Automotive Industry Upcoming Trends

Stanford Consulting

The automotive industry has seen more rapid and significant change in the last decade itself than the entire fifty years preceding it. Specifically, the introduction of consumer electric vehicles driven by software has disrupted what was once a fairly predictable market and has changed the name of the game for automotive manufacturers. Here are three trends to keep an eye out for within the automotive space in the coming years.

  1. A shift from hardware centric to software centric vehicles enables post-production updates, but simultaneously raises cybersecurity risks. Traditionally, with hardware being the biggest component of a vehicle, manufacturers have had little room to update vehicles post-production. However, as software becomes a larger and larger part of vehicle functions, manufacturers will be focusing more on dynamic development design that allows for flexibility and improvements even in post-production. These changes come with large risks to automotive manufacturers, especially in regards to cybersecurity and increased production times due to more complex integration. Further, as these companies attempt to reach the software-development speeds of digital-native firms, expect an increased effort on talent acquisition by automotive companies looking for software engineers and related professionals.
  1. The automobile industry has embraced a shift towards centralized E/E architectures. Early digital vehicles (sometimes referred to as ‘1.0’ or ‘Generation 1’) had architecture largely composed of multiple engine control units (ECUs) each with its own independent functions. As these vehicles have evolved, most common architectures now include a central gateway for connection between ECUs. While these advancements have increased complexity, they have also allowed for cross-functional features such as adaptive cruise control. As this trend continues, expect automotive manufacturers to be looking towards a future with a virtual domain to decrease hardware costs and allow for more high complexity computing functions.
  1. More companies are deriving revenue from subscription-based software services (shifted business models). As companies in the automotive industry continue to adapt to technological advancements, companies will rely heavily on subscription based services. Examples of automotive subscription based software include features such as lost vehicle tracking, navigation systems, and vehicle diagnostics. These advancements will allow customers to experience innovative technologies in their vehicles, without having to purchase new vehicles. Additionally, the integration of artificial intelligence (AI) will revolutionize the automotive industry, enabling a more personalized experience for drivers, while optimizing performance and safety. 

Overall, the automotive industry is experiencing significant growth driven by technological advancements and shifting business models. The transition from hardware-centric to software-centric vehicles demonstrates that manufacturers will approach design and development in new ways, emphasizing areas such as talent acquisition in software engineering. Additionally, the rise of subscription-based software services, enabled by new technologies and artificial intelligence, will better the customer experience inside vehicles. As these trends change the automotive industry, companies must remain forward thinking in order to thrive, in an increasingly competitive landscape.  

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Photo by Lee Rosario from Pixabay.

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