How automakers can keep pace with their tech rivals

Randy Miller

Randy Miller,

EY Global Automotive & Transportation Leader & Global Diversity & Inclusiveness Champion

www.linkedin.com

Autonomous, shared, connected — transportation’s future is here. But who’ll lead the industry tomorrow: tech companies or automakers?

Man driving a small food cart alongside a large lorry

Who’ll be in the driver’s seat?

Transportation is changing: industry barriers to entry have broken down, and new competitors are challenging traditional business models. In this fast-evolving reality, automakers and suppliers have an opportunity to set the pace. To succeed, they must collaborate with technology companies and invest in a portfolio of start-ups.

A race with new rivals

Forecasts indicate that automotive sales will plateau within the next five years. But revenues from services based on mobility solutions, connectivity and data have been increasing rapidly over the past few years. And they are expected to continue to rise.

This shift has enabled a number of technology companies to become major players in transportation. And they have shown a continued willingness to make significant investments in new talent and other tech companies — often start-ups — that have mobility uses.

Competition between traditional and nontraditional automotive companies is fierce. And there is a race to be the first to perfect self-driving technology, with many companies trying to own the technology that will provide the brains for future autonomous cars. 

A more mobile future

What “transportation” means to consumers is changing. They now accept the idea of having vehicle access without actual vehicle ownership. And they expect to have full access to their virtual lives and entertainment while in a vehicle, which has paved the way for new in-vehicle content, information services and connectivity.

In this new reality, nontraditional automotive challengers will set the pace for innovation, through new electronics and software development. Automakers will do what it takes to keep revenue flowing and to ensure they own the autonomous vehicle fleets of tomorrow.

Current value propositions are changing and new revenue opportunities are emerging for incumbents, translating into new business, new employment opportunities and, in turn, further innovation. How this all plays out depends on who moves fastest and who collaborates most creatively. 

 

From 23-26 April at EY Innovation Realized and Convergence Lab, EY will be convening leaders that are at the forefront of disruptive innovation and industry convergence. Join the conversation by following #BetterQuestions.