and more on social and environmental benefits, rather than purely financial growth.
The women-only panel, led by Natascha Zeljko, Co-Founder and Chief Editor at F10 FemaleOneZero & CURAZE, focused on how much opportunity the current crisis brings. The central question was: How many companies have really understood that constant change and continuous questioning of the status quo is essential for business success? Prof. Dr. Katharina Hölzle (University of Stuttgart & Fraunhofer IAO) argued that the understanding for change is now there, but the radical implementation of it is still not happening in many companies. The younger generation in particular has already internalized the idea of transformation. However, it is now the task of schools and universities to provide these people with the tools for implementation. Katharina Hopp (Bosch) made it clear that innovation is the only way out of crises. Especially as a hardware manufacturer, Bosch is forced to enter into strategic alliances with software startups. When it comes to diversity in the startup scene, women are still underrepresented, she said. They need to become more visible, network better and, above all, find role models. Nicole Büttner (Merantix Momentum) mentioned here the entrepreneur and founder Verena Pausder, who together with five other female entrepreneurs recently announced her investment in the women’s team of the soccer club 1. FC Viktoria 1889 Berlin. Their goal is no less than to change the German sports world for good.
Our conclusion of the day:
- the capital in the market is still there, and needs to be distributed
- it’s “back to the basics”: in the future, only tech startups whose ideas are really good and also sustainably successful will be able to persist
- a crisis is the best time to start a company
- The speed of financing rounds will slow down from about 18 months to 24 to 30 months.
- Diversity in companies needs clear structures, role models and KPIs
To drive innovation in your own company, it is worthwhile to collaborate with suitable startups. At magility, we help you make the right contacts in our international tech startup network. Contact us now – we’ll be happy to answer your questions.
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