SapientNitro_Insights_Automotive_Technologies_Final
- 2. 2Trends at the Intersection of Technology & STORY Reimagining an automaker’s business “as usual” From partner collaboration to the ownership market, automakers are being driven towards a business “unusual” mindset as they respond to consumer trends such as always-on digital natives and the sharing economy.3 FIGURE01 1 Deloitte. “The Internet of Things Moves In.” http://deloitte.wsj.com/cio/files/2015/08/Internet-of-things-GMCS_Infographic-2015.pdf. 2 Speaking at The Code Conference, May 2015. Mobile World Live. “Apple Says Car Is the ‘Ultimate Mobile Device.’” http://www.mobileworldlive.com/apple-says-car-ultimate-mo- bile-device. 3 IBM. Digital Disruption and the Future of the Automotive Industry. https://www.ibm.com/multimedia/portal/H752407R29967B14/IBMCAI-Digital-disruption-in-automotive.pdf. Business unusual Market development and diversification Non-traditional partner collaboration Shrink development times Alternative to ownership markets New retail formats The sharing economy Always connected digital natives Lifetime customer value Business as usual Market penetration, product development Business as usual R&D Aspiration to own cars Engineering heritage Growth market land and expand Transactional one-time sales Sustainability of dealerships Services businesses Multimodal experimentation Ten years from now, cars will be unrecognizable. Technological ad- vancements, government mandates, consumer trends, and emerging mar- kets will continue to drive evolution in the auto industry. Indeed, our interconnected lives and need for immediate information and sharing of content are pushing auto- motive manufacturers to rethink how they create cars. From a technology perspective, our smartphones play the biggest role in development with 72 percent of smartphone users finding The auto industry is poised for more change in the next five-to-ten years than it’s seen in the past 50. – Mary Barra, CEO of General Motors2 value in a connected vehicle solution, particularly when it comes to safety, traffic, weather, navigation, mainte- nance, access, and entertainment1 . But with the rapid rate of technological advancements, automotive manufac- turers are facing the nearly impossi- ble challenge of creating innovative solutions and integrating them quickly (see Figure 1). By understanding how technologies and manufacturing will change, these organizations can deter- mine where future business opportuni- ties can be utilized.
- 3. 3Trends at the Intersection of Technology & STORY The future evolution and simultaneous convergence of powertrain technolo- gies, lightweight materials, advances in connected vehicles, shifts in mobility preferences, and the emergence of autonomous vehicles are the most effective growth strategies to broaden the automotive industry’s focus beyond just products. Undoubtedly, there will be contrast by regions and demograph- ics of inhabitants pertaining to needs and use, but the overarching trend is clear: The automotive future stems from tech-enabled convenience, safety, and efficiency. Convenience Vehicle lifecycles in the automotive industry used to require a five-year process — from a new model’s initial concept phase to it being displayed in a showroom for consumer purchase. Through automation of the design with computer-aided design (CAD), opti- mized timing and tracking of approvals, and parts and manufacturing with computer-aided manufacturing (CAM), the total process has been reduced to three years. That process is helped fur- ther by automation through a Product Life Management software (PLM) – an information management system that details a product’s lifecycle from its inception and engineering, through its design and manufacturing, up until its service and disposal. Yet, even with these new tools, shaving two years off the process is not fast enough to be able to keep up with technology, government regulations, and consumer demands. Smartphones, for example, average an upgrade every 24 months. The battle over in-vehicle experiences between original equip- ment manufacturers (OEMs) and smartphones will be for control of the hardware and the ability to make in-car features adaptable enough to survive rapid technology shifts in the market. Besides wheels, what does a car offer that a smartphone doesn’t? There are already many existing apps that offer navigation, e-commerce, and entertain- ment. And electronics systems contrib- ute to more than 90% of innovations and new features brought forth in new car models.4 But that’s not enough. Current disruption in the automotive market is filled with new-age consumer expectations and competition to not just deliver a good driving experience, but also an enhanced experience that provides important safety and naviga- tion features. What has been an indus- try for more than 100 years creating and introducing new advancements in the pursuit of a better driving experi- ence, now has been busily transforming itself into consumer connectivity and improved experiences. Disruption in the auto industry: It’s time to embrace change. – Carlos Ghosn, CEO of Renault-Nissan Alliance5 4 PwC’s Strategy&. Automotive Perspective. http://www.strategyand.pwc.com/reports/automotive-trends-2015. 5 Keynote speech at the opening of the 2016 New York International Auto Show. “Disruption in the Auto Industry: It’s Time to Embrace the Change.” http://nissannews.com/en-US/ nissan/usa/channels/Executive-Speeches/releases/disruption-in-the-auto-industry-it-s-time-to-embrace-the-change.
- 4. 4Trends at the Intersection of Technology & STORY Furthermore, biometric access will likely soon be provided with unique fingerprint or retina scan, much like cell phones are unlocked today. MIT is currently developing tattoos that will connect with mobile devices to control the devices or communicate data with other devices via near-field technology. By using your connected technology, many types of convenient preferences – such as seat settings, climate set- tings, music preferences, and previous destinations – may be set in the car as you enter and even adapt across any car (whether it’s yours, your friend’s, or an on-demand ride). In addition, a connected vehicle tells you the price of gas, provides you the weather report, navigates directions, al- lows you to make calls, sends voice-re- cited text messages, accesses a variety of music and media options, and reports traffic issues. The future gets a little closer each day as connected vehicles and the utilization of smart- phones allow cars to communicate through multiple options – like Wi-Fi, Bluetooth, vehicle-to-vehicle, and vehicle-to-business sources – for information from friends, marketing services, or retailers that want to better inform and serve consumers’ “in the moment” experiences. More so, this level of progress means that in just a few short years there will be an influx of self-driving capabilities and ultimately an autonomous transpor- tation experience. As with connected technology, self-driving technology is challenging the traditional automotive manufacturer to keep up with constant new driving innovations. And smart cars (connected and autonomous vehicles) are being developed by more than 30 different corporations, not all of which are traditional car manufacturers. The leaders among the automotive compa- nies considered to be at the forefront of connectivity, self-driving, and autono- mous technology are BMW, Daimler, GM, and Tesla.7 When we think of ourselves as a mobility company, it comes back to our vision of making people’s lives better by changing the way the world moves. – Mark Fields, CEO of Ford Motor Company6 6 Deloitte. “Examining the Evolving Mobility Ecosystem.” http://www2.deloitte.com/us/en/pages/manufacturing/articles/examining-the-evolving-mobility-ecosystem.html. 7 KPMG. “Global Automotive Executive Survey 2015.” http://docplayer.net/6734787-Kpmg-s-global-automotive-executive-survey.html.
- 5. 5Trends at the Intersection of Technology & STORY In response, tech giants like Google, Microsoft, Apple, Nauto, nuTonomy, comma.ai – alongside startups like Re- moto, navdy, TriLumina, PathSense, Em, and Amprus – are all targeting specific pieces of automotive components and disrupting an OEM’s traditional way of doing things (see Figure 2). The idea that there’s some intelligence embedded there in a vehicle is going to be a big idea. – James Kuffner, Chief Technology Officer at Toyota Research Institute8 8 Automotive News. “2016 Car Management Briefing Seminars.” http://www.autonews.com/article/20160803/OEM06/160809910?template=print. Unbundling the automobile A combination of tech giants, startups, and other high-tech companies are tackling various components of the automobile in an effort to better users’ driving experiences. FIGURE02 Battery Storage Amprius, Boston-Power, Envia, QuantumScape, SolidEnergy Connected Car Airbiquity, AutoBot, Automatic, Automile, CarIQ, CarVi, Dash, Metromile, Mojio, Remoto, Truvolo, Zubie Driver Safety Augary, CelluDrive, Exploride, HeadsUP!, Lytx, Navdy, SmartDrive, Zendrive V2V/V2X Communication Autotalks, Cohda Wireless, Kymeta, RoboCV, Savari, TTTech, Veniam ADAS/Car Automation AdasWorks, Drive.ai, Comma.ai, Nauto, nuTonomy, Oxbotica, ZMP, Zoox Auto Repair Autobutler.dk, Carz, ClickMechanic, Fayette Fabrication, HONK, Openbay, Pitstop, RepairPal, Urgent.ly, YourMechanic Navigation/ Mapping BirdsEye, INRIX, Mapkin, MapmyIndia, Navmii, PathSense, Swift Navigation Vehicle Cybersecurity Argus Cyber Security, Karamba Security, Visual Threat Engine Efficiency ACAT Global, Achates Power, Agility, EcoMotors, ePower, Pinnacle Engines, Yan Engines Sensor Hardware LeddarTech, Phantom Intelligence, Quanergy, TriLumina Tires Aperia Technologies, DMACK, LDL Technology Source: CB Insights.
- 6. 6Trends at the Intersection of Technology & STORY Speaking of which, the simple manu- facturing of a vehicle is having its own disruption. New robot technologies, along with machines and sensors on assembly lines, are innovating cur- rent processes, while analytics and breakthroughs in overall quality are contributing to reduced costs and greater efficiencies. In addition, current gas-driven vehicles require many parts in the assembly process and operation, while newer technology like electric and fuel-cell require up to one-third the number of parts, and components are more integrated and less mechanical. This results in lower barriers to entry for new, non-traditional automotive manu- facturers establishing their own supply chains and large assembly lines. When it comes to innovation opportu- nities, OEMs will need to collaborate more with these modern tech compa- nies and welcome novel ways of man- ufacturing. Choosing the right partners will be crucial as they look to transform and advance their research and devel- opment beyond current solutions and limitations. Safety The worldwide connected vehicle market stood at $37.5 billion in 2015, and is expected to increase to $151.8 billion in 2020.9 New revenue opportu- nities come from the Internet of Things (IoT) and its data connectivity services — consumers’ behaviors, consumers’ preferences, apps, mobility services, and upgrades can all provide profitability in the future for the auto industry. But all of this desire for convenience and instant information comes with the price of allowing technology to fully access the data in our lives — where we have been, what we have purchased, things we have liked on social plat- forms, friends, our bank/credit balances, products we use, or references to what our current mood is. The good news is that people seem more and more will- ing to allow the collection of data to be used if it makes things easier for them. There is, of course, an ongoing con- cern with cybersecurity as cars have increasing technology integrated into them – a concern that was recently validated by Tencent with their hack of a Tesla S.10 Seventy-five percent of auto executives admit they do not have a strategy in place in case their vehicles are hacked, while 40 percent of vehicle owners desire the most innovative safety features, such as Blind Spot, Forward Collision, Adaptive Cruise, Lane Departure Warning, and Automat- ic Braking, when considering points in making decisions about a purchase.11,12 Today, sophisticated onboard platforms are now transforming large amounts of collected data into information that helps the technology and its driver be aware of the surroundings. This information from various data sources appears clearly in front of you even in decreased visibility conditions like rain, fog, or low light situations. 9 GSMA. “Transforming the Connected Car Market.” http://www.gsma.com/connectedliving/the-evolving-connected-car-market/. 10 Wired. “Tesla Responds to Chinese Hack with a Major Security Upgrade.” https://www.wired.com/2016/09/tesla-responds-chinese-hack-major-security-upgrade/. 11 McKinsey & Company. “How Carmakers Can Compete for the Connected Consumer.” http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-carmak- ers-can-compete-for-the-connected-consumer. 12 RougeWave. Survey by Ponemon Institute. “Car Cybersecurity: What Do the Automakers Really Think?” http://www.roguewave.com/getattachment/7771decd-9c2d-4853-b3f5-f7d- 87d460afa/car-cybersecurity-what-automakers-really-think?sitename=RogueWave. The good news is that people seem more and more willing to allow the collection of data to be used if it makes things easier for them.
- 7. 7Trends at the Intersection of Technology & STORY The heads-up-display (HUD), which has been around for a while, is now being researched and developed as a high-tech solution, and is beginning to reach into the realm of the high-resolu- tion display. HUD (which is essentially augmented reality) will actually be able to display your speed, objects on the road or in your blind spot, clear passing lanes nearby, and recommended stop- ping distances all on the windshield glass, while allowing the driver to re- main focused on the road ahead. A few models already have an HUD option, but the feature will be integrated into mainstream vehicles over the next few years as automakers work to add more functional information to their displays. Furthermore, improved GPS in smart- phones and cars means that location services will only get more accurate, thereby improving travel time estimates and allowing for better navigation where multiple exits/turns are possible. And proximity does not stop there. Safety in cars that can communicate with each other and with the world at large will not only make travel more efficient, but also more connected and secure. Self-driving options like auto-braking, lane-change avoidance, and auto parallel parking are just the tip of the iceberg. As humans become more comfortable with letting cars drive themselves and make decisions, major traffic issues in main cities stand to decrease. The connected car will also be able to monitor passengers’ health. Think of astronauts who are hundreds of thou- sands of miles away, but have NASA effectively reading and monitoring their vital signs. Future steering wheels and seats will be able to monitor a number of vital signs, as well. For example, a car could call a paramedic or take someone to a hospital when vital signs detect someone having a heart attack or stroke, going into labor, or having a seizure, and can even alert the driver to sleepiness/ distracted driving – or simply not allow the car to start if the driver is drunk. These driver monitoring systems are currently in concept or testing phases at Nissan, Audi, Ford, Mercedes, major universities, and app developers, and will be introduced into the market in as little as one to two years. We are witnessing a revolution in auto technology that has the potential to save thousands of lives. – Anthony Foxx, U.S. Transportation Secretary13 13 National Highway Traffic Safety Administration. “U.S. DOT to Host Public Meetings on Safe Operation of Automated Vehicles.” http://www.nhtsa.gov/About-NHTSA/Press-Releases/ nhtsa_meetings_automated_vehicles_03112016.
- 8. 8Trends at the Intersection of Technology & STORY Efficiency Most of us hear “efficiency” and think about reducing pollution. Hybrid, plug- in hybrid, electric, and fuel-cell vehicles have been around for years. And with continued technological advancements, these power sources (at first too ex- pensive to get much real consideration) have become more mainstream. After a four-year study, researchers at MIT concluded that electric vehicles on the market today could replace 90 percent of the cars used in the U.S.14 These vehicles would only need to be charged once a day at home or work to meet the travel distances required by consumers, and could reduce 30 percent of greenhouse gas emissions. Indeed, manufacturers like Tesla are generating interest in using electric power sources as a way to lower emis- sions – pairing this with the fact that electric vehicles generate less noise while still having substantial power, even when compared to gas engines. The viability and speed of adoption are mainly hanging on consumers’ percep- tions of their driving habits and distan- ces, lower battery costs, the availability to manufacture the new cells, charging infrastructure, the life of the batteries, and cost of ownership. Fuel-cells, which have been said to be perpetually five years away, are getting a huge second look because they are environmentally friendly, the only by-product being water vapor. Auto companies such as Toyota and Hyundai have been evaluating different mod- els since 2002, with the first models rolling out this year. Much like electric vehicles, fuel-cell vehicles have an infra- structure hurdle to cross, necessitating that gas refueling stations be replaced with hydrogen ones. This is not out of the realm of possibility: Rather than filling ground tanks with gasoline, hydrogen tankers would just stand up a fresh hydrogen tank in the corner (California currently has 25 of these stations, with a goal of having 68 by the end of 2016). Unlike batteries, fuel cells are capable of long-range driving and can be recharged in minutes – great if you live in California, but limiting if you’re driving out of state. However, seeing as conservation trends suggest that we’ll be relying more on alternative power sources in the future, fuel-cell networks will certainly expand. of cars used in the U.S. could be replaced by the electric vehicles available on the market today.15 90% According to MIT 14 Digital Trends. “Electric Vehicles Available Now Could Replace 90 Percent of Cars Used Today, Study Says.” http://www.digitaltrends.com/cars/today-electric-cars-replace-90-per- cent-todays-cars/. 15 Ibid.
- 9. 9Trends at the Intersection of Technology & STORY The dream, of course, is comprised of vehicles that run on renewable energy, like sunlight. And that dream is a little closer to reality now, thanks to an invention that beams the sun’s power into a car like a giant magnifying glass. This invention, being developed by researchers at Georgia Tech and Ford Motor Company, would solve the problem of current solar panels not generating energy quickly enough to make solar cars feasible. While the technology is already being developed, it will be more than 20 years before so- lar vehicles are ready for the consumer market and mass consumption. In the meantime, manufacturers have been searching for other modes of meeting government guidelines for efficiency – one being lightweight ma- terials. Steel is heavy and aluminum is lighter, but carbon fiber and reinforced plastic are very light and deliver laud- able low-weight-to-high-strength ratios, corrosion resistance, and workability. Unfortunately, manufacturing costs only increase as we move up the scale of lowering weight without sacrificing strength. Carbon fiber production, for example, can increase costs by anywhere from 6 to 40 times per kilogram.16 That being said, carbon fiber is expect- ed to go mainstream in automobiles by the mid-2020s and, to take advan- tage, manufacturers must position themselves to shift to this material.17 High-end luxury car manufacturer BMW stands out, leading the way to large-scale implementation into all their models. But they’re not the only ones. Most major automotive companies are now forming partnerships with experi- enced carbon fiber players in order to bring the material closer to a commer- cial reality. For example, carbon fiber (due to its strength and light weight) has always been a staple for sports car manufacturers, aerospace, and oil and gas organizations — making them prime partner opportunities for OEMs. 16 Goldman Sachs. “Cars 2025.” http://www.goldmansachs.com/our-thinking/technology-driving-innovation/cars-2025/. 17 Lux Research. “Carbon Fiber to Go Mainstream in Automobile by 2025.” http://www.luxresearchinc.com/news-and-events/press-releases/read/carbon-fiber-go-mainstream-automo- bile-2025. As conservation trends suggest that we’ll be relying more on alternative power sources in the future, fuel-cell networks will certainly expand.
- 10. 10Trends at the Intersection of Technology & STORY 10 Efficiency will constitute more than thinking green or having lighter mate- rials. It will also be about the desire to use cars without the cost and handling of actually owning one. This idea of shared mobility seems to be especially popular with Millennials with 42% frequently using multiple transpor- tation options.18 Zipcars, carpooling, taxi alternatives, apps that help with on-demand pick-up (e.g., Uber and Lyft), and capacity availability will begin to grow. More so, the cost of implementing new technologies continues to raise the cost of ownership, thereby propelling this shift in car ownership even more. The same way Millennials’ smartphone usage transformed the whole tele- communication business by virtually eliminating hardline connections in the home, so too will the idea of shared mobility disrupt the status quo of car ownership. Big cities stand to be affected the most by on-demand ride-sharing for several reasons. For example, did you know that most vehicles worldwide are idle 95% of the time, used solely for short trips, and parked for extended periods of time? Large cities today, like Los Angeles New York City, and Beijing, are heavily burdened by traffic jams and have a lack of adequate parking. Vehicles are an additional expense to maintain, add pollution to the air (which causes health issues), and raise insurance costs. Services that provide ease of use and accessibility, such as Zipcar, Turo, and Car2go, will continue to grow towards On-demand in the U.S., and Millennials are leading the trend.20 but vehicle sales will shift to private companies that operate large fleets. 18 American Public Transportation Association. Millennials & Mobility: Understanding the Millennial Mindset. http://www.apta.com/resources/reportsandpublications/Documents/AP- TA-Millennials-and-Mobility.pdf. 19 Los Angeles Times. “Ride-sharing Forces Automakers to Rethink How They Sell Cars.” http://www.latimes.com/business/autos/la-fi-0628-ford-car-sharing-20150628-story.html. 20 American Public Transportation Association. Millennials & Mobility: Understanding the Millennial Mindset. http://www.apta.com/resources/reportsandpublications/Documents/AP- TA-Millennials-and-Mobility.pdf. 21 Deloitte. “Examining the Evolving Mobility Ecosystem.” http://www2.deloitte.com/us/en/pages/manufacturing/articles/examining-the-evolving-mobility-ecosystem.html. Rates ofdriving aredown Autosaleswill decreaseforthe individualowner segment, becoming the main sources of transpor- tation. Even in developing countries and emerging markets like China and India where there are large populations and booming car ownership, ride-sharing and electric or fuel-cell technology will provide the automotive industry with future growth by lowering pollution. However, as the popularity of on- demand ride-sharing takes shape, it will be a mixed blessing for the auto industry as profitability still remains an issue.19 On one hand, the continued growth of car-sharing reduces the number of individual sales. At the same time, there are now more than 4.8 mil- lion members and more than 104,000 vehicles in 33 countries across five con- tinents (with Asia, Europe, and North America leading the market) — which means that sales are increasing among private companies that operate. As Mark Fields, CEO of Ford Motor Company, stated, “The business of transportation products and services — think of it as revenue spent on miles traveled via mass transit, taxis, ride-sharing, etc. — that’s worth about $5.4 trillion. Today, we — and the rest of the traditional automotive industry — get 0 percent of that business.”21 In turn, new segments will be crea- ted for the growth of on-demand use and will lead to specialized vehicle designs fulfilling very specific needs: vehicles specifically built for hauling goods, tight areas, passenger comfort, various volumes of people, and availa- ble connectivity.
- 11. 11Trends at the Intersection of Technology & STORY Conclusion Driven by new technology, the global automobile industry is poised for a major transformation. Our vehicles will become smarter, better connected, and, eventually, self-thinking. The auto industry will change and continue to have new competition from high-tech companies. Meanwhile, consumer be- havior is simply changing what it means to use a vehicle. Drivers will continue to look at vehicles and how they use them differently. All of the aforementioned factors have a silver lining – one that includes potential revenues. An estimated 112 million vehicles will be purchased by 2025, with emerging markets dominat- ing the future growth of the automobile business.22 Auto leaders who begin looking at emerging and developing markets — along with revenue pools driven by shared mobility, connectivity services, and feature upgrades — stand to take a slice of 2030’s estimated 1.5 trillion-dollar market.23 In the end, consumers will decide which technologies and business strategies survive. Becoming both an automotive and mobility company helps make our customers’ lives better, but it also makes good business sense as well. 22 Goldman Sachs. “Cars 2025.” http://www.goldmansachs.com/our-thinking/technology-driving-innovation/cars-2025/. 23 McKinsey & Company. “Disruptive Trends That Will Transform the Auto Industry.” http://www.mckinsey.com/industries/ high-tech/our-insights/disruptive-trends-that-will-transform-the-auto-industry. 24 Deloitte. “Examining the Evolving Mobility Ecosystem.” http://www2.deloitte.com/us/en/pages/manufacturing/articles/ examining-the-evolving-mobility-ecosystem.html. – Mark Fields, CEO of Ford Motor Company24
- 12. COPYRIGHT 2016 SAPIENT CORPORATION. ALL RIGHTS RESERVED.COPYRIGHT 2016 SAPIENT CORPORATION. ALL RIGHTS RESERVED. SapientNitro® , an active element of Publicis.Sapient, is a trusted advisor to clients looking to imagine new business models, new services, and new possibilities for the age of the customer – driven by the power of technology. Our capabilities across brand and marketing; sales and service; technology and operations; and deep industry expertise allows us to drive measurable business impact for today’s leading brands by putting customer experience at the heart of their organization. For more information, visit www.sapientnitro.com. INSIGHTS ON THE GO For additional interactive and related content, download the SapientNitro Insights app. It gives you on-the-go access to our latest provocative thinking, research, and recom- mendations. Download it today via the links below or search for “SapientNitro Insights” in your App Store or Google Play. Timothy Cory Associate Creative Director, SapientNitro Detroit tcory@sapient.com An expert in journey marketing (with a focus on “in the mo- ment” experiences and in-market shopping), Tim has worked on Ford, Lincoln, Cadillac, GMC, and FCA brands with more than 25 years of automotive brand knowledge. Tim’s career spans more than 35 years and a variety of vertical expertise developing concepts and content for broadcast, digital, print, experiential, and social channels.