Automotive manufacturers are focusing on R&D on ACE technologies to build fully connected and completely autonomous vehicles.
18 Sep 2017 | 10921 Views | By Autocar Pro News Desk
Automobile companies must collaborate with diverse players for Research and Development (R&D) on autonomous, connected and electrification (ACE) technologies to achieve double-digit growth opportunity, says a report by Frost & Sullivan’s Mobility Team.
With narrowing margins being witnessed by automotive industry, there is a pressing need to look at ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Automobile companies must collaborate with diverse players for Research and Development (R&D) on autonomous, connected and electrification (ACE) technologies to achieve double-digit growth opportunity, says a report by Frost & Sullivan’s Mobility Team.
With narrowing margins being witnessed by automotive industry, there is a pressing need to look at other revenue streams. While, it is also important to retain the customers and be committed to the brand for their next purchase.
Automotive manufacturers are focusing on R&D on ACE technologies to build fully connected and completely autonomous vehicles. To thrive in this highly competitive, evolving market, manufacturers will need to look beyond from just being a product supplier, and instead focus on becoming providers of mobility services. This will open the door for lucrative, new digital revenue streams.
Frost & Sullivan’s research, Global Key Automakers’ Autonomous, Connected, and Electrification Strategies, Forecast to 2025, finds that between 2015 and 2025, 10 key automotive original equipment manufacturers (OEMs) are expected to spend about $345 billion (Rs 2,179,365 crore) on ACE R&D.
“In order to match market expectations, OEMs’ present objective is to build cars that can change the form and function, compared with what is currently available,” says, Jagadeesh Chandran, industry analyst, Future of Mobility, Frost & Sullivan. “OEMs should focus on collaborating with diverse players such as utilities, charging infrastructure owners, mobility providers, service providers, and leasing companies to establish a potential e-mobility market.”
The report highlighted that the research found that the current focus on autonomous technologies make-up for the bulk of investment in the segment, averaging $1.43 billion (Rs 9,033 crore) in estimated investment per OEM from 2015 to 2025. Decentralised R&D activities continue to play a vital role in achieving higher sustainability. Along with premium and volume vehicle makers view connected car technologies essential to compete in the market.
Comparing the global scenario, the report found Japanese OEMs focus on in-house development of capabilities, while European and American OEMs focus on collaborative development through partnerships and acquisitions. With the American OEMs spending less on basic research, while European and Asian OEMs allocated equal spend towards basic and advanced research.
Betting big on connected technology on playing a vital role for short-term gains, as autonomous and electrification technologies are expected to yield returns by 2018 to 2019. And, artificial intelligence and machine learning accounted for more than 80 percent of all new future revenue and business opportunities.
“On the flip side, challenges with employee retention and protection of development activities are expected to increase with the development of various autonomous and connected car technologies,” notes Chandran. “To maintain a foothold in the market, OEMs should keep track of third-party connected car service providers that can bring the same or similar services as OEMs to market at a significantly lower cost through an entirely different monetisation model.”