Driven by technological innovation and demand changes, the automotive industry is undergoing systematic innovation in the entire industry chain and in all aspects. As an important foundation of the automobile industry, traditional car companies need to adapt to the strategic positioning of the new pattern.
Since the beginning of the 21st century, as emerging market countries have entered the automobile society due to rising income levels, the global car ownership has continued to grow. In response to the challenges of resource, energy and environmental constraints, the technological revolution characterized by electrification, digitization, networking and intelligence, combined with business model innovation characterized by platformization and sharing, is changing the way cars are produced. The pattern of sales and the way of using it, the traditional automobile industry with manufacturers as the core is facing an unprecedented change.
After a century of development, the automotive industry has formed a complete industrial chain from R&D and design, material supply, parts procurement to vehicle manufacturing, sales and after-sales service. Driven by technological innovation and demand changes, the automotive industry is undergoing systematic innovation in the entire industry chain and in all aspects.
Innovation in R&D and design
From the perspective of R&D and design, industrial innovation mainly focuses on electric vehicles, flight taxis, driving simulation platforms, wearable devices, vehicle networking technologies, and blockchain verification.
Due to advances in manufacturing technology and the promotion of large-scale production of electric vehicles, the production cost of lithium-ion batteries is declining. The decline in battery costs ultimately helps to reduce the cost of electric vehicles. In this context, car manufacturers attach great importance to the development of electric vehicles. Volkswagen announced in November 2018 that it will invest about $50 billion to develop revolutionary automotive technologies such as electric vehicles.
With the cooperation of major players in the aerospace and transportation sectors and driven by the passenger, logistics and distribution markets, flying taxis (ie, vertical take-off and landing aircraft) have also received increasing attention.
The driving simulation platform helps autopilot car developers effectively reduce the time required for actual road testing.
Wearable high-tech equipment such as smart glasses can improve workers’ ability and minimize work injuries and productivity.
The Internet of Vehicles (V2X) technology enables vehicles to detect the movement of objects outside the field of view by wirelessly communicating with other vehicles, pedestrians, and networked devices on the road infrastructure, allowing the car to travel more securely. Startups are using V2I communication technology to develop a software that enables vehicles to move to less traffic lights and adjust traffic light times to optimize traffic flow.
The blockchain system synchronizes the data and transactions of thousands of companies in the automotive supply chain without the involvement of any third party. After using the system, the car manufacturer can prove the authenticity of the purchased parts and track defective parts. This will help prevent a recall event.
Innovation in material supply, parts procurement and vehicle manufacturing
From the perspective of material supply, parts procurement and vehicle manufacturing, the automotive industry innovation focuses on industrial robots, industrial sensors (laser radar), flexible assembly lines, and 3D printing technology.
In recent years, as the industry is moving toward highly mixed, low-volume production (small-volume production of multiple products) and digital manufacturing technologies, the popularity of industrial robots has accelerated significantly around the world. Through the networking of plant equipment, manufacturers can monitor assembly lines in real time, increasing productivity and efficiency in the production process. Audi has established a “smart” factory in Mexico that uses radio frequency identification equipment and intelligent logistics to coordinate the entire production process.
As the most advanced automotive sensor, Lidar can provide high-precision 3D vehicle surroundings visual map. As automakers continue to drive the development of electric and fully automated vehicles, the manufacturing process will become more complex and the demand for flexible production lines will increase.
Significant changes to the design and components of the car are required to develop autonomous vehicles, electric vehicles and shared travel. According to a survey by the Boston Consulting Group, 90% of automakers say they expect to use modular production lines in the final assembly phase by 2030.
Automakers such as Ford and BMW have been using 3D printing technology. This technology helps vehicle manufacturers accelerate the speed of automotive design and improve quality through rapid prototyping, avoiding time-consuming and costly automotive design iterations.
Innovation in sales, after-sales service and vehicle use
From the perspective of sales, after-sales service and vehicle use, the automotive industry innovation focuses on travel services, telematics, advanced driver assistance systems, automotive e-commerce, driver monitoring, online aftermarket, digital dealers, HD maps and A generation of in-vehicle infotainment systems and other aspects.
The travel service (MaaS) has expanded from the initial network car service to bicycles, scooters and shared cars, increasing the utilization of vehicles and improving the accessibility of public transport areas.
Telematics will greatly influence the business model of traditional vehicle manufacturers. According to McKinsey data, by 2030, telematics data will generate $1.5 trillion in revenue for automakers.
With advances in sensor technology and the development of machine vision software, vehicle manufacturers have developed advanced driver assistance systems (ADAS) that enable semi-automatic driving.
The Internet has changed the way people buy cars. Buyers can get a lot of information about any car model from any manufacturer with the click of a button. In China, online car portals such as Easy Car and Auto House have seen strong consumer demand. Many automakers are also working with e-commerce sites such as Alibaba to promote new models and launch virtual showrooms. Some OEMs even sell limited edition models on their own websites or through third parties such as WeChat.
OEMs need to redesign their marketing strategies to address digital trends. At the same time, many startups and component suppliers are developing a technology that can help monitor driver behavior in real time.
Due to the improvement of the car design, the service life of the car is extended. The average useful life of US (light) passenger cars is gradually increasing, which increases the frequency of maintenance and the number of parts replaced.
In addition, high-definition maps of self-driving cars are more accurate than digital maps in smartphone navigation applications. Chinese search engine giant Baidu is developing high-definition maps for its self-driving car software platform, Apollo.
The development of the Internet of Vehicles has made traditional in-vehicle infotainment systems obsolete, and OEMs are designing dashboards with more features and more safety features and navigation tools.
With the advent of the Internet era, consumers will change from buying cars to buying travel services. The demand pattern of the automobile industry will undergo a fundamental change; electrification and modularization will change the traditional division of labor in automobile production, and the industrial organization will undergo significant changes. Digitalization, networking and platformization have changed the traditional processes of the automotive industry, and the focus of industrial organizations is shifting from manufacturing to services. The travel service operation platform and hardware management operators will become the drivers of the formation of the new industry structure; the new automobile industry pattern centering on individualized consumption and travel services will gradually take shape. As an important foundation of the automobile industry, traditional automobile enterprises need to adapt to the strategic positioning in the new pattern.