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Automotive giants are planning to set up hubs in Israel

Automotive giants Volkswagen (VW) and Hyundai Motor Company are planning to set up hubs in Israel to tap into the wealth of mobility and smart-car technologies the so-called Startup Nation is churning out. “We are very serious about creating a campus in Tel Aviv,” said Peter Harris, chief customer officer of Volkswagen Group, at a conference in Tel Aviv on Tuesday. “There is no doubt we need to be here.”

The VW center will be similar to the Future Centers the German car manufacturer has already set up in Berlin, California and Beijing to help the firm grow from a hardware company into a software and services firm, he said. The Volkswagen Group has 39 Centers of Competence and IT labs located in Europe, North America and Asia. Similarly, Youngcho Chi, chief innovation officer of Strategy and Technology at Hyundai Motors Group, said that the South Korean car manufacturer, among the five largest globally, is in the process of “setting up an innovation hub that is expected to be launched in the early part of next year.”

Key points of interest will be artificial intelligence (AI), robotics, energy and smart city technologies, Chi said, with the South Korean giant looking to partner, acquire or invest in local firms to introduce their products globally, he said. “We like to work with the most innovative and creative minds to change mobility, and that is why I am in Israel,” he said. “We want to partner with Israel in shaping the future of mobility.”

Both Harris and Chi were speaking at The Fuel Choices and Smart Mobility Summit being held in Tel Aviv on Tuesday and Wednesday. Hosted by Prime Minister Benjamin Netanyahu and attended by some 2,000 participants from more than 30 countries, the summit assembles decision makers and business leaders to discuss new approaches to transportation technologies and to promote Israel’s goal of reducing 60 percent of its oil consumption by 2025, according to the summit website.

Intel Corp.’s massive acquisition of Jerusalem-based Mobileye in March this year has pushed Israel to the forefront of the highly competitive autonomous car and auto-tech industry.

Automakers from GM to Toyota and Volkswagen have been acquiring startups and taking stakes in technologies globally in an effort to stay at the cutting edge of developments. GM bought Cruise Automation, a San Francisco-based developer of autonomous vehicle technology in 2016. And Ford invested in Argo AI, an artificial intelligence company in February. Auto-tech startup financing topped $1 billion in 2016 with sector financing reaching a “frenzied pace,” according to CB Insights.

Israel has never had an automotive industry to speak of. But as the focus of automakers now moves from hardware to software and with the huge amount of data needing to be processed and analyzed to help smart transportation happen, Israel can play a pivotal role in this massive industry, said Eli Groner, the director general at the Prime Minister’s Office, who is also leading the nation’s National Intelligent Mobility Initiative. With its talented pool of ex-army officers who get intensive training in the army, its academic prowess in artificial intelligence, its cybersecurity abilities and its ingenuity in creating sensors and radars, Israel now has the chance “to be big in the auto industry,” Groner said at a briefing with journalists at the conference.

“Right now, we get 20 percent of global private investment in cyber (security technologies),” Groner told The Times of Israel at the sidelines of the briefing. “From a global perspective, the intelligent mobility industry is much bigger than cybersecurity. We don’t need to get 20% of the global private investment for this to have a huge impact on our economy.” Israel is doing its utmost in terms of tax environment and education to ensure that “we will be a hub for global innovation in this space.”

Globally this industry will be bigger than the cyber industry, he said. “In Israel it won’t be bigger in the short term, but in the intermediate term it could certainly have just as much impact.” There are more than 550 startups that are part of the smart car, efficient fuel and mobility industry, Anat Lea Bonshtien, the chairman and director of the Fuel Choices and Smart Mobility Initiative, told the conference audience. In January this year, the government passed a national plan for smart transportation to promote and encourage entrepreneurship and research in this field.

The idea is to make Israel a “playground for mobility,” said Bonshtien. The initiative aims to collect data from Israel’s drivers and streets, digitally map out the nation’s roads — for use of self-driving cars for the future — and set up test sites and supportive regulation that will allow road experiments to enable Israel to be a leader in autonomous cars, she said.

Shoshanna Solomon