Saeed Amidi, CEO & FOunder, Plug & Play Tech Center
Mamatha Chamarthi, ZF friedrichshafen
Saeed Amidi provides an introduction for an interview with the Chief Digital Officer of ZF Group, a $40 billion revenue German Tier 1 Auto Supplier, and a Plug & Play Tech Center Corporate Partner in the Mobility Program
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Ali Tabibian: 00:06 Welcome, welcome, welcome everyone to this episode of Tech Cars Machines. My name is Ali Tabibian. Lots of the good stuff as usual are in the episode notes. This is our second episode with an executive and a key supplier to the global automotive industry. The previous episode was with Magna International. I'm sufficed here to say that ZF is one of the top five tier one suppliers to automotive companies, with revenues over $40 billion each in every year and activities that extend into heavy equipment like tractors.
Ali Tabibian: 00:39 Our guest is Mamatha Chamarthi, chief digital officer of ZF. Since her background was really interesting, I decided to go into it a little bit as part of the beginning of the episode rather than cover it as I usually do as part of my introduction here. There's an extra treat in this episode and that is that there's an opening interview with Saeed Amidi, the founder of Plug & Play Technology Center where Mamatha suggested we needed to record our episode.
Ali Tabibian: 01:08 Plug & Play is a technology incubator with hundreds of startups in it and also with a very big differentiator, a vast network of large corporate partners who's sometimes like ZF, even house their own technology scouting teams at the Plug & Play facilities. What's interesting over the years as I've noticed that while Plug & Play has grown internationally, the original Silicon Valley office where we recorded this episode has become a tourist destination.
Ali Tabibian: 01:35 Literally, buses of technologists from overseas stop by for a tour and take selfies with the company signage. Dear listeners, let's get this double treat started.
Speaker 2: 01:46 Tech, Cars, Machines, subscribe here or at gtkpartners.com.
Ali Tabibian: 01:52 Good morning everyone. We're here with Saeed Amidi today. Saeed is the founder behind Plug & Play Technology Center. Thank you so much for taking the time with us.
Saeed Amidi: 02:02 Yeah, it's a pleasure dnoing this podcast with you. To give you a little bit of history about Plug & Play, we set our goals to provide the best facility and everything that a startup needs which includes investments from us as well as our VC partners. As we develop the Plug & Play, we realized more important than money and investment is clients. Most startups especially B2B businesses selling software or solution, they really would love to meet the corporate world.
Saeed Amidi: 03:03 In the last five years, we have been able to create for example the biggest mobility platform in the world with major OEMs like Mercedes, Porsche, Toyota, Nissan. When you want to innovate in the automotive industry or mobility industry, you also need first and second tier supplier like ZF, Bosch. What nowadays we do when we built this mobility innovation platform, we have more than 50 corporations involved in this platform.
Saeed Amidi: 03:56 We operate this platform in Stuttgart, Silicon Valley, Beijing, and soon Detroit. If a startup has a technology for economist vehicle, connected vehicle, or electric vehicle, they could join this platform and be introduced to the right people. This innovation platform, some people used to call it accelerator but the word "accelerators" mean startups that are less than I would say two to three years old.
Saeed Amidi: 04:46 They might have less than 20 to 30 people but when you call it innovation platform, a hundred people startup, a startup that has even raised $100 million. They're still a startup to the likes of Mercedes and ZF. We work with early stage startups, middle stage startups, and late stage startup. Of course, we are very proud of our mobility innovation platform but we also have insurance in short tag innovation platform. Quite frankly, we have more than 10 verticals that we create this meeting place.
Ali Tabibian: 05:45 That's really interesting both history of accelerators in general that you brought up where basically they became focused on providing services to the corporations but if our listeners knew you as longest I have for a few years, you'd know that a very extroverted, a personable person like yourself will eventually not think about general and administrative stuff but will think about relationships.
Ali Tabibian: 06:08 That's really what's unique about Plug & Play. What are some of maybe the success stories or for the new irrationals that your partners have for coming to Plug & Play?
Saeed Amidi: 06:21 If I can stick to mobility innovation platform for example in Stuttgart, Mercedes is a great company same as ZF and other organization. They have incredible R&D team. They are continuously building new technology and some people say fantastic automotive Mercedes cars. In general, the worlds especially the digital world is moving so fast. Ola, the incoming CEO of Mercedes said it very nicely on stage one day is you have to have internal R&D and great engineers.
Saeed Amidi: 07:21 You could also reach out site and work with entrepreneurs, work with great technology outside of your four walls, and then you could bring it in and blend it together to build a better product and services for your clients. That is what we hope to do and we focus to do in Plug & Play, blending large corporations, R&D department with technology from entrepreneurs.
Ali Tabibian: 08:04 When I've talked to people like Mercedes or Bosch or ZF that is that in this environment, they need people who manage to design business models that extract value out of sometimes very large market, sometimes niches that they never would have been able to imagine on their own. By the way, when you mentioned Mercedes and I think Stuttgart is the facility that if I recall correctly was a 20 million Euro venture.
Saeed Amidi: 08:31 Specifically University of Stuttgart and EU, they built a beautiful facility for robotics and for innovation. It has a big operating budget. Our portion of the project in Stuttgart is the startups mostly in the software business that compliment what Arena 2036 has built. In general like you mentioned the new business models but I also believe culture at these large companies need to be more entrepreneurial and more agile.
Saeed Amidi: 09:22 Any big, large, multibillion dollar company have incredible structures and organization but sometimes to move technology fast inside these companies, you need to have a culture of entrepreneurship, small teams, and fast decisions. That's another thing that we have been able to learn and to show our corporate partners that are right now more than 250 of the largest and most successful corporate partners in the world.
Ali Tabibian: 10:09 Technology, culture, and business model. Those are the three big things. Anything good that's on the horizon that you'd like to point out?
Saeed Amidi: 10:17 We are very proud that so many entrepreneurs choose us to be part of their journey. Some of these journeys end up with a great success, more as everybody knows are challenging but still even during the hardship and challenges, I think it's great to deal with these entrepreneurs, and know more and more the corporate world is choosing us to be part of their digital transformation or their innovation journey. We are actually quite proud to be where we are and humbled by the experience.
Ali Tabibian: 11:12 Great, Saeed. Thank you very much. We appreciate it.
Saeed Amidi: 11:14 Thank you, thank you so much.
Speaker 2: 11:16 Tech, cars, machines, subscribe here or at gtkpartners.com.
Ali Tabibian: 11:23 Mamatha, thank you so much for joining us and for our listeners, we're here at Plug & Play Technology Center in Sunnyvale, in California. Mamatha's been very kind she's taken some time for us while she's out here from her residence in Michigan. We're very, very pleased that she could take the time.
Chamarthi: 11:42 Thank you so much. It's really a great privilege to know you and your background, to Ali. It's quite an honor to be doing this podcast for you.
Ali Tabibian: 11:52 Thank you so much. We really appreciate it. Just so our listeners understand, we had a little bit of a chat before we started recording. Mamatha really has an amazing background.
Chamarthi: 12:01 I have a very unique background. I grew up in Southern India in a city called Hyderabad. I've done my undergraduate in Psychology, Sociology, and English and went on to pursue my master's in English with a scholarship from the government of India, and then started teaching English all the way up to undergraduate students in a city called Bangalore. That's when though it was a great generous profession, I felt that teaching was getting to be a bit mundane in India.
Chamarthi: 12:38 Back at the time, we were still a close economy, so I went to a business school to pursue my MBA. By then, my husband had come to California to San Jose State University to pursue his master's, his second master's in electrical and communications engineering. His dream job was to work for Ford Motor Company. A few months into his master's degree, he gets an offer from Ford. By the time I land here in California, only to turn around to go to Michigan.
Chamarthi: 13:13 Little did I know when I was moving from California to Michigan that was truly my calling into the automotive industry. I was about to stop my master's in computer science in San Jose State and then I started pursuing this at Wayne State University in downtown Detroit and then later on, finished at Oakland University. Almost six, seven months into my master's degree at Wayne State, one of my friends had asked.
Chamarthi: 13:49 Because the IT back then was going through such a boom but the boom was about to start and he said, "Why don't you go and see if you can get any job?" My first offer was from HP in Mountain View. Me and my husband stayed apart from each other for two years while I was doing my master's degree in India, going to business school. We said again, "We won't do that again," so I didn't come back to California.
Chamarthi: 14:19 My second offer was from Chrysler Corporation in 1996. I took that role as Lotus Notes Programmer, if you really know what that means. That was the beginning of my, I would say love affair with the automotive industry. Initially, I joined Chrysler Corporation as a contractor while still pursuing my master's in computer science. Two years later, I became an employee. As soon as I became an employee, I was asked to sign the NDA to be a project manager for day one of the integration of Daimler and Chrysler.
Chamarthi: 15:00 I think one of the first projects if I remember, I remember still very clearly is they asked me to write a Lotus Notes application to create a workflow for their tax incentives because Chrysler would do a lot of projects with the government where they got tax incentives. I said, "It's great you're asking me to write this program, can I just go and job shadow what exactly this department does?" because coming from India, I didn't know what exactly government affairs does.
Chamarthi: 15:37 I job shadowed them for a couple of months. In 1996, I created a paperless office for government affairs using all collaboration technologies on Windows 3.0. That got the attention of the vice president of government affairs and also the CIO of Chrysler Corporation. She said, "I really need someone that has this unique thinking to be the project manager for the integration of Daimler and Chrysler," so I became the project manager.
Chamarthi: 16:14 From then on, there was never looking back in my career. Chrysler became DaimlerChrysler. Then I also later on after doing number of IT stance in Chrysler and DaimlerChrysler including postmodern integration, I went to DaimlerChrysler Financial Services. Daimler had three big arms. One was passenger cars that second was trucks and the third was financial services. We did captive financial services.
Chamarthi: 16:45 We provided loans and leases to Mercedes cars or Chrysler cars and trucks. I went to financial services in January of 2007 to turn around a project. A couple of months later, the CIO of DaimlerChrysler Financial Services including the CEO had asked if I could be the program manager for the day one of the separation of Daimler and Chrysler. It was-
Ali Tabibian: 17:16 Do a round trip acquisition.
Chamarthi: 17:18 Exactly. There was a part of me that really wanted to go and join an investment bank or a consulting company like an Ernst & Young in the M&A division because I've done both the merger as well as the separation and I thought I brought the table of both sides of the … Understanding of both sides of how a company needs to be brought together and separated. I think after that, I went on to become the … I was supposed to go to Germany as an expat and I took the role of the CIO at Consumers Energy.
Chamarthi: 17:59 I did that for four years and then TRW, an automotive supplier asked me to come and join them as a global CIO. I was back in the automotive industry within a snap that I didn't have to think for too long to come back to the automotive industry. When I was still in DaimlerChrysler in the postmodern integration team, I got an opportunity to support Mercedes Benz Southeast Asia. I would have never imagined growing up in India that I would be even coming to the US, sitting in Bangalore to come to be in the headquarters of Chrysler Corporation on day one.
Chamarthi: 18:46 To be in that building in Albany Hills was just a dream, an out of the world experience. Until now, travel for that company to globally including to India to implement the retail template to sell Mercedes cars in a consistent way all over the world was definitely a very, very unique experience and something that I think in automotive industry you would find many people going through similar kind of patents in their career.
Ali Tabibian: 19:23 Big global supply chain workforce, that's a lot of great experience.
Chamarthi: 19:26 Yeah.
Ali Tabibian: 19:27 Mamatha, how would you describe your position today at ZF? Essentially you in a sense are still at TRW if you will, or not still at TRW but ZF absorbed TRW about four years ago?
Chamarthi: 19:39 In 2014.
Ali Tabibian: 19:39 In 2014, that's right. How would you now … CIO is a term that I think a lot of people have a sense what that means. Describe for us your title today and what that role means within the global ZF empire?
Chamarthi: 19:55 Today I am the chief digital officer of ZF, Friedrichshafen. It is very interesting, two, three months after I joined TRW, the acquisition talks were on the way with ZF. I joined Chrysler and got acquired by Daimler. I come to TRW and now it's getting acquired by another German company, ZF. There was an incumbent CIO that I was working with on the ZF side and together we worked very closely on the integration of ZF and TRW.
Chamarthi: 20:29 They were four different businesses that had old lap with ZF's business, so we had to diverse them off. My role as a CIO was to bellow to the business plan of TRW so that they continue to make the money and deliver great products for which we were bought by ZF to diverse off these businesses and integrate with the ZF. I did that until almost August of 2016, from 2014 until 2016. In 2016, I was asked by the CEO, Dr. Stefan Sommer to take on the role of Chief Digital Officer.
Chamarthi: 21:10 Then he and I talked about it. He said, "Let's start on a clean canvas, on a blank canvas. I really don't know how to define this role but this role is I want this role to transform every aspect of our business because the disruption that's coming at the automotive industry in terms of autonomous, connected, electric, and shared mobility is so disruptive that we can't just have the chief digital officer role just focus on products but we have to change every aspect of how we do business."
Chamarthi: 21:52 That is where we started. Initially, it was all about defining what exactly what the role of the chief digital officer be. He said that you would focus on products and services, product, to see how we can include digital capabilities in our existing products and take these digital capabilities and create services out of it. Business processes, most of our business processes in the automotive industry are I would jokingly say are still from the industrial era or from the industrial revolution. It is how do we rethink all of these business processes in the context of how our products are changing with more software capabilities and more selling software as a service, not just a mechanical component. The third aspect of it is how do we change our manufacturing and supply chain, also to deliver to this new model around our products and services. That means we have to change our culture in our workplace.
Chamarthi: 23:06 That's how we defined the role of the chief digital officer at ZF that it would cover all aspects of the business and have a clear customer centricity because we knew even the customer was changing for us. We would go typically after the traditional OEMs. We saw more and more the emergence of new mobility customers, Uber, Lyft. People always talk about those companies but we also started seeing emergence of new players in the electric car idea from China and saw that China was emerging as a leader in electrification of the car.
Chamarthi: 23:57 We have to think through our entire business strategy around how do we continue to grow in the existing markets with existing customers, and how do we expand in new markets with new customers? Even in the existing markets, we had to look at Silicon Valley closely and because we saw an emergence of new mobility customers like Zoox who we have started working with recently. We are a volume player as a tier one supplier.
Chamarthi: 24:34 To work with someone like Zoox or a new mobility customer, it's not volume play. It's an innovation play. You get into the partnership very early on to try the innovation together and to share the risk. That was a completely different kind of a thinking that we have to get adapted to and that's what I mean by we had to change even our culture and our workplace and our entire thinking around how do we address these disruptive forces that are coming at the automotive industry.
Ali Tabibian: 25:10 Very fascinating. Thank you for that description. I know for example couple of our podcast episodes were with GE Digital. One of the things that we talked about in those episodes were how your organization, how does it wind up working with and sharing roles and responsibilities with the portions let's say of those mechanical component units that have some software technology in them? How does that interaction work? What's been maybe an interesting set of lessons learned to make that work?
Chamarthi: 25:48 Today we have roughly nine divisions within ZF. Each division focusing on different product technology, so when we created the digital role from an organization perspective, they said it would go as an L shaped organization. It will be an L shaped. Think about the divisions as horizontal or sorry, vertical silos and the digital organization would go as horizontal across these vertical silos. There, we focus on what are our existing products and what can we do with digital that will hit our bottom line cost savings or that would help us get incremental revenue with our existing products.
Chamarthi: 26:35 This is more to ignite the change in thinking and change in products that needs to happen. We created an agile framework to take ideas to minimum viable products to scaling if we see the benefits. That's what we did as a horizontal organization. As a vertical organization, we started incubating some new business ideas like the car e-wallet where we took a block chain enabled financial transaction engine and embedded that into one of our electronic control units.
Chamarthi: 27:16 Think about a scenario where you are in a level four, level five autonomous car and you have gone out for dinner with friends or with your wife. Do you still want to go along with a car to pay for the parking? Won't it be nice if the car would go park itself and pay for the parking and as you're going through tolls because you're no longer sitting in a forward facing position in an autonomous car.
Chamarthi: 27:48 It's a living room on wheels or it's a conference room on wheels, whatever, totally configurable to your case. As you go through the toll gates, as you go through any kind of financial transactions that you would have to do, the car would do for you?
Ali Tabibian: 28:09 Fuel charging, all of-
Chamarthi: 28:11 For fuel, for charging. Then you walk into the restaurant, if it's running low, it can go drive itself to the charging station, charge and then come back and be available to you. This is the vertical part of the digital organization where we started incubating new ideas. In our world, we call it a balance approach across the three horizons in terms of our thinking, safeguarding our core business with digital.
Chamarthi: 28:36 Enriching our core business which is adding digital features to our existing products and expanding our core business, and we call it disruptive adjacency. Think about the entire value chain of mobility, future of mobility and how it is evolving and what are the new business models that we can try to go from just being a tier one supplier to getting more and more into Tier 0.5 or into becoming a services provider.
Ali Tabibian: 29:06 That's actually an interesting point that you just brought up. In a sense, you are still a supplier to the OEM but you're bundling in a service that you would manage post-delivery as that example.
Chamarthi: 29:18 Exactly, exactly.
Ali Tabibian: 29:18 That's pretty interesting. That's probably one of the first instances that I know of where a tier one would actually have a consumer interaction I think. That's why I don't know with too many other examples that-
Chamarthi: 29:33 Yeah. Yeah, no.
Ali Tabibian: 29:33 That's a big change.
Chamarthi: 29:33 It's a huge change.
Ali Tabibian: 29:33 It's a huge change, right.
Chamarthi: 29:34 It's a huge change.
Ali Tabibian: 29:35 That's right.
Chamarthi: 29:37 We are working with the OEMs to see if we can either take our car e-wallet concept or product and embed that into an OEM product. We created a platform there, the OEMs can participate as consumers. Fuel companies, charging stations, parking, they can join the platform as suppliers of services.
Ali Tabibian: 30:04 Excellent.
Ali Tabibian: 30:04 Mamatha, you brought up the L shaped organization and horizontal part that digital spans everyone basically provoking the horizontal sections in a good way into understanding and sensing and tasting what might be out there from some of the adjacencies that you talked about for some of the external drivers. We've talked about automobiles now so far in the episode but really ZF is more diverse than just autos which I think some of our listeners may not know.
Ali Tabibian: 30:35 Commercial vehicles, tractors, even wind turbines come to mind. What is common to the digitization of these various divisions, of this various products I should say?
Chamarthi: 30:46 Let's say when there is there is a need for a gearbox on a transmission, you find ZF providing that capability whether it's in large windmills with GE investors, these are our customers or and John Deere in agricultural space. We do commercial vehicles as well as passenger cars. I think if you look at this, ZF brings in a very unique capability from a product perspective and also are offering in various spaces.
Chamarthi: 31:24 If you think about mobility as a service and look after ZF's products, I think we are in a really sweet spot with the breath of product portfolio that we have and the breath of our presence in passenger cars and commercial vehicles and in industrial application. That's what is common … You asked what exactly is common. Let's think about autonomous vehicles. Autonomous, we believe we take a very strong position that autonomous vehicles, the first version of them would be in geo-fenced areas.
Chamarthi: 32:05 The geo-fenced areas if you think about geo-fenced areas, mining is a geo-fenced area, agriculture is a geo-fenced area.
Ali Tabibian: 32:14 Our listeners will be familiar with the term we've used called the closed filed applications. I think geo-fence is essentially what your phrase for it, yes.
Chamarthi: 32:27 Exactly. Recently, we have invested as ZF in startup from University of Aachen with Professor [Shu 00:32:35] called e.GO Mover. It's an autonomous people and cargo mover. This level four, level five functionality, we would like to take it and then create, take it and apply it across very so far, passenger cars or across commercial vehicles and also industrial application.
Ali Tabibian: 32:57 Absolutely. It is interesting and I want to do all on it too much but despite the popular press, really the applications of those high level autonomies are in essentially commercial environments. First of all, the environment is more controlled that commercial vehicle is frequently in a more controlled environment but also it can tolerate the cost of form factor for all the equipment that's needed for that level four and five which is I think a lot of people forget.
Ali Tabibian: 33:22 They don't realize those fancy pocks on these vehicles that run around on the bay area. I think most people are surprised when they realize, "A cheap version is $5,000."
Chamarthi: 33:31 Yeah, you can get into advanced driver assist functionality all the way up to level three. There's still there's a human driver being assisted by advanced functionality in the car but once you get into level four where you're trying to remove the human driver, and then those applications will be in a defined geo-fenced space. Because no matter how much we test, this is more of a personal perspective, we cannot really mix a human driven vehicle with an autonomous vehicle because each one of us have a completely different kind of driving behavior.
Chamarthi: 34:16 It would take an enormous amount of learning for the artificial intelligence brain that sits in the car to learn every one of our driving behaviors. Then to come up with the, "How should I react to the reflex of Ali versus Mamatha?" it's completely different. It has to be geo-fenced so you know exactly the path of the vehicle, the path that the vehicle is going to take and also some level of predictability, of the mix of traffic and pedestrians, so more predictability.
Ali Tabibian: 34:51 Excellent, thank you. Mamatha, "See, think, act," tell us about that.
Chamarthi: 34:59 When you look at our products, they categorize our products into three major brackets. Every decision that we as humans make, we see, we think, and we act. Even for autonomous vehicles, it is they need to see, to see what's going on around them, what's going on, on their path from A to B whether it is level one all the way to level five. Then there has to be some … Today, we have like a braking ECU doing the thinking function for the braking and a steering ECU taking care of this thinking for the steering.
Chamarthi: 35:42 Think about a central brain that is doing all of the thinking and all these sensors are fusing the data that they are receiving. This is being computed by a central brain, that's the think and then the hundred years of experience that we have with our various mechanical products which have actuators in them that act. That is see which is provide cameras, we provide the various electronics and sensors. Then the thing is our partnership with NVIDIA where we have created a product called ZF Pro AI.
Chamarthi: 36:23 The act is more than the hundred years of experience that we have in building mechanical actuators.
Ali Tabibian: 36:30 That's what the act have.
Chamarthi: 36:32 That's what the act part is.
Ali Tabibian: 36:34 Refers to. When you say see, when I was at CES in January, one of the things that was impressive to me was the breath of both the camera and especially the radar offerings that CES had, and that maybe a recent acquisition if I recall correctly but talk to us about a little bit of the breath on that sensing side and how you're integrating it both at the sensor layer as well as of course at the think layer.
Chamarthi: 37:00 I think the approach that we have taken at ZF which has now become a pretty common trend in the automotive industry is when we look at the white spaces that we had in our technology portfolio when it came to sensing whether it was a midrange radar or a long range, we had some in-house radar capabilities in our advanced driver assist business unit. Then we also partnered and we did an investment in a radar company called Astyx to complement our own capabilities.
Chamarthi: 37:41 In addition to that, we also partnered with Hella so that we close all of the white spaces in terms of the radar technologies. The same thing that we did with Lidar, we invested in a company called Ibeo for Lidar. Interesting in the sense space, we call this an ecosystem approach to see where we have strengths and look at where others have strengths and create different kinds of structures around this. It is all the way from investment to a strategic partnership.
Chamarthi: 38:24 For example, the internal cockpit of the future for level four, level five autonomy, we are working with Faurecia. We think they are market leader when it comes to the internal cockpits. We can bring our active safety and passive safety, and we want to be a leader in the domain of integrated safety. There's no other supplier that comes to my mind that has active and passive safety components like the way we do in the partnerships we do with both Hella and Faurecia to provide that integrated safety as a system for both advanced driver assist as well as level four, level five autonomy.
Ali Tabibian: 39:08 Okay, great. Thank you for that description. One thing I noticed in the ZF material is a recent initiative you had on platooning, is that something in truck platooning, is that something interesting to talk about?
Chamarthi: 39:24 Absolutely, absolutely. What we had done is wanted to take all of the level four, level five technologies that we had been working with. At CES, we showed how that works in a passenger car. Recently at IAA which focused on commercial vehicles, we showed an innovation truck concept where an innovation, a truck with level four, level five can deliver packages. You could have that as a courier. When the courier goes to drop off a package, the truck follows as though in front of virtual leash so that you don't have to always walk back to where the truck was parked but instead the truck comes along with you as you're delivering the packages.
Chamarthi: 40:23 We have then also combined it with some of the car e-wallet technologies to unlock their truck, their trunks in passenger cars and brought together our commercial vehicle and passenger car technologies. Their packages can be delivered to locked trunks of cars.
Ali Tabibian: 40:43 I see. I see. That's pretty interesting and that's just what Amazon can do to your home but you could do it to your car or around the parking lot outside this office, fill everybody's … Put your groceries in or whatever it is and off you go.
Saeed Amidi: 40:56 Exactly. Because we think that the last mile delivery solutions are really important and we also demonstrated with our innovation truck and with the innovation depot where an autonomous truck can work in a yard. It can just drop off the cargo, pick up the cargo, and then come out of the yard because as many fatalities happen on the roads, there are also many fatalities and serious injuries that happen in these yards where cargo is dropped.
Ali Tabibian: 41:34 That's right. That's interesting you say that because I'd seen the statistics on where in the United States, something like 10% or 12% of the fatalities are not on a "public road". When I hear you say this, it probably means that in a commercial nonpublic road environment, those accident rates are obviously much germane than somebody dying in a road driveway or-
Chamarthi: 41:55 Exactly.
Ali Tabibian: 41:56 If you just zoom in on commercial then it's probably a really big problem, people dying or getting hurt on the outside the public road but within where the vehicle is travelling.
Chamarthi: 42:09 That's how we are extending our thinking beyond just our product to providing the capability of an autonomous depot where not just vehicles are autonomous but dropping off the cargo, picking up the cargo.
Ali Tabibian: 42:24 Is everything that ZF provide for the most part inside the sheet metal of a vehicle or a turbine or inside the wind turbine, or for example do you have infrastructure that you would deploy alongside a road or inside that work yard to then make it a lot easier for the vehicles to be smart?
Chamarthi: 42:46 In the autonomous depot, we have through our Openmatics subsidiary, we have come up with these low energy Bluetooth devices. We call them deTAGtive like "detective" but detag, deTAGtive. These tags, we put them on the depot so that we can mark the path for the autonomous vehicles. These are so low energy that you can go for tens of years without replacing them.
Ali Tabibian: 43:25 Beaconing environment?
Chamarthi: 43:25 Yeah. We want to provide a full stack solution to autonomous depots including tracking their cargo. There it is that I think at any point in time including the condition of the content in the containers.
Ali Tabibian: 43:39 Let's talk a couple minutes about ACES, autonomy, connectivity, electrification, and sharing. Which one do you think will change mobility the most? Which one do you think will change the tier ones the most?
Chamarthi: 43:56 When I joined the automotive industry, technology was such an afterthought and now it becomes so front and centered with connectivity becoming the key enabler. I think connectivity is the foundational enabler for autonomy and also for shared mobility. Electrification can work with connectivity without connectivity but I think for autonomy and shared mobility, activity is the foundational enabler because for autonomy, either you need a connectivity to the cloud or some connectivity to the infrastructure or some V2X connectivity.
Ali Tabibian: 44:36 That's right.
Chamarthi: 44:36 I think 5G which provides that persistent connectivity in terms of just a pure connectivity is going to be a huge enabler for autonomy and for different kinds of shared mobility. From shared mobility, it's not just right haling. I feel that it's moving more and more into customized mobility. Why do I have to stick with just one car for all of my needs? Can I get whatever car I need?
Ali Tabibian: 45:11 Issues.
Chamarthi: 45:11 I think you can't have one size fits all solutions when it comes to autonomy because the roundabouts in Paris or in London are completely different from the streets in San Francisco or New York.
Ali Tabibian: 45:27 Very much so and these are countries where people typically follow the rules. You go to some places where the rules are unwritten or un-followed I should say, makes very difference.
Chamarthi: 45:39 I think those countries that you're talking about especially China and India, I think they're with us because of their massive issues with the global challenge around pollution, I think they would take more leadership role in electrification of the public train than the other countries like even US or Germany. I feel like even today, the number of electric vehicles per capita in China is a lot more than in the US or in Germany.
Ali Tabibian: 46:10 It's interesting, Mamatha because one of our recent episodes that was tongue and cheek called Every Hates Tesla, as part of the introduction we said this is about developed country, electrification because India and China are basically responding to public health emergency. It's a much shorter term exigency than what we're trying to do here with electrification to some extent.
Chamarthi: 46:36 I think to some degree, there is a nice interrelationship between autonomy and electric because if you look at the car today, we have not changed it much in terms of the structure from a horse cart. Horses are in the front, the carriage is in the middle, and the luggage spaces in the back. It's the same concept that we are following today with the car, right? I see engine in the front, the driver and the passengers in the middle, and the trunk space in the back. Pretty similar horse carriage but now on faster wheels but then you start thinking about electrification.
Chamarthi: 47:18 Now, it creates a configurable cockpit capability. For the autonomous car, that is an important aspect. That's why at ZF, we introduced this rolling chassis so that you can configure it in various way.
Ali Tabibian: 47:39 M-Star I think it's called, is that right?
Chamarthi: 47:41 Yeah.
Ali Tabibian: 47:42 It's very innovative.
Chamarthi: 47:43 Very innovative. My perspective on electric car being targeted again at the luxury customer segment, most of the innovations in automotive when they first come out are fundamentally targeted at the luxury segment, right? In 2008, seven and eight when I drove my Mercedes GL, it had an adaptive cruise control with all of the safeties and the active safety system in it. That was more of a premium car safety technology but now it's becoming more and more standard.
Ali Tabibian: 48:30 That's right.
Chamarthi: 48:30 I think it's the same thing that would happen with electrification but then we have to see if electrification and autonomous and shared mobility coming together will have an impact on the volume of sedans sold. That's where you see players like Ford and other OEMs taking a very strong position that they would exceed the sedan market. That's why it's when these trends would be converging and completely coming together, and what would be the impact on the volume of SUVs versus large people movers versus sedans.
Ali Tabibian: 49:16 Mamatha, describe that to me. I missed why the impact would be on sedans.
Chamarthi: 49:19 The first thing is sedans in terms of the profit margin, it's pretty low. When you think about ride sharing and in geo-fenced areas, you talk about level four, level five autonomy, you're talking about people movers and cargo movers. The bias is more towards large shared vehicles. If I can get a large shared electric vehicle, I would rather prefer that versus a sedan. Again, I would say that we have to keep observing how and when this convergence will come and what would be the impact on the volumes of large cars versus small and midsize cars.
Chamarthi: 50:09 Maybe we would go more towards smaller cars within a geo-fenced area, not actually a sedan with four seats or five seats in it. Maybe it's going to be a smaller car with one or two seats in it, or a large car with people mover or a cargo mover.
Ali Tabibian: 50:33 We think about the functionality that changes but the whole concept that what the vehicle is going to do it and for who it really is really changes.
Chamarthi: 50:42 Yeah. Also it is not just about a car as the primary mode of mobility from point A to point B. It is going to be right … Today even we have mixed mobility to a great extent with flying and then driving but I think we will see a lot more combination, lot more choices in terms of our mobility because for a hundred years, we had the horse carriage that was disrupted by the car. For more than a hundred years, we have had a car as the primary means of mobility.
Chamarthi: 51:17 I think now is the time to start looking into drones and other means of mobility. I think it's more about this convergence of the ACES than just one disruptive force. Each one is a disruptive force. The convergence of these four disruptive forces is going to be tremendous. It's going to be a huge impact on, we can't call it the automotive industry anymore, on auto mobility.
Ali Tabibian: 51:55 Where have you found is best for you to keep the ideas coming internal, external geographies, size of organization?
Chamarthi: 52:05 All of the above.
Ali Tabibian: 52:06 It really could come from anywhere. Is your experience?
Chamarthi: 52:12 Absolutely, absolutely. I think I have to just give you one example. Recently I was in a Gartner Research board meeting. I was along with a CIO from medical instruments industry. They make mostly medical equipment and instrumentation for ambulances. They wanted to see if we can provide them data from the crash site on how, at what pressure the airbag was released and what was the impact, any data that we could provide on the impact of the airbag on the person and the contact points.
Chamarthi: 52:59 If we can't send them this data ahead of time so that the ambulance could come prepared to reduce the time to diagnose what fractures and whatever is the injury of the crash victim, if they come prepared, they can literally hit the ground running. You wouldn't believe that you would be sitting next to someone from medical instrumentation industry and they would want to get this data. Now we are in a very early stage working with them because we do a lot of test with crash dummies.
Chamarthi: 53:39 We are trying to provide them the data because those dummies also mimic completely a human being with all the nervous system then the muscles with the bones and everything. We are giving them that data so that we can do a minimum viable product before we go any further on it. I think that's just an example of where today this whole sharing of data, people take it very lightly and people keep talking about who owns the data.
Chamarthi: 54:11 If I were to tell the passengers of the vehicle, if you were to share the data from your car with this instrumentation company when you have a crash that they will be better prepared to come and help you, I think many of those people driving cars would be more than happy to share their data because their seconds matter to save lives. That's what really at the end of the day these disruptive forces and what they do for our society is what gets me all geeked up and all excited.
Chamarthi: 54:50 It's all about saving lives and saving the environment, creating a sustainable future, and creating more mobility choices and making the world truly flat that we can connect from anywhere to anywhere within hours or minutes. That's fantastic. That opens up a whole new world of opportunities that gets me all excited not just for us but for many other generations, for my children, and for their children. There is so much that technology that offers now that I get so excited just talking about it.
Ali Tabibian: 55:30 It is nice to be able to point to something in front of your kids and say, "I did that."
Chamarthi: 55:35 Exactly.
Ali Tabibian: 55:38 Mamatha, you've certainly geeked me up about all these stuff with the great information you've given us that's why I hate to end it but I do know you have a flight that's just standing on the other side on this podcast. Did we cover everything that you wanted to talk about? Is there anything that we missed?
Chamarthi: 55:55 In ZF, in one of the things that we are changing about our culture and our workplace is we believe that the 146,000 employees that we have, have enormous potential to contribute to the company and if you only to move the bureaucracy, they have great ideas. In March of 2017, there were two employees. One from our e-mobility which is public train electrification division was sitting along with another employee from corporate strategy.
Chamarthi: 56:28 They were looking at … We brought together 50 startups from across 15 countries. They were watching a startup from Eastern Europe called Noiseless Acoustics. They had this idea that we have, see, think, act. In the see product portfolio, what we are missing is sound, capturing sound. They started looking at data on how many fatalities are caused by not able to detect sound that children playing behind a large tractor or with children playing behind an SUV.
Chamarthi: 57:08 They convinced us that this is an idea worth investing. We started an innovation challenge for employees called Internal Pitches. We created a venture capitalist out of our board of management and our heads of divisions. They invested in this idea from these employees called the sound AI to capture sounds as another sensory input for our cars. Today, I'm very happy to say they have tried it as a minimum viable product and two large OEMs are interested in this product as a core capability, as a safety offering so that they can detect which way the ambulance is coming from and can inform the driver if the lane next to them is available to the right, is available to move to the right.
Chamarthi: 58:02 That they would see an alert on the screen that the ambulance is coming from behind or from the front and the right lane is available and to move it to the next lane.
Ali Tabibian: 58:17 That's incredible.
Chamarthi: 58:17 Yeah. It's just amazing what employees when you just remove all of the bureaucracy can do.
Ali Tabibian: 58:23 Good for them.
Chamarthi: 58:24 Yes?
Ali Tabibian: 58:24 They're going to save some lives and we're all happy about that.
Chamarthi: 58:27 Yeah, we're very happy about it.
Ali Tabibian: 58:28 Mamatha, just thank you much for taking this time.
Chamarthi: 58:32 Thank you.
Ali Tabibian: 58:32 It's been wonderful.
Chamarthi: 58:33 Thanks, Ali.
Ali Tabibian: 58:34 Thank you. Bye, bye.
Speaker 2: 58:35 Tech, cars, machines, subscribe here or at gtkpartners.com.