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Embracing the Next Automotive Revolution: Key Questions
Despite the “connected” promise, the connected vehicle sits in a complex ecosystem involving various “disconnected” stakeholders, including automakers, technology companies, government agencies and infrastructure providers.
Tom Molden
October 27, 2023
4 Min Read
Connected car driving interdependency of technology domains.
The automotive industry is under extreme pressure. Between new entrants in transportation, business model disruption, supply chain issues, electrification deadlines, regulatory pressures and ransomware attacks, automotive executives have a constant stream of major issues to address.
The industry faces another fundamental challenge as vehicle architectures become more software-driven and IT-like. There’s a convergence of different technology domains – Information Technology, Operational Technology and Product Technology – without any end-to-end solutions across all these domains. While it’s arguably the biggest industry challenge, it isn’t the most immediate, so it hasn’t been as highly prioritized.
The industry understands that soon every car will be connected to every other car, road, city and business, and there will be implications for that hyper-connected world. Organizations preparing for that future now will succeed when it finally comes to fruition. The sands will continue to shift between now and then, so you must ask: Who will be in the game moving forward, and how will legacy companies and OEMs ensure they keep a seat at the table?
Industry Disruptions Nothing New
The automotive industry has seen its share of disruptions.
In the 1970s, Japanese automakers made inroads into the American market, offering more fuel-efficient and affordable cars than their American counterparts. Domestic brands such as AMC eventually closed down, unable to compete with Japanese automakers on price and quality.
In the 1980s, the minivan was a major disruption, creating a new market segment for family vehicles. Sales of the once-popular station wagons declined as consumer preferences shifted with more options. We saw similar patterns in the 1990s with SUVs and more recently with the development of hybrid and electric vehicles.
The connected vehicle is poised to be the biggest disruption ever in the automotive industry. According to International Data, the connected-vehicle market may reach $1.8 trillion by 2025. Growth will be driven by increasing adoption of 5G, the automotive industry making inroads into developing countries and the demand for safety and efficiency in transportation.
Evolve or Die
The connected vehicle will be an unprecedented disruption. While it’s vital to address today’s hot-button issues, successful auto companies already are dedicating time and resources to future-proofing their companies and backend technologies.
As automotive companies contemplate the future and how they can maintain or improve positions, here are questions for them to consider:
Where does our company fit in the evolving connected-vehicle ecosystem?
Traditional stakeholders and new entrants are vying for market share. Technology companies such as Apple, Google, Qualcomm and Intel are muscling into the industry, contributing to the evolution. With reputations for breaking new ground, there’s no telling how far they’ll go in automotive. Legacy companies must figure out how to best work with or against them to maintain relevance. Traditional and new entrants have strengths and weaknesses that will help and hinder them while jockeying for position in the connected vehicle ecosystem, so it will be interesting to see where things settle.
What’s our strategy to address the comprehensive regulatory requirements around connected vehicles?
The regulatory environment is evolving as rapidly as technology, with multiple regulations impacting stakeholders globally and across traditional technology domains. For example, NHTSA issued regulations governing the design and performance of connected-vehicle systems. It also issued guidelines for testing and certifying connected vehicles. Additionally, the Federal Trade Commission issued guidelines for the collection, use and sharing of connected-vehicle data and has brought enforcement actions against companies violating guidelines. Fortunately, many of these compliance standards share a common core of best practices that can be applied broadly. With new regulations issued consistently, it’s paramount that companies are aware of the latest updates so vehicles and technologies remain compliant.
Do we have the internal organizational relationships necessary for new areas of collaboration?
This historic industry change is driving interdependency between technology domains that traditionally operated independently. Engineers from IT, manufacturing and vehicle product development are now collaborating to determine the best way to manage and protect the ecosystem surrounding the connected vehicle. This brand-new landscape requires that organizations have the right relationships to succeed. The best and brightest engineers are needed to work effectively with others across technology domains.
Looking Ahead
Despite the “connected” promise, the connected vehicle sits in a complex ecosystem involving various “disconnected” stakeholders, including automakers, technology companies, government agencies and infrastructure providers. Connectedness is critical to succeed.
Tom Molden Headshot (002)
Thankfully, disruption can level the playing field. Nimble newcomers introduce fresh innovation, often making them attractive acquisition targets for incumbents during market shifts. Simultaneously, the incumbents have well-funded R&D teams with some tricks of their own. There is a piece of pie for everyone in the connected-vehicle ecosystem – and it’s time to dig in.Tom Molden (pictured, left) is chief information officer of global executive engagement at Tanium, a cybersecurity and systems management company.
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