by Nada Welker | Sep 23, 2024 | Alternative Drives, Automotive Industry, Electrification, Hydrogen
We at Magility GmbH are firmly convinced that hydrogen does not represent a viable solution for heavy-duty transport. While some experts, including most recently VDA President Hildegard Müller at the IAA Transportation, still view hydrogen as one of the promising pathways to decarbonizing truck fleets, we, after extensive analysis and practical experience – including multiple calculation scenarios and technology studies for the truck fleets of our logistics sector clients – consider this option inefficient and unrealistic. Instead, we are committed to battery-electric truck solutions (BET solutions), which we see as the practical and future-proof path for energy transformation in heavy-duty transport. As early as 2021, our CEO, Dr. Michael Müller, gave interviews on the challenges of hydrogen technologies, demonstrating Magility GmbH’s in-depth engagement with the topic.
The Challenges of Hydrogen
High Costs – We see cost structures as one of the biggest hurdles for hydrogen in heavy-duty transport.
- Production: The production of green hydrogen, which is essential to meet climate targets, is extremely energy-intensive. Since the electricity required for electrolysis comes from renewable energy sources, the production of hydrogen is significantly more expensive than the direct use of electricity in batteries.
- Infrastructure: Building a comprehensive hydrogen infrastructure, including refueling stations and pipelines, involves immense costs. The investments required to create a functioning supply chain are disproportionate to the already existing charging infrastructure for battery-electric vehicles, which continues to be expanded.
- Vehicle Acquisition: Fuel cell vehicles are currently significantly more expensive to purchase than battery-electric trucks. The high acquisition costs and the complicated technology result in a clear disadvantage compared to the increasingly efficient BET (battery electric truck) solutions.
Low Efficiency – For us, the efficiency of hydrogen technologies remains another obstacle.
- Energy Losses During the conversion of electricity into hydrogen and the subsequent reconversion into electrical energy via fuel cells, a large portion of energy is lost. This means that significantly more electricity is required to generate the same amount of energy than with the direct use of batteries.
- Overall Efficiency Battery-electric trucks have a much higher efficiency due to their direct drive with electricity. This makes them a better choice for the future of heavy-duty transport, both from an ecological and economical perspective.
The Advantages of BET Solutions
At Magility, we focus on the continuous improvement of battery technology as the key to decarbonizing heavy-duty transport. The advantages of BET solutions are clear!
Cost Efficiency
- Decreasing Costs: Due to mass production and technological advancements, battery prices are continuously decreasing. Economies of scale are leading to a significant reduction in costs for both vehicles and infrastructure.
- Fast Charging Times: Fast charging systems are developing rapidly, and charging times for battery-electric trucks are becoming shorter and shorter. This progress increasingly debunks the argument that electric trucks are impractical due to long charging times.
Technological Maturity
- Proven Technology: Batteries have already proven themselves in many areas of mobility, from cars to buses to light commercial vehicles. The technological maturity and continuous development make battery-electric trucks a reliable option for fleet operators.
- Multiple Uses: After their use in vehicles, batteries can be used for stationary energy storage. This extends their lifespan and improves their economic sustainability.
Infrastructure Expansion
- Existing Power Grid: Unlike the complex hydrogen infrastructure, there is already a well-established power grid. The expansion of the charging infrastructure for electric vehicles is progressing rapidly worldwide, and more and more charging stations are becoming available. With intelligent load management and the use of renewable energies, the power grid can be operated in a stable and sustainable manner.
Conclusion: E-Mobility as a Viable Solution
At Magility, we see hydrogen in heavy-duty transport as an inefficient and cost-intensive solution that does not meet the requirements of this sector. The high costs, low efficiency, and underdeveloped infrastructure are barriers that cannot be overcome in the foreseeable future. In contrast, E-solutions offer a mature, efficient, and economically sustainable way to drive the energy transition in heavy-duty transport. With the continuous development of battery technology and the rapid expansion of charging infrastructure, we see battery-electric mobility as the key to decarbonizing heavy-duty transport.
“Hydrogen remains an illusion for us – battery-electric trucks, on the other hand, represent a realistic and achievable future vision.” – Jürgen Schenk, Senior Advisor, Magility GmbH
Our experts are happy to assist you in mastering the energy transformation in the mobility sector successfully. We support you with professional and holistic planning of your procurement scenarios through dynamic cost analyses. For the conversion and optimization of your fleets, we develop customized decision matrices based on typical usage periods, which will efficiently ease your management efforts.
by Nada Welker | Jan 19, 2024 | Automotive Industry, Electrification, New Mobility
Electromobility is gaining an increasingly significant role in the “Power Ecosystem,” presenting companies with a multitude of challenges. Simultaneously, it opens up numerous opportunities for innovative solutions and new business models. In this blog article, we will delve into the key aspects of electromobility in the power ecosystem, succinctly summarized.
Challenges of Electromobility in the Power Ecosystem
Ensuring sufficient grid capacity is crucial for reliable charging processes. Companies face the task of investing in technologies that optimize grid capacity and promote the integration of renewable energies.
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Diversity of Plugs and Standards
The variety of plugs and standards poses a challenge. Compatibility of charging stations with different plug types and standards is essential, necessitating standardized solutions.
Fast charging times are a crucial customer need. Companies must choose the right charging speed and technology to meet requirements, with technological innovations playing a vital role.
Strategic site selection for charging stations is critical for success. Companies need to carefully consider factors such as accessibility, traffic density, and parking facilities.
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Costs and Economic Viability
Investing in charging stations is expensive. Companies must conduct economic planning that considers usage and charging prices.
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User-Friendliness and Customer Experience
User-friendly charging stations, simple payment systems, and a positive customer experience are crucial. The integration of apps and reliable systems contributes to customer satisfaction.
Awareness and compliance with regulatory requirements are indispensable. Companies must be aware of and fully comply with local laws and regulations.
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Fleet Charging Infrastructure
Developing an efficient charging infrastructure for fleets requires a holistic strategy. Scalable solutions are needed to meet the demands of fleet operators.
Regular maintenance is crucial to avoid failures. Companies must ensure well-organized maintenance processes and provide reliable support when needed.
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Data Security and Billing
The security of customer data and reliable billing processes are of great importance. Companies should rely on robust security protocols and implement transparent billing procedures.
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Availability of Charging Infrastructure
Providing sufficient charging stations is a challenge. Companies need to develop scalable models to support the growing number of electric vehicles.
Successfully addressing these challenges requires comprehensive strategic planning, technical expertise, and close collaboration with various stakeholders. At magility, we are pleased to assist companies in developing and successfully implementing a comprehensive e-mobility strategy in the power ecosystem. Energy Management and balancing plays a key role in the future.
Electric Vehicles and Fleets as Flexible Energy Sources in the Power Ecosystem
Electric vehicles and fleets not only offer mobility but can also act as flexible energy sources. Through bidirectional charging, also known as Vehicle-to-Grid (V2G), they can contribute to grid stabilization.
Challenges in Electric Vehicles and Fleets
- Infrastructure for Charging Stations: See previous section
- Charging Times: Require careful planning and integration into operations.
- Range Anxiety: Concerns about limited range require specific solutions
- Costs: Higher acquisition costs compared to conventional vehicles
- Charging Infrastructure Costs: Investments in charging stations and infrastructure
- Technical Expertise: Transition requires qualified personnel or access to skilled workers
- Fleet Management: Requires specialized software solutions
- Charging Infrastructure Management: Optimal use of infrastructure
- Environmental Impacts: Consideration of ecological aspects
- Brand Impacts: Transition can influence brand imag
- Cybersecurity: Implementation of necessary security measures
- Availability of Government Incentives: Dependent on regional incentive programs
Addressing these challenges requires strategic planning, infrastructure investments, and employee training. At magility, we offer comprehensive consulting services to assist companies in successfully implementing their electric vehicle initiatives.
Bidirectional Charging: Potentials and Challenges in the Electricity Ecosystem
Bidirectional Charging (BDL) or Vehicle-to-Grid (V2G) is an innovative technology where electric vehicles not only draw energy from the grid but can also feed energy back into the grid.
Challenges of Bidirectional Charging in the Power Ecosystem
- Technical Complexity: Requires special hardware in vehicles and charging stations
- Battery Lifespan: Controlled charging and discharging are crucial
- Standardization: Uniform standards for interoperability are lacking
- Grid Integration: Requires careful integration into the existing grid
- Security: Robust security protocols and hardware are necessary
- Economic Incentives: Creation of incentives for end consumers and operators
- Regulatory Hurdles: Adjustments in existing regulations are necessary
- Data Security: Protection of user data is a central challenge
Potentials of Bidirectional Charging in the Power Ecosystem
- Grid Stabilization: Contribution to stabilizing the power grid
- Peak Load Management: Reduction of peak loads on the grid
- Renewable Integration: Efficient integration of renewable energies
- Additional Revenue Streams: Income through energy feed-in
- Emergency Power Supply: Use of electric vehicles as emergency power sources
- Sustainability: Increase in the overall sustainability of the energy system
Companies investing in bidirectional charging technology can benefit not only from ecological advantages but also unlock new business opportunities. Our experts at magility and the experts of our partner Hive Power are ready to assist companies in realizing the associated potentials.
Magility, we don’t just drive business ecosystems. We invite you to connect with us for a discussion on the electricity landscape. Stay tuned for more insights in our upcoming blog on the Electricity Ecosystem!
by Nada Welker | Sep 12, 2023 | Uncategorized
Visitor surge at IAA MOBILITY 2023
IAA MOBILITY 2023 witnessed record levels of international participation, with 750 exhibitors from 38 countries, making it a truly global event for exhibitors, speakers, guests, and journalists. The event showcased in excess of 300 world premieres and innovations, underscoring the exhibitors’ exceptional innovation capabilities. More than 500,000 visitors attended the event from September 5th to 10th, with over 100,000 people present at the IAA MOBILITY’s Open Space in the heart of Munich on Saturday alone. International media coverage increased by over 70 percent compared to IAA Mobility 2021, with 3,700 accredited journalists from 82 countries in attendance. This high level of international presence was also reflected in the visitor demographics, with approximately 30 percent of the attendees originating from 109 different foreign countries.
Engagement with Stakeholders, Politics, Society, and Business
The IAA MOBILITY was inaugurated by Federal Chancellor Olaf Scholz, and it featured over 500 high-profile international speakers at the IAA Conference, providing exclusive insights into the future of mobility. This included many leading CEOs from both established mobility and tech companies as well as promising startups. Notable international figures, such as Oscar winner Natalie Portman, Mars mission candidate Alyssa Carson, and climate advocate Sophia Kianni, also took the stage in Munich.
The intensive dialogues and constructive debates with various stakeholders from politics, society, and business at the Open Space and IAA Summit are crucial elements in achieving climate-neutral mobility successfully.
The recent images broadcasted from Munich vividly depict the automotive industry’s unwavering commitment to preserving Germany’s status as the “Land of the Car” while aligning with climate objectives, the welfare of individuals, and economic prosperity. The advanced concept introduced in Munich has demonstrated consistent success this year.
Magility @ IAA Mobility 2023 – Our Perspective on the New IAA Mobility
IAA Mobility 2023 served as a crucial platform for the global automotive industry to showcase its latest technologies and innovations. From the vantage point of an automotive technology consulting firm such as Magility GmbH, the following trends become particularly prominent.
Electromobility
The electrification of automobiles remains the most significant trend in the industry.
The use of electromobility is increasing worldwide due to legal regulations and financial incentives. New emissions regulations in China and Europe, along with government incentives in the USA and Europe, are making electric vehicles more attractive to consumers. Simultaneously, advanced driver-assistance systems are paving the way for semi-autonomous mobility in the near future. The utilization of shared mobility, especially among Generation Z, is expected to rise significantly. The increasingly digital and connected lifestyle of consumers is also driving higher demand for seamless mobility solutions, particularly in the micro-mobility and last-mile transportation sectors. The automotive industry must embrace comprehensive connectivity as the foundation to address this mobility revolution.
IAA Mobility 2023 showcased numerous new electric vehicles, including models from established manufacturers like BMW, Mercedes-Benz, and Volkswagen. Many Chinese OEMs are actively contributing to this trend, offering their electric vehicles at competitive prices. The significance of charging infrastructure for electric mobility was further highlighted during the IAA MOBILITY.
Vehicle batteries are becoming “virtual power plants” within a smart grid. Swiss startup Hive Power demonstrated how smart grid balancing works.
Connectivity
Connectivity is another crucial trend in the automotive industry. The growing importance of connectivity for vehicle manufacturers stems from the fact that cars are becoming increasingly digitalized devices on wheels. Connected vehicles can communicate with other vehicles, infrastructure, and the internet, opening up new opportunities for safety, convenience, and entertainment.
This transformation requires traditional automakers, initially not primarily software companies, to build their expertise and establish partnerships to acquire the necessary skills to manage the complexity of software-defined vehicles. Investments in enabling seamless connected digital experiences are necessary to meet consumer expectations. Simultaneously, automakers must address the challenges of data management and cybersecurity as the volume of data, both within and outside the vehicle, continues to grow.
To better align themselves with connectivity, automakers must strike a balance between the costs of developing mobility services and the potential revenues from digital offerings. They need to accurately assess consumer willingness to pay in different markets and segments and strategically determine where to focus their efforts. Connectivity is crucial for enabling the new era of mobility, not just a means to an end. The IAA Mobility 2023 showcased numerous new connectivity solutions.
Sustainability
The concept of “sustainable mobility” goes beyond emission reduction and the development of alternative propulsion systems. It also encompasses the more efficient use of transportation modes. In public transportation and shared mobility, better utilization can help reduce the number of vehicles in urban areas. Smart cities and vehicle connectivity offer opportunities for smarter and more sustainable traffic management.
The question of whether we can achieve entirely emissions-free driving in the future becomes intriguing due to new projects related to E-fuels and carbon capture. There are many opportunities in the mobility sector to become more sustainable and improve the lives of billions of people and the environment.
The automotive industry is acutely aware of the challenges posed by climate change and is working to make its products and processes more sustainable. Sustainability was a central theme at the IAA Mobility 2023. “Circular economy” is a current buzzword and was a challenging topic in the IAA Mobility Visionary Club.The concept of a circular economy holds the potential to deliver eco-friendly mobility while posing both an opportunity and a challenge for the automotive sector. At its essence, it strives to generate new without depleting fresh resources.
Such an approach enables the sustainable use of finite resources and contributes to reducing CO2 emissions. A new label for sustainable vehicles was also introduced at the IAA.
[infobox headline=”At a glance”]
- The IAA MOBILITY 2023 recorded record participation with 750 exhibitors from 38 countries.
- Over 300 world premieres and innovations were presented.
- The event attracted more than 500,000 visitors, including over 100,000 on a single Saturday.
- International media coverage increased by over 70 percent compared to 2021.
- German Chancellor Olaf Scholz opened the event, and over 500 high-profile international speakers discussed the future of mobility.
- Electromobility remains a key trend, with increasing adoption due to legal regulations and financial incentives worldwide.
- Connectivity is becoming increasingly important as cars are becoming digitally connected devices on wheels.
- Sustainable mobility goes beyond emissions reduction and alternative propulsion and includes more efficient use of transportation.
- New projects involving E-fuels and CO2 capture could enable a carbon-neutral future.
- Additional trends include software-defined vehicles, artificial intelligence, and advanced safety technologies.
[/infobox]
The automotive industry is undergoing a massive technological transformation, with electrification, connectivity, and software development shaping the future.
Other Trends at IAA Mobility 2023
Additionally, the IAA Mobility 2023 featured the following trends:
- Software-defined Vehicles: Software is becoming a critical success factor in the automotive industry. New providers of automotive operating systems, such as SONATUS from California, are emerging.
- Artificial Intelligence: Customers increasingly expect personalized products and services. Automotive manufacturers and suppliers are working to personalize their offerings with AI. Numerous new personalized products and services were showcased at the IAA Mobility 2023. For example, German company XaiTeck, which defines applications using Explainable Artificial Intelligence and Knowledge Graphs, presented its innovations.
- Security: Security is a central theme for the automotive industry. The IAA Mobility 2023 introduced various new safety technologies, with a focus on autonomous driving systems. Cybersecurity companies like Magility Cyber Security GmbH also made their presence felt.
The IAA Mobility 2023 demonstrated that the automotive industry is undergoing a massive and profound technological transformation and facing international competition. Electrification, connectivity, and electronification (software) are the most critical technological trends that will continue to shape the industry in the coming years from Magility’s perspective.
by Nada Welker | Feb 24, 2023 | Automotive Cyber Security, Automotive Industry, Cyber Security Management, Future Trends, Internet of Things, Market development & Trends, New Mobility, Smart City, strategy in change
The automotive industry is in a constant state of transformation due to the constant evolution of existing technologies and innovations, as well as new ones being added. In recent years, autonomous driving capabilities and many other vehicle and software features designed to make our roads safer and traffic more efficient have evolved more rapidly than in several decades prior. Along with this rapid change comes a number of new trends emerging in the industry. In this article, we at Magility GmbH summarize what is currently going on in the automotive industry and which megatrends you will encounter in the future.
[infobox headline=”At a glance”]
- China is the world’s largest automotive market; sales of electric vehicles doubled in 2021
- UN regulations on emissions and automotive cyber security are already partly active or will soon come into force in many countries
- Technologies and trends that were once dreams of the future are already significantly shaping activities in the automotive industry – including convergence, autonomous driving and e-drives, 3D printing, new battery technologies, among others
- Magility identifies eight megatrends that will significantly shape the activities and future of the automotive industry in the coming years
[/infobox]
Interesting data and facts
Source: Statista – Largest automotive markets worldwide in 2021, based on new registrations (in millions)
- The global market for autonomous vehicles reached a size of nearly US$106 billion in 2021. This market is forecast to reach a size of over 2.3 trillion US dollars in 2030
- In the first quarter of 2019, 61.88% of car buyers opted for a used car
- In 2021, nearly 15 million cars were sold in America
- Toyota Motor generated nearly $250 billion in revenue in 2020
- Tesla broke record by delivering over 936,172 electric vehicles in 2021
UN regulations leave a lasting mark on the automotive industry
As the automotive industry continues to grow, it is becoming increasingly important to consider its impact on the environment. For this reason, many countries, as well as automakers including General Motors and BMW, support Tesla’s call for carbon regulation.
Source: Automotive World, 2020
If the regulations are adopted, this should trigger a new wave of innovation in the industry in favor of the environment. Fortunately, this issue is being taken seriously by policymakers. During the World Environment Day celebrations, the UN announced its plan to push for stricter carbon regulations. This could have a major impact on the future of the automotive industry. In addition, governments around the world, including the U.S. and China, are planning new policies to encourage the adoption of electric vehicles and promote the use of public transportation.
The three UN regulations 155, 156 and 157 are particularly important for all companies in the automotive industry in the coming years. They are there to ensure an international standard for cyber security and software updates.
UN Regulation 155 addresses cybersecurity and cybersecurity management systems, while UN Regulation 156 addresses software updates and software update management systems. Finally, UN Regulation 157 addresses Automated Lane Keeping Systems (ALKS) and the security risks associated with them. These regulations provide a foundation for automotive companies to ensure that their vehicles are adequately protected against cybersecurity risks. According to the United Nations Economic Commission for Europe (UNECE), the regulations will play an important role in mitigating cybersecurity risks in vehicles as well as updating automated driving systems. Japan has already announced that it will implement the regulations, and the European Union also plans to make them mandatory. In addition, the regulations contain a number of standards that must be met to ensure the safety of road vehicles. These are taken from the ISO/SAE 21434 and ISO 26262 standards.
Former technologies of the future are already a reality in the automotive industry today
The transformation of the automotive industry is a complex and ongoing process that involves a shift from traditional manufacturing to the development of software-defined vehicles. This shift has been driven by increasing competition from new entrants, such as technology companies like Tesla and Waymo, and growing demand for electric and autonomous vehicles. Many technologies were dreams of the future for deployment just a few years ago; by 2022, many of them became real.
In 2022, we have seen more traditional automakers invest in electric and autonomous vehicle technology, and companies such as General Motors and Ford have announced major investments in these areas. This trend is likely to continue as automakers try to keep up with the industry’s changing environment and meet the demands of consumers who are increasingly interested in sustainable and high-tech vehicles.
We have been providing regular updates on the coming and ongoing changes in the automotive industry on our Magility blog for the past few years. Digitization and connectivity will play an increasingly important role, with vehicles becoming more connected and intelligent than ever before. This will lead to a shift from selling vehicles to selling mobility services as automakers seek to provide customers with a more holistic transportation experience.
Finally, the road to the software-defined vehicle is also an important topic in the industry, as advances in technology are leading to a new generation of vehicles that are more software-driven than ever before. This means that software development and engineering will become increasingly important in the automotive industry, and automakers will need to develop new capabilities and skills to keep pace with these changes.
Overall, change in the automotive industry is an ongoing process driven by a variety of factors, including technological progress, changing consumer preferences and increasing competition.
Convergence of industries
The convergence of the automotive and technology industries is turning vehicle manufacturers into software companies. As vehicles become more connected and intelligent, the importance of software development and engineering in the automotive industry continues to grow. In addition, the importance of customer involvement in the development of services and apps is also becoming increasingly important in the automotive industry. As vehicles become more connected and intelligent, the demand for personalized services and apps that cater to individual needs and preferences will increase. This means that automotive manufacturers will need to involve customers in the development process to gather feedback and suggestions and ensure that the services and apps they develop meet the needs of their target group.
Over the course of the last year, major mergers, acquisitions and partnerships have been almost on the agenda in the automotive industry. These deals range from the very big ones, such as Ford’s acquisition of Argo AI, to more niche collaborations, such as the partnership between GM and Lyft. Automakers have also been making efforts in the area of customer engagement, offering more services and add-ons, some of which are integrated into the vehicle environment. For example, Ford’s new service, which makes it much easier for consumers to integrate new functions or even repairs for their vehicle. In addition, automakers are increasingly relying on customer engagement to boost sales and brand loyalty. BMW, for example, offers an “Owner’s Circle” program that gives customers access to exclusive discounts, events and seminars. Volkswagen offers an “Online Owner’s Manual” that helps customers navigate their car’s features, decide when maintenance is due, and even set up their car’s Bluetooth connection. Ford’s Sync Connect app allows customers to remotely connect to their vehicle and start the engine, monitor the vehicle’s status and even control climate settings. Toyota’s “Toyota+Alexa” program lets customers ask Alexa to start their car, unlock and lock the doors, or flash the headlights with simple voice commands. Nissan has a “Carwings” app that gives customers access to real-time and historical data about their vehicles, such as speed, location and fuel level. The possibilities are endless as automakers continue to explore innovative ways to engage their customers.
Autonomous driving and electric drives
New features and technologies for autonomous driving have been introduced and launched, such as Tesla’s full self-driving option. In addition, numerous automakers’ plans have been made public, such as Volvo’s to offer a Level 4 autonomous driving feature in the not-too-distant future. Thanks to new technologies and in particular the rapid development of artificial intelligence (AI), self-driving vehicles will have a steep development curve. Over time, the majority of new vehicles will be self-driving or at least have self-driving features. AI is already being used in vehicles today for functions such as automatic braking and collision avoidance. Google’s self-driving cars are a good example of this. These cars are equipped with a variety of sensors that allow them to detect obstacles in their environment, such as pedestrians and other cars, and use the internal communication system to adjust driving behavior accordingly.
Automakers are preparing to put more self-driving vehicles on the road. Ford, for example, has been testing autonomous vehicles on Pittsburgh streets for the past year. This also shows that automakers and technology companies are making great efforts to translate the technical possibilities that already exist in theory today into practical solutions.
OEM interest in the emerging electric vehicle market is also very high, with many manufacturers announcing plans to launch new e-vehicle models in the coming years.
Electric vehicle sales have continued to rise in recent years as more consumers opt for sustainable and environmentally friendly vehicles. According to our Magility research, electric vehicle sales have actually doubled in 2021, despite the economic downturn caused by the COVID-19 pandemic and increasing supply chain difficulties. This trend is likely to continue as automakers invest more in electric vehicle technology and consumers become increasingly aware of the environmental benefits of these vehicles.
[infobox headline=”EV sales doubled in 2021″]
- More than 6.5 million e-vehicles sold worldwide in 2021
- Sales growth in 2021 based on e-vehicle sales alone
- Tesla has achieved the status of a mega-tech company; many new e-vehicle manufacturers followed since
[/infobox]
The automotive industry relies heavily on suppliers to obtain the parts and components needed for vehicle production. Currently, the industry faces a number of challenges related to suppliers and their ability to deliver parts on time.
A major challenge is the shortage of semiconductor parts, which are essential for the production of modern vehicles equipped with advanced technologies. The COVID-19 pandemic has disrupted global supply chains, resulting in shortages of these critical components. As a result, automakers have had to adjust production schedules and curtail production, impacting the entire supply chain.
In addition to the semiconductor shortage, there are other challenges facing suppliers and the automotive industry. These include rising raw material costs, trade conflicts and increasing demand for components for electric vehicles.
To meet these challenges, automakers and suppliers are looking for new ways to improve the supply chain and ensure parts are available on time. This includes investing in new technologies, improving communication and collaboration between suppliers and automakers, and developing alternative supply chain strategies.
3D printing in the automotive industry
One of the technology trends that has taken hold in the automotive industry is 3D printing. Some car manufacturers are making considerable investments in the further development of 3D printing technology. Audi and also Porsche have integrated 3D printing into the production of their vehicles. By using 3D printing, long lead times in manufacturing can be reduced and manufacturers can get their models to market faster. Many automakers, including Toyota and Honda, are currently experimenting with 3D printing parts for autonomous cars.
Batteries: From lithium to LiFePO4 and new developments
There have also been developments in battery technology that could have a significant impact on the future of the industry. First there was a lot of hype about lithium-ion batteries. Lithium-ion batteries are lightweight and easy to produce, which argues for their use in autonomous vehicles, for example. But while they may still be a good choice, automakers are exploring other battery types. This includes the use of rare earth minerals, as in lithium iron phosphate (LiFePO4).
LiFePO4 batteries are best suited for Tesla cars because they have higher overvoltage tolerance during charging, longer shelf life, better cold resistance, and are cheaper compared to other lithium batteries. In addition, LiFePO4 batteries are safer and more stable than lithium-ion batteries, and they combine high energy density with long run times and consistent discharge voltage, making them ideal for use in UPS systems. Disadvantages of LiFePO4 batteries include low voltage rating, high self-discharge rate, lower energy density, poor performance at low temperatures, and difficulty charging in some devices. In addition, LiFePO4 batteries must be protected from overcharging and aging.
A new type of battery that uses nanomaterials to store more energy could have significant implications for the future of the auto industry. This type of battery is called a nanomaterial-based battery. It has been researched several times and is used in some applications, including electric vehicles. This type of battery has the potential to revolutionize the automotive industry by providing the necessary energy storage capacity for the entire industry. The nanomaterial-based battery could also reduce the cost and environmental impact of conventional lithium-ion batteries due to its higher energy storage capacity. In addition, this type of battery could enable the development of smaller, lighter and more efficient vehicles due to its high power-to-weight ratio.
Outlook – Megatrends in the Automotive Industry
At Magility, we have identified eight megatrends that are already having a lasting impact on the entire automotive industry and all its manufacturers and suppliers, and will do so even more so in the coming years:
- OEM transformation from pure vehicle manufacturer to software company
- Vehicle development towards the software-defined vehicle with use in automated driving, for applications with artificial intelligence or connectivity
- Lifecycle Management – Development of various Diagnostics as a Service
- Conversion to smart factories
- Challenge of charging infrastructure for EV manufacturers
- New requirements for battery management – with increasing sales and use of EVs
- Vertical integration in EV production
- Sustainability in the product lifecycle – ESG issues become essential
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by Julia Riemer | Aug 3, 2022 | Future Trends, Market development & Trends, strategy in change
Rapid and disruptive developments are repeatedly taking place in the mobility industry. One such change is the digital business transformation in the automotive industry. Increasing connectivity, the IoT, Mobility as a Service (MaaS) and Software as a Service (SaaS), the implementation of new features and services or apps, these are all elements of this business transformation. It evokes increased customer expectations, which manufacturers are responding to by focusing more on the consumer experience. And it requires new regulations for technical areas, which are joined by those for the environmental compatibility of corporate activities. Both together are drivers of investments in digitization.
Automotive experts predict that connected vehicles, smart factories (Industry 4.0) and a wealth of available customer data will drive this development. According to Frost & Sullivan’s Future of Mobility report, IT spending will rise from $38 billion in 2015 to more than $168 billion in 2025.
What can we expect from the digital business transformation in the automotive industry?
A look at history shows that some central aspects of the buying experience in the automotive industry have hardly changed over a long period of time. E-commerce has long been available to dealers and customers for the sale or purchase of new cars. Nevertheless, most customers preferred the traditional buying experience to the digital one. Even the introduction of digital tools such as iPads in showrooms has hardly changed customer behavior.
Now in 2022, customers of all provenance are increasingly willing to make their purchases, including car purchases, online. Automotive companies of all types, whether they operate offline, B2C, or B2B in eCommerce, will seek to further enhance the digital buying experience and further connect with customers digitally, whether through social media, an app, or a website.
The consumer experience is also the focus in the further development of the automobile itself. The car, which used to end with the body, is becoming a software-defined car, i.e., a software-centric electronic device on wheels that can communicate with the infrastructure and the back end, contains AI applications, can be updated over the air (OTA), and no longer has much to do with the way a traditional vehicle functions.
Challenges of digitalization in the automotive industry
Most initiatives to manage technological change in the automotive industry revolve around technology-driven trends and customer requirements and remaining competitive. Trends such as digital transformation in manufacturing, concern for the environment, increased requirements for software solutions, mobility-as-a-service and predictive analytics bring numerous benefits, but also present the industry with at least as many challenges. We have summarized some of them.
Investments
In the current difficult economic climate, maintaining liquidity and risk managing are of particular importance.
Companies investing in the digitization of the automotive industry need to focus on the most valuable use cases with the highest ROI. Predicting the ROI of new technologies and identifying optimal use cases in the automotive industry will remain one of the biggest challenges.
Just a few years ago, autonomous vehicles were heralded in the press as the biggest game changer. Since then, the outlook of seeing fully autonomous vehicles on the road has shifted significantly into the future. A 2020 Deloitte survey found that most consumers in Germany (67%) and Japan (61%) are not willing to pay more than $500 to equip their cars with autonomous vehicle technologies.
Similarly, innovative powertrain technologies. 58% of German and 54% of U.S. consumers said they would not pay more than $500 for alternative fuel engines. While there are advocates for these technological advancements, the uncertain investment climate and concurrent unclear customer demand for the technology remain among the biggest obstacles.
Resistance to change
The automotive industry could do more to drive critical transformative initiatives and business models. While the range of electric cars is increasing, range anxiety remains a real problem. More and better communication would be needed here. Also, broader initiatives by the automotive industry and its associations to promote a global or at least nationwide charging infrastructure could be envisioned. The ongoing debate about whether charging infrastructure should be the responsibility of OEMs or the government could be used for this purpose.
While the automotive aftermarket has benefited from B2C e-commerce for a long time, digital commerce has been sporadic in other areas of the automotive industry. Manufacturers face similar challenges.
Customer centricity
According to a Qualtrics study, the lack of customer centricity is an urgent challenge for the digital transformation of automotive retail.
Approaches to solving this problem should ensure that the personal experience at the dealership and the digital experience on any device produce similar customer experiences. The growing number of digital natives are sensitive to these experiences, and companies need to rethink how their relationships with prospects, customers, dealers, suppliers, and vendors can help to improve the overall experience of the car owner.
[infobox headline=”At a glance”]
- Digital buying experiences in general, but especially in the context of Software-Defined Car, are shaping business transformation in the automotive industry
- Technology transformation struggles with challenges in investment, resistance to changes and customer centricity
- Five trends are significantly influencing digital transformation in the automotive industry: environment and sustainability, connectivity, autonomy, digital commerce and augmented reality
- Although the journey of business transformation requires a lot, the benefits outweigh the risks, such as innovation and expansion
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Examples of digital business transformation in the automotive industry
The automotive sector already offers excellent examples of digital transformation: from product innovations to operational changes and customer-focused improvements. Here are some examples of digital transformation in the automotive industry:
- Tesla has long been a pioneer in the use of artificial intelligence and Big Data. Since 2014, the company has been collecting data from drivers using onboard sensors and was able to roll out a wireless update that improved the accuracy of its Autopilot software.
- Volvo’s Polestar brand was named the best positioned car brand for online sales. Like Tesla’s models, the Polestar 1 and Polestar 2 are only available online. However, Volvo also maintains dedicated “Spaces” at physical locations at partner plants.
- BMW has introduced an IoT platform at its Regensburg plant with great success. It enabled the company to cut the time needed to roll out new applications by 80% and reduce quality control issues by 5%.
- Volkswagen partnered with AR-based application developers to tag auto parts with the right tools. This system, known as MARTA, increases the efficiency of service technicians.
- One example of overcoming the limitations of traditional offline business is TruPar, a wholesaler of forklift parts that has future-proofed its operations with unified eCommerce, CRM and ERP integration.
- Mercedes-Benz recently invested 200 million euros in the Electric Software Hub in Sindelfingen, also known as the “software integration factory,” with the aim of accelerating its own transformation. Many functions relating to hardware, software, system integration and testing will be brought together there under one roof. 19 cross-functional units work there on 8 levels and 70,000 square meters of space on the electric/electronic integration process.
The 5 most influential trends for business transformation of the automotive industry
1 Environment & Sustainability Topics
The impact of human activity on the environment remains the number one global issue. Every industry must address sustainability issues and focus on sustainable technologies. Almost every major car brand already has a fully electric vehicle on offer. According to research by CNN, Volkswagen predicts it will sell 1.4 million electric cars by 2025, and it’s quite possible that electric cars will completely overtake gasoline-powered cars by 2040:
The rise of online shopping is driving sales of electric delivery trucks. In fall 2020, Amazon ordered 1,800 electric vans from Mercedes. Joining the trend of many brands to move sales to the Internet as well, automakers are offering customers a convenient experience without having to visit a dealership.
2 Connectivity
From phones to TVs to watches, most of our devices are already networked in some form, and automotive products are catching up fast. The development of infotainment systems, for example, is advancing rapidly. Cars are getting better at understanding voice commands, monitoring parts for wear based on driving behavior, and adapting to the driver’s personality.
As a digitally enhanced driving experience becomes more standard, automakers need to accelerate updates to vehicle systems. Tesla, for example, has long been a pioneer in wirelessly updating vehicle software. OEMs see significant value in remotely updatable vehicles, and their sales are expected to increase tremendously. The further development of Over the Air Updates (OTA) will continue to be a big topic we just recently reported on in an article about SUMS (Software Update Management Systems).
3 Autonomy
Machine learning and predictive driving technologies are already widely used in the automotive industry. As these technologies advance and autopilot-ranked systems are developed, the general public will warm to the idea of letting cars drive themselves.
The automotive industry is extremely data-driven, and the amount of data being transmitted by cameras, sensors and computers is increasing daily. Assisted driving is already becoming mainstream, and these technologies will soon find their way into automotive products at all price levels.
4 Digital commerce
Digital commerce technologies are transforming the automotive industry by enabling greater efficiency, cost savings and personalization. The proliferation of new tools and the wealth of available data can be better used for customer service. One example is feedback tabs or surveys on e-commerce and social media sites that can relay information directly to the dealer or manufacturer.
5 Augmented Reality
There are many applications for augmented and virtual reality functions in the automotive industry. Virtual showrooming, for example, allows customers to sit in a chair that mimics a car seat and experience in real time what it feels like to sit in the car of their dreams. Virtual prototyping and virtual configuration can help users to visualize the final product and to understand how all the parts connect.
Service departments, for example, can use augmented reality software provided by the manufacturer to make the job easier for automotive technicians. These technologies can be used not only by OEMs, but also by service departments in the insurance and used car industries.
What are the benefits of digital transformation in the automotive industry?
As digital technologies evolve all around us, manufacturers are increasingly at the crossroads: transform and evolve, or stick with the tried and true? In the long term, digital business transformation offers many benefits, including
- Streamlining supply management in automotive production and facilitating a networked supply chain.
- Innovation of vehicle performance and design
- Expansion into new markets with the sale of automotive parts
- Omnichannel sales and customer service experience
- After-sales support and customer satisfaction monitoring
How can you get started with digital transformation?
Today, more than ever, companies need to stay ahead of the curve and get into the minds of their customers faster than their competitors. They need to identify their current and future needs and work with the right technology partner to meet them. They also need to streamline internal processes, maintain and grow relationships, and reduce costs. Magility helps your company to master the challenges in your industry and transform your brand using the digital revolution.
Enable digital transformation in your automotive business today
The pressure to go digital requires automotive companies to collaborate and partner with technology solution providers. Make digital transformation a core, inseparable part of your business, regardless of which area of the automotive industry you are operating in.
At magility, we’re here to help. Contact us now – we’ll be happy to answer your questions. Follow us for more news also on LinkedIn. We look forward to hearing from you!
