Reshaping Industry with Digital Transformation

The global push towards carbon neutrality and the transition towards greener vehicles, with their rapid shift in technology, is accelerating the transformation of the automotive industry. The sector, with its 7% GDP contribution, is the bellwether of emerging economies like India. With a technology-first and aspirational drive sweeping the Indian landscape, automakers are gearing up to realise the immense opportunity that lies ahead, as the country promises strong growth potential, with its low motoring penetration. 

Furthermore, with high levels of product quality, conforming to global safety and emission standards, companies are also increasingly exploring exports to overseas markets. However, the mega transformation is causing a situational conflict for vehicle manufacturers and component makers alike as to how to prudently align their resources, both human and capital, to aim for future readiness while maintaining the robust business metrics that drive continued viability and profitability. 

The various challenges and opportunities being thrown at industry players, be it legacy companies or young startups, are creating a huge conundrum that could seemingly find answers only with a technology-driven approach that gives precedence to modularity, agility, and scalability. To broadly discuss some of these key challenges being faced by the industry and the possible way forward, Autocar Professional organised a CXO Roundtable – InnerCircle - in association with Autodesk, on 12 November in Bengaluru. 

The roundtable witnessed the participation of industry leaders from the mobility ecosystem – startups and traditional automotive players – to deliberate upon the massive change that is currently underway in the industry, as well as to discuss how the role of technology is enabling companies, new or old, in making the transition towards sustainable mobility. 

Nikhil Deshpande, head of product development at Tata Passenger Electric Mobility (TPEM), outlined the multifaceted nature of this industry shift, stating: "There are 4-5 key factors that are enabling the transition to electric mobility in India. Firstly, it is the economic growth that we are witnessing in the country. Driven by consistent and stable policies, there has been notable growth over the last decade. Secondly, with growing urbanisation, which is set to witness more than 500 million people settling in urban centres by 2030, the demand for mobility is on the rise."

Expanding on the potential of rural markets, Deshpande further pointed out that the rural economy is also witnessing strong growth in India, and the passenger vehicle sales of Tata Motors in these regions speak volumes about the potential of these markets. “Having said that, despite the broader sustainability mandate, the consciousness towards the environment is coming more from the younger generation with their greener lifestyle choices. And lastly, the advancement in technology and the exposure to the latest technology is driving a major transformation in the automotive industry,” he pointed out.

Shifting the focus to infrastructure's role, JCB India’s Atul Deshmukh pointed out that the government push towards infrastructure development in India has been a key growth driver for the construction-equipment sector over the last decade. While companies like JCB are presently eyeing sustainability by leveraging data and its potential to optimise fleet operations, they are also exploring alternative propulsion systems such as hydrogen-powered and electric powertrains.

Speaking from the perspective of a shared mobility provider, Naveen Dachuri, Co-Founder and CTO, Yulu, said: “While we started our business to solve people's mobility problems, the unprecedented e-commerce growth during Covid gave a significant push to at least one segment – last-mile delivery – of our business. Today, we deploy close to 45,000 e-bikes purely in the shared-mobility segment, and Yulu executes more than 20 million deliveries every month in Tier-1 and Tier-2 cities.”

EVs Unlocking Opportunities

For Bengaluru-based electric performance-motorcycle startup Ultraviolette, the e-two-wheeler market in India is poised for rapid growth with increasing urbanisation and income levels. Explaining the huge opportunity they see in the market, CTO Niraj Rajmohan said: “The kind of growth that we witnessed in China over 20 years ago is expected to take place in India in the coming years, and that represents a massive opportunity for companies in the automotive sector.”

The company, which has seen major investment from established two-wheeler players such as TVS Motor Company, is eyeing a niche in the electric two-wheeler segment with its high-performance, aspirational motorcycles. Delving into their strategic choices, Rajmohan said: “When we were thinking about which mobility segment to kickstart our operations in India 7 years ago, we were in a conundrum. But, very soon we realised that it had to be this entry-premium category of two-wheelers where the competition was lower and there was a big opportunity to build a brand.”

He continued, highlighting the positive response to their product: “Today, there is organic demand coming for our products from across the country, and it is purely based on word of mouth for a product which truly meets global standards. It is an amazing feeling to be recognised.”

Offering her insights on the importance of indigenous technology, Madhumita Agrawal, Founder and CEO, Oben Electric, said: “India is a highly price-sensitive market, and indigenisation, localisation, and having in-house technology, play a huge role in the EV adoption. Two-wheelers are not just about utility, but also a means of status symbol in rural India.”

Andrew Anagnost, CEO, Autodesk, gave a global perspective on the automotive industry's transformation. “When we look at mobility and the automotive industry globally, it is being transformed by the CASE megatrend – wherein – while electrification is enabling the shift towards autonomy, it is also driving a move towards in-vehicle experience.”

He further elaborated on the changing customer expectations. “The expectation of how one experiences a car is changing dramatically. The industry is moving away from managing mechanical complexity to managing system integration, value chain integration in completely different ways. This is a once-in-50-year opportunity for new brands to get established, and we can see it already in the form of Tesla and BYD,” he said.

Dinesh Arjun, Co-Founder and CEO, Raptee, highlighted the unique innovation happening in India, noting, "What we are seeing today is a demographic-specific innovation wherein startups are creating products that make sense for the Indian market. And that means changing things at the architectural level of the vehicle.”

For e-two-wheeler startup Simple Energy, Indian consumers are moving towards value-driven propositions rather than restricting themselves to price points. Outlining this shift in consumer behavior, Shresth Mishra, Co-Founder, Simple Energy, pointed out: “The demand for electric two-wheelers in India is growing rapidly, and the market is evolving and accepting premium products as well.”

Returning to the construction equipment sector, JCB India’s Deshmukh, pointed out that not all segments are being electrified at the same pace: “Out of the two segments – compact and large equipment – it is the former which, with its up to 5-tonne capacity, is more suitable for electrification. We have already exported 10,000 made-in-India electric scissor lifts to the US in CY23.”

Anagnost emphasized the potential of the Indian market, adding, “While the two- and three-wheeler categories are big segments in India, they offer strong potential for global markets as well. Therefore, electrification, which will be transformational for India, offers us a huge opportunity for us to bring our technological tools.”

Transformational Cloud, AI 

With the foray of startups in the mobility ecosystem, the chances of these companies making it big will depend upon their ability to develop disruptive technology and create a robust digital backbone that will enable speed and future scale. Commenting on the need for agility, the Autodesk CEO said: “These younger companies disrupting the automotive industry are also looking at newer value chains. People must design their processes and systems for agility as this market is evolving quite fast and rapidly.”

He further stressed the importance of cloud technology and AI, stating that AI and cloud will play a crucial role in enabling young companies to make a mark in the automotive industry. “Today, if a company is not on the cloud and not deprecating paper, they are really lagging. Therefore, it is important to make a full transition to the cloud for a complete digital transformation.”

Anagnost also shared Autodesk's long-term vision. “AI has been in our DNA for a while. We envisioned a cloud-enabled future which will be driven by AI more than a decade ago. Companies embracing AI and cloud are going to be the new global and local brands in the future,” Anagnost added.

Dachuri shared Yulu's reliance on technology, commenting, “Technology has had a big role to play in making our business sustainable, and without digital transformation, Yulu’s business would not be viable.”

For JCB India, the company is leveraging IoT and cloud, and tapping into data from its over 200,000 connected construction equipment vehicles on the field, and with its telematics platform, working on remote diagnostics and executing preventive-maintenance activities for minimal downtime.

Vertical Integration, Local Supply Chains 

The growing EV volumes, for instance, with the electric two-wheeler industry in India racing past the 1-million sales milestone for the first time in a calendar year in CY24, is also giving a fillip to the demand for EV-specific components. This is driving the maturity of a local EV supply chain in the country.

Agrawal explained Oben Electric's approach to vertical integration, stating, “We have an entire in-house technology stack wherein we not just design but manufacture motors, vehicle control units, as well as batteries for our motorcycles in-house. This allows us to control the technology and offer a better price as well as quality to our consumers. One must design in a way to get to a price tag, and that is how in-house technology really aids an OEM.”

Anagnost also commented on the strategic importance of vertical integration for startups: “Vertical integration is key to the growth of emerging startups in the mobility landscape. Therefore, they must eye new value chains to go to market faster. It is this reason that companies like Tesla opted for vertical integration because the ecosystem could not match the pace of their growth.” 

However, he also offered a nuanced perspective. “Having said that, vertical integration lasts for a period of dramatic change and starts to disintegrate again as the ecosystem now changes and retools,” he pointed out.

For electric passenger vehicle market leader Tata Motors, the economy of scale makes a significant difference in the market’s ability to localise new technology, and therefore, as per Deshpande, India must assess global supply potential as well.

Deshpande further highlighted the impact of localisation. “Having said that, the drive towards localisation has pushed the entire ecosystem to come out of its comfort zone. We must start making cells, chips, and PCBs in India, and that is where there is a huge opportunity. Although the EV supply chain is maturing quite rapidly, unless that happens on a full scale, we cannot say that it has developed completely,” he added.

Deshmukh shared insights into the construction equipment industry's supply chain dynamics: “When it comes to electrification, the construction-equipment industry is leveraging the same supply chains that are available for the PV industry. Having said that, EV supply chains in this category are still in their infancy the world over, and as JCB, we are entering into 4-5-tonne compact machine space with respect to electrification.”

Skills Key Constraint 

While the industry is adopting more tools to accelerate product development, manage product lifecycles, and get faster to the market, there lies a fundamental concern that is plaguing all players, big or small. And, that is unfolding in the form of a huge challenge in finding the right talent to fuel their EV ambitions. 

Deshpande highlighted the critical need for skilled manpower, stating, “What the industry today lacks is skilled manpower, and a strong industry-academia connect is extremely critical to ensure an industry-ready workforce.”

Echoing this concern, Rajmohan of Ultraviolette and Dachuri of Yulu added that experienced industry executives find it difficult to transition to newer tools and platforms, and therefore, finding the right skill sets remains a concern.

Rajmohan also pointed out the challenges in transitioning to cloud-based systems: “Despite an OEM’s switch to the cloud, the suppliers continue to demand traditional means of managing complexity in the form of requiring physical drawings. Therefore, a complete transition to the cloud necessitates an accelerated drive of the entire ecosystem,” said Rajmohan.

Outlining Autodesk's initiatives to address the skills gap, Parminder Singh, Country Head, Design and Engineering, India and SAARC, Autodesk, said: “Autodesk is driving a big skill enablement initiative in India to prepare an industry-ready workforce. Since starting an EV organisation demands a fundamental mindset change, we are ensuring to make students comfortable with our technology, and are working with various governments, as well as institutions, to define certified courses that are aligned with the market demands.”

Deshmukh detailed JCB India's approach to talent development. As per Deshmukh, JCB India is collaborating with IITs, and working with them on curriculum development and imparting the right skills that suit the industry’s requirements. The company eventually hires students from IITs and NITs to expand its workforce.

Agrawal suggested looking beyond top-tier colleges for talent. According to her, while there is enough talent and facilities in the top-tier colleges in India, startups must look at tier-2 colleges as well as there is “enough hunger and the zeal to drive change” in the students in these institutions. “I truly believe the future disruption will be done by engineering and design students in tier-2 colleges,” she added.

Arjun said it was easier for Raptee to migrate to digital tools, as it had an average age of 23 years. In the US, a vast majority of engineers graduate knowing the Autodesk Fusion platform.

“While the adoption of our tools in the US education system is dramatic, we are not quite there in India yet,” pointed out Anagnost. “But, since there is a humongous scope of penetration, we will get there. We recently signed an MoU with the Tamil Nadu government to ensure that next-generation digital tools are native to the future workforce. This is how the ecosystem will get transformed – starting with the youth, and moving upwards. We must remove the resistance to embrace new technology, and to change the ecosystem, we must start with the digital natives, who will handhold the digital laggards.”

The panel unanimously agreed on the immense potential of digital transformation towards driving unprecedented growth in the mobility ecosystem in India, which is poised to fulfil the demands of not just the domestic market, but also cater to global automotive demand with its high-quality, cost-effective, and modern products. As the country has already achieved the stature of being the third-largest passenger vehicle market in the world, and is already the world’s leading two-wheeler market, the future technological innovations by the industry augur well to circumnavigate the challenges around sustainability and economic development.