R&D on Autonomous, Connected, and Electrification Technologies Creates Double-digit Growth Opportunities
September 19, 2017 | Frost & SullivanEstimated reading time: 2 minutes
As the automotive industry faces narrowing margins, the need to look to other revenue streams and keep the customer committed to the brand for their next purchase is paramount. Hence, automotive manufacturers are focusing on research and development (R&D) on autonomous, connected, and electrification (ACE) technologies to build fully connected and completely autonomous vehicles. To thrive in this highly competitive, evolving market, manufacturers need to look beyond seeing themselves as product suppliers and focus on becoming providers of mobility services. This will open the door for lucrative, new digital revenue streams.
Frost & Sullivan’s research, Global Key Automakers’ Autonomous, Connected, and Electrification Strategies, Forecast to 2025, finds that between 2015 and 2025, 10 key automotive original equipment manufacturers (OEMs) are expected to spend about $345 billion on ACE R&D. The study provides a strategic overview of the R&D activities of key OEMs, including key technology development, investment plans, expenditure trends, current expertise, and impact on business performance. Major players such as Volkswagen (VW), Toyota, BMW, General Motors, Ford, Mercedes (Daimler), Nissan-Renault, and Tesla—and their ACE technology strategies—are provided.
“In order to match market expectations, OEMs’ present objective is to build cars that can change the form and function, compared with what is currently available,” said Frost & Sullivan Future of Mobility Industry Analyst Jagadeesh Chandran. “OEMs should focus on collaborating with diverse players such as utilities, charging infrastructure owners, mobility providers, service providers, and leasing companies to establish a potential eMobility market.”
Current OEM R&D activities include:
- Autonomous technologies are the largest investment segment, averaging $1.43 billion in estimated investment per OEM from 2015 to 2025;
- Decentralised R&D activities play a vital role in achieving higher sustainability;
- Premium and volume automakers see connected car technologies as essential to compete in the market;
- Japanese OEMs focus on in-house development of capabilities, while European and American OEMs focus on collaborative development through partnerships and acquisitions;
- American OEMs spend less on basic research, while European and Asian OEMs allocate equal spend to basic and advanced research;
- Connected technology plays a vital role for short-term gains, with autonomous and electrification technologies expected to yield returns by 2018 to 2019; and
- Artificial intelligence and machine learning account for more than 80% of all new future revenue and business opportunities.
“On the flip side, challenges with employee retention and protection of development activities are expected to increase with the development of various autonomous and connected car technologies,” noted Chandran. “To maintain a foothold in the market, OEMs should keep track of third-party connected car service providers that can bring the same or similar services as OEMs to market at a significantly lower cost through an entirely different monetization model.”
Global Key Automakers’ Autonomous, Connected, and Electrification Strategies, Forecast to 2025 is part of Frost & Sullivan’s Future of Mobility Growth Partnership Service program.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community.
Suggested Items
IDTechEx Examines the Opportunities for Wearables in Digital Health
04/19/2024 | IDTechExIDTechEx’s report, “Digital Health and Artificial Intelligence 2024-2034: Trends, Opportunities, and Outlook”, covers this ongoing trend in the consumer health wearables market and includes analysis of the opportunities and roadmap for biometric monitoring.
Real Time with... IPC APEX EXPO 2024: Pluritec's Expansion and Growth in the North American Market
04/19/2024 | Real Time with...IPC APEX EXPONicola Doria, president of Pluritec, discusses the company's strategic focus on the North American market, their investment in a new sales organization, service expansion, and a new process integration line. The conversation also covers market response and future installations, as well as Pluritec's new partnership with IEC.
Mycronic Releases Interim Report January–March 2024
04/18/2024 | MycronicNet sales increased 39 percent to SEK 1,692 (1,219) million. Based on constant exchange rates, net sales increased 42 percent.
Real Time with... IPC APEX EXPO 2024: Exploring Silicone Solutions with R&D Director of CHT
04/17/2024 | Real Time with...IPC APEX EXPOIn this interview, Gerry Ellis, the R&D director for CHT, discusses the product range offered by his company. He explains the challenges in creating base formulations, the drive to make products more user-friendly, and the various application techniques involved. Ellis also highlights the key market segments and the significance of providing efficient solutions to customers.
Gartner Forecasts Worldwide IT Spending to Grow 8% in 2024
04/17/2024 | Gartner, Inc.Worldwide IT spending is expected to total $5.06 trillion in 2024, an increase of 8% from 2023, according to the latest forecast by Gartner, Inc. This is an increase from the previous quarter’s forecast of 6.8% growth and puts worldwide IT spending on track to surpass $8 trillion well before the end of the decade.