Israel becomes latest hotbed for auto tech

TEL AVIV, Israel — Around the time General Motors was killing brands, slashing jobs and closing plants as it spiraled toward bankruptcy, its top executives placed a bet on a little-known corner of the automotive world that's now paying dividends.

GM opened a technical center in the Israeli coastal city of Herzliya in 2008, a year before its Chapter 11 reorganization, becoming the first major automaker to secure a foothold in what's become an oasis for mobility startups on a par with Silicon Valley.

"They understood this was the future of the company," Gil Golan, a GM lifer who lobbied for the Advanced Technical Center and now is its executive director, said in an interview. "It was like a baby."

Since GM, dozens of automakers and Tier 1 suppliers — including BMW, Hyundai, Bosch and Lear — have opened similar centers in Israel to tap into the talent here. Ford Motor, which acquired Israeli computer vision company SAIPS in 2016, formally opened its own r&d center in Tel Aviv last week.

The boom is driven by culture and necessity.

Near-universal conscription into the Israel Defense Forces has instilled a sense of maturity and leadership among Israeli entrepreneurs. And many autonomous technologies, from cybersecurity systems to radar and lidar sensors, have their roots in military applications.

The culture that encourages risk- taking, local leaders say, stems from a historical lack of natural resources and an ingrained belief that Israelis can overcome challenges by creating something where nothing exists.

"We go after the impossible," Golan said. "This is how we're educated from childhood."

While the country produces talent in multiple areas, the auto industry has become a major player in recent years.

Since 2013, some $6 billion has been invested in high-tech mobility startups, according to data from EcoMotion, a nonprofit that launched an annual mobility conference in Tel Aviv that year. Since then, the number of mobility startups has exploded to 644 from 87, organizers say. They make up about 10 percent of the country's total startups.

"We're becoming this mobility hub that everyone comes to brainstorm, test and develop," Orlie Dahan, EcoMotion's executive director, told Automotive News. "You can Skype and fly in from time to time, but there's nothing like being close and on the ground."

That's the message Golan lobbied to GM's top brass even as the company hemorrhaged cash in the depths of the Great Recession.

The automaker had been scouting in the region since the late 1990s, but having a physical presence before many competitors helped GM attract top talent — and keep it after rivals followed suit.

The site today has roughly 350 employees — mostly computer scientists and electrical engineers — in 50,000 square feet of office space. It expanded to a second location a few blocks away in late 2017.

The new building features a trendy ground-floor cafeteria and two levels of open office space. Meeting rooms bear the names of famous inventors, including da Vinci, Newton and Curie.

The site is next to offices for 1,700 employees of Apple, near Amazon and about half a mile from Microsoft, all of which are looking for similar talent, Golan said.

GM workers there help develop sensor hardware and are directly responsible for multiple innovations in vehicles today, including a map on the myChevrolet app for users of the Bolt electric vehicle that shows how far the car can take them and nearby charger locations. The team also was responsible for the OnStar app interface in Europe.

"This is my startup," Golan said of the company's Israel operations. "I'm building something from scratch. The auto industry has a great story to tell. We're impacting society, and [workers] want to be part of something big."

Ford now hopes to replicate that success. The automaker has been scouting Israel for talent throughout the last decade, but last week, it committed more firmly with a research center here.

Ford Research Center, Israel is next to offices for SAIPS, and together, the two take up roughly 5,000 square feet, according to Udy Danino, SAIPS' founder and CEO.

Executive Chairman Bill Ford attended the center's ribbon-cutting along with his family, including his son Will, who works at Fontinalis Partners, a venture capital firm the elder Ford started in 2009 to invest in promising startups.

Bill Ford said it's important for the automaker to have a permanent presence in the country.

"Ford needs to cast our net as wide as we can and to reach innovators wherever they are," he told Automotive News. "Israel is such a hotbed of innovation right now. We need to stay very close to the ecosystem that's developed here."

The center's research will focus on interior monitoring, sensors, over-the-air updates, cybersecurity and autonomous technology. It will work closely with other Ford sites around the globe.

It will be staffed by 10 to 12 employees to start, Bill Ford said, but that number should grow, just as the company has boosted its employment in Palo Alto, California, to 250 employees since planting a flag there in 2015.

"It will, importantly, provide an access point for all these entrepreneurs to be able to find Ford Motor," he said. "Somebody can become an advocate, then, in our system and get them to the right people and make sure their voice isn't lost."

Bill Ford's visit last week was his first to Israel. He swam in the Dead Sea, hiked the ancient Masada mountaintop fortress and toured the Golan Heights region. He planned to visit Jerusalem after attending the r&d center opening.

He said he admired the country's ability to innovate through struggles, whether crafting unique irrigation systems in a desert climate or adopting top-notch military practices because of constant tensions in the region.

"They keep running into obstacles, either natural or man-made, and they keep solving their problems," Ford said. "It's not surprising that kind of creativity and brainpower has the ability to change our industry and many other industries as well."

Ford Motor's history makes the company's arrival in Israel particularly notable. Founder Henry Ford was known to espouse anti-Semitic views, although Bill Ford, his great-grandson, has supported a number of Jewish causes.

The automaker was the only sponsor of the 1997 NBC commercial-free broadcast of Schindler's List, and Ford has donated to and supported filmmaker Steven Spielberg's USC Shoah Foundation. Bill Ford received the organization's Ambassador for Humanity Award in 2015.

The auto industry faces a unique set of challenges, especially in densely populated cities such as Tel Aviv. Side streets are clogged with cars parked on both shoulders, leaving narrow driving corridors. Bicycles, electric scooters and mopeds are ubiquitous, and parking is so scarce that the local government operates a large lot on the city's outskirts where commuters can board free buses to central points.

Solving congestion was one of the many topics that startups at the 2019 EcoMotion conference last week tried to address, along with medical transportation, vehicle maintenance and noise cancellation, among others.

"It's in our DNA," Dahan said of innovation. "It's being fearless of failing."

EcoMotion, run by a joint venture between the Israeli government and the nonprofit Israel Innovation Institute, has grown rapidly since its inception in 2013.

There were 4,000 attendees at this year's event. In addition to Bill Ford, speakers included government officials, a vice president at the Bird scooter company and former Ford CEO Mark Fields.

For the first time, the North American International Auto Show in Detroit sent a representative as part of a Michigan delegation to explore partnership opportunities.

To kick off the event, organizers allowed anyone to come up to the main stage, grab the mic and make a 15-second pitch to the crowd. A line wrapped around the stage with dozens, if not hundreds, of startups offering mobility-related products.

"I'm not a prophet; I can't tell you when autonomous vehicles will be on the road," Dahan said. "What I can tell you is that every autonomous vehicle will have some kind of Israeli tech on it."