Auto industry friend or foe? Amazon walks a thin line

SEATTLE — With its Alexa Auto in-vehicle assistant, its cloud platform and its growing investments in startups such as Rivian, Amazon's big push into the automotive industry has been met with a wary embrace.

Traditional automakers and suppliers are being cautious to avoid giving Amazon too much power as the company increasingly gets involved with in-vehicle technology, auto retailing and other aspects of their business. It's a push-and-pull that's happening as the technology and automotive industries face disruptive changes and size each other up as both partners and rivals.

Voice assistants such as Alexa pose a dilemma for automakers, which have had to decide whether to develop such features on their own, split the work with tech companies or cede the task to an Amazon or a Google.

"For a long time, we have had embedded voice [recognition] systems that have definitely needed an improvement," Jeff Hannah of SBD Automotive told Automotive News. Hannah is an analyst and director of the North America office for the automotive technology research company in Ann Arbor, Mich.

"Amazon Alexa and Google Assistant as well have both provided a connected solution to solve that problem," he said. "Most, if not all, of the automakers will embrace the strategy of looking outward to partners like Amazon or like Google to power their voice-rec solutions, and largely, that's due to the fact of the quality that both offer."

Amazon has gone beyond simply bringing its user-experience expertise to the auto industry. The company's investment in Rivian — including an order for 100,000 electric delivery vans — is another example of its growing competitive position. Amazon also has invested in self-driving car startup Aurora, which has gained much attention from automakers.

While automakers and suppliers are cognizant of their core competencies, they understand when to look to consumer electronics companies for expertise they simply don't have, said Brian Rhodes, automotive technology analyst for IHS Markit.

"Amazon's a single example. How many engineers do they have dedicated to that Alexa platform? They have this benefit of scale outside of the vehicle that you can't reasonably replicate inside a single automaker," Rhodes said. "And not only that — that's just pure r&d and functionality — but then we talk about all of the consumers and what they're using in their daily life."

By now, the industry knows Amazon's primary automotive offerings: In addition to its cloud platform, Amazon Web Services, the company has focused much of its automotive efforts on the Alexa assistant. So how does "Alexa, turn on the oven" translate to having a competitive advantage in automotive?

Many automakers allow customers to enable Alexa by using an aftermarket plug-in device or through other infotainment system applications. In September, General Motors became the first automaker to adopt full Alexa integration and said it would offer built-in Alexa Auto through the infotainment systems on all eligible Cadillac, Chevrolet, Buick and GMC vehicles starting early this year. Eligible vehicles are new 2020 models as well as 2018 and 2019 vehicles that can accommodate the over-the-air update.

At a media event in December in Seattle, Amazon showed how the built-in integration offers a more seamless user experience through the voice-command button on the steering wheel or an icon on the touch screen.

Then at CES in January in Las Vegas, Amazon announced expanded vehicle integrations of Alexa Auto, new in-vehicle Alexa features, partnerships on the Alexa Auto software development kit and the international rollout of the Alexa-enabled Echo Auto device.

Akshay Singh, automotive principal at consulting company PwC, said automakers are trying to figure out a model to make their relationships with tech giants work.

"If I'm a customer and I want Android Auto or Apple CarPlay on my vehicle, I would want the OEM to work with the tech companies to provide a solution," Singh said. "I think some OEMs have realized that some of these tech companies actually have the resources and the scale to develop the solution better than what these OEMs can do in-house."

Another Amazon access point is EB Guide, a human-machine interface development tool from German software supplier Elektrobit that expands Alexa's in-vehicle capabilities. It also puts a lot of control in the hands of Amazon and Elektrobit when it comes to implementing features automakers are willing to take risks on with autonomous vehicles.

For example, it enables the voice assistant to proactively engage with the driver in such vehicles, connecting data from the vehicle with the driver's user experience and home preferences. "Hello, I've calculated the route with the most autonomous driving time. I'll let you know when you can take your hands off the wheel," Alexa says through the Elektrobit integration.

"The voice service detected a different segment of the road and told you, 'Hey, this is an opportunity for you to enable autonomous mode,' " Ricardo Dematos, principal solutions architect for Alexa Auto, told reporters in Seattle. "Because not everybody knows everything about the vehicle and how to enable and disable things — sometimes that's kind of hidden — you can use voice to get more information about that."

Dematos said this concept gives drivers an earlier warning for when a route that allows for autonomous driving will end and the driver needs to take over.

"We allow OEMs to expose as much of the features as they feel like is appropriate for the type of car that they're implementing," Dematos said. "Because ultimately, we want the OEMs to own that side of the experience and only give to their drivers what they think is safe to do. Some OEMs are going to have different appetites for risk than others, and we'll support what they want to do."

Still, Singh said that these types of partnerships between automakers and tech companies are works in progress.

"The customer wants the OEMs and the tech companies to work together, but that relationship is evolving and at this point is not mature," Singh said. "OEMs really understand the vehicle environment, whereas tech companies are good at some of these technologies, so they really need to work together. These are not traditional automotive suppliers; they are still trying to figure out how the automotive industry works."

Yet many companies along the West Coast believe they can be bigger, better and faster than automotive experts in Detroit. Personal assistants are among the innovations Amazon and other technology companies are generally perceived as doing better than automakers. Tech companies tend to be more agile, attract more talent and more seamlessly integrate technology into a vehicle's user experience. So automakers increasingly are feeling the need to rely on these tech giants.

"Some OEMs are developing in parallel some sort of custom solutions to put this more into their own language," Hannah said. "BMW and Mercedes have both come out with their own virtual personal assistants, leveraging alternative partners to have an experience that's very consistent with their brand, maybe allows more car-based functionalities such as owner's manual commands and things very personal to their brands. Amazon and Google will allow automakers to do that as well, but I think there are a few OEMs who have hedged their bets, if you will."

BMW and Mercedes-Benz have developed their own solutions from scratch, while other automakers use either a combination of in-house and third-party solutions or just use the tech giants' offerings. The extent to which different solutions are used or combined depends on the automaker.

BMW, Ford Motor Co. and Toyota Motor Corp., for example, connect with Alexa via an app on the Apple or Android operating system rather than through the infotainment system. Lamborghini and Rivian, on the other hand, announced their exclusive use of Alexa at CES, while Volvo said it soon would use Google Assistant.

Some automakers — GM, Fiat Chrysler Automobiles, Porsche, Ford, Honda, Byton, Lamborghini, Rivian and Volvo — have announced plans to launch new voice-assistant solutions in various markets this year, according to SBD Automotive, in addition to their existing integrations.

FCA announced in January that its Uconnect 5 connected-vehicle platform will support the Amazon Alexa integration in its vehicles, which allows occupants to ask the assistant to do tasks such as play music, podcasts and audiobooks.

According to SBD Automotive, built-in connectivity is largely what is accelerating voice-assistant adoption, especially for the assistants developed by automakers.

But "OEMs are looking for small points of differentiation," Hannah said, "and if they see that their competitor has Amazon integration, for example, and they don't, obviously they're going to want to enable such a feature to not lose those customers."

Collection and ownership of the data created by these technologies creates another potential source of friction between the auto and tech industries, Rhodes said.

"We really have kind of two phases of tension," he said. "One is, if I'm an automaker, can I own the user experience? And I think what we're seeing in the market play out is, yes, you can still own it even if you integrate consumer electronics from mega companies because you're integrating in your own way.

"The other tension, which is much less settled, is who owns the data? What exactly are they asking for? And is this really the gold mine that people think it is? And if so, why would I let somebody else tap into that?"

The auto industry's hesitancy is heightened as companies witness how online shopping on Amazon.com has wracked traditional retailers.

Ned Curic, Amazon's vice president for Alexa Auto, said after a tour of the company's Seattle facilities that he understands the tension between automakers and big tech. But in Curic's eyes, the two sides aren't true rivals.

"You can't say — quite often I hear this expression — 'Well, tech companies are going to kill automotive.' It's, like, good luck," Curic said. "It's not going to happen because it's just difficult to build, produce reliable cars at the scale that they do. I have an utmost respect for car companies."

But, he added, "partnerships are important. They have been always important for the automotive industry. Now, they are looking for new partners and suppliers, and ... now they have to partner — they need to partner — with the likes of Amazon and others."