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 Nada Welker | Jul 1, 2021 | Automotive Industry, Future Trends, New Mobility, Technologies for new markets
Industrial convergence is described as “the demand-induced convergence of industries and goods markets from different sectors of the economy that previously had no or only sparse interaction”. Markets which previously had been clearly separated from each other, are now coming together. As a result, previously existing industry boundaries are becoming blurred. In some areas, new market segments are developing as a result of this merging, which means that customers can be offered new, hybrid opportunities. Cross-industry approaches also allow exciting new business models to be established.
When does industrial convergence occur?
Industrial convergence occurs “when innovations emerge at the interface of demarcated markets”, triggering structural changes and increased economic momentum. The logical consequence that arises in this context is the at least partial convergence of previously delimited markets.
MIH EV Platform by Foxconn
The Foxconn MIH EV platform is a suitable example of the convergence of the industry. This is primarily about building an open platform for electric vehicles (EVs). On the platform, companies from a wide range of industries up that have not been in contact with each other until now can liaise. This is intended to accelerate innovation and development in the EV industry. According to the MIH website, 1,718 members are currently working on this common platform for electric vehicles.
4 main features of the MIH platform:
- The structure of the platform is fully modularized, scalable and easily customizable.
- The chassis is made of the latest lightweight materials with a unibody design that optimizes the EV’s performance.
- The platform provides a high-performance electrical structure for all application levels.
- The platform is designed to promote the development of autonomous driving technologies.
Risks of traditional automotive industry enable opportunities of MIH
According to its founders, the MIH platform represents the solution to some key problems of the traditional automotive industry. Three key issues are highlighted as challenges facing the traditional automotive industry:
- High development costs
- Long lead times
- Frequent lack of resources
The Electric Vehicle (EV) Platform is designed to help partners and third-party developers to evolve functional features and systems, which will strengthen the growth of the overall electric vehicle market. This can provide a foundation for developers to be able to create a complete ecosystem for the electric vehicle industry.
[infobox headline=”The most important”]
- Industrial convergence describes the demand-induced merger of previously separate goods markets from different sectors of the economy.
- Industrial convergence occurs when innovations emerge at the intersection of demarcated markets.
- Foxconn MIH EV platform aims to become an open development platform for electric vehicles
- The platform is expected to strengthen the growth of the overall electric vehicle market.
- Operational technology (OT) describes monitoring, controlling, and managing the processes of physical machines. The convergence of IT and OT paves the way for the further expansion of Industry 4.0.
[/infobox]
Industry 4.0 and the industrial convergence of IT and OT
The intelligent networking of products and information technologies represents the technological goal of Industry 4.0. It not only takes on the task of increasing efficiency, but also serves as a transmission channel for cross-technology and cross-industry business models. Briefly, Industry 4.0 takes over the digital networking of the entire economy. This requires the merging of IT and OT. Operational technology (OT) describes the monitoring, controlling and steering of the processes of physical machines. For a long time, these processes were not connected to networks – unlike industrial technology (IT). In order to establish a network between the processes of operational technology and thus to be able to achieve the goals of Industry 4.0, IT and OT convergence is unavoidable. It is necessary to develop a sustainable strategy and to analyze the opportunities and risks for the company and its respective market environment.
We at magility will be happy to advise you on new business models for your company. Get in touch with us!
by Nada Welker | May 22, 2021 | Automotive Cyber Security, Automotive Industry, Future Trends, New Mobility
The EcoMotion Week took place virtually once again this year, and unfortunately under the most unfavorable circumstances imaginable. Every year, the important startup fair in the tech metropolis of Tel Aviv brings together leading global companies and startups that are doing pioneering work in the field of smart mobility. This year, around 600 startups, quite a few investors, industry leaders, associations, universities, policy makers and other key participants, used the virtual space to take advantage of various opportunities for knowledge sharing, networking and business initiation. Under the theme of Smart Mobility, countless interactions have taken place in the field of innovative technologies from Autonomous & Connected, Mobility Services, Electrification & Energy, Drones & Aviation, and Supply Chain.
The EcoMotion Week stages – at the pulse of time
It started after the Opening Words on the first day with a virtual challenge stage. Here, various experts were able to exchange ideas on current mobility topics. The topics were given and were categorized into different core industries as well as countries. In this way, the resulting discussions were pre-structured and moderated.
On the Startup Stage, the high-tech startups were represented with virtual booths whose virtual rooms were unlocked at set times. The second day started with the “Opening Words” by Orlie Gruper, Executive Advisor of EcoMotion, on the main stage. This stage was followed throughout the day by fireside chats, interviews and presentations on the most important topics of smart mobility. VDA President Hildegard Müller was also a speaker, laying out the connections between the German automotive industry and the Israeli startup ecosystem. The content that followed covered infrastructure development, the new era of electrification, the shift to the new age of smart mobility, and of course a discussion about the new cyber security regulations of UNECE WP.29, which pose major challenges to the automotive industry, was not to be missed. We at magility have already reported on this several times. Our startup partner Argus Cyber Security, one of the world’s best-known automotive cyber security companies, has been preparing for these regulations for years and has already implemented the necessary measures in its products.
Groundbreaking technologies through connectivity
The conference continued with presentations on autonomous driving, e.g. how connectivity can be taken to the next level and the role of the aftermarket as a target market. The presentations repeatedly emphasized how important cooperations in a wide variety of fields are becoming today in order to accelerate innovations. It was also reported how a whole new area of value creation can be opened up through the networking of data, starting with development and continuing through production to the vehicle on the road or the condition of the road itself. What was clearly emphasized was how urban mobility is becoming the central theme of startups. Public-private partnerships are accelerating future mobility and EV solutions in this context, more and more flanked by political institutions.
Tracking electromagnetic radiation
Also under discussion were the increasing electromagnetic challenges in the automotive industry. The magility startup partner VHOLA from Israel, for example, is dedicated to this very special field of electromagnetic radiation.
The patent-pending VHOLA technology enables predictive maintenance of vehicle performance by permanently measuring magnetic and electromagnetic emissions throughout the life of a vehicle. From the permanent measurement, an algorithm is derived that leads to corrective actions for an emitting ECU, thereby also minimizing passenger exposure to high magnetic field levels. VHOLA’s solution provides continuous magnetic field feedback and shares all measurements and corrective actions with the car manufacturer via the telecommunication unit to enable continuous improvement and regulation.
Overview of other core EcoMotion Week topics
Many other core topics were discussed at the EcoMotion Week. These included automotive disruption and the Israeli smart mobility ecosystem. The question of how the transformation of public transport to Mobility as a Service (MaaS) could succeed was raised many times. Very closely related to this is the search for the shape of micromobility in the city.
The Corona pandemic with its effects literally forced the topic of the sustainability of automotive supply chains onto EcoMotion, with the question arising in this context of how logistics in all its aspects is to be generally redefined in the future. Smart Logistics is becoming a decisive factor for success. The exchange of ideas on the further spread of electromobility also took up a great deal of space, with particular discussion of global approaches to solutions for the necessary EV infrastructure, without the spread of which there is a threat of stagnation. In order to be able to master the challenges arising from the range of topics presented, enormous investments in mobility will also be necessary in 2021, whereby the safety of the interacting systems is of very central importance. Just one example is antiviral technology, which is the basis of all safe mobility already in the present and even more so in the future. And, of course, there is the question of the future interaction of cloud and edge computing, the answer to which is also important for the needs of autonomous driving cars of levels 4 and 5.
After a morning rich in presentations, there was room for B2B conversations on the Main Stage, and the Live Expo Morning Session opened on the Startup Stage. On the Open Stage, all community members of the fair had the opportunity to present themselves to the other fair participants with a 20-second video. At the Meet & Greet session, a limited number of virtual rooms were available for people to connect and discuss current topics as well as make new contacts and initiate collaborations.
Virtual booths and live demos
At the virtual booths, everyone could get up-to-date information about the startups, watch live demos as well as participate in interactive sessions at certain times. Via the internal B2B Area, all participants had the opportunity to network with each other, set meetings and chat live. We at magility also made intensive use of these opportunities and got to know many new technologies and high-tech startups, which we will be happy to report on in the next article.
The EcoMotion Week is and remains one of the most important virtual trade fairs for getting to know the latest innovations of startups and the players behind them, picking up fresh impulses and integrating them into new business models, so that we can continue to act on the pulse of smart mobility in the future. Please feel free to contact us about this.
by Nada Welker | Feb 9, 2021 | Automotive Industry, New Mobility, Smart Logistics
The integration of Industry 4.0 and Internet of Things (IoT) in the logistics sector is being discussed under the term Smart Logistics. Behind this is the data-driven approach of networking all the players involved in the supply chain in order to accelerate the flow of goods and make it more efficient. Smart Logistics essentially arises from innovations in Transportation Management Systems, Warehouse Management Systems and Supply Chain Planning.
What is changing and why?
The biggest changes in logistics are expected to come from the integration of artificial intelligence (AI). In September 2020, the Congress “Zukunftskongress Logistik” met in Dortmund. The head of the Fraunhofer Institute for Material Flow and Logistics (IML), Prof. Michael ten Hompel, was confident that through the use of AI, supply chains can be independently networked in real time and at all levels. In this way, autonomous devices could negotiate contracts and conclude payment transactions independently. Fraunhofer IML is already working with the “Silicon Economy” on a digital platform economy that will act as an environment for these new technologies. According to Prof. Michael ten Hompel, the logistics sector will benefit particularly from AI and play a leading role in its use. This forecast is also supported by DHL’s current strategy. The logistics provider opened its third innovation centre in September 2019, this time in Chicago after Troisdorf and Shanghai. There, employees, customers and scientists are working together on the digital future of logistics. DHL already uses autonomous and collaborative robots in its shipping centres. AI is intended to optimize routes and drive automation. The company has already announced the next step: the development of a digital platform to control and monitor all shipments. This is because the expectations of market participants regarding delivery times as well as process improvements in deliveries are high, and the competition, which now comes predominantly from the online sector, is not sleeping. For example, the two e-commerce giants Amazon and Alibaba integrate entire supply chains via their platforms. Other logistics service providers can participate in this as partners, but it is even more important that they build intelligent infrastructures themselves so that they do not slip into full dependence on the online giants in the future.
Great pressure to innovate smart logistics from online giants
The big online retailers Amazon and Alibaba are already playing a major role in the developments in logistics and are steadily increasing their market shares. Alibaba, for example, has big plans with its own logistics service provider Cainiao. Cainiao Network operates a platform that handles everything from digitization and standardization, from waybills to route optimization for couriers. Just recently, Cainiao accepted its first container bookings. Setting a new standard in delivery times – this is in particular what the Chinese company has set its sights on. At the end of 2020, it was announced that Cainiao will also expand to Japan in the future. The expansion is expected to improve shipping by up to 40 per cent especially through a stronger logistical infrastructure and greatly reduce delivery times.
Cainiao’s largest Chinese competitor, JD.com, aims to deliver selected products within China within 30 minutes. JD.com relies on AI to determine the distance between retail shops registered in its partner network, its own warehouses and distribution centres, and customers. If an offline shop from the network is closer to the customer than the company’s own warehouses, delivery is made from there. There are already more than 20,000 partners in the network, mostly retailers from China. In addition, JD.com cooperates with the US retail chain Walmart, which is represented in JD.com’s network with over 170 shops.
In Q3 2020, JD.com, with shares in logistics company Kuayue Express, expanded its logistics division with the aim of developing technology activities as well as service extensions for third-party providers and enabling integrated supplier management.
Novel digital platforms using AI, automated distribution centres as well as new business models for the delivery of goods are thus the enablers for the short delivery times.
“Last Mile” as the most important success factor?
In logistics, the route of a product from the distribution centre to the customer is referred to as the “last mile”. Innovations in this area could determine market leadership in logistics for end customers in the future. One trend is the establishment of many small shipping warehouses that are distributed like a network across entire countries in order to keep the distances to the end customer as short as possible. Amazon already maintains 175 such so-called “fulfilment centres“. In order to monitor stock levels in advance, warehouse data is networked in real time with retailers and manufacturers in a shared data room. The delivery itself still has high potential for optimisation. Precise tracking of the delivery vehicles could announce the delivery to the customer on their smartphone to the minute. The consideration of a delivery time specified by the customer and simplified returns should soon be better implemented.
Specialists for route guidance, such as Uber Freight, the cargo division of Uber, are also maturing into competitors for logistics service providers. In Germany, a number of start-ups are also successfully addressing the issue of the “last mile” and carrying out lightning deliveries for well-known large companies. Good examples of this are Tiramizoo and Liefery oder Parcello.
Autonomous vehicles, infrastructure and the state enable progress
In order to introduce and implement innovative concepts such as the use of autonomous delivery vehicles or delivery drones, an intensive exchange with state stakeholders such as municipalities as well as licensors is inevitable. The ability of a state to ensure the functioning of autonomous vehicles can therefore become a key economic success factor in the future. The United Arab Emirates (UAE), for example, have recognized this and are investing massively in their infrastructure to make it fit for the autonomous future of delivery traffic. By 2030, a quarter of the vehicles on the UAE’s roads are expected to be autonomous. In the Autonomous Vehicles Readiness Index 2020, which has been compiled annually by KPMG since 2018, the UAE has now positioned itself in 8th place, while Germany has slipped from 8th to 14th place compared to the previous year.
Competition in smart logistics is becoming political
Meanwhile, competition in logistics is reaching a new dimension. Where US corporations compete with Chinese corporations, it quickly becomes political these days. The US government, supported by many governments from the EU, successfully fought for fairer rules in international postal traffic in the Universal Postal Union until the end of September 2019. The Universal Postal Union (UPU), founded in 1874 and based in Geneva, is the third oldest international organisation in the world. According to a secret and complicated mechanism, it determines how much an item costs to send from one country to another. This is because in the recipient country of an item, it is no longer the post office where the item was posted that is responsible, but the one responsible for the area of delivery. This service has to be paid for. However, in order to avoid major imbalances in international postal traffic due to differences in purchasing power around the world, the UPU classifies its 192 member countries into four categories. The lower the category, the less a country had to pay for an international item. This system, which actually makes sense, had led to an item from China (an emerging market according to the UPU) to the USA costing only a quarter as much as an item within the USA. This calculation can also be applied to the EU. This resulted in massive price advantages for Chinese e-commerce traders. The German E-Commerce and Mail Order Association rebelled.
Every year, about 70 million small consignments of goods are sent from China to Germany. German postal companies have so far lost at least 100 million euros a year in postage revenue. Likewise, domestic traders were missing out on potential sales due to distortion of competition. As the US had threatened to leave the UPU, member countries found a compromise at an extraordinary meeting in September 2019: industrialized countries are now allowed to charge higher amounts for forwarding international mail.
Exciting start-up movements in the smart logistics industry despite Corona
One would suspect that the Corona restrictions would have a rather slowing effect on the logistics sector in particular. Developments in logistics start-ups speak a different language. Many new start-ups were registered in the logistics sector in the Corona year 2020. Ludwig Hausmann, partner at McKinsey & Company, also commented positively on this at the KLU Logistic Innovators Day. “The momentum of start-up funding has accelerated through Covid-19.” He said the total funding for logistics has increased by 25 per cent from 2019 to 2020.
Smart logistics is the future
The flow of goods from source to destination depends on the integration of multiple elements such as ships, trucks and planes, ordering and information systems, and most importantly, people and their rulebooks and policy decisions. A network that intelligently connects and coordinates all participants, at best in real time, is the prerequisite for the success of Smart Logistics. Logistics is becoming a growing success factor on different levels. Against the background of these developments, what opportunities and risks do you see for your company? Feel free to contact us for a professional exchange.
by Nada Welker | Feb 1, 2021 | Automotive Industry, Future Trends
Convergence is one possible solution for securing a company’s existence on the market and opening up new markets at the same time. It is made possible by merging companies from different sectors of the economy. Current examples can be found in the merger of the automotive and IT industries, which we at magility announced years ago.
The automotive industry is currently seeing the most activity
According to a study by Deloitte, safety and communication systems are among the central areas for convergence technologies. Electric mobility is the main focus here. The interaction of the Chinese IT-company Baidu and the Chinese Daimler partner Geely, for example, paid off right at the beginning of the year with a remarkable increase in the share price of +20%.
Chinese government promotes electromobility
Supported and promoted by the Chinese government, the electromobility sector within the Chinese automotive industry can no longer complain about a lack of courtship. On the contrary: as described in the Automobil Industrie newsletter, companies like Baidu are flirting with starting their own e-vehicle production or see themselves as contract manufacturers.
Convergences create jobs
The South Korean technology group LG is entering into a similar liaison with the Canadian-Austrian automotive supplier Magna. Around 1000 jobs are to be created in a joint venture called LG Magna e-Powertrain, which will in future manufacture main components for electric cars such as chargers or electric-powered motors.
OEMs must look for partners
This should give the original equipment manufacturers (OEMs) pause for thought, since it seems that only those who join forces with partners from outside their industry in good time will be able to secure their market position in the future. For LG Electronics, at least, the calculation has worked out so far. The South Korean technology giant holds 51% of the shares in the new joint venture, which is said to be worth about one billion US dollars. According to a report in the Handelsblatt, LG shares shot up to a record high on the day of the announcement.
Apple as icing on the cake for partners from the car industry
The South Korean car manufacturer Hyundai also experienced a stock market high when it announced a possible partnership with Apple. The news hit like a bomb, but was withdrawn shortly afterwards. With its alleged plans for its own car and its interest in developing autonomous driving, Apple definitely represents a coveted cherry on the cake for a cross-industry tête-à-tête with the automotive industry.
Other giants are also at the start
However, search engine giant Google is also at the starting line with its sister company Waymo. The latter is developing technologies for autonomous vehicles and is way ahead in the race with Tesla, while ride service provider Uber only recently pulled out of the development of autonomous vehicles and sold its shares to the US start-up Aurora. This company specialises in the production of systems for autonomous driving and will gain access to the Uber platform in the future, as the ride service provider is investing around 400 million euros in Aurora as a strategic partner. The founders of Aurora, Chris Urmson, former head of Google’s robot car programme, Sterling Anderson, formerly responsible for the Autopilot system at Tesla, and AI expert Drew Bagnell are enjoying great popularity. Their start-up’s second round of funding included none other than retail and cloud services giant Amazon.
Business is booming
Amazon, by the way, also bought the Californian specialist in the field of autonomous driving, Zoox, with an investment worth billions. Daimler, on the other hand, secured the US chip manufacturer nVidia with its subsidiary Mercedes-Benz. The partnership is to produce software for autonomous driving controlled by artificial intelligence. BMW has teamed up with Intel and its camera software specialist Mobileye for this reason. And IBM wants to create synergies in the market with the takeover of Red Hat. But struggling companies also see advantages in mergers. According to the motto “Together we are strong”, PSA and Fiat-Chrysler are trying to regain a foothold in the markets by merging. The name of the new joint venture is Stellantis.
The fun has its price
As promising as industry convergences may be, they also have disadvantages. For example, cross-industry mergers are considered time-consuming and cost-intensive. The Deloitte study estimates that it takes at least five years until the companies involved in a merger have jointly developed the convergence technologies they are aiming for. And the investments are usually in the billions. VW, for example, invested 2.6 billion US dollars in the start-up Argo Al, in which Ford holds a majority stake.
Innovation through convergence
However, the convergence of technologies, products and services from different industries, which continues to increase due to the Internet of Things and digital networking, can only work successfully with a well-functioning network of partner companies.
Digital networking enables and forces companies to bring ever more comprehensive service offerings and more complex products to the market.
Classic product strategies are moving into the background. Mergers become the driver for innovations. Know-how is networked and brought together where it is needed. New possibilities for business models are emerging and industry boundaries are blurring. Start-ups are becoming increasingly important in this context.
Convergence requires more security
Of course, with the convergence of industries, the importance of security against cyber attacks is growing in equal measure. Magility has already reported several times on the vulnerabilities in connected vehicles as well as in smart and cognitive buildings. The largest known successful hacker attack to date on software from the US company Solarwinds confirms the urgency empheasized by Magility Managing Director Dr Michael Müller to consider and implement appropriate security concepts in good time.
We at magility would be happy to show you the way to the secure further development of your company’s business models.
