You probably remember one of Back to the Future’s most iconic quotes: “Roads? Where we’re going, we don’t need roads.” Let’s admit it. We’ve always been fascinated by the future of cars – and secretly hoped that cars would fly in 2020. Of course, flying cars haven’t materialized yet, but the future of mobility is quite exciting.
Even considering the impact COVID-19 will create, I’m confident the auto industry will soon be back on track with OEMs quickly responding to these dreary times. We’ve all learned from previous challenges like the 2008 recession, and we are in a better disaster recovery mode today than we were a decade ago.
Our financial systems are more resilient. Our consumers are better prepared. And our economies are stronger. Companies will rise to the challenge with a renewed focus on building comprehensive and proactive supply chains models, as well as exploring M&A opportunities that restore business, automation, and newer business models.
Additionally, these renewed businesses will serve as an accelerated segue into the future.
What is driving the future of mobility?
Consumer expectations drive technology innovation. The cars we see today, although loaded with technology, have limited end-user features – like parking assistance, remote start, and car analytics data. Owners seek more personalized experiences from their vehicle, as well as technology that makes transportation more sustainable and hassle-free. A recent study found an increasing trend toward shared mobility and autonomous vehicles. Ride sharing services are already capitalizing on this trend to offer self-drive rental subscriptions.
As consumer buying patterns change, the auto industry will become “Amazon-ized” or “Uber-ized” very soon!
There are four key trends driving the future of mobility:
Connected Experience (CV): The growth of connected things and the advent of commercial usage of 5G will drive huge change in the automotive industry. Vehicle data will make it possible for personal cars to have features like personalized infotainment. Meanwhile, commercial vehicles will gain productivity features like tracking, email on the go, and more.
Electric Vehicles (EV): The global wireless electric vehicle charging market was valued at $7.56 million in 2019, and it’s projected to reach $701.38 million by 2030, accounting for a 45.8% CAGR from 2020 to 2030. Governments, customers and OEMs are working together to grow the EV sector. Demand for these vehicles continues to grow. Policies being built up for electric vehicles. And OEMs continue focusing on added features, battery costs and new segments like commercial, individual hybrid, and EVs.
Self-driving cars (AV): Many players from hardware and software firms in the automotive industry have started investing in partnerships to move the autonomous industry forward. Japanese automaker Toyota Motor Corporation has partnered with Chinese autonomous driving startup Momenta to develop a high definition (HD) mapping platform in China for autonomous driving vehicles. And self-driving truck startup TuSimple is partnering with automotive supplier ZF to develop and produce autonomous vehicle technology – like sensors – on a commercial scale.
Shared Mobility (Smart Mobility): Newer spending generations like millennials have different spending preferences, and they’re influencing the way products and services are designed. The comfort and flexibility of shared mobility has eliminated the need for many to own a car. Services based on a sharing economy are perfectly aligned to these trends.
The technology enabling rapid automotive transformation
The automobile industry future largely depends on how judiciously and quickly OEMs shift from a factory mindset to Silicon Valley mindset. The winners will transform themselves from a motor company to mobility company – essentially shifting from the Internal Combustion Engines (ICE) to Electric Vehicles (EV) that are autonomous.
Most Detroit-based auto makers have already started their R&D initiatives in Silicon Valley. Others have acquired tech start-ups or collaborate with new, tech-savvy companies with aspirations of tapping the same future market. Examples of this include the Ford-VW BEV-MEB collaboration, the Ford/Argo/Autonomic/Pivotal investment, the GM-Lyft acquisition, and the FCA-Waymo cooperation.
As manufacturers continue to invest in technology, a number of innovations will take place. The winners (or survivors) will be those OEMs who can tap into the imagination of their future customers. Here are a few of those innovations:
Brand experience in the absence of the dealership: Customer profiling and business journey tracking will become more sophisticated. For example, following consumers’ information and preferences online will lead to enhanced brand experiences and a streamlined buying process. Dealerships may even cease to exist.
Wipro’s Designit helped Audi build ‘Audi City’, a brand experience digital showroom where interested buyers walk into a room with an Audi consultant and construct their personalized vehicle.
Servitization: OEMs will integrate software into cars, enabling services like enhanced connectivity (5G), traffic information, weather updates, possible hazards, coffee/tea stores (and coupons), hotel booking, ticket reservations, service due date alerts, appointments booking, media streaming, gaming, or even an entire office inside your car.
Most cars have sophisticated virtual assistants that are voice enabled and seem to know just about everything the user needs. There are many companies who are building Transportation-as-a-Service platforms that support route optimization, fleet management, location-based retail services, and more.
Data-led customer experience: OEMs will invest in a robust IT infrastructure to handle user data along with a sound Data Center or Cloud and Analytics/Prediction mechanism. This will lead OEMs to a new revenue stream of Data Economy, which can be used to provide customers with tailored product promotions, coupons, and overall advertisement space inside vehicles. Some OEMs may give a share of this profit to customers!
In the EV and AV sectors, there’s a need to infuse more technology in vehicles. For AVs, we already have pioneers like Tesla and Google working on accident-preventing algorithms, automated auto insurance, accident response, and more. And with technology and data becoming sophisticated, OEMs will also invest in resilient security systems.
The way forward for OEMs
OEMS, although bracing for disruption, can transform their core business with the help of intelligent, data-driven products and services, as well as strategically digitizing where possible. Here are the key areas they need to focus on:
- Knowing millennials and their preferences: The impact on the auto sector from Millennials could be as great as the impression Baby Boomers had on the industry in the 1980s, according to experts in a recent automotive report. Plus, the number of people who want EVs is increasing, as 41 percent of respondents interested in alternative technology. Reducing emissions and operating costs are the main reasons consumer preference is shifting around the globe.
- Implementing agile operations: Dealers, sales associates, operations personnel and back offices must invest in robust IT to keep systems seamlessly connected and resilient. IT infrastructure is the enabler of the most effective use of customer data and the backbone for vehicle data and insights.
- Forming a new automotive ecosystem: Build a collaborative ecosystem to test product features and get them to the customers faster. OEMs are collaborating with customers, technology partners, academia, and governments to build new mobility models and features.
5-point agenda for OEMs
- Attune to customer demands
- Realign existing infrastructure to prepare for agility
- Collaborate with other companies to create a tech-based ecosystem
- Move from motors to mobility – from a car seller to a service provider
- Become a solution provider for the transportation problem
Barring the hurdle that the pandemic has created, if you are in any way a part of the automotive industry, good times are on the horizon. But investing in the right technology and partner is crucial. Companies with resilient and sophisticated technology will be able to create a differentiation in the market and have a competitive advantage. So, start your journey now!