Really?... the ‘mobility’ industry?
Yes, the automotive industry is transforming into the mobility industry. For example, Ford is rebranding itself as a mobility company. It has spun off a division related to mobility, positioning Ford to compete in the new world of autonomous vehicles, Uber, Lift, ride sharing and so on. Further, the Society of Automotive Engineers has started using the term ‘mobility engineers’ when referring to their members.
Evolution versus Revolution
I use the term Evolution as opposed to Revolution to refer to the digital industrial transformation that is occurring in the automotive/transportation industry. Why? Because digital industrial concepts have been in play for many years even decades in some cases, and are now evolving into a true transformation.
Automakers have been using connected car concepts for many years. For example, GM’s OnStar is going on 20 years, and most vehicles today offer connection to your phone and tablets, streaming your favorites from satellite radio, and so on. But now they are furthering the field of connecting key components with sensors to drive continuous operational and occupant data into the cloud for performance analysis and predictive maintenance. Instead of having to drive to the dealership and get a download of data based on ‘codes’ behind the “Check Engine” light, real-time performance data is streaming into the cloud to allow for predicative maintenance based on the performance (or lack thereof) of the vehicle.
This type of digital industrial transformation will open up new capabilities for automakers, dealers, and service centers to offer new services to consumers, transforming old business models into new service offerings.
Insurance companies have been offering lower rates for better drivers based on a device that can be plugged into your vehicle and transmit operational and performance data for their analysis and determination of your rates based on your type of driving (e.g. do you speed often?). Automakers have for years offered leasing as an alternative to purchasing, requiring less cash or capital up front, and including all maintenance necessary for the life of the lease. This alternative business model is the forerunner to many new ideas of how people can utilize vehicles to experience the mobility outcomes they desire.
Autonomous, or ‘driverless’ vehicles are all the rage. Many people think autonomous vehicles will replace the traditional automobile and we will all be lining up to get into our driverless cars. Not so, says Carlos Goshn, CEO of Renault-Nissan.
Drivers will always be responsible for what happens with the vehicle. More than likely, semi-autonomous vehicles will allow for the mundane tasks of driving to be done by the vehicle’s computers, such as monotonous highway driving, but allow the driver to take over the vehicle when compelled to do so due to unforeseen circumstances. Mr. Goshn goes on to explain why he feels that fully autonomous vehicles will have a specific place in society, but will not overtake entirely the drivable vehicle. That’s good news for those of us who like to drive, and experience the fun of a sunny afternoon on a curvy mountain road or along a lakeside.
Regardless, safety is powering new autonomous capabilities in today’s vehicles such as lane assist, self-parking, and self-braking.
The Electric Vehicle (EV) evolution is another example of the digital industrial transformation in the automotive industry. Not just because of the electric engine, but because of the transformation of the components that make up an electric vehicle. Electric vehicles have been around for years; most all automakers offer them, or at least a hybrid. But they have largely stalled in the market, until recently. In large part due to the Tesla 3s pre-order success, reaching almost half million. Some people think this is the “iPhone moment” for EVs. But, Mr. Goshn interestingly points out it won’t be the high-end EVs that unleash the EV market, it will be the mass marketing of lower cost EVs combined with the rapid development of EV infrastructure.
Nissan, one of Mr. Goshen’s automaker companies, sells the most successful EV on the road today, the Leaf. Some 200,000 plus Leafs have been sold. So why not more? Yes, consumers want extended battery life beyond the ~100 mile limit today like 200-400 miles. So battery technology is critical, but more importantly, infrastructure such as the traditional gas station is necessary to make large-scale adoption of EVs happen.
It will take more than automakers improving battery technology. It will take governments and private business working together to create the infrastructure to enable wide scale battery recharging possible. The ability to find recharging stations in many places will make the move to EVs a no-brainer. Meanwhile, the U.S. should take a page out of Europe’s playbook – build in capability to turn off the combustion engine when stopped at a red-light or in stop-and-go traffic, and use electrical charge to keep the vehicle idling.
These are all important forces within the evolution of the automotive/transportation industry. You can’t read a magazine article, blog, or newspaper without someone pontificating on the changes we are experiencing and expecting in the ‘mobility’ industry.
In upcoming blogs, I’ll focus on the three main populations—consumers, automakers, and automotive suppliers—exploring the impact of the evolution on each:
- Consumers, whose tastes and expectations are driving the demand for ever increasing performance, quality and options in vehicles of today and tomorrow. And who will ultimately determine if they want to drive themselves or have the vehicle drive them around.
- Automakers who have to constantly balance the ever increasing consumer demand for more options, variety, performance and quality with lower costs and regulatory requirements from governments around the globe.
- Automotive supply chain members, the tier one, two and three suppliers who are constantly under pressure to deliver ever increasingly complex components on-time, under cost and above quality expectation, and be competitive on a global scale.
I’ll explore these concepts with the eye toward what these disruptive forces mean to manufacturing and operations. Meanwhile, check out GE's own playbook for digital industrial transformation.