Issue: Jun 2009


The Global Hybrid Cooperation: Competitors Partner for Innovation in Automotive



by Michael Burkett and Jane Barrett

The Global Hybrid Cooperation development effort was established by Daimler AG, Chrysler, General Motors (GM), and BMW in order to build next-generation, hybrid powertrain technology. AMR Research recently spoke with leaders from Daimler to understand both the opportunities and challenges of putting such a cooperative effort in place. 

The recent turmoil in the global economy is hitting all industry sectors, with the automotive industry experiencing its own share of disruption. Adding to the financial challenges is the need to invest in R&D of new technology to meet the demand for improved fuel efficiency and environmentally friendly vehicles. One creative approach is the Hybrid Development Center (HDC) in Troy, Michigan, created by the Global Hybrid Cooperation development effort between Daimler AG, Chrysler, General Motors (GM), and BMW to build next-generation, hybrid powertrain technology. AMR Research recently spoke with leaders from Daimler to understand both the opportunities and challenges of putting such a cooperative effort in place.
Demand grows for the next hybrid powertrain technology 

The market share for hybrid gas-electric vehicles is forecast to grow from 2.8% in 2008 to 5.3% in 2012, according to automotive market intelligence firm R.L. Polk & Co. This demand, combined with formidable competition from Toyota and Honda, has spurred the unique cooperative agreement between the four automotive competitors. All have agreed to share the costs for developing hybrid powertrains, which will have common characteristics, but will differentiate according to the needs of each vehicle brand. 

The HDC began with discussions in 2004, initially operated by then DaimlerChrysler and GM, and later joined by BMW. The facility has a shared development space for all partners as well as dedicated locations restricted to each individual company. Over 500 engineers are working together to develop a two-mode hybrid technology powertrain. The challenge is to provide a set of hardware and software components that tackles competing vehicle targets successfully, spanning a spectrum of needs—from the torque requirements of trucks, to the performance needs of a luxury sedan. 

Organizing for cooperative development among industry competitors
Sharing product development across competitors presents its challenges and must be managed carefully. Daimler has a manager of cooperation responsible for supporting this cross-company process by providing input on strategy, negotiating agreements, and implementing contracts with engineering. Each manufacturing partner has a similar role within their organization. A steering committee with director-level representation from each manufacturer provides governance over the relationships. 

There are separate agreements to develop three core types of powertrains: truck, luxury, and front-wheel drive. A separate chief engineer is assigned to each program, with leadership coming from the manufacturer with the deepest interest or domain experience for a given program (for example, GM will lead the development of the truck hybrid powertrain and Daimler the luxury program). Although the core platform will be common, it will be calibrated to the unique requirements of the vehicle brand. BMW may choose gear shifting suited to high-performance driving, while Daimler may choose smoother gear shifting better suited to a luxury vehicle. Requirements and trade-offs for the core platform were negotiated and specified by all participants, with testing and feedback provided by each manufacturer for improvement. Engineers are co-located by work function such as software, hardware, or electronic design. 

The group has a joint sourcing committee to qualify suppliers and generate initial quotes, but purchasing contracts are done by individual companies directly with suppliers, with pricing varying by actual volumes. Joint sourcing remains a complicated area that continues to evolve. 

Establish an IT infrastructure to support the design teams 

Each manufacturer uses its own IT infrastructure for product development based on the program it’s leading. Daimler is the program lead for luxury vehicles, using its internal SMARAGD product data management (PDM) environment built on an early version of SDRC’s Metaphase (now Siemens PLM’s Teamcenter) and Dassault Systemes’ CATIA V5 for CAD. T-Systems is the service provider responsible for operating the SMARAGD and CATIA environment globally for the company, providing all support, updates, and training. T-Systems was a natural partner on the project, thanks to its multi-year relationship supporting the Daimler design environment.
Integration to other partners differs based on design environment and needs. GM, for example, doesn’t have direct access to SAMARAGD. Instead, the company places an RFI that’s later sent and translated through a third-party application from the CATIA format to the Siemens NX format it uses. GM uses Siemens PLM’s Teamcenter for product data management, which is used to manage data for the truck version of the hybrid powertrain. The HDC programs remain on separate PDM systems; integration between these different applications remains a challenge.
Lessons for co-opetition in new product development 

Tackling a joint product development project across competing companies is a daunting task the HDC members have successfully executed thus far. The first hybrid two-mode powertrains are now in production and available on several vehicles, including the GM Tahoe and Escalade trucks, the Chrysler Aspen minivan, and the Dodge Durango truck. Daimler and BMW will make hybrid powertrains available on 2009 vehicles. The program continues to improve as product moves from development into production vehicles. 

Here are a few lessons noted by the Daimler team: 

• This is more than an engineering relationship, and it can’t be accomplished without board-level commitment. 

• Be prepared for contracts to expand as other systems become involved through development, such as power steering. 

• Cooperation managers help to bring the different parties together as the team evolves through a large learning process. Think through not only goals, but how to get through difficult times. 

• Think about what to do after the product is in the market. Start to scope the second-generation product and define rules for product support and engineering changes. 

• Define the IT infrastructure to support the process and integration or access points by partners. A common environment is helpful within a single development program.
We look forward to your ideas and feedback—mburkett@amrresearch.com and jbarrett@amrresearch.com.


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