What are the main drivers for digital transformation in the automotive industry?

Bassam ZarkoutBassam Zarkout IGnPower admin
edited April 2020 in Business

The automotive industry is going through a major transformation, technology-wise and business model-wise. What are the main drivers for the digital transformation of that industry and how will it look like after this transformation takes its course?


  • Sven SchmidbergerSven Schmidberger Technical Compliance Officer

    One of the biggest outcomes of the digital transformation in the automotive industry is the shift from hardware define to software defined features. For as long as cars have been sold they declined in value starting with the first mile driven, software enabled features could increase a vehicles value long after the initial sale took place.

    Software enabled features, that are available on-demand, also offer new revenue models to car manufacturers and fleet owners.

    To enable software defined features a paradigm shift is necessary to include hardware (electronics, sensors, etc.) in a vehicle that is not used at the point of production or sale. Traditionally a vehicles bill of materials is stripped to the bare minimum for the supported feature set to increase margins.

  • ken figueredoken figueredo More-with-Mobile

    An important consideration is the extent to which new vehicles will include Internet connectivity. In conjunction with connected and autonomous vehicles (CAVs), this trend is fueling the market for Mobility on Demand (US term)/Connected and Autonomous Mobility (European term) services. As a result, CAV suppliers recognize that they will operate in a system of systems.

    To take one example, CAV performance improves with access to data about the transport network. This comes from municipal IoT systems. In the same way, CAM services improve the convenience of travel if there are ways to plan and deliver multi-modal journeys (e.g. car + bus or, train + scoter etc.). The business model in both these examples requires collaboration and data sharing, based on strategies that consider the automotive sector as one of several actors in a larger ecosystem. As a result, a variety of public-private initiatives are springing up in the intelligent transport arena. More here - https://www.etsi.org/e-brochure/Magazine/January-2020/mobile/index.html#p=20

    Eventually, automotive suppliers and service providers will pursue collaborative business models, beginning initially with a limited set of partners where service quality metrics are easier to manage.

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