Back in 2023, BMW was widely panned for its plan to offer heated seats as a paid subscription.
Steve Basra, Google Cloud’s global head of automotive, believes that the tides have turned since then on what consumers are willing to pay extra for, upending automakers’ plans to create new subscription-based revenue streams.
“Subscription fatigue is definitely a real thing after Covid,” Basra said. “Customers are less willing to pay for things that they believe they should just get when they buy the second most expensive thing in their life.” After a home, that would be a new vehicle, which costs an average of nearly $50,000 in today’s market.
But Basra is bullish on automakers using AI to personalize and improve the in-vehicle experience, thereby creating a value proposition consumers can’t deny.
“A lot of the transformation hasn’t been achieved, and I think AI is the one technology that is going to transform the industry,” Basra said of the industry’s long-hyped transition to EVs and software-defined vehicles, “whether they want to or not.”
Tech Brew recently caught up with Basra, an auto industry veteran who spent 25 years at Toyota, at Google’s Detroit office, where he explained how Google Cloud is helping automotive clients implement AI across their value chains.
Product development: The auto industry’s product planning and development cycles are notoriously long, historically taking several years to bring a new vehicle to market. This is one area where Basra pointed to the potential for AI to help automakers save time and money, citing EV battery research as an example.
“When you get a direction from the company that says, ‘We want to start working on the next generation of EV batteries,’ the first step [is] a lot of research. What are the Chinese doing? What are other competitors doing? What are the latest technologies? What are the latest patents? That can take a lot of time,” he said.
Google Cloud offers its Gemini Deep Research agentic AI, which Basra said can collect, collate, and summarize data in ways he claimed could cut research time down by months.
Manufacturing: The US auto industry collectively spends tens of billions of dollars per year on warranty claims. This nagging issue is another opportunity, as Basra sees it, for AI to help reduce costs.
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Google Cloud’s Manufacturing Data Engine tool connects factory floors with the cloud, which Basra said can help automakers catch issues like battery defects and paint anomalies before vehicles get shipped out.
“Using vision systems at the point of manufacturing to make sure that the batteries are manufactured in the correct way is one area that we’re investigating with an OEM,” he said.
As Tech Brew previously reported, manufacturers like GM say they’re implementing AI to make their plants safer and more efficient, and to improve quality. One representative application uses AI to inspect weld and paint jobs.
In the vehicle: Then, of course, there are the customer-facing AI use cases. Google Cloud’s Automotive AI Agent is being used by automakers including Mercedes-Benz to improve voice control and act as in-vehicle assistants.
Google Cloud revealed the product in January, describing it as “a new way for automakers to create helpful generative AI experiences” and to let automakers “create highly personalized and intuitive in-car agents that go beyond current vehicle voice control.”
And last year, Volkswagen announced that, in partnership with Google Cloud, it was introducing a GenAI-powered virtual assistant designed to give drivers “intuitive access to critical vehicle information and services.”
Basra posited that an AI agent could improve the in-vehicle experience for drivers, for example, by automatically opening the trunk when they approach with shopping bags in hand or notifying someone they’re meeting for lunch that they’ve hit traffic and are going to be late.
“You’ve got an assistant that sits with you in the car, that takes care of all that hassle,” he said. “That is the experience, I believe, that people want, and that’s the experience they expect from these agents.”
The transition to EVs and software-defined vehicles may be taking longer than expected, but Basra said he views AI as something that will force legacy automakers to catch up.
“I think without AI, they would have really struggled against the Chinese OEMs and the new OEMs that are coming in,” Basra said. “This gives them the opportunity to compete with these companies.”