Technology Trends Impacting Automakers

To better prepare for the digital transformations influencing the automotive sector, automakers must identify emerging technology trends and upgrade their manufacturing processes.

FREMONT, CA: Automotive companies need to understand the current and relevant technology trends to optimally prepare for the software, hardware, and digital transformations occurring in the automotive sector. Automakers largely focused on the mechanical side of car development and left software to third parties. As digital technology emerges as a differentiator in the car, the software will become automakers' primary profitability growth driver. Original equipment manufacturers (OEMs) will aim to become tech or software companies. Therefore, automakers should consider technological trends to advance their manufacturing process.

Automakers Review Their Approach to Hardware Sourcing

Automakers are redefining their long-held inventory approach following the just-in-time (JIT) principle, which led OEMs and Tier 1 vendors to have no buffer inventory to fall back on during the recent chip shortages. As a result, automakers review how they deal with chip manufacturers and consider designing their own chips. It is anticipated that more than 50 per cent of large automotive OEMs will design their own chips and develop explicit, strategic, long-term working relations with chip companies while leaving the JIT inventory management process.

Digital Giants Integrate the Car Into a Holistic Ecosystem

Digital giants are continuously expanding their footprints in vehicle technology. These large businesses bring the car nearer to their ecosystem, opening new vehicle-connected services. While companies find it difficult to develop technology and software independently, they can partner with digital giants to succeed in turning software into a major cost-effective process or build vast in-house resources to achieve it on their own.

Open Data and Open-Source Collaboration Models

Several tech companies have recently created open-source vehicle architecture operating systems and open electric vehicle (EV) platforms. This approach of embracing new partnership models in the automotive sector is likely to increase in the coming years as well. Additionally, automotive companies will observe data in a similar way to that of the tech world. The aim is not to sell data but to establish or integrate ecosystems, enabling them to access a broader data diversity. This helps them to offer more compelling features or digital services.

Established Automakers Boost OTA as Main Digital Revenue Channel

There were major changes in the automotive over-the-air (OTA) software market the previous year when several car manufacturers started providing software updates. With more automakers updating the hardware on their vehicles to enable software updates, they will now shift to a revenue model based on services instead of asset sales. As a result, over half of the top automakers will offer unlocks and capability upgrades through software updates available after the vehicle sale