A NEW FUTURE OF THE AUTOMOTIVE INDUSTRY

Technology is paving the way for a new future of the automotive industry. In recent years, major technology companies, beyond trendy names like Tesla and Google, has worked closely with automotive industrials to deliver the most advanced vehicles ever.

A NEW FUTURE OF THE AUTOMOTIVE INDUSTRY

Digitization, automation, big data and artificial intelligence are revolutionizing industry players’ responses.

These forces are giving birth to four disruptive technology-driven trends in the automotive sector :

1- Autonomous driving

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When it comes to developing self-driven technology, companies such as Apple, Facebook, Google, Microsoft and Samsung are strongly poised.

They have been investing in Virtual Reality, developing their own mapping applications and extending battery life through software and hardware management.

This provides these companies with additional advantages for self-driven technology.

Five years ago, autonomous driving was  « maybe possible»  Then it became « defintely possible »

 Nowadays it is «inescapable »

The path to autonomous driving begins with driver assisted technologies including mapping, back and front cameras, self parking, automatic braking sensors, motorway lane sensors and adaptive cruise control.

Several cars have already developed those capabilities.

With the future, self-driving vehicles appears to be the new automotive industry standard.

2- Electrification

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Since the United Nations climate change convention in 1992, there is a general agreement on the responsibility to reduce emissions. At the forefront of the fuel-efficiency movement, Tesla released a slew of electric and hybrid vehicles, followed by VWGeneral Motors (Cadillac, Ford, Chevrolet..) ,  Hyundai

In 2017, the European Commission, announced stricter gaz emissions regulations; vehicles will have to emit 15% less CO2 by 2025 than 2021 levels. By 2030, they have to emit 30% less CO2 compared with 2021 levels.

The McKinsey report predicts that by 2030, from 10 to 50% of vehicles sold will be electric. 

The global electric vehicle market is amped up and on the rise. In the past few years,  the sale of electric cars have exceeded expectations. In 2016, more than 2 million electric vehicles were sold worldwide.

Going electric has many benefits :

  • Quiet and silent ! 
  • Cheaper to run compared to petrol or diesel
  • Cheaper to maintain,
  • Better for the environment
  • Easy home charging
  • Quick and Tax saver

3- Connectivity

Being « unplugged » for long  the road can take is hateful to most of people. Connectivity is seen as an essential need.

It became a key product feature incorporated into everything.

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Gartner, a global technology research firm, estimates that « by 2020 there will be a whopping 50 billion IoT devices installed worldwide ,many of them in our cars ».

There is a real pressure to make time spent behind the wheel productive or at least entertaining. Cars are becoming large smart devices doing much more than drive and park.

The Tesla for instance is really a closer cousin to a smartphone than a car.

Integrating infotainment systems that deliver information and entertainment content, connected vehicles are designed as a platform to customize and personalize drivers’ in car experience.

Driving is now integrated into the larger connected world. Vehicles becoming internet connected are in reality building a bridge into the greater Internet of Things (IoT).

4- Diverse Mobility

The way the world moves is changing. The result of the increasing viability of electric cars, the growth of connected and autonomous vehicles, is the emergence of a new ecosystem of mobility.

The McKinsey report points out complex and diverisified mobility industry landscape. This diversity is explained by the need for more transportation flexibility, the rise of shared mobility at the expense of private car ownership as well as urban environments that discourage car use.

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The development of a new vehicles market designed for sharing will create an additional $1.5 Trillion in revenue potential due to apps and softwares inclusion.

The bottom line is that autonomous driving, electrification, diverse mobility and connectivity are definitely redefining the driver experience and automakers strategies.

The McKinsey report concludes that these four trends will reinforce and accelerate one another and that the automotive industry is ripe for disruption.

Much like smartphones and computers, automated driving, electrical, connected and shared vehicles will likely come with software, technological advances and upgrades. Meaning that tech companies are automakers’ new competitors unless they learn to cooperate and collaborate in order for this dynamic to work.

Besides Automotive Industry, industries from insurance and health care to energy and media will likely be affected by this shift and should reconsider how to create value in this emerging environment.

Corresponding Author
Chirine DHOUIB
chirine.dhouib@onetech-group.com
April 15, 2019