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THE AUTOMOTIVE
TECHNOLOGIES
DRIVING
CONVENIENCE,
SAFETY &
EFFICIENCYTIMOTHY CORY
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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
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It gives you on-the-go access to our latest provocative thinking, research, and recom-
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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.

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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.