Why Automakers Need to Change the Way They’re Structured

Can legacy automakers develop software-defined electric cars with their current corporate structures?

Maybe, maybe not. This is a hot topic in management circles. But so far, for the most part, it’s just talk. With one exception, none of them is making big changes. C-suite execs are worried about creating chaos with the operations they’ve got.

Software-defined cars and skateboard-based BEVs are shaking up the old way of doing things. And it’s likely going to force OEMs to change their corporate structures, especially in their engineering departments.

For the most part, legacy engineering operations are organized around specific parts of a vehicle: powertrain, chassis, interior, body, electric/electronic. Each of those departments is further divided into specific subsets. For example, powertrain is subdivided into fuel systems, exhaust systems, electronic controls, etc.

This kind of organizational structure worked well until the industry recently entered the era of the software-defined car. And then Tesla showed everyone the cost and efficiency advantages of approaching car design from a total-systems standpoint. But legacy engineering departments are organized in silos that are not set up to do total-systems engineering, or at least not efficiently.

By all reports, Tesla starts designing new vehicles by first developing the electronic architecture. Once it decides how software will control every aspect of a vehicle, it begins to design the vehicle around that. That’s not how legacy OEMs do it.

Historically, the physical structure of a car was determined by how the designers wanted to style it, or by the interior dimensions they wanted to provide to the occupants. Over the years, as engineers came up with new features such as power windows, cruise control or air conditioning, they were bolted onto the car and connected with wires to a switch and power source. As more and more features were added, wiring harnesses began to grow in size and weight.

With the advent of computers in cars, automakers began grouping components into what are commonly called domains. Each domain was centered around a given function, such as engine controllers or brake controllers. And they organized their engineering departments around these domains, which is how most legacy automakers are organized today.

But domain computing caused wiring harnesses to explode in size, weight and cost. The typical car today has well over a mile of expensive copper wiring and a wire harness that weighs over 100 lbs. (46 kg). It’s like carrying an extra passenger around. And lugging around excess weight drags down the driving range of electric vehicles. Moreover, all that wiring requires multitudes of connectors, and connectors are one of the highest warranty items on a car.

So now the legacy automakers are moving to what is commonly called zone computing. Each zone corresponds to the physical layout of a car. You have a front-left zone, a middle-left front and a rear-left zone, and you have their mirror opposites on the other side of the car.

By arranging computing and components by zone, automakers can greatly reduce the amount of wiring they need. The wiring becomes a lot shorter and that saves weight and cost. But to do this efficiently means engineering departments ideally should be organized by zone, not by domain.

And then there’s another step beyond that, what they call centralized computing. That’s where almost all the computing is done with a couple of powerful microprocessors instead of a handful of zone computers strung around the vehicle. Not surprisingly, Tesla pioneered centralized computing, and it also has the simplest, lightest, cheapest wiring harnesses in the industry.

Electronic architectures are not the only reason why legacy automakers will have to change their organizational structure. BEVs that are built on a skateboard chassis are another. The best way to optimize the design of a BEV is with a total-systems approach. Engineering departments that are organized in separate silos are not efficiently set up for systems engineering.

So far Ford is the only legacy automaker that has announced it will change its corporate structure. All its ICE operations will be put under what it calls Ford Blue. All the BEV operations are going into what they call Ford Model E. Renault is talking about doing something similar.

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But as they get deeper into this whole concept of the software-defined vehicle, more legacy automakers are likely to conclude they need to change their organizational structure. And I don’t think it’s going to take very long for us to see this happen. To paraphrase an old song, when it comes to corporate structures, we’re on the eve of disruption.  

John McElroy (pictured above, left) is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit.