Deloitte Supplement - January 6, 2020 - D16

Industry 4.0 in automotive

Israel: Advancing the automotive sector
in the Fourth Industrial Revolution
By Lotan Levkowitz, partner, Grove Ventures and Yariv Lotan, head of strategic sector development,
Startup Nation Central
As manufacturing goes digital, automotive companies seeking to form strong, transformative, and
reliable Industry 4.0 partnerships may do well to look to Israel for opportunities. The country has more
than 240 Industry 4.0 startups-the second most in the world-with robust technical capabilities in a
wide range of disciplines, including cybersecurity, operations optimization, platforms and connectivity,
sensing and imaging, supply chain, maintenance, additive manufacturing, inspection, and testing. And
they have access to funding opportunities, with the government committed to investing the equivalent of
US$68.5 million between 2017 and 2021,1 and venture capitalists (VC) pumping more than US$6 billion in
2018 alone.2
Many Israeli startups have major automotive companies as partners and customers, including Ford,
Volkswagen, Porsche, Faurecia, and Lear Corporation. Moreover, the Israel's innovation hub' significant
impact on the global automotive sector is showcased by well-recognized success stories such as
Mobileye, bought by Intel for US$15.3 billion, and Waze, acquired by Google for more than US$1 billon.3
How can automotive companies engage Israeli startups?
* Define a precise business problem. Automakers should start by defining the exact business
challenges they would like to solve. Then, they can appoint a champion to lead manufacturing
digital transformation and help Israeli startups develop and apply the right tech capability to the
production environment.
* Map out pilot projects. Israeli startups that have brought value to multiple automotive companies
globally, such as Claroty, 3DSignals, and Inspekto, started their journeys with well-defined pilot
projects. It is recommended that, before diving into a new alliance, companies clearly define proof-ofvalue processes, onboarding processes, and key performance indicators.
* Develop a local presence. A local partner, such as a current ecosystem player, accelerator, or VC, can
help large multinational automotive companies bridge the gap between their culture and the pace and
the attitude of emerging startups. For example, Porsche established a local entity-Porsche Digital Lab
Tel Aviv-that assists it in scouting and interacting with cutting-edge Israeli startups.
In short, the Israeli Innovation Valley is at the forefront of creating technologies that can allow for a safer,
cleaner, and more efficient mobility experience. Companies looking to gain a competitive advantage
in the rapidly evolving global automotive landscape would do well to better understand the potential
benefits that Israeli startups can offer.

16
Deloitte Supplement - January 6, 2020

Table of Contents for the Digital Edition of Deloitte Supplement - January 6, 2020
