Inside CAR: Pioneering the Future of the Automotive Industry

[Transcript]

[00:00:00] Jan Griffiths: Welcome to the Automotive Leaders Podcast, where we help you prepare for the future by sharing stories, insights, and skills from leading voices in the automotive world with a mission to transform this industry together. I'm your host, Jan Griffiths. That passionate, rebellious farmer's daughter from Wales, with over 35 years of experience in our beloved auto industry and a commitment to empowering fellow leaders to be their best authentic selves.

Stay true to yourself, be you, and lead with Gravitas, the hallmark of authentic leadership. Let's dive in.

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This episode is a very special episode. This is the first episode that I will be collaborating with a co-host and my fellow co-host is Carl Anthony. He is the managing director and co-founder of Automoblog and AutoVision News and host of the AutoVision News Radio podcast. He is a veteran broadcaster. He knows his stuff. And we met about a year ago. And something that you might not know is that in the podcasting world, we're very supportive of each other. We're very collaborative. Now, Carl tends to focus more on the technical side of the automotive industry, and I focus on leadership and culture. So, Carl, how excited are you that we're doing this together?

[00:02:16] Carl Anthony: Jan, thank you for that wonderful introduction. And it was such an honor to have you on my podcast on AutoVision News Radio. Even though I focus on the tech side, as I have learned from your work, we cannot accomplish all of these technical innovations, from electrification to software-defined cars to autonomy. We cannot accomplish all of that if we don't have the right leadership model. If we're doing command and control, it ain't going to happen.

[00:02:47] Jan Griffiths: That's right. Well, our guest today is at the forefront of the future of the automotive industry. He is the president and CEO of CAR, the Center for Automotive Research. Alan Amici, welcome to the show.

[00:03:04] Alan Amici: Hello. Thank you, Jan. Thank you, Carl. It's good to be here with you both.

[00:03:08] Jan Griffiths: I saw you take the stage at CAR when you first went into this role. So, you've been in this role now for almost two years. What does it feel like?

[00:03:18] Alan Amici: Well, the calendar has flipped by very quickly. We've been very active in our work at CAR. So, there's been some rebuilding and reconfiguring. There's been some strategies we've put in place. We've brought in some new talent. So, lots of activities are happening at the Center for Automotive Research, and really exciting things that are happening here. So, we've made CAR a stronger entity. There is a lot going on, and it is a really exciting time for CAR but also for the auto industry at large.

[00:03:45] Carl Anthony: Alan, on your website from the CAR website, and I'm going to quote verbatim here, "The Center for Automotive Research is involved in the research of significant issues that relate to the future direction of the global mobility industry. CAR's mission is to produce independent research, convene stakeholders, and analyze critical issues facing the mobility industry, and its impact on the economy and society. Alan, can we expand more on that? What does that mean? What is the vision for CAR in that context, as you have it written on the website?

[00:04:27] Alan Amici: So, to expand on that vision, CAR's mission is to inform and advise. And we inform and advise with the goal of making the automotive industry more viable and more sustainable. I mean, ultimately, that's our goal. We're a 501(c)(3) nonprofit organization. And it's really important that in order to achieve that mission, our methods are threefold. And the first is we conduct independent and original research. And we conduct research that addresses the big issues in the automotive industry. And we try to take a broad-brush approach to cover the topics that are keeping CEOs awake at night. Our mission in that regard is to shine a light on problem areas so people can get together and talk about potential solutions and perhaps even solve some of these things. So, number one, original and independent research, is the foundation for the Center for Automotive Research. So, the second way we achieve our mission is through the events that we hold. Our flagship event is MBS, our Management Briefing Seminar. And we hold this event every August. This year, I will be at the Grand Traverse Resort in Traverse City, Michigan. This will be year 59th for the event. And it brings together C-suite executives to talk about the big problems in the industry. How do you make EVs more affordable? How do you make EVs profitable? What's happening with charging infrastructure? How do we increase range? What's happening in the battery industry in terms of new chemistry? So, critical issues affecting the auto industry are viewed from a CEO or a C-suite executive viewpoint. And then, the third way we try to impact the auto industry is through our partnerships. And so, we have affiliates, which are our private companies. And then, automotive community partnerships, which are our public entities. So, these may be economic development corporations. It could be the State of Michigan or the State of Indiana. They could be the City of Sterling Heights, Michigan, for example, or the City of Lima, Ohio, for example. So, smaller public organizations that we are able to share our data and our research with to give them some insight into what's happening in the auto industry. So, we share our book of deals. We share what's happening in investment in that particular space. We weave those three elements together: research, events, and our programs to try to inform and advise, which is really the purpose of our mission.

[00:06:57] Jan Griffiths: A lot of technical focus, obviously, not so much focus on the leadership and culture piece of it. And as I'm sure you've heard me say many times, Alan. In this industry, you can't run a 4k video on a 95 Windows operating system, so what makes us think we can develop EVs in the world of mobility and use the same cultural operating system that we've had in this industry for decades? Is that part of CAR's mandate, or how do you see it weaving into the overall CAR mission?

[00:07:33] Alan Amici: Well, it can be. I mean, there's an element of labor economics and policy that is part of the Center for Automotive Research, and it's part of the research that we do. There's a specific example, which is technology. And we could talk about software or software-defined vehicles. Many of the automakers are bringing software in-house, which means they're developing their competencies within the organization. That means they're developing mechanisms to manage. That means they're developing the competence to manage these organizations. And so, just the fact that companies are motivated to bring software in-house, does it make it happen? It takes the competence, it takes the capability, and it takes the leadership to be able to do something like that. And quite honestly, the auto industry is struggling with developing software in-house right now. It's not going particularly well. And so, this is an area we're very interested in. And you can see some of the moves companies are making, like General Motors just recently announced their Mountain View tech hub, and so they're going to be sourcing software capability out in Mountain View, out the Bay Valley, to try to bring software talent into the organization. So, this is a strategic move that they're making. Ford Motor Company, on the other hand, is taking a different approach, and they're focusing on Michigan Central Station, along with Newlabs, and they're creating an environment that is cool, and they're trying to give their employees interesting work to work on. And so, they're trying to attract talent to the Detroit area for that purpose. So, these are two divergent strategies, ultimately, with the same goal in mind. But I think there are other issues that are really important to the automotive industry: women in engineering or women in leadership positions. The auto industry has made some significant progress in the past 15 or 20 years, but we still have a ways to go. There are some examples like Mary Barra, who's leading general motors and has done a terrific job in that particular role, but there's still within the organizations, a lot of people won't find women in middle management or even senior management that they can emulate, or they can look up to, or they can seek a sponsor or a mentor. And so, there's some progress that has been made, but there's some improvements that can continue. And so, CAR definitely has a role in workforce development and DEI in that particular space as well.

[00:09:58] Carl Anthony: That would be something that I would really love to see is just more women in automotive or the barriers come down. That's the automotive industry that I dream of. I'm glad you brought that up, Alan.

[00:10:12] Alan Amici: I think there are better decisions that can be made. I mean, if you look at the product that's out there in the market, it's been a little while since we've done this study, but at the time we were looking at minivans, 51 percent of the decision makers on minivans are women. And yet, the cars were generally designed by men and engineered by men. And so, we're missing the market in a number of places, but I think it adds richness to the content of the product. It adds richness to the thoughtfulness of what to include and what's important to prospective decision-makers or prospective buyers. I think you make better decisions if you have a diverse workforce to be able to do that.

[00:10:51] Carl Anthony: Everything that you're saying here about the changes in the industry from electrification to software-defined cars, we can include autonomous driving, we can include AI in that, so two pictures here. We've got all that stuff that I just mentioned, and you've been talking about all this fast-paced transformation at a lightning pace. And then, what Jan is saying is that the leadership and the cultural aspects are hugely important. How do we navigate this when we have so much going on both sides, both the tech side, there are changes on the tech side and there are changes on the leadership side? How do we navigate this? What are your thoughts there?

[00:11:35] Alan Amici: It's an incredible challenge. If you think about the changes that are occurring, we're going from ICE propulsion to EV propulsion. And we're trying to do all of that in five or six years, say, less than ten years. And this is an auto industry that for the past one hundred and ten years has been largely internal-combustion engine based, so you got a change in technology from ICE to EV. And so, a large portion of engineering companies, automotive engineering companies, more than thirty percent, are devoted to engineering the ICE portion of cars. So powertrain engineering, whether they're engines or transmissions. And so, in a future where you have purely EVs or eventually hybrid and then EVs, you're going to have to move some of that talent out of the ICE arena into the EV space. And so, this is a transformation that the auto companies are having to do right now as they move their talent around and they're looking for different talent. So they're looking more for software and some of the electrical engineering, and in some cases, chemical engineering, you know, in battery technology, whereas in the past, they may have been looking for combustion engineers or mechanical engineers in that space. So, that's one transformation that's occurring inside the companies. The second one is we're trying to do infrastructure at the same time. It's taken somewhere around 50 years to get gasoline pumps at every single corner, such that the consumer has lots of choices when they decide to gas up. And in five years, we're trying to build out an EV infrastructure that looks like that. That is very challenging to do. And so, the federal government has helped spur that with the Infrastructure Act and with NEVI $7.5 billion across the country to spur the development of DC fast chargers across the country in these alternative fuel quarters. So, we're trying to build out the structure at the same time, and a 3rd item that's occurring is companies are trying to rethink how they engineer these vehicles. And so, this is the notion of a car that is updatable once it goes to the customer. You could use a cell phone as the model as your cell phone is continually being updated. Sometimes, you know about them; sometimes, you just have to accept, and then you get the latest features, enhancements, and bug fixes. And so, the idea here is what changes do you have to make to the architecture and, specifically, the electrical architecture of the car to be able to facilitate something like this? And so why would I want to do this? I want to keep cars that are out in the field safe. And so, if I have the latest safety features, or perhaps even new safety features that I could deploy easily to a car that's already in service, that would be interesting. And there's the potential to even save lives if I'm able to do that. Well, that requires over-the-air updates. It requires a reconfiguration of how the cars are architected, hence the discussion about software-defined vehicles and re-architecting that. That's a third change that's trying to occur at the same time. This is also very challenging. The auto industry has been using a supplier model for the past 25 or 30 years. And that is, an OEM will choose a supplier who will work to the OEM specifications, develop hardware and software, and deliver a product, and the OEM will integrate this into the car, and it becomes part of the network and part of the architecture of the car. Well, if the OEM is doing their own software and they want a centralized architecture, and they want to centralize software, so-called software-defined vehicle. They're not necessarily purchasing the software from the supplier. Maybe they're only purchasing the hardware. So, the relationship between the OEM and the supplier changes as well. And so, you have these three changes that are occurring at the same time. I need different talent. I need different management styles and leadership styles to be able to make that work. I need different verification schemes. I need the ability to keep vehicles that are out in the field updated and verified. So, it is a very complicated transformation that the auto industry is going through and they're trying to do it very quickly. So, any one of those three things would be a big challenge; doing all three at the same time is a daunting experience. Quite honestly, it's not the leader from 10 or 15 years ago; it's perhaps a new leadership style that can contemplate how should we be doing software differently. How should we be developing software differently? How should we be verifying software differently? Do we have the right talent to do so? There are big challenges and lots of changes going on. We live in interesting times right now in the auto industry.

[00:16:29] Jan Griffiths: Alan, you mentioned the way the traditional supply base is set up, the OEMs through the tier system, and that is changing. We are moving to more of a supplier ecosystem. And yes, the model of leadership and culture is changing along with it. But one aspect of that that is definitely related to technology is the speed and agility needed to drive innovation. We cannot have innovation operating at the level of speed that we need in this industry. It cannot coexist with fear. And a lot of the culture that we have in the automotive industry is based on fear. And so, this idea that you will try something new, and if it doesn't work out, you maybe tweak it, and you iterate, and you iterate, and you iterate, and then, finally, you get it. All the startup people that I've interviewed talk about a relentless focus on customer pain points, and then they try something, small bets frequently, and they tweak it and tweak it and tweak it. And they keep going because they don't have the fear of failure. They're just focused on the mission and conviction, and let's get this thing figured out, whereas traditional auto culture is more about, 'Oh, well, we got to have this thing fully vetted. We better have the P&L lined out for the next five years, and we got to have this whole thing ready to go.' That model is not going to work, is it?

[00:17:57] Alan Amici: Well, a couple of thoughts on that is, yes, it does feel like we're dragging our knuckles on that one a little bit. I would say the model that has been set up and that we've been working on for the past 50 years means the moment that car leaves the end of the assembly line is effectively the last time the manufacturer can touch that car. Sure, in a dealership, you can make changes and fixes, but that's it. And so, there are no opportunities for software changes without cost. There are no opportunities for hardware changes without cost. We don't want to do that; the auto industry never wants to do verification on the customer. Verification is to be done internally. And the customer expectations are: My car operates perfectly. I don't get the blue screen. When I'm crossing train tracks, everything works; my car doesn't stop. It reliably starts every single morning from minus 40 to plus 125 degrees. It is a very robust piece of equipment in a very difficult environment. That being said, are there things that we can do to improve the speed? So, within my career, a number of years ago, the product life cycle and product development life cycle was 60 months. It was five years. And so, this even predated the need for camouflage on vehicles because it took so long, you say, 'Hey, you can look at my car. We just know you can't catch up with it. And so, it doesn't really matter. I'll show you my car.' Between the beginning of my career, when it was 60+ months, and towards the end of my time, when I retired from Chrysler, it was much closer to 20 or 22 months. You know, to do that, the companies have become very efficient. You produce fewer cars. You play much more in the virtual world. You're doing CAD; you're doing virtual mock-up, digital mock-up assembly, you're staying in the virtual world as long as possible, getting everything right before you actually cut any steel and build cars. And so, this reduces the cost of building prototype cars, reduces the number of prototype cars, and it reduces your risk because you can iterate very rapidly in this virtual world. Does that solve all the problems? Not yet, but it's certainly reduced from 60 months to 22 months and is used by all automakers out there. Let's look at the second premise, which is that once a car leaves the assembly line, that's the last time the OEM can touch it without cost. That's changing now because of a couple of things we alluded to, whether it's over-the-air updates or some type of flash updates where you can, in fact, provide value and updated software to a vehicle, perhaps without the customer bringing it into a dealership. You know, they can hook up to their Wi-Fi, schedule the update at night, press accept, and you get this software update. This update could be a bug fix. It could be a feature enhancement. It could be a new feature. And so, you've created this opportunity that does a couple of things: one, it is not the last time I touched the car. I do have an opportunity to update or upgrade the car. I have the ability to take a little bit more risk during the development phase. Now, we can make mistakes if we're too loose with that policy. We end up having the customer discover problems, and you don't want to do that. So, you still want to ship a high-quality product. You just want to create the opportunity to add features later that might be interesting that you wouldn't have time for previously. So, that's a very interesting premise that can provide value to the customer. It does actually provide some speed in that the customer doesn't wait till the next generation of cars to get a particular feature; they may be able to enjoy it on their present version. But it does certainly require discipline. And so, one has to contemplate the fact that can I tolerate the bug on iOS X that is updatable two days later on iOS X plus one? Does the automotive customer feel the same way? And I'm not sure they're there yet, and maybe over time, they may be more tolerant of it. It certainly depends on the degree of the change and what type of fix occurs, but speed is really important. To make one more point, competition is tough. And so, no longer is GM competing only with Ford Chrysler or Stellantis. But you also have, along with the European manufacturers and the Japanese manufacturers, you have China. And China has significantly improved the quality of its products. If you go back 30 years ago and look at some of the Chinese imports that you saw at the Detroit auto show, your expectations were that they were cheap knockoffs, and that's what it was. If you look at the cars now, the craftsmanship is there. It's interesting, and it's competitive. For the automakers writ large, whether you're talking about North America or you talk about North America and Europe, there's big competition in China, and speed is part of the competition.

[00:23:06] Jan Griffiths: For me, it's about the people, it's about the networking, it's about the collaboration. And here we have, coming up very soon the CAR MBS conference in Traverse City. So, tell us, what do you have in store for us this year, Alan?

[00:23:21] Alan Amici: MBS will be August 5th through 8th in Traverse City, Michigan. This is at the Grand Traverse Resort. So, our theme is Engage, Embrace, and Embark. This is a bit of a refresh on MBS for us. So, with lots of support from the automotive OEMs. We have a lineup that's going to knock your socks off in terms of speakers. So, Mark Ruess, who's the president of General Motors, will be one of our keynote speakers. Joe Hinrichs, formerly the Chief Operating Officer at Ford Motor Company, now the CEO of CSX, will be a keynote speaker. Joe will have an interesting perspective. He was not only a customer of CSX, and now he's the CEO of CSX. So, he's been on both sides of that transportation question. We have Allan Swan, who's the president of Panasonic Energy, North America, and Robert Lee, the president of LG Energy, North America, will be keynote speakers. So, we've assembled a terrific lineup. We have speakers from Toyota, Honda, Rivian, the supply base: ZF, Eaton, and others, as well. We've created some new content also for MBS. So, there are two areas that we have that are new for MBS: one is for the Economic Development Corporation. So, we're going to have three roundtables on EDCs, and these will be Economic Development Corporations from around the country. So, Michigan, certainly, in the Great Lakes region of Ohio, Indiana, Illinois, and Kentucky, but also in the southeast from Georgia and Tennessee and other states. We're bringing these EDCs together into Traverse City, and we've created these three roundtables. We're going to bring in a speaker for each roundtable to talk about what's important for people and organizations that are looking for site selection. This is an opportunity for EDCs to hear firsthand what these folks are thinking about when they're looking for the right location for their battery plants or their assembly plant. That's one new piece of content for MBS. The second one is on Thursday; in partnership with the Alliance for Automotive Innovation, they are hosting a supply chain summit. So, this will be after Joe Henrich's keynote speech on Thursday; it'll be Thursday from 10 AM to about 2 PM for this summit. And so, they're going to talk about onshoring and reshoring and nearshoring and friendshoring, and how do you make supply chains more robust? And they'll be represented by some three federal agencies attending. It'll be the first time we've had this type of event specifically for supply chain. A couple of brand-new events that we're adding to MBS. We have some dynamite speakers, so it's going to have a slightly different look and feel. Of course, we have our golf outing that occurs on Monday at the beginning of the week, and Traverse City has been pretty good about having fabulous weather at the beginning of August. So, it's a great opportunity to make meaningful connections. It's somewhat of a captive audience. And we'll have our casino night and a variety of different networking events. So, fantastic events. We have a student program as well. We'll have approximately 40 students from universities in and around the Great Lakes area. I love for the students to be there. They get a great glimpse of what the automotive industry is like. How automotive conferences work. You get a little confidence going up to an executive, shaking their hands, and asking them about what they do and what they see. Come on up and join us for a good time to be had by all.

[00:26:52] Jan Griffiths: Well, and we'll drop a link in the show notes, of course, for the registration for the conference. And Carl, you and I are going to be there, aren't we?

[00:26:59] Carl Anthony: Yeah, I'm really excited. This will be my first MBS conference. So, I'm excited to see, and you sold the agenda wonderfully, Alan.

[00:27:09] Jan Griffiths: We're going to figure out, Carl and I, we're going to be grabbing people, literally, I will be running around like a lunatic, grabbing people that we think are interesting or have something interesting to say, and we'll be pulling them into the media room, and we'll be recording.

[00:27:23] Alan Amici: Good. Please do. And also, to your extended network, let folks know we'd like lots of people to attend MBS. It's really a special event and we have special speakers this year, too. So, come join us.

[00:27:34] Jan Griffiths: Okay, a great way to end. Alan, thank you for joining us.

[00:27:37] Alan Amici: Jan and Carl, it's been a pleasure. I hope we do it again soon.

[00:27:41] Jan Griffiths: All right. Carl, great working with you.

[00:27:43] Carl Anthony: Always a pleasure, Jan. And thank you, Alan. I look forward to seeing you in August.

[00:27:47] Alan Amici: Very good. Thanks, Carl.

[00:27:53] Jan Griffiths: Thank you for listening to the Automotive Leaders Podcast. Click the listen link in the show notes to subscribe for free on your platform of choice. And don't forget to download the 21 Traits of Authentic Leadership PDF by clicking on the link below. And remember, stay true to yourself, be you, and lead with Gravitas, the hallmark of authentic leadership.