Reuters

SAN FRANCISCO

As cars increasingly resemble digital devices, a group of technology firms that can send wireless software updates to cars are in hot demand by carmakers scrambling to catch up to Tesla Motors in the arena of over-the-air updates, or OTAs. Interest in the technology, through which certain car functions can be upgraded much the same way as an iPhone, comes as Tesla is set to deliver an OTA for hands-free cruise control this month, allowing its electric Model S sedans to drive themselves on freeways.

“Tesla has made great strides in raising the profile of OTA, making it appear somewhat sexy by showing how features could be added,” said Strategy Analytics consultant Roger Lanctot. “They’re almost poking the traditional carmakers in the eye by making it look so easy.”

That has spurred the big automakers to get more serious about OTAs, although they are hampered by the challenge of making software compatible with internal combustion engines, dealers worried about losing service revenue and security concerns. “There’s a whole mindset change” as automakers embrace the need for the technology, said Honda spokesman Matt Sloustcher.

Oren Betzaleli, product strategy head for Israeli OTA firm Redbend, said four years ago it was hard to get in the door. “Today, OTA is so important to car makers that we can get in right away to see the VPs of manufacturing,” he said.

Betzaleli said between six and 10 auto companies are “engaged” with Redbend’s technology for cars but declined to name them. There are about 70 different computers in every modern car, each with software that has to be managed, Betzaleli said.

Michelle Avary, VP of auto products and strategy at wireless carrier Aeris, said she had “yet to speak to a single OEM (original equipment manufacturer) who is not active in this space right now.”

The technology has set off a wave of partnerships, investments and acquisitions. Audio products maker Harman International Industries paid $170 million to acquire Redbend and another $780 million to buy Silicon Valley-based Symphony Teleca, another OTA firm. Both deals were in January. Some big carmakers, including GM, BMW and Mercedes, are already using OTA updates, but mostly for their entertainment systems.

Mahbubul Alam, chief technology officer of Michigan-based global OTA firm Movimento, predicted that in three years nearly all car makers will have some kind of OTA capability. Tesla has already introduced over 75 features via OTA, from raising the ground clearance of cars to boosting acceleration. The recent hacking of a Jeep Cherokee through its telematics system has highlighted security vulnerabilities as cars add more digital technology, and auto experts say OTAs are the best way to minimize breaches because weak links can be quickly repaired.

Besides the practical advantages for consumers, who won’t need to waste time at dealerships for new fixes, the technology may save money for automakers because up to half of warranty repair issues and recalls can be corrected through OTAs.

The cost of fixing an issue through a safety recall, in which dealers are compensated for repairs, versus an OTA is higher by a factor of 20 to 30, said Alam, without saying how he arrived at that estimate.

A September report from research company IHS found that global cost savings from OTAs will grow from $2.7 billion today to more than $35 billion in 2022. Those potential savings have eroded earlier resistance to OTAs, said Lanctot.

“That’s where the chief financial officer says to the chief information officer, ‘Get out of the way, buddy, if we don’t do this, we’re going out of business.’”

As much a tech company as an automaker, 12-year-old Tesla is free of the constraints its rivals face - complicated combustion engines, huge model ranges, four-year development cycles and a reliance on car dealerships.

Tesla “started from a blank piece of paper,” said Avary. “They didn’t have 100 years of legacy engineering to contend with.

“Your typical combustion engine is still very mechanical. Your gasket blows, it’s gone. Tesla is different, they have a lot more software in their cars, it’s a very different beast.”

Traditional carmakers’ reliance on car dealers also impedes OTA adoption, with some dealers worried their lucrative service revenue will drop off if car owners come less frequently to dealerships when fixes are done by OTA updates, said Lanctot. “It’s not in carmakers’ interest to annoy the dealer,” he said.

Jackson, Michigan, Chrysler dealer Wes Lutz defends his role, arguing that while Tesla’s higher income clients may be tech buffs keen on OTAs, the average car owner is less savvy and needs hand-holding. “When it’s daylight savings time and the clock changes, I have customers lining up out the door!” Lutz said.

700,000 Seat vehicles fitted with cheating software

AFP

MADRID

Seat, the Spanish carmaker owned by the Volkswagen group, fitted 700,000 of its cars with pollution cheating software to dupe emissions tests, a company spokesman said Tuesday.

“These 700,000 vehicles were distributed by Seat’s global network and we are currently working to determine how many of them were sold in each national market,” the spokesman said.

VW had sparked global outrage last week when it admitted that 11 million of its diesel cars worldwide are equipped with so-called defeat devices that activate pollution controls during tests but turn them off when the car is on the road. Seat said it would summon the owners of vehicles equipped with the affected EA 189 motors to authorised service centres to undergo tests. It will also set up a search engine on its website to allow customers to find out if their vehicle is affected. Seat said it had temporarily suspended the sale and delivery of all new vehicles with the EA 189 motors. Volkswagen’s top-of-the-range automaker Audi said that 2.1 million of its diesel cars worldwide are affected, as are another 1.2 million vehicles of VW’s Czech subsidiary Skoda.

A spokesman for Volkswagen’s light commercial vehicles business said 1.8 million of its light utility vehicles were also similarly equipped.

German prosecutors announced Monday a criminal probe of Volkswagen’s former chief executive Martin Winterkorn, who resigned over the scandal.

The group named Matthias Mueller, head of VW’s luxury sports car brand Porsche, as Winterkorn’s successor.

With the carmaker facing the possibility of having to recall as many as 2.8 million vehicles in Germany alone, the direct and indirect costs of the affair are still incalculable.

VW has already said it will set aside 6.5 billion euros in provisions in the third quarter. But analysts at DZ Bank suggested it could be one to three billion euros more.