How Amazon, Google, other hyperscalers are transforming the auto industry

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Volkswagen engineers working from home were presented with a challenge during the pandemic. The complex calculations and simulations needed to test and validate their developments could not be carried out using the hardware on their personal computers.

In addition, data couldn’t securely leave the controlled environment of Wolfsburg’s technical development center.
With the help of a solution developed by U.S. software developer Citrix, VW engineers were able to feed and extract huge amounts of data to the automaker’s servers via a fast, stable and remote connection over the Internet. According to an internal survey of 179 employees involved in the project, more than 80 percent enthusiastically embraced the process.

Cloud computing already runs everything from online shopping to streaming and gaming, but it is now expected to play a significant role for the auto industry as intelligent, automated data analytics become a central tool for managing all aspects of the business.

Automakers such as VW are employing the technology to crunch massive volumes of data without having to pay for the infrastructure needed to do the work. That is why they are turning to third-party specialists that operate data centers, often built at “hyperscale.”

“We are forecasting an explosion in demand for cloud computing resources in the automotive [sector] over the next five years,” said Jeff Hood, principal at Deloitte Consulting. The pace of growth will outstrip most other industries as manufacturers endow both their vehicles and their factories with Internet-connectivity, creating entirely new opportunities for the business.

In part that’s because automakers have some catching up to do: “They are adopting cloud [applications] later than in some other industries, such as financial services, technology and retail,” Hood said.

Manufacturers will be relying primarily on the three major global hyperscalers — Google Cloud, Microsoft Azure and Amazon Web Services (AWS). Other players include IBM. Meanwhile, Alibaba has grabbed the early lead in the hyperscaler sector in China, where domestic competitors include Huawei, Tencent and Baidu.

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