Tech Trends and the Role of IT in the Automotive Industry

The pace of the automotive transformation we are observing is truly astonishing. We at Andersen know this better than anyone else, as the IT sector and the progress it enables are the main engines of the unprecedented ongoing advancements in the automotive industry. Today, we would like to briefly assess these far-reaching automotive trends. We will also address the corresponding role the tech world plays in them.

The automotive industry: new needs and patterns

As a major and complex sector, the automotive industry can still be defined as all the entities and operations involved in the production of vehicles and their components to be sold to individuals and companies. Previously, the main focus of this understanding was centered around motor vehicles, internal combustion engines, and personal ownership.

However, very soon, this framework will recede into the historical distance and will be replaced by a new IT-based reality serving newer usage preferences, driving practices, and ownership patterns.

Thus, as early as 2016, Mary Barra, Chair and Chief Executive Officer of GM, told the World Economic Forum that the industry will face a full-fledged revolution, determined by “convergence of connectivity, electrification, and changing customer needs.”

Indeed, due to unique constellations of factors at play, the automotive industry is being simultaneously reshaped by:

• environmental concerns and a greater demand for cleaner e-vehicles,

• tech progress enabling greater connectivity levels and AI-based autonomous driving,

• recent trends focused on sharing and using, not on owning vehicles.

As a result, the PwC experts see “the car of the future” as “electrified, autonomous, shared, connected and yearly updated.” With these three dimensions in mind, we would like to dive deeper into the following four implications for the industry:

• Electrification and battery software;

• Autonomous driving;

• Shared mobility;

• Fleet management.

E-vehicles

As the McKinsey experts put it, around 2030, “the share of electrified vehicles could range from 10 percent to 50 percent of new-vehicle sales.” What does this mean for automotive manufacturers? It implies that they need cheaper and more reliable batteries that can be controlled, monitored, and assessed by modern software.

Three years ago, the market size of battery management systems was only $5.81 billion. Around 2027, it is expected to be as high as $24.83 billion. To benefit from this growth, both automotive manufacturers and their IT teams and partners need to make sure that their battery management systems can successfully perform such crucial tasks as:

• effective control and seamless tracking of batteries’ conditions in terms of charging and discharging,

• sending and displaying timely alerts about the status of a battery,

• ensuring automated safeguards to protect batteries from damage.

In other words, in McKinsey’s opinion, a typical electric vehicle platform of the future is a product capable of seamlessly combining a “HV battery, charger, e-motor, and further HV components inside.”

Shared mobility

At the end of 2021, the global market of shared mobility - which can be understood as the “shared utilization of mobility resources, thus providing short-term and on-demand access to vehicles” - was valued at $251 billion. Around 2027, it is projected to exceed $1,000 billion. Why is this happening?

Well, it is part of a bigger trend towards a sharing and subscription-based economy that can be observed across a wide variety of sectors. In this context, the main rationale behind its popularity is an opportunity to “gain the benefits” provided by vehicles “without the costs and responsibilities of car ownership.”

As such, this segment provides end-users with several ways to access mobility:

• Car-sharing and car-pooling;

• Micromobility (i.e., usage of bikes and e-scooters);

• E-hailing, aka ride-hailing that may also include ride-splitting;

• Microtransit.

What unites all these directions is an enormous need for software and, potentially, IoT solutions for:

• online car booking tools and reservations systems (OBT),

• integration with OTA websites and CRM solutions,

• IoT-based car tracking tools,

• communication channels,

• service-reporting tools,

• etc.

Autonomous driving

In 2030, we may be living in a new world where 800,000 robo-cars are manufactured annually. Together with the recent successes in the AI domain, an entire range of factors is contributing to this potential growth:

• Demand for higher comfort;

• Need to reduce chances of accidents generated by human error;

• Focus on business efficiency and connectivity;

• The growing popularity of e-vehicles, which automatically implies connectivity and, as a consequence, more space for AI.

Fleet management

The changing patterns of car usage and shared mobility presuppose a greater need for effective fleet management tools. As Deloitte stresses, while describing the current situation in Europe, almost “two of three cars are sold to the corporate channel.” All those companies need advanced solutions to manage their diverse car pools of multiple vehicles (which tend to be connected, shared, and autonomous).

In this respect, the Deloitte experts point out that the so-called Total Cost of Ownership (TC) consists of the following two parts:

• 40% of the TCO is associated with the “actual vehicle,”

• 60% of costs “are incurred during the use of the vehicle itself.”

And as long as the operating companies, i.e. fleet owners, need to spend all that money on using those vehicles, fleet management tools are of enormous importance. Via these tools, it becomes possible to reduce costs related to such crucial aspects as:

• tracking depreciation,

• monitoring fuel consumption,

• dealing with repair and maintenance,

• interest rates (if loans are used) and insurance payments,

• fees.

Conclusion

No matter how challenging and rapid the ongoing automotive revolution may be, with a reliable IT partner, any enterprise can obtain a fully viable cost-effective tech solution to keep up with the times. Andersen’s all-encompassing expertise, experienced IT talent, and knowledge of the best industry practices enable us to deliver an automotive IT project of any complexity, including such cutting-edge solutions as:

• automotive car software,

• connectivity and telematics tools,

• car rental solutions,

• fleet management software,

• you name it.

Get in touch with Andersen to join the wave of tech innovation in the automotive industry!