Electrification, Connectivity and Autonomous Driving: Upcoming Disruptions in the Automotive Industry

The automotive industry is always changing…

However, today, it’s changing faster than ever before. Just ask Mary Barra, the General Motors CEO, who believes that these days, the industry is changing quicker than it has in more than 100 years.

Moreover, according to Boston Counseling Group, in less than 25 years, around 25% of miles driven in the US could be in shared driverless, electric vehicles. And if this happens, the part suppliers and car manufacturers would face the biggest challenge to their business models in a century…

These comments and studies only underscore the drastic changes that confront the industry. Some of the forces that are reshaping the auto industry as we know it include connectivity, electrification, etc.

Let’s examine some of these factors that are changing the auto industry…

Driverless Vehicles

Way back in 1908, when Henry Ford introduced the legendary Model T, most people were still using horses as their main mode of transportation in the United States. And just a decade later, horse-powered transportation was basically obsolete

And now, more than a century later, we’re practically on the cusp of driverless cars. But we’re still not there – the technology is simply not completely ready for nationwide driving. But the only question is now – not if – but when will autonomous driving become omnipresent.

So it’s logical that high-tech companies around the world are trying to get the piece of that autonomous pie. As a matter of fact, even Apple is jumping on the bandwagon – just recently, Tim Cook announced that the company is starting to focus on autonomous vehicles. And as you already know, Apple actually has resources to make a big impact in autonomous systems…

All-Electric Cars

Just a decade ago, Tesla introduce their first all-electric roadster, while some people regarded the vehicle as a simple fad, the company managed to catch the attention of a number of high-end consumers. And five years ago, Tesla Model S outsold most rival luxury models in its class.

According to Electrek, the model managed to outsell Mercedes S-Class, BMW 6/7 Series and Porsche Panamera combined in the United States this year. And if we’re looking at stock market capitalization, Tesla is currently higher than Ford, Honda, Nissan and even General Motors.

Over the next couple of years, hybrid cars will probably see the most growth, but adoption of full electric cars is still a few decades away. With continuous improvement in both costs and performance of charging technology, all-electric cars will probably command a large percentage of cars sales in the future – which is something that even the oil companies are acknowledging.

The Internet of Things

Ordinary things are now, for the most part, connected to each other. With the rise of the Internet of Things in the last couple of years, we’re now seeing vehicles connecting to each other and sharing information about everything from weather and traffic conditions to vehicle speed…

Toyota and Intel are just two companies that are currently working on making an ecosystem for big data for cars. Currently, we have around one Exabyte of data from cars per month. However, Toyota predicts that we will have ten times more data from vehicles on the road in less than a decade.

And when it comes to car connectivity, according to IBM research, a new modern car now produces more than 25 gigabytes of data per hour. With all of that data, we now have the resources to create new services, new economic value and of course, new opportunities. And we’re just now starting to realize the potential of the Internet of Things and those massive volumes of data…

New Competitors

Last but not least, all of these new technologies are now creating new business models that could potentially increase auto revenue pills by trillions of dollars during the course of the next decade. So it’s not surprising that the aforementioned companies like Intel, Apple and Google are now entering the automotive industry…

But established companies don’t want to end up like Kodak, so are pushing hard for connectivity, autonomy and electrification, as Daimler executive Dieter Zetsche notes. So we can expect that these high-tech companies and automotive manufacturers will interact with each other as so called “frenemies” – which means they’ll collaborate on some project and compete on others.

But new technologies are also presenting a great opportunity for smaller companies to compete with the larger ones. For example, by the end of the decade, sales of automotive parts are expected to exceed $20 billion, according to Frost & Sullivan research. Online parts purchasing is slowly exploding worldwide, so it’s no wonder that companies like DBA are seeing massive sales lately…

Final Thoughts

So what does all of this mean for new entrepreneurs and companies that are looking for economic opportunities in this particular industry? Many manufacturers are now deploying various resources in order to adept to these changes.

If we’re talking about hardware changes, the growth segments in the industry include electric motors, batteries, cameras, lasers, lidar and a number of other high-tech sensors. If we’re talking about software, since the industry is moving towards digital cars, businesses with strong software talent will surely have new economic opportunities…

You just have to be aware of all of these changes and try to stay up-do-date with them, if you want to see any success in the future. Companies and individuals that are ready to embrace these changes and adept to them, will definitely find their place in the automotive industry…

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