At the BMW Group Mobility Lab in Los Angeles on January 30th, TPR spoke with Dr. Thomas Becker, Vice President, Corporate Strategy, Sustainability and Mobility, at BMW Group, on the evolution of urban mobility and the BMW Group strategy for harnessing the value of customer choice to an vehicle manufacturer with a long tradition of engineering excellence. Underscoring the challenges of navigating fast-evolving customer preferences and dynamic marketplaces, where change is increasingly driven by decisionmaking at the local level, Dr. Becker points to the opportunity to be found in Los Angeles, with its near-unique abundance of resources and political will, to innovate and implement mobility solutions and provide a paradigm-shifting model for markets around the world.
Dr. Becker, you're here in Los Angeles with BMW looking at this Southern California metropolis as a “laboratory”. This isn’t your first probe into the urban car marketplace. You have been touring and listening, over the last few years, to learn about urban mobility and transportation challenges & trends globally. How has your thinking evolved since 2018? What have you learned from your customers & from city officials?
Dr. Thomas Becker: Things are fundamentally changing. Until a few years ago, you could be sure as a car maker that you had a reliable strategy if you met the regulatory requirements of the United States government, the State of California, or the European Commission. Apart from that, customers would use the vehicle the same way. You have the gray stuff on the ground and a piece of hardware that can go wherever and whenever the customer wants at no cost.
All of that is now changing. We see a landscape where cities are becoming the drivers of change with the framework conditions set—not by national government—but by local government, which impacts the choices of our customers much more heavily than ever before.
For example, in some places in Europe, people contemplate shutting down historic city centers and putting a price sticker on accessing the city. If you have an electric vehicle you park for free, but get charged heavily if you don’t. That means people buy different products, but not because we make different products or because the President of the United States requires them; mayors and city councils are driving those choices.
Being present locally, having an ear on the ground, and being in dialogue with those people who shape our customers’ future behavior is so hugely important for us. And Los Angeles—to be very clear about that—is not only our biggest market in the US, it is the city that everybody in the world associates with being built around the car. But namely what we see here is a big political determination to change mobility for the better and to reshape framework conditions. We absolutely want to be a part of that in order to be able to anticipate what's coming, but also to contribute to better solutions.
Address the challenges a global OEM like BMW faces adjusting to the decentralization of the policy frameworks that shape the consumer market for urban mobility.
That's a huge challenge. I know it’s a bit of an exaggeration, but many of us used to do things like in China, where there’s a big strategy revamp every four or five years. You look into what has happened, what needs to change, what needs to adjust, and what our way forward is, but that doesn't work anymore.
We need to constantly revisit the changes in our environment. We have to be attentive to the things that we did not anticipate. It's about the ability to respond quickly to things that you see happening when they happen. How we decide our future is changing because our environment is changing; both things belong together.
Elaborate on what are you observing/hearing in metropolitan Los Angeles that sets it apart from the other global, urban markets? What is its’ uniqueness?
There are several factors that come together here. Congestion is evident; at the same time, you have a very strong focus on equity.
Secondly, there is a very strong political will to change. Listening to Mayor Garcetti at VerdeXchange again reiterated the fact that he sees the city as a global actor when it comes climate change. This is the second dimension: the will to get something done.
The third factor that suddenly makes Los Angeles so important is the very high density of technological competence that you have here. If you look at the potential toolbox of modern, differentiated ways to manage transport, digitization and communication are key and a higher concentration of people who are really actively thinking about how to provide solutions for those huge challenges. That's pretty unique, and this is why we think that Los Angeles will play a very important role in shaping mobility globally.
The BMW Group offers global customers a wide array of “drive” choices. Share some context for the scope of BMW’s offerings and how they are evolving in response to today’s dynamic urban marketplace?
One of the things that challenges us globally is the fact that we have no certain pathway, for example, for the evolution of the drive. If you just look at European markets, in Norway, eight out of ten BMW customers go for an electric car, but in Italy, it's not even eight percent.
What we see is that we need to be able to supply very different customers—with very different needs and preferences—with the right product; we need to invest into flexibility. The first example of that you’ll see is our X3 Compact SAV, which will soon be available as diesel, petrol, plug-in hybrid, and battery electric.
Obviously, this means spending money that you wouldn't have to spend if you knew exactly what the future would look like, but as this is not the reality, we have to provide our customers with what we call the ‘power of choice’.
Share the challenge of advocating for the value of customer choice inside BMW Group, an engineering company with a long tradition of engineering excellence?
That is exactly one of the huge organizational challenges that we have. Engineering excellence is certainly one of the keys to a sustainable future. On the other hand, it must be combined with the ability to attentively listen and to really feel the changes in customers preferences before they materialize as vehicles not sold. This is the challenge that our new CEO is undertaking with clear, bold steps to have incorporate a permanent, strong radar listening into the world around us, interacting with people who can provide input and asking for feedback.
Address the role of autonomy and autonomous vehicles for the future of urban mobility.
There is a tendency in that debate to look at things from what people envisage to be this final scenario of the world in 2050 with everybody traveling in autonomous pods that buzz or fly around on the roads solving every problem in a fantastic new world.
Unfortunately, what matters for the job we do is not so much 2050, but 2020, 2025 and 2030. Why undertake all the effort to reach high levels of automation when there is already a big return possible in terms of safety and more fluid traffic by utilizing the full potential of connectivity that we have today? Level 3 —which may not be able to drive totally autonomously— provides significant benefits We are also looking at utilizing what is already tangible can get us from A to B faster, safely, and more smoothly.
All of that requires a very close collaboration as an industry between regulators and all the other corporate players involved—the TNCs, the companies providing the connectivity and 5G infrastructure. A lot of things and people need to come together and work together in order to get that done.
Speaking of collaboration, you've noted today in your remarks that public-private partnerships are possible in California, but perhaps not in Europe. What for BMW is the value of these public-private partnerships.
It's a mindset. In the many years that we as a company, and I myself, have been dealing with California and the institutions here, there is a strikingly low level of ideology; it's about getting things done and finding solutions. You don't have as many hidden agendas. This is the most open minded and also conceptually creative place that I know of.
Reflecting on your comments, it seems there is a globally significant competition of ideas on how government and economies should interact — between the ‘free-market West’ and ‘managed-economy China’. How significant for BMW is this contest of ideas? Who, in your opinion, will win?
There are two different models that have been evolving. In the US, and namely on the West Coast, the impulse is for change to come from the corporate sector— from technology, from universities, from innovation. Policymakers then respond to the change. If ride hailing negatively impacts public transport, governments will respond to that with technical regulation or taxes. This is how it's playing out here in the US.
If you look at China, it’s a totally different situation. Political guidance and objectives delegate parts of the overall plan to an industrial base. Here, it's bottom up; the Chinese model is more top down. The toolbox of intervention is bigger, but the guiding principles of the political system are also very different.
I'm really concerned that Europe has neither of those two models and is still struggling between both perspectives. Therefore, as a global company, it is hugely important to listen to all those developments and be very closely in touch with the people who shape conditions both in China and the US.
Dr. Becker, while you’re personally returning this week to Germany, BMW Group has an established presence in the West Coast and intentions to grow this footprint….why is BMW Group so engaged in CA?
There are not many places where you can see things happening before they happen like you can here—but it really requires you to be here, to talk to people, to network, to understand what is happening, and to offer collaboration to those who want to drive things forward. Therefore, both from the point of view of gathering valid input for strategic thinking, as well as to really understand what's ahead for our customers, we think it's worth it to be here and be part of the community. Although the challenges here are enormous, so are all the opportunities and the likelihood that something that works here could work elsewhere; this could be a model for other places.