The international consultancy firm analyzes how Israel has positioned itself at the forefront of the driverless car revolution.

New smart car research, published by Roland Berger, one of the world's largest international consultancy firms, focuses specifically on Israel's role in the smart car revolution, and is even named Israel's Automotive & Smart Mobility Industry.

Imagine a future, not far from now, let's say in ten years, in which tens and hundreds of millions of people living in the world's large cities will not have to use their private cars at all. They will have to press a button and within minutes a smart autonomous car will appear at their very doorstep, with or without the 'supervision' of a human driver. The car will take them to their destination via the shortest route, cheaply and with no air pollution. 

Many of the advanced technologies integrated in these smart vehicles are being developed in Israel, or at least by companies with Israeli origins. The list includes the 'eyes' or the sensors that enable the car to detect its surroundings and avoid trouble; the algorithms, which enable the car's brain to 'deep learn' unexpected situations; the 'nerve system' which rapidly transfers a huge volume of data between systems; the car's cyber protection; communications with other cars and the road infrastructure; electric propulsion components and more. All of it is produced in Israel.

"Oh well," you will probably say, "these days it is difficult to tell visionaries from day-dreamers and imagination from reality. We have already seen how enthusiastic entrepreneurs failed to convince clients to use an innovative product which they don't really need. And besides that, the established car industry will not let this happen - just as the oil industry has effectively blocked the development of oil alternatives."

Development at a brisk pace

But at least in the case of smart cars, technological vision and real business development seem to go hand in hand, at a pace that surprises even optimists, not to mention cynics. Here is one example: last week the Volkswagen Corporation announced the founding of a new brand at an investment of hundreds of millions of euros. The brand, named MOIA, will focus on cooperative transportation and become Uber's direct competitor.

Its operations will include huge transport car fleets, which will of course be manufactured by Volkswagen; they will be accessible to subscribers via an application and will enable random groups of people travelling to the same destination to share fares. Volkswagen has already signed an agreement with the municipalities of some large European cities and intends to expand operations to dozens of additional locations worldwide. It intends to gradually focus on smart cars with full or partial electric propulsion and adopt autonomous capabilities. MOIA's headquarters will be in Berlin. Israel was not mentioned in the announcement, but the technology of this new global brand is based on the technology of Israeli taxi hailing and delivery service Gett, in which Volkswagen invested hundreds of millions of dollars this year.

And here is another example: last week the US authorities reported that they are in the midst of an advanced regulatory process that will require automakers to equip new cars with automatic vehicle-to-vehicle (V2V) and vehicle-to-road infrastructure (V2I) communications systems. This development alone could help Israeli companies, such as Autotalks, who have presented relevant advanced technologies in the past few years, to add some zeroes to their value.

Roland Berger's research was conducted with assistance from the Israel Export and International Cooperation Institute and included, among other things, interviews with dozens of industry companies, in Israel and abroad. It provides an across-the-board picture of Israel's unique contribution to the evolution of future smart cars and accompanying venture capital operations.

Some interesting figures provide the basic information: there are over 500 local companies devoted to various aspects of the smart car industry, a minority of independent veteran companies and a majority of startups at various financing stages.

About 15% of these companies operate in the field of electric cars and auxiliary technologies, 17% develop autonomous driving technologies and auxiliary technologies such as sensors, software and more, and 40% focus on smart transportation, whether on hardware, software or entire smart car prototypes. The rest of the companies deal with the development and production of car industry spare parts; only a few years ago, this was the main field of local operations.

And here is another interesting figure: Israeli smart transportation companies have raised over $1.6 billion in the past few years, most of its from foreign investors.

Israel as a guinea pig

This dramatic activity takes place in a country defined by the research as "having a limited car market, with no local car manufacture. and indigenous production capabilities of only standard car components. This forces all high tech products to be export-oriented from the very start, as part of their strategy. For some companies, however, particularly those providing end-user software solutions (for example, applications), the small Israeli market provides a good sandbox where they can generate a working product, which can then be easily exported to key target markets. In a nutshell, Israel's drivers and roads might not be a source of significant revenue or business for advanced car technologies, but they certainly make good guinea pigs. Just ask Mobileye(NYSE: MBLY).

The authors of the research had tried to pinpoint how Israel turned into a smart transportation hub, and reached a conclusion which sounds somewhat anthropological, but would be familiar to Israelis. "The business culture is direct and somewhat confrontational; people are trained in out-of-the-box thinking during their military service and develop a robust attitude towards failure and risk-taking. This combination of characteristics, alongside a very large skilled workforce pool - the ratio of engineers in the population is one of the world's highest - results in a fast speed of business."

The research does not fail to mention the current tendency of clients - both carmakers and technology suppliers - to come closer to the knowledge and develop direct operations in Israel: "In addition to the active startup scene, which has acquired substantial experience with smart transportation solutions in the past few years, carmakers are also transferring their innovation centers to Israel. The movement generates a market potential and opportunities for both startup companies and well-established companies." At the same time, "Israel's smart car industry is developing into an 'innovation lab' for the global car industry in fields such as electric population, autonomous propulsion cars and smart transportation."

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