Why Israel is automotive tech’s global engine

Legend has it that the fiberglass shell of Autocars' Sussita, the symbol of Israel's brief flirtation with automotive manufacturing during the 1960s and 1970s, was considered a delicacy by the country's camels. While the story of hungry camels gnawing on cars was just a rumor, the first “blue and white” carmaker shuttered its manufacturing operations in 1981. Today, the modest Israeli vehicle manufacturing industry serves primarily military purposes. If local manufacturing failed to live up to carmakers' aspirations, Israel's emergence as a global engine of automotive technology has surpassed all expectations. Home to more than 500 transportation start-ups; innovation hubs established by many of the world's leading automobile manufacturers; and soaring investment, Israel has truly secured its place as a veritable driving force of automotive innovation. It has been a bumpy ride at times. Ill-fated Better Place, the electric vehicle start-up that promised to revolutionize the worldwide automotive industry, was liquidated in 2013 despite $850 million in investment. Yet just as the story of Better Place showcased the potential misfortune of Israel's automotive pioneering spirit, Intel's acquisition of Jerusalem-based vision technology start-up Mobileye for $15.3 billion in 2017 demonstrated the country's potential to succeed. The deal remains the largest “exit” by an Israeli start-up to date. According to Start-Up Nation Central, Israeli start-ups raised more than $750 million in funding last year, more than double the amount raised in 2014. Excelling in fields including autonomous mobility, e-mobility, smart mobility and vehicle technology, entrepreneurs have attracted the attention of the world's leading original equipment manufacturers (OEMs) and tier-one automotive suppliers. With no signs of Israeli innovation and foreign interest slowing down, what is the secret of Israel's automotive technology success? “The best way to exemplify Israeli culture – or any country's culture – is to simply drive on its roads,” Erez Dagan, executive vice-president of product and strategy at Mobileye, told The Jerusalem Post. “You can imagine the very socially aware and effective German driving culture, for example,” Dagan said. “That's something that can operate on a large scale, allowing for very organized road travel. In Israel, the high energy is such that you feel something that is more assertive and direct in nature.” “When it comes to having multiple and independent attempts to create economical value, which is the start-up culture, that's where you need greater energy and greater competition,” he said. “That's what I think makes Israel fit to be the spearhead of innovation in the automotive industry.” Mobileye executive vice-president of product and strategy Erez Dagan. (photo credit: MOBILEYE) Dagan, who joined Mobileye in 2003, is one of many Hebrew University of Jerusalem graduates currently working at the company, who all studied under Mobileye's celebrated founder Prof. Amnon Shashua. Santa Clara-headquartered Intel, Dagan said, is eager to maintain Mobileye's strong Jerusalem DNA. “We receive a huge amount of horsepower from Intel, setting us up when it comes to software and hardware resources – the bread and butter of Intel,” said Dagan. “There is a huge amount of autonomy in Professor Shashua's decision-making, leading the autonomous efforts inside of Intel.” As the global automotive industry increasingly focuses on data and communication technologies, traditional areas of strength for Israeli hi-tech, it is not surprising that the world's leading manufacturers have established a permanent presence in the country as they seek to secure early access to cutting-edge innovation. MANUFACTURERS WITH Tel Aviv-based innovation labs and research centers include American giants General Motors and the Ford Motor Company, the French-Japanese Renault-Nissan-Mitsubishi Alliance, South Korea's Hyundai Motors, German multinationals Daimler and Volkswagen, Sweden's Volvo, Michigan-based General Motors and high-performance car manufacturer Porsche. The Renault-Nissan-Mitsubishi Alliance, a strategic alliance between three manufacturers responsible for approximately one-in-nine car sales worldwide, inaugurated a joint innovation lab in June at Tel Aviv's Atidim Business Park. Tsuyoshi Yamaguchi, stands next to Tel Aviv mayor Ron Huldai and other officials as they cut a ribbon during the inauguration of Renault-Nissan-Mitsubishi's joint innovation lab in Tel Aviv, Israel. (Amir Cohen/Reuters) The 20-acre gated business area is home to CityZone, a smart city experiment zone established by the Tel Aviv Municipality, Atidim Business Park and Tel Aviv University, enabling early-stage start-ups to develop technologies and solutions relevant to the real needs of the modern city. “The automotive industry is moving away from classical cars and facing new challenges. Those challenges are mainly that cars are becoming increasingly electric, increasingly connected and increasingly autonomous,” Antoine Basseville, director of the Alliance Innovation Lab, told the Post. “All the carmakers, including the Alliance, are looking for new solutions. After early expeditions to the Israeli ecosystem, it was obvious that Israel is at the highest level regarding open innovation. Our minds should be open, too.” The innovation lab, currently testing and working on over 10 joint prototyping projects and Proof of Concepts (POCs) with Israeli start-ups, focuses on sensors for autonomous driving, cyber security and big data. The facility is the Alliance's third of its kind, complementing existing labs in Silicon Valley and Shanghai, and evaluates solutions on 10 test vehicles located in Israel. “Due to the large size of the Alliance – almost half a million employees in total – and the culture of the industry, it is difficult to be agile and to be ready to fail. Failing is maybe even considered a disaster. That's not at all the case in Israel,” said Basseville. “In addition to the technology, we need to train our minds so that we are not afraid to start from a small pitch deck, a few pictures or a dream. That's really helpful for us so that we can be more agile and be more open-minded.” In May 2018, the Volkswagen Group established Konnect, a Tel Aviv co-working campus providing dozens of local partners and start-ups direct access to the German multinational and its many subsidiaries. Stephanie Vox, the managing director of Konnect, told the Post that the automotive industry's transformation from a pure hardware manufacturer into a hardware, software and service provider requires finding both “the right technologies” and the “right skills with the right mindset.” The Israeli market, Vox said, offers both elements and is a driver of the Volkswagen Group's innovation efforts. “For us, in order to be continuously looking for new technologies and to be innovative, it is no doubt that we need to be in the center of the Start-up Nation,” said Vox. “OEMs are looking to learn from the Israeli start-up culture: find technology partners for testing, implementation and scaling.” “In order to achieve that, it is necessary to be on the ground with an Israeli team, to quickly identify new trends, speak to start-ups and be easily accessible for the Israeli ecosystem,” she said. “As a group representing 12 different brands, it is important to speak in one voice, align and learn from each other to be better coordinated and scale innovation topics.” IN ADDITION to establishing a permanent foothold offering early access to potential solutions, hardly a day goes by without Israeli entrepreneurs securing additional investment from the world's leading manufacturers. On Wednesday, Tel Aviv-based start-up TriEye announced that it had secured the backing of Porsche Ventures, the corporate venture capital unit of the German car manufacturer, for its short-wave infrared (SWIR) sensor technology. Toyoto, Volvo and Japanese automotive components manufacturer Denso have all secured investments in recent weeks. Last month, Israeli mobility venture fund Maniv Mobility secured $100m. in commitments to invest in early-stage start-ups in Israel and around the world, all working to accelerate the digitization of transportation. Among the strategic investors were 12 automotive and transportation industry corporates, including Alliance Ventures, BMW i Ventures, Hyundai Motor Group and Deutsche Bahn Digital Ventures. Danielle Holtz, head of business development at Maniv Mobility, told the Post that the unprecedented disruption currently affecting the automotive industry aligns very well with Israel's “core technology strengths.” “What's happening is that the vehicle is turning from a piece of metal on wheels to a digital platform. There's a huge shift from industrial production at scale to a digital platform,” said Holtz. “Israel's strengths are now relevant, and take a key part in this huge transformation that is happening in the global industry.” For giant carmakers lacking experience in developing in-house innovation, Holtz said, building alliances with large technology companies and partnering with start-ups enables them to remain at the cutting-edge of mobility developments. The development of Mobility-as-a-Service (MaaS) technologies, including Moovit, have accelerated in recent years as they do not require integration into vehicles. “There has been a lot of talk about whether the Israeli scene is a bubble, but we're over the hype now,” said Holtz. “Once you're over that hype, it is probably the best place that the sector can be. The real technologies are emerging and the stronger companies are surviving.”

Why Israel is automotive tech’s global engine

Leading carmakers realize Tel Aviv’s mobility tech hub is here to stay

The quiet path for Israeli companies to reach Nasdaq

Elon Musk loses lawsuit over OpenAI mission

Why Israel is automotive tech’s global engine

Leading carmakers realize Tel Aviv’s mobility tech hub is here to stay

See more on