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The long road to commercially available autonomous cars is almost at an end. A number of things will be changing when that happens. Chief among the changes is the way automotive manufacturers invest and sell their products.

What separates an autonomous car from a regular car is the onboard computer. Behind that technology are companies such as Intel, Qualcomm Inc. And Nvidia Corp. which provides the chips necessary for the computing power. Cars will need to be turned into essentially mobile data centers meaning that the competition for the future of autonomous cars isn’t only among car manufactures. It’ll also be with and between the world’s largest biggest tech companies.

There’s Big Business in Little Parts

As we approach the final lap on the course towards autonomous cars, automotive manufacturers have already started to change their sale tactics. Where manufacturers used to talk about horsepower, they’ve now started talking about processing power.

According to data compiled by Bloomberg, the total value of automotive supplier deals in 2015 and 2016 were $74.4 billion. For some context, each of those years far exceeded the $17.7 billion annual average of the previous 10 years.
“The number of transactions valued at $500 million or more also skyrocket to 18 last year, triple the level of the previous decade” writes Elisabeth Behrmann, Polina Noskova, and Aaron Kirchfeld from the same Bloomberg article. “There have been 11 such deals so far this year.”

An example is Intel. Its automotive business is currently involved in 30 vehicle programs on the road. By 2020, the company is set to increase that number to 49 with orders worth $1 billion according to the Wall Street Journal.

Many of the deals are still done with makers of powertrain and chassis components. However, electronics-related acquisitions are growing the fastest. Some estimates have the cost of electronics in car manufacturing growing to 50% by 2030, up from around 30% in 2015. A portion of resources have also gone into securing the proper know-how to ensure that their cars have the necessary sensors, cameras, radar, and computing power necessary to safety assess traffic conditions and see their environment as a driver would.

Phone to Pocket PC, Car to Mobile Entertainment Hub

One of the biggest innovations over the last two decades has been in finding new uses for old products. TVs grew ‘smart’, watches and shoes graduated into personal trainers, and cell phones evolved into pocket PCs. Today’s new technology is sold with the promises of greater efficiency and consolidation. Autonomous cars will be no different.

For as useful as cars are in our everyday lives, they spend close to 95% of the time unused. This means there is a big opportunity for the manufacturers of autonomous cars. Captive consumers will be surrounded by the technology for an average of at least five hours a week. The challenge will not just be how to commercially manufacture autonomous cars, but also in building a platform that connects software developers with the passengers.

As Nokia and Blackberry demonstrated in the past, consumers need more than just an effective product. They also need their devices to consolidate their consumption of media.

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Last week, an article in the Wall Street Journal covered the changing technology that are now coming as standard in automotives, and how it is creating changes in car manufacturing supply chains. In the article, WSJ writers Yoko Kuota and Jeff Bennett reported that auto part makers are quickly looking to adapt after the entry of Google and other tech focused businesses into car manufacturing with the services and features their automotives offer.

For large automotive parts companies, this means focusing on installing newer technology into their cars while forgoing more traditional features to optimize space.

“General Motors Co.’s pricey new sedan isn’t unique in leaving a few old standbys out. New cars hitting dealerships this year—ranging from bread-and-butter Dodge sedans to edgy Audi coupes—are shedding familiar features to save weight or keep up with fast-moving technology. Versions of Toyota Motor Corp. ’s latest Prius hybrid, for instance, lack a spare tire”, write Kuta and Bennet. “Well-known components like ignition keys and analog gauges are going the way of cigarette lighters and hand-cranked windows” they continue. Other staple features that some newer model cars no longer come with are lighters, analog displays, and even rear view mirrors in some cases.

More technology on the horizon

Even with all the innovations that both tech companies and the quickly adapting car manufacturers are offering their customers, several analysts are predicting that there are still many more not-so-distant features on the horizon.

For example, Forbes contributor Karl Brauer writes in this article a list of features which he believes will become the standard for cars made past 2020. Here is the list:

  • Driver Override Systems
  • Biometric Vehicle Access
  • Comprehensive Vehicle Tracking
  • Active Window Displays
  • Remote Vehicle Shutdown
  • Active Health Monitoring
  • Four-Cylinder Supercar
  • Smart/Personalized In-Car Marketing
  • Reconfigurable Body Panels

Functionality Versus Branding

In Kuota and Bennett’s WSJ article, there was the sense from those interviewed that to compete with the likes of Google, car part manufacturers would have to adapt by forgoing traditional features in their newer model vehicles. However, such an approach applied across the industry could hurt some car manufacturers. Especially if those car makers brand themselves and their product a certain way.

“A great car in Germany is not the same as a great car in the US. A great car in Germany is seen by many consumers to be a car that can be driven at 200km per hour on the autobahn” writes Professor Dominique Turpin in this article. “When Volkswagen – the quintessential people’s car tried to launch a luxury car, the Phaeton, it did not really take off. Through the development of a portfolio of brands, however, the Volkswagen Group has ably met the challenge to meet different customer needs” continues Professor Tupid.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!