Many industries claim that innovation is reflective of their future, but the automotive industry is actively implementing innovative change. In a recent interview on S.M.A.C. Talk Live, Uli Muench, global vice president of the Automotive Industry Business Unit of SAP, weighed in on the changes coming to the industry. Mr. Muench highlighted four key areas that are directly impacting the future of the automotive industry.
At the forefront of the changes in the automotive industry is the push for autonomous vehicles. According to Mr. Muench, Audi has a fully autonomous vehicle that is almost ready to hit the road. “So far only Audi staff can drive hands-off in real traffic,” he said, “but it is fully capable of what’s called ‘level-five autonomy.’”
Audi is the first company to manufacture this technology, but others are close behind. Tesla also has developed a vehicle that is ready to go, and in 2016 it announced that all newly produced vehicles would include the hardware necessary for self-driving. The Verge reports that GM has also announced a goal to create self-driving vehicles with no steering wheels or pedals by 2019.
While the infrastructure to support self-driving vehicles is still lacking, the technology is nearing completion. This will likely be an important innovation in the near future. Mr. Muench indicates that full adoption may happen within the next five to ten years. In terms of the future of the automotive industry, that is not far away.
A second driving force for the future of the automotive industry, according to Muench, is connectivity. Cars with built-in Internet connections, smarter tracking technology for GPS, and even upgraded fleet tracking systems fall within this category. This technology is already in place but will expand significantly in coming years.
For instance, by 2021, Business Insider estimates that 94 million connected cars will be shipped around the country, comprising 82% of the cars shipped that year. The Internet of Things is becoming a key factor in the automotive industry, and car manufacturers are changing the design and features of their vehicles as a result.
Connected technology goes beyond simply adding Wi-Fi to cars, though that is becoming an in-demand feature. It is also adding connectivity to public transportation, increasing the connectivity of fleets, and adding connected GPS technology to passenger vehicles. In the future, connectivity will be a standard feature of all vehicles.
Muench pointed out that the sharing economy is also a driving factor in the future of the automotive industry. Car-sharing services like Zipcar enable drivers to share the costs and maintenance of vehicles in lieu of car ownership. This is becoming an increasingly popular option around the world, and it is likely to continue to grow in popularity as people realize the benefits of car sharing over ownership.
How quickly car sharing will grow remains to be seen. Globe Newswire estimates the car-sharing market will hit $16.5 billion by 2024. Several factors are impacting this growth, including increased regulation of emissions and the high cost of vehicle ownership. Car sharing helps people find an affordable mobility solution without the need to own a car or rely only on public transportation.
Mr. Muench indicated that electric automobiles are a driving factor in the future of the automotive industry. This particular change directly impacts everything from the way vehicles are manufactured to the infrastructure that keeps them running. As more and more cities offer charging stations for electric vehicles, the opportunity to electrify the vehicles is increasing.
According to Forbes, declining electric vehicle costs and greater access to charging stations are making electric vehicles more popular in the United States. Add to this more familiarity with the technology behind electric vehicles and increasingly high oil prices, and the future is bright for electric vehicles. Forbes predicts that as many as 75% of the sales of vehicles by 2050 could be electric.
Growing global reach
Finally, Mr. Muench indicated explosive growth in China as one of the key areas that will impact the future of the automotive industry. This growth indicates the increasingly global nature of the automotive industry. As demand for vehicles in China has grown, so has its rate of manufacturing vehicles. In fact, Mr. Muench stated that in 2015 it surpassed the United States as the largest car country in the world, and the demand isn’t slowing.
Automotive industry changes
In light of these changes, the future of the automotive industry is expected to look quite different than it looks today. “The whole concept of a designated driver may be as foreign to your kids as a landline is for the current generation of teenagers,” said Muench. “I think it’s dramatic. It’s exciting. It’s, I think, scary for a lot of the players because it really changes their business models.”
As these changes take place, traffic challenges may disappear as self-driving vehicles take over. Car sharing could reduce the number of cars people own, especially in crowded urban areas. Electric vehicles will reduce the dependence on oil for fuel. Connected technology will make cars more intuitive and automate many of the fleet and public transit actions.
Technology innovations are driving tremendous changes in the automotive industry, and those changes will make a difference in how people interact with their vehicles. For leaders in the automotive industry, adapting to these changes will be essential to staying relevant and at the head of the competition.
The future is bright for the automotive industry, but it will have a new look. To hear more about these changes and their potential impact, listen to the full podcast interview.
Hear the full episode here. Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Discrete Manufacturers: Automotive, Aerospace and Defense, High Tech, and Industrial Machinery. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?