Traditional OEMs vs. startups: Report to cite strengths, weaknesses

An SAE white paper on the different engineering approaches taken by traditional automakers and recent arrivals indicates that each category is remarkably aware of the others' strengths and weaknesses.

Sven Beiker, a management lecturer at Stanford University, authored the report “Two Approaches to Mobility Engineering.” He gathered commentary from every corner of the vehicle ecosystem, from suppliers to software companies to manufacturers, and summarized the findings in a presentation at WCX 2024 in Detroit. Rather than “old companies,” Beiker likes to refer to traditional automakers as “incumbents.” Here are a few common observations from the report, which will be published this summer:

Newer players are better at simplifying complexity, such as Tesla's ability to build vehicles with fewer parts. Older automakers are better at managing complexity, such as integrating disparate systems.

Newer companies are constrained by financial resources and a shortage of available talent. Traditional companies are constrained by existing staff and “this is the way we've always done it” thinking and inflexible facilities.

Newer companies are good at innovation in the name of customer centricity. Incumbents are very good at creating and maintaining processes.