Automobile industry chain, "third party"

In the past few days, ZF and Microsoft have expanded their collaboration on digital transformation to create ZF Cloud, an integrated data and integration platform that will ultimately benefit all of ZF's production and operations, including Microsoft's Cloud business.

At first glance, this is very common industry news in the era of the new four modernizations of automobiles. But digging deeper reveals more about industry trends and how the relationship between tech companies, component suppliers and automakers is subtly changing.

Realising that they should not be defined simply as providers of hardware and physical components, a growing number of component makers see an opportunity to work with technology companies to expand into software. In the new era of software-defined cars, they have every opportunity to stand alone and offer automakers new businesses and services that are different from the past.

It also marks the emergence of a new power structure in the auto industry, in which the tech giants play a significant role in the industry chain, or even occupy a third seat. In the past, only automobile manufacturers and suppliers were the absolute protagonists in the whole industrial chain. They firmly occupied the only two seats, playing games with each other and supporting each other.

Why are tech companies like Microsoft and Google increasingly important to the entire automotive supply chain, as well as the process of designing and building vehicles? Because software platforms are already playing a crucial role in car manufacturing.

Suppliers also know to ride the wave.

As with ZF's deal with Microsoft, component suppliers are reaching out to tech companies to help them build core capabilities, such as autonomous driving, that are independent of carmakers.

In essence, this expands the possibilities for product innovation. The latest trend also shows how teaming up with technology companies can give component suppliers a new competitive edge, allowing them to shuffle their decks again in the face of new trends.

This has also led to another change.

The traditional boundaries between carmakers and suppliers are beginning to blur. The more collaborators and vertically integrated participants there are throughout the value chain, the more difficult it is to clearly define a participant as a supplier or technology company or OEM. The best case is Tesla. Is it an OEM? Or is it a technology company?

In recent months, by Mr Fu in the autopilot invested a lot of money on the business, the company management committee member Martin Fischer said, as the software vendors are increasingly turned to drive technology, as a traditional component manufacturers, in collaboration with other technology partners will become more and more important, software defined car, is an opportunity, But it is clear that neither side can do it alone.

Oems can't do it alone. Tech companies can't do it alone. Even component giants that could once have gone it alone, or built supply chain dominance through massive acquisitions and mergers, need the soft power tech brings.

Zf is not alone in reaching this conclusion.

Robert Bosch, the world's largest component maker, also said this year that it would work with Microsoft on an automotive software platform. Continental also recently signed an agreement with Horizon Robotics, a Chinese AI company, to use its AI technology in its driver assistance systems.

Carmakers are following the same path.

Volkswagen has partnered with Microsoft to provide cloud computing support for smart connectivity and autonomous driving. Ford partnered with Google to use its cloud technology and artificial intelligence systems; Similarly, BMW and Toyota have partnered with Amazon Web Services (AWS) to develop plans for connectivity, autonomous driving and sharing.

It can be seen that in the full swing of the transformation of the new four modernizations, the reshaping of the entire supply chain is not only the reform of battery and drive mode, but also the new pattern of collaboration and competition in the software field. More and more industry players have realized the importance of opening their minds and embracing change.