Exploring the Future of Automotive in a World of Disruption
Published on September 3, 2019
Rohit Talwar – Futurist Speaker
By Rohit Talwar and Alexandra Whittington
What are the critical themes that leaders in automotive and road transport management must wrestle with as they develop future strategies?
Developing Future-Aware and Connected Leaders
Tomorrow’s leaders in the automotive sector will face an unprecedented range of changes and challenges to navigate as they steer the organization’s path into the future. When those in road transport management look to leaders in the automotive sector for answers, we realize that they are so deep in the “I don’t know” stage of industry evolution that they cannot offer the clarity the former are seeking. Hence both sets of leaders need to be deeply connected to the world around them to ensure they are truly aware of potentially disruptive current and emerging developments taking place across the sectors and in the broader environment.
However, as we look to 2040 and beyond, there are few facts about what has yet to happen. In many cases, it is far too early to distinguish between what could turn out to be temporary fads and the more substantive ideas and developments that could turn into significant trends that will have a meaningful impact on the sector.
With an accelerating pace of change, developments can emerge, grow exponentially, and have a significant disruptive impact in a very short space of time. We cannot simply sit back and wait to see what might happen. As industry leaders, we need to ensure we are developing our anticipatory skills, scanning the horizon for signs of future change, and building the ability to act fast in evaluating and responding to the resulting future insights.
Good foresight has become a critical tool for conscious leaders. It equips us to make our own choices about how best to take advantage of emerging opportunities and protect against potential threats. Across every part of the automotive and road transport infrastructure value chains, we are witnessing a number of these developments and emerging ideas which need to be understood.
In the absence of hard facts, we have explored the ambiguous nature of these six forces to outline possible scenarios that, while low on certainty, would have a large impact on the automotive industry and, in turn, the highways management sector. These address the themes of:
- Concept to Production
- Digital and Connected
- Autonomous Vehicles
- Evolution of Business Models
- Societal Shifts, and
- Rapidly Evolving Markets.
Here’s a glimpse of the future of automobiles: What we might see, why we might see it, and when.
From Concept to Production
Nanotechnology, smart materials, and a range of new and emerging design and manufacturing approaches are starting to enter the automotive and road maintenance sectors. These could have a significant potential impact on the value chain from concept creation and vehicle design through to manufacturing, maintenance, and repair by 2020. These will offer super-aerodynamic automobile designs from highly flexible, cost-efficient, and easy to maintain new materials.
Boeing has introduced a new metal that’s touted as being “light as air,” for example. Lighter vehicles can be more efficient, and stronger—in this case, thanks to a design made of tubes thinner than a hair that mimics human bone structure. The material can absorb tremendous shock despite its delicate composition. Superior strength and efficiency could deliver cost savings across the entire value chain.
The car industry is accelerating the use of 3D printing as a strategy for saving time and money in producing prototypes, components, and entire cars. For example, Local Motors is using 3D printing to develop entirely new vehicle lines such as the Strati which has just 50 components. This also offers the potential to reduce transportation costs and repair time by 3D printing spare parts on site. There may come a time when it is cheaper to print, rather than fix, a part or vehicle.
3D printing could also allow us to reintroduce iconic vehicle designs of the past and manufacture them economically in very small quantities. In the medium to longer term, 4D printing could enable us to produce objects that can change their shape and properties over time. To avoid junkyards full of 3D printed scrap, the car industry is also increasingly focused on reusable or recyclable materials.
Digital and Connected
Digital transformation, the Internet of things (IoT), and advances in smart technologies such as robotics and artificial intelligence (AI) are blurring the boundary between the physical and virtual world. In fact, by 2025, we can anticipate vehicles using these and other cutting edge technologies such as hyperconnectivity, blockchain, cloud computing, and drones to help drivers accomplish goals other than driving. Collectively, they could turn our cars into always on, highly connected, self-monitoring, self-managing technology platforms that can be updated as frequently as the app library on a mobile phone, so much so that more than 80% of the value of vehicles is expected to lie in their digital components by 2040.
Not only are vehicles becoming smart, autonomous, and communicative, but they are starting to combine multiple emerging technologies. Could automobiles become new spaces for conducting other business besides transportation? For example, manufacturers and resellers are looking at adding constantly updated flexible external display panels to cars to generate advertising revenues for the owners.
Ford is using drones to guide self-driving cars, so these vehicles can operate when there’s no internet service—taking autonomous vehicles beyond the city limits. Similarly, Local Motors has a car design equipped to launch a drone, which provides the driver with a bird’s-eye view of the landscape. Indeed, many of the advances coming into our cars will help recreate the automobile’s heyday when a Sunday drive might provide a few hours’ entertainment.
A growing number of manufacturers are building fully or partially autonomous vehicles. Dramatic claims are being made about their potential to cut accident rates, improve fuel management, increase traffic flows, and reduce the number of taxis required in a city. As we move from partially to fully autonomous vehicles, by 2040 we could reach a point where all new vehicles and existing stock must be retrofitted with a self-driving mode. This could see human drivers criminalized, ostracized, or otherwise considered deviant members of society with driving becoming an anachronism.
Every manufacturer and a range of new entrants are pursuing the autonomous dream. Uber is planning a fleet of self-driving cars, with live trials in Pittsburgh and another recently halted in California, while its Otto subsidiary has powered the first autonomous truck. There’s already a self-driving minivan, a self-steering cruise ship, and self-flying planes. There are also self-flying cars and single person drones. Key goals here are lower accident rates, more efficient traffic flows, lower emissions, reduced car parking requirements, and shorter journey times.
The most drastic possible expression of the autonomous vehicle revolution sees a world in which human drivers are considered too dangerous, unpredictable, distractible, and probably uninsurable. A shift to completely self-driving vehicles would require a campaign to recast driving as the new smoking or the new drunk driving. However, while this likely to be unpopular with many drivers, like those other campaigns, such changes might ultimately be a good thing for society as a whole.
Yet, nostalgia is a difficult obstacle to overcome. The rise of the automobile played a large part in creating specialty facets of modern culture: car hobbyists, suburban communities, and road trips, to name a few, and these would not be possible without automobiles. Some people alive today grew up during this automobile revolution, and it plays a role in their personal identity. Now, some of those same Baby Boomers and GenXers may experience the emergence of a diametrically opposite worldview: humanity unfit to operate a car. Ultimately, it is possible that driving could become little more than a sentimental artefact of the post-World War II era.
Evolution of Business Models
There is gradual shift taking place from focusing on a vehicle as a one-off product sale to viewing it as a digital service platform, information center, and commercial portal with recurring revenue streams. At the same time, consumers are embracing concepts like the sharing economy with a growing interest in “usership” over ownership. Hence, a number of manufacturers now offer shared ownership schemes. Car sharing is possibly the most widespread new model with anywhere from 6 to 40 people sharing ownership of a single vehicle. This clearly has an impact on automotive sales revenues and maintenance costs as each vehicle is used anywhere from 5 to 50 times more than under single ownership.
For many, the rise of taxi services like Uber has enabled them to see their car as a revenue earning asset, not a cost center. This creates opportunities for manufacturers to explore the potential of sharing risks and rewards with the vehicle owner. Some are going so far as to suggest that by 2030 we could see the emergence of “self-owning” autonomous vehicles operating as taxis 24 hours a day, seven days a week. The idea is that those involved in producing the vehicle, supplying the components, refueling it, and servicing it would receive a continuous stream of revenues from the earnings of the vehicle over its lifetime.
Consumers also see opportunities for vehicle ownership to increase their income as well. By 2020, it could be common for vehicles to produce a paycheck rather than eat into it. Uber and Airbnb have normalized the idea of using personal possessions to make money, and that’s exactly what future car consumers might also sense: What they drive is not just a car, but an underutilized ATM. Peer-to-peer car lending via Turo, FlightCar, and other such platforms already started moving beyond the fringe in 2017. The idea of renting out your car when not driving it may mesh well with the gig economy, as a way to enhance income—or to simply justify vehicle ownership at all.
Within the industry, BMW and Toyota have introduced technologies that are enabling the re-use of electric vehicle batteries to charge the home. Elsewhere researchers have tested cars that charge while driving on specialized “smart” roads. These developments are budget-friendly, but are also bringing drivers one step closer to becoming energy producers rather than just consumers. Any vehicular advances that promote off-grid use, or generate and capture solar, kinetic, or any type of energy, are potential money-makers. Fascinating new business models could share the revenue from the energy generated from smart roads between all the players in the ecosystem by 2040.
A number of broader societal trends are also beginning to touch on the automotive world. Again, their long-term impact is very difficult to predict, and so we have to prepare for a range of possibilities. For example, we are experiencing radical changes in public thinking about the need for more integrated planning of the future of mobility and the value of smart infrastructures. The expectation is that transport systems and city infrastructures can be managed far better with lower ecological impact once the fully connected vehicle is communicating continuously with its external environment.
At the same time, a variety of “open source” car design projects such as OSVehicle, coupled with the reduced complexity of 3D printed cars and electric vehicles, are bringing down the cost and time to develop new designs. There is also growing societal acceptance of crowdfunding platforms like Kickstarter for innovation and Crowd Cube for raising equity.
Collectively, these societal shifts are enabling new vehicle manufacturers to test the market for new product concepts and raise seed funding without making major initial investments. The crowdfunding platforms are proving an effective route to raise finance and build brand awareness amongst a target market. A growing societal emphasis on environmental sustainability is also spurring the development of green vehicles and encouraging manufacturers to think about recycling and the “cradle-to-cradle” lifecycle of a vehicle.
We are experiencing radical changes in public thinking about the need for more integrated planning of future mobility with lower ecological impacts. By 2040 specific, regional, and local needs could displace “Big Automotive’s” monopoly, with cars designed locally using open source platforms such as OSCar—targeted at local residents based on usage patterns made evident via big data.
A major driver of future infrastructure is the smart city. All over the world, cities see the advantage of capturing data from every corner to run the city more efficiently and safely. Alongside these benefits there are also many risks, such as loss of individual free will and privacy. A major consideration in smart city planning is the balance between housing, industry, parking, and transportation, and that’s where cars come in.
By 2040, it’s possible to imagine that future smart cities will adopt very specific types of transportation technologies and approaches that best suit their specialized needs. Some will rely on autonomous cars while others may prioritize renewable fuel vehicles instead. Some may opt for both. Behavior modification around congestion, traffic, and driving in general are among a smart city’s key strategies.
Localized solutions to transportation may be preferred in some cases, particularly if there are ecological, political, or cultural reasons for a smart city choosing, say, large-scale public transportation over individual cars. Because big data is the key here, future smart cities will be automated to the hilt, and all decisions will be made based on what needs their particular data reveals.
Rapidly Evolving Markets
The rapid development and sizeable populations of many emerging countries are creating new vehicle markets, and several million new car buyers enter the market each year. From ultra-lost cost vehicles such as the Tata Nano through to extreme luxury, demand is growing. Competition is also likely to increase as local manufacturers continue to emerge in more populous countries such as China, India, Malaysia, and Indonesia.
Today, in contrast to the developed world, emerging economies largely reject car sharing or self-driving vehicles and fully embrace the idea of individual car ownership. However, by 2030, advanced technologies should make it possible to leapfrog toward sustainable transportation, thus electric vehicles (EVs), renewables, and biofuels could well be prioritized. The demand for ecologically sound cars could reach a frenzy.
Whether BRICs (Brazil, Russia, India, China), MINTs (Mexico, Indonesia, Nigeria, Turkey), or TICKs (Taiwan, India, China, Korea), the emerging world economies are where it’s at for all kinds of consumer goods, from refrigerators to air conditioners. However, the emerging economies of today can learn from the mistakes more industrialized countries have made. Many are gradually embracing the sustainable option—with some seeing the commercial potential. In fact, the developing world leads in the consumption of renewable energy, with Bangladesh, for example, being one of the worlds’ biggest markets for solar home systems.
Developing countries able to implement the right financial incentives may find that EVs ride the demand explosion for renewable energy. Currently, Renault has plans to roll out an inexpensive EV for China, which is where demand for EVs is expected to grow most. On the other end of the consumer spectrum, Jaguar Land Rover wants to station an EV hub in the UK. In the future, the leading economies—new and old—might need alternatives to fossil fuels, and the EV is one of the leading adaptations maturing societies have to choose from when it comes to using resources efficiently and cost effectively.
The Broader Global Context
These industry-level forces are also at play in the broader economy, where they are combining with a general thrust towards increased globalization, rapidly evolving economies, digital transformation, shorter and faster business cycles, and the rise of cyber currencies. In this broader context, questions are being raised about major issues such as:
- The role and purpose of business in tomorrow’s society,
- The importance of brands, design, and culture,
- The impact of automation on future employment opportunities,
- How to educate tomorrow’s workers and citizens? and,
- The implications of global markets and disruptive technological shifts on national identity, values, and governance.
A Future-Conscious Approach to Leadership Development
So, collectively, these forces of change are driving uncertainty—and fueling disruption, renewal, and transformation in every sector. In response to this “perfect storm” of change on the horizon, the automotive sector is being challenged to think hard about future strategies and how to respond to these forces both individually and through their collective impact. For both the automotive and Smart Highway sectors, the first priority has to be developing an effective “horizon scanning” function to identify and analyze the emerging changes and explore the alternative possible scenarios and their implications. Whilst the sectors may be able to influence each other’s decision making, a more reliable approach would be to prepare for a range of possible scenarios as hope is not a strategy.
For both sectors, new “conscious leadership” perspectives are required on how to deal with disruptive news entrants, how to innovate in design, manufacturing, and distribution, how to evolve business models and organization designs, and how to ensure effective stakeholder engagement in a fast changing world.
These transformative challenges are in turn raising fundamental questions on the future nature and capabilities required of leadership, and how to attract, develop, and retain the type of talent needed across the organization to ensure future relevance and growth. Our experience is that the best managed organizations are aiming to develop leaders who are prepared for a broad range of possible developments, opportunities, and challenges, and who are conscious of the different possible scenarios through which they may play out. We find that this deep sense of future orientation helps unlock the leadership drive, imagination, and personal capacity required to create a positive future for the organization.
Next generation leadership programs will need to explore a range of these emerging developments and the questions they will raise for tomorrow’s leaders. They should examine possible scenarios for how these developments might combine and play out. Finally, they need to generate and prioritize ideas on practical next steps to exploring the horizon and embedding future awareness in the toolkit of tomorrow’s conscious leader.
- How might automakers, smart city leaders, transport planners, and citizens work together to develop workable solutions for the autonomous era?
- What could the redefinition of driving and cars mean to the everyday family and its dynamics?
- How might these forces of change impact related sectors like the automotive aftermarket?