The study forecasts that the automotive industry will offer a greater personalized driving experience by 2025. It also suggests that big changes are coming in the automotive supply chain.
"While the automotive industry has seen a resurgence in recent years, a new industry identity is emerging—one that is more open, inclusive, and without borders. Welcoming this transformation can result in benefits the likes of which haven't been seen since the automated assembly line," said Alexander Scheidt, Global Automotive Industry Leader, IBM Global Business Services. "By 2025, the industry will not only recreate our highly personalized and digitized lives inside our cars, but also give consumers a bigger role in defining that experience, whether as a driver or passenger."
This is a significant shift in the product development landscape. With electric vehicles and hybrids forming only a minority of vehicle sales, and the prospect for stable, lower oil pricing for the foreseeable future, there is no significant technical innovation on the horizon that will drive a sea change in consumer auto buying preferences.
What’s left is connectivity. With automakers now driving sales with a pitch that revolves around a car’s ability to connect to the Web or a driver’s smart phone, volume growth in non-telematics mechanical and electrical systems may be limited. And with notable exceptions such as Delphi Automotive, the supply chain for high level telematics will come increasingly from the IT industry rather than traditional Tier Ones.
The IBM Automotive 2025 Global Study is based on interviews with 175 executives from automotive OEMs, suppliers, and other thought leaders in 21 countries, detailing customer expectations, growth strategies, mobility requirements, ecosystem disruption and other topics shaping the direction of the industry. Entitled "Automotive 2025: Industry without borders," the study was developed by the IBM Institute for Business Value (IBV) as a follow up to "Automotive 2020: Clarity beyond the chaos."
Consumers and automakers will co-creating autonomous vehicles
Today's consumers are more engaged than ever. They desire both digital engagement and an improved driving experience. The report indicates that consumers not only want to drive cars; they want the opportunity to innovate and co-create them so that they include related services, such as infotainment.
The report also indicates that nearly two out of every three (63%) executives surveyed saw mobility services or car/ride sharing as an area for greater collaboration with consumers. In addition, more than half (59%) felt product design, marketing campaigns (54%) and service/after-sales (52%) were areas in which the industry would benefit from working directly with consumers.
Cognitive vehicles will offer a personalized driving experience
By 2025, vehicles will be sophisticated enough to configure themselves to a driver and other occupants. Also, they will be able to learn, heal, drive and socialize with other vehicles and their surrounding environment. Nearly 80% of the executives felt that in-vehicle cognitive technologies will be a key component of how vehicles learn to provide a better experience for the occupants and optimize itheir own performance.
Fifty-seven percent of the respondents believe that vehicle "social networks" will be in place whereby vehicles will communicate with each other, allowing vehicles to share not only traffic or weather conditions, but information specific to a given automaker. For instance, if a vehicle was experiencing some type of problem not recognized before, it could communicate with other vehicles of the same brand to seek help on that issue.
In contrast to common beliefs, the report also underscores considerable skepticism about fully autonomous vehicles—where no driver is required and the vehicle is integrated into normal driving conditions. A mere 8% of executives see it becoming commonplace by 2025. Moreover, only 19% believe that a fully automated environment—meaning the driving system handles all situations without monitoring, and the driver is allowed to perform non-driving tasks—will be routine by 2025.
The skepticism about fully automated driving is especially noteworthy given Google’s advanced technology and several predictions that automated systems would in fact be commonplace by 2025.
While most predictions are based on the rapidly advancing state-of-the-art in sensor actuator technology, there are still multiple unresolved legal and political issues around fully autonomous driving. Not least of these is product liability. If automakers become automatic co-defendants in traffic accident cases, the pressure will be on to either implement serious tort reform, or delay implementation of autonomous systems until they can be so demonstrably foolproof that automakers’ insurers will underwrite the risk.
In the US at least, juries generally find it easy to award massive damages against OEMs, regardless of the facts. Expect any fully autonomous systems to still require a licensed driver with some nominal control to avoid these issues, much like the upcoming Mercedes-Benz highway autopilot system, which will require a hand on the steering wheel.
The borders of the automotive supply chain will come down
Overall, the IBM Automotive 2025 study paints a very clear picture: Industry growth will come from delivering additional value rather than just selling more vehicles. And even though one third of those surveyed feel they will be able to adapt to the challenges this presents, only one in five feel that they are prepared now.
The future requirements from the study emphasizes that the rigid, self-contained industry of the past century must quickly transform into an ecosystem that is open, collaborative and filled with new innovators:
- 73% of OEM executives rated mobility services and cost-effective alternatives to vehicle ownership like car/ride-sharing as a significant area for co-creation with consumers
- 73% of all executives rated collaboration with other industries as the best opportunity for industry growth as it progresses toward 2025
- 75% of all executives expect non-traditional industry partnerships to have a key role in the automotive ecosystem by 2025
An element of increasing importance in those non-traditional partnerships may be the emergence of Uber-like ridesharing systems. In urban environments, the possibility that vehicle ownership may be replaced by either subscription-based or pay-as-you-go automated taxi services is very real. If this evolves, technology changes may become evolutionary, without the new model change cycles that have defined the industry since World War II.
"Looking toward 2025, as the borders continue to come down, the new ecosystem will create challenges and opportunities the industry has never had to face before; the enterprises that welcome openness will set the stage for long term success and industry leadership," said Scheidt.
For more information about autonomous vehicles, check out Driverless Cars - The Race to Level 5 Autonomous Vehicles.