There are many visions for the future of the automobile. Some look to the drivetrain and debate whether the internal combustion engine (ICE) will give way to battery-powered plug-in vehicles, or to fuel cell vehicles, or evolve to run on biofuels or natural gas. Others point to advanced materials, or to self-driving cars, while others still look beyond the car itself, to disruptive use cases like car sharing and taxi replacements (see Figure 1). While debates tend to revolve around whether one or another of these innovations will or won't become a dominant solution, the reality is that multiple advances will reshape the industry over the coming decades. One common but under appreciated thread runs through all the innovations that are likely to succeed – safety.
Figure 1: The Future of Transportation Spans Many Visions
Consumers regularly rank safety as one of their top three priorities when buying new cars. Yet despite significant advances, safety issues remain a key issue for OEMs and consumers. Automakers in 2014 recalled more than 60 million vehicles in the U.S. for safety reasons, which amounts to a years’ worth of sales. Some of these recalls were astonishingly serious, like GM’s Cobalt ignition key flaw, which had more than 80 deaths. Globally, the World Health Organization estimates that there are 1.24 million road traffic deaths a year.
However, vehicles are on the cusp of a safety revolution. By 2030, no one buying a new car will die in that car.
As Automakers Pursue New Technologies, Safety Comes Along for the Ride
The pathway to this audacious goal, however, will be subtle; safety benefits will arise as developers pursue other objectives. Take for instance, advanced materials for improved efficiency. OEMs are earnestly pursuing vehicle lightweighting because of stricter efficiency regulations, which are driven by concerns about emissions. In 2015, Ford even succeeded in switching its hefty F-150 pickup truck – the best-selling vehicle in the U.S. – from a steel body to one made of the much lighter aluminum, dropping more than 600 lbs in weight and improving fuel efficiency. What’s more, there was a safety benefit as well: Ford’s heat-treated aluminum alloy is stronger than the steel panels it replaces. A similar story will follow as even lighter-weight carbon fiber reinforced plastics (CFRP) begin to penetrate the industry. In 2014 BMW deployed the first large-volume automotive CFRP application, in the $41,000 BMW i3 plug-in car. The performance benefit was increased driving range due to weight savings from the CFRP, but the resulting car added safety benefits over many direct competitors, too.
The pursuit of convenience also brings safety benefits. For example, cruise control is now a near-standard convenience, and automatically adaptive cruise control is next. This feature is part of an emerging class of technologies known as “driver assist” – not just automatically adjusting cruising speed, but also evasive braking and steering to avoid an accident. While these features make driving easier, the safety impact is already apparent. The Insurance Institute for Highway Safety (IIHS) has started seeing new car models that no one has died in, including the Subaru Legacy, which includes a suite of some of the industry’s most advanced driver assist features.
Once Safety Is Near-universal, the Auto Industry Will Change
While one auto OEM will achieve zero deaths first, most others will get there soon thereafter, so safety will cease to be a differentiator. Instead, it becomes an enabling platform, from which brands will then have to build to focus on other issues, such as how people use cars to get around and what the user experiences are inside the car.
To the first point, ride-hailing services like Uber have been tremendously successful in recent years, not just as an alternative to taxis, but even as a replacement to drive one's car. However, Uber has had its share of controversy, in no small part due to high-profile safety issues associated with a few of its drivers. Perhaps not surprisingly, it is opening up a research facility to develop self-driving cars, which would lead to a safe, and more consistent, customer experience (and eliminate driver salaries). Within carsharing fleets like Zipcar’s, self-driving cars or other safety features could also prove to be a key enabler, making up for inexperienced drivers in unfamiliar cars. In both cases, total safety can help take these already-popular novel automotive business models to new heights.
An even bigger transformation is the user experience inside the car, where traditional auto OEMs are struggling to integrate electronics and connectivity. For example, Consumer Reports noted in 2014 that “infotainment system problems plagued the industry once again,” with “unresponsive touch screens, reluctance to pair phones.” Consumer electronics leaders like Apple and Google have already spotted the opportunity and are deploying Apple CarPlay and Android Auto to improve the user experience. They will not stop there. Both Apple and Google (along with others like Foxconn) are looking at a bigger slice of the automotive opportunity. The car is evolving in that direction anyway – by 2030, half of a car’s value will come from electronics and software (see Figure 2). Total safety will rely on increased use of electronics but also serve as a platform for increased opportunities in the car.
Figure 2: By 2030, Half of a Car’s Value Will Come from Electronics and Software
In entering this market, electronics and IT players like Apple and Google will expand the value chain, and also take away some of the automotive OEMs’ stranglehold on power. Today, OEMs like GM sit atop Tier 1, Tier 2, and other suppliers, all the way down to raw materials, dictating pricing, innovation needs, and pace of deployment. In the future, the line between automotive OEM and electronics ODM (original device manufacturer) will blur, and the value chain below them will expand (see Figure 3). More worryingly for auto OEMs, the power in the value chain, and the bulk of the revenues, may ultimately be in the hands of software and electronic hardware design. OEMs would still put out new cars – they are hard to build, after all – but the electronics hardware could be refreshed like consumer electronics, on a much quicker cadence than the four- to seven-year automotive design cycles. Meanwhile, over-the-air software updates could upgrade car capabilities monthly or even more frequently, without costly dealer visits.
Figure 3: The Conventional Automotive Value Chain Will Shift in Power and Expand
The disruption will blow open the automotive value chain. Clients interested in tapping into this upcoming opportunity should ask three key questions. First, does your business currently have a play in – or can it competitively enter – the automotive advanced materials and autonomous systems arenas? Second, what already existing partnerships can you tap into and what new ones do you need to form (for example, can you creatively apply your autonomous system work to an already existing partnership with a plug-in vehicle developer)? Third, does it all come together to improve safety?
For more information on Energy Storage technologies or clients interested in discussing the future of the automobile, contact Cosmin at email@example.com.