Truck Manufacturers and Suppliers Look to Startups for Tech Advantage

In search of cutting-edge innovations, older generation truck manufacturers and OEMs use specialized venture capital funds and direct investments to position themselves in small companies developing promising technologies and digital expertise.

Daimler, Michelin, and BorgWarner Inc. are among the leading truck manufacturers and suppliers to have taken the plunge, in an effort to leverage new relationships with small businesses in advancements that outpace – or at least follow – the competition. They are widely researched in areas such as peloton, automated driving fleet management, and electric powertrains.

Large companies seek the entrepreneurial spirit and dynamic approach that characterizes startups to infiltrate legacy organizations and cultures, broadening the horizons of senior management and making the entire company agile.

Almost all truck manufacturers recognize the importance of technological disruption these days and are responding to new imperatives that range from the advancement of automated driving technology to Tesla’s promise to make trucks as well as cars.

“The industry is undergoing massive disruption related to business models and new technologies,” said Quin Garcia, managing director of Autotech Ventures, a specialty venture capital firm based in Menlo Park, Calif. “They all want to take advantage of IT to streamline their businesses and to get cheaper electronics.

Much of the industry’s response has been to strengthen internal R&D capabilities.

“They’re trying to figure out where they can really challenge themselves to become more innovative and try to move forward,” said Russell Norris, national manager of transportation and logistics practices for consulting firm Grant. Thornton.

Paccar Inc., for example, will open a cutting-edge technology center in Silicon Valley later this year. Earlier this year, Cummins Inc., the major diesel engine maker, launched a new internal organization called the Digital Accelerator to streamline innovation in areas such as digital capabilities, data and analytics.

When it comes to looking outward for new technology, the truck manufacturing industry has lagged behind automakers such as General Motors Co. and Ford Motor Co. And so far, The business of truck manufacturers has been largely eclipsed by that of freight, Hot digital startups such as Peloton Technology, Convoy and Omnitracs have attracted Bill Gates of Microsoft Corp. and a lot of venture capital.

“Being much smaller than automakers, truck makers don’t really have the resources to invest in venture capital funds and other instruments,” said Tim Denoyer, analyst for ACT Research, a truck based in Columbus, Ind. – Industry consultant and data provider.

But a few truck manufacturers have created a vanguard. Volvo Venture Capital Group, owned by Volvo Trucks, has been investing in startups for several years. Daimler Trucks North America is looking for innovators in the fields of load brokerage, video security and big data.

Its actions include the investment in 2015 in Zonar Systems Inc., a telematics company that exploits data generated by engines, vehicle GPS systems and other on-board sources.

Zonal ecosystem. (Photo: Zonar)

By targeting investments, Daimler seeks cutting-edge technology as well as a “contextual awareness” possessed by the startup, Lori Heino-Royer, director of business innovation and program management office at Daimler, told North America Trucks. “We are looking to see if they truly understand not only their business model, but also the scalability of our industry and how they can differentiate themselves.”

Michelin has supplied heavy-duty tires for decades. Jean-Dominique Senard, its chief executive, believes the company must also look outside its walls to innovate, said Ralph Dimenna, COO of its Michelin Americas Truck Tires division.

“What we heard from our fleets is that they expected us to be more than just a tire supplier. They wanted to fit in with us so that we could take over more of the maintenance and management of their fleet, which is a problem for them, ”Dimenna told

In June, Michelin acquired US telematics provider NexTraq from Fleetcor Technologies Inc. This followed an earlier acquisition of Sascar Tecnologia Automotiva, a Brazilian fleet management company and the purchase of the fleet management business assets of Copiloto. Satelital, based in Mexico. Today, Michelin is looking for more start-up investments, particularly in the peloton and new powertrains.

Castrol, the UK-based lubricants brand owned by multinational oil and gas company BP, launched Castrol innoVentures a few years ago with the aim of investing and partnering with smart mobility companies and other emerging sectors. Its investments include a 50/50 joint venture with TechSolve Inc., a Cincinnati-based manufacturing consulting firm.

Today, more and more players in the manufacture and supply of trucks are stepping up. “Truck OEMs have really caught up in the last couple of years and are getting more and more aggressive,” said Garcia of Autotech Ventures.

BorgWarner, for example, which relies on truck components for about 13% of its revenue, recently invested in Autotech’s $ 120 million capital. inaugural ground transportation fund as well as dozens of other auto manufacturers, parts suppliers and more.

Rather than going it alone, “We wanted to find a way to effectively put a net around all the best and brightest ideas,” said Scott Gallett, vice president of marketing for BorgWarner. Autotech “has a deal flow that comes from all over the world, which makes it very effective for us. We don’t want surprises.

In addition to having a front-row seat when companies turn to Autotech, BorgWarner has the right to co-invest – or even put a startup aside for pure corporate investment – if Autotech decides the outfit isn’t. not suited to his business. – capital portfolio.

Many companies rely on another benefit of their closer encounters with startups: to shake up their own organizational status quo by copying what makes vibrant small businesses tick.

“We want to continue to challenge our own people to think a little differently,” said Gallett of BorgWarner.

Read more: Venture capitalists flock to truck tech startups

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