Volvo wants to turn its cars into iPhones on wheels

Car makers used to compete over who had the latest-and-greatest hardware on offer: the highest-horsepower engine, the comfiest seats, the silkiest-sounding speakers.

As manufacturers try to turn their vehicles into rolling smartphone-like devices, the race will revolve around the next big things in chips that upgrade infotainment and vision systems, as well as the car’s general controls.

“That is really the big change that’s happening in the industry,” Jim Rowan, a former top executive at BlackBerry and Dyson who started as CEO of Volvo Car last week, said in an interview.

This is, of course, far from the first smartphone analogy used to describe the motoring industry’s evolution. Doug Field, the former head of Apple’s car project, made the comparison when he joined Ford last fall. Volkswagen’s Herbert Diess warns his staff against ending up like Nokia.

Rowan, 56, saw the upheaval up close, from the perspective of a major player on the wrong end of the disruption. During his time at BlackBerry, the company more than quintupled revenue to over US$20-billion. But by the time Rowan left in 2012, BlackBerry’s once-dominant brand and operating system had been soundly beaten by Apple’s iPhone and Google’s Android.

“Ostensibly, the product stayed the same,” Rowan said. “You could make a phone call and you could share some data. But the transformation between a feature phone and smartphone, in a very short period of time, transformed the use of that device a thousand times.”

A phone was no longer just a phone. And the same is happening to the car.

“A vehicle is a vehicle, but what we’re going to do in the journey that we’re on is to make so much technology available in that vehicle that it massively expands the use of that next-generation mobility,” Rowan said. “All the stuff that you can do in your smartphone will be almost inherently native within the vehicle.”

Here’s an except of Rowan’s conversation with Bloomberg global cars editor Craig Trudell. The questions and answers have been edited for length and clarity.

What were the conversations like that led to you becoming Volvo’s CEO?

When I first engaged with the board, it was around the challenges Volvo faces going forward. We have a fantastic company in terms of automotive — almost 42 000 people in the company, and the vast majority of those people come from an automotive background and have been working in the industry for decades.

So, we have that covered, and the thinking was that as the industry goes through this massive transformation — partly, it’s electrification, but that’s really the easiest part, if I’m being honest. The bigger part of the transformation is really going to be about software and core compute. That technology will be harnessed to drive next-generation active safety systems — so Lidar, radar, cameras, and obviously the software stack that enables that.

The actual software on the vehicle itself becomes a much bigger component of the value proposition. They were looking for somebody who came from a consumer electronics background, who had worked at a very fast cadence, who could blend that with all the skills we already have in automotive, and hopefully we get that kind of synergy effect, where one and one equals more than two.

How will Volvo change the way it develops and deploys software?

We’re going to have to be a lot more intelligent about the decisions we make around making versus buying software, and we’re going to need to understand software at a much more vestral level than before.

That doesn’t mean that we need to do every single software stack, but we need to be able to control how we interact with suppliers and build that final product, that interface we’re looking for.

How do you actually make the best of the computational power that you’re spending a lot of money on to put in the vehicle? How do you make sure that you’re using that properly and in the most effective way?

What did you learn about the car industry during your time at Dyson, when it pursued but ultimately abandoned an electric vehicle?

When you have a project where you say we’re going to build a car from scratch, you learn a lot about everything that’s involved. It’s a very complex product. You look at the supply base, the technology, the cost, the direction of travel that the industry is going to go. As a newcomer, you need to really go to school on every aspect of that.

It was a good learning exercise. At Volvo, we’ve got great factories, fantastic designers, all the infrastructure, a supply base, a technology road map, vehicles on the road and loyal customers. Transforming Volvo from an internal combustion engine company, to an ICE and hybrid company, to a battery-electric vehicle company, is much easier because we have momentum, and all those skills, people and investments. Doing it as a start-up is extremely difficult.

What is the status of semiconductor supply for Volvo?

We had been making pretty decent progress in terms of the shortages, but there are a couple of types which are just doggedly unavailable. That’s going to affect us in the second quarter. By the end of the second quarter, we expect that we’ll start to see a much more robust supply of those, and then to accelerate into the back half of the year.

One thing that is clear is that we need to digitise our supply chain more. In the same ways we’re building that digital backbone to reach out to customers, we also need to build a highly sophisticated digital supply chain infrastructure. It’s not to say that we need to change the suppliers, but we need to be able to connect with them to get real-time data, to take that data and analyse it, write algorithms to run what-if scenarios, identify the fracture points and decide whether we need two sources on a particular component.  — Craig Trudell, (c) 2022 Bloomberg LP