The Automotive Ecosystem

The automotive industry has enjoyed decades of steady growth, immune to outside disruptions like the ones seen in the entertainment industry with Netflix and the disruption it has caused in the film making industry. However, tightening regulations and changing consumer trends fuelled by major advancements in emerging technology is changing all that. The industry is faced with evolving growth beyond expectations and real-time demand from automotive consumers.

In the automotive industry, customer perception of value has shifted from the car hardware and brand name to safety, efficiency, driving comfort and environment-friendliness and smart connectivity along with existing radar, LIDAR, cameras, and sensors have produced several advanced driver assistance systems (ADAS) that are being implemented extensively, thereby disrupting the industry today.

Among the ADAS features are adaptive cruise control, blind spot detection, parking assistance, lane departure warning and autonomous emergency braking. The ADAS market is now an established multibillion-dollar industry with rapidly evolving methodologies and best practices. While ADAS has contributed significantly to improving transportation safety, emissions and efficiency, it is only the first step towards a larger goal – Fully autonomous vehicles.

Despite the advancement and proliferation of smart sensors, there have been reported cases of sensor snags. This situation is a complete no-go when an AV is driving itself at speeds above 60 mph. Moreover, three kinds of systems – radar, camera and LIDAR are required. Sensor fusion yet again is not fail-proof. Another challenge is the volatile nature of the driving environment. AVs need highly complex algorithms to predict the behaviour of human pedestrians, human cyclists and human-driven vehicles. Weather conditions like snow and fog only add to the misery.

Developing advanced driver assistance systems that can be manufactured and deployed at a large scale with cost-effective, maintainable hardware is quite complicated. Insurance pricing becomes dynamic. What will be the new pricing methods for insurance, and how do you determine compensation when liability is unclear? Another issue is the vast amounts of data generated by AVs, which opens new monetisation opportunities. How do you determine who owns the data in these situations?

 

There are many questions to be answered and obstacles to be crossed. If we are to see these 4-wheeled robots on the road any time soon, it is quite clear that automotive OEMs must engage in partnerships and collaborative ecosystems to speed up their go-to-market. This opens the door for established technology companies that are already software inclined and have more deployable human capital towards software development. Traditionally, automotive companies have focused on minimising risk due to rigid supply chains, product development practices and tough sectoral norms. Technology firms, on the other hand, use agile operating models that allows experimentation. This is only augmented by the fact that they enjoy higher financial agility and robust operating margins that increase the opportunity to explore innovative solutions.

 

In addition to autonomous driving, trends such as connectivity, electrification and mobility are transforming the global automotive market’s massive size and value-creation potential. As a result, the already complex automotive ecosystem is primed to become more intricate, and one thing is inevitable – software will drive the driverless future and partnerships between automotive OEMs and technology firms will be at the forefront.