The key to success in the new automotive ecosystem is the right combination of digitization and business models at scale. While automotive OEMs are already well positioned to secure a lead, nimble startups are doing their best to besiege this emerging space.
Part 1 of our article presented autonomous mobility services as the key trends for growth in tomorrow’s auto markets. In this concluding segment, we extend our research to cover connectivity and electrified vehicles. We believe that these four key trends and opportunities can provide a solid business and technology foundation for system integrators, automotive OEMs and startups to extend their profitability beyond today’s scope of traditional car making.
1. Connectivity & Security
The US Department of Transportation wants to ensure that all light duty vehicles include standardized vehicle-to-vehicle (V2V) communications from as early as 2021. To avoid federal action, both automotive OEMs and infrastructure partners are working together to introduce a fully operational system of connected technologies. For instance, Ford SYNC technology allows drivers to voice control smartphone apps, remotely start the vehicle, unlock doors, check fuel level, etc. using a smartphone. That is just the beginning toward an integrated in-vehicle communication system, and the route to developing full-fledged V2V communication will only grow exponentially over time.
Implications and Opportunities
Unlike a traditional car, a self-driving car will be more dependent on connection from the outside. For example, the stop-and-go mode for a congested traffic situation relies on a healthy mix of V2V and V2X (with other vehicles, facilities and central ITS station)
Did you know?
Mercedes-Benz became the first motor vehicle manufacturer in the world to present V2V communication in commercial vehicles in 2017i. The vehicle has the capability to “spot” hazardous situations before they are perceived by the driver. This warns the driver and other road users well ahead of time.
Automotive OEMs can expect cost savings, particularly in R&D and materials procurement by “repurposing” platforms among themselves. AUTOSAR, for instance, can be adopted as a software development standardization initiative.
2. Electrified Vehicles
Governments worldwide are providing subsidies to the automotive sector to reduce fuel imports and improve air quality. With battery costs expected to decrease to around $150-$200 per kilowatt-hour over the next decade and the charging infrastructure continually evolving, the supply-demand dynamics will favor electric mobility in years to come.
Implications and Opportunities
OEMs and their associated ancillaries need to invest in electrification of the automotive power train. This, coupled with reducing battery costs can increase efficiency and improve driving range of electrified vehicles.
The increased adoption of electric vehicles will have to simultaneously accommodate the need for adequate charging infrastructure. Technology investments for wired (and eventually wireless) EV charging infrastructure make charging easier for EV owners, making it a win-win for OEMs to pursue their electric agenda further.
Going all out
Automotive OEMs are increasingly viewing themselves as technology and information companies as they embark into new technology and business models. Startups, meanwhile, are contributing a further step to ‘intelligent driving’. System integrators are facilitating ‘out of the box’ thinking by evolving existing business models around testing, qualification and certification of new products.
At Open Innovation, we have observed startups emerging in every single focal point highlighted in this paper. Our study leads us to believe that a combination of local market conditions and customer needs are propelling startup growth and associated technological developments more than ever before. The same focus should remain in the future, when we witness the launch of L4 autonomous vehicles in tight geo-fenced areas, like the launch of the world’s first public trial of self-driving car service by nuTonomy in Singapore in 2017. Further, we are seeing OEMs partner/invest or JV with interesting startups through incubating programs such as GM Ventures, BMW Start-up Garage, JLR Tech Incubator and Volvo ventureii. Continuing with the same example, nuTonomy has partnered with Jaguar Land Rover to operate self-driving cars in Michigan and the United Kingdom. This self-driving program is like the partnership between Uber and Volvo. In India, Hyundai and Maruti Suzuki are planning to expand their product offerings by introducing electric vehicles in India.
All this means that we will see more change in the next 10 years than we have in the last 50 years. Let us, therefore, buckle up and brace ourselves for the ride!