Finding a New Balance in the Automotive Industry Driving Responsible Innovation and Transformation for the Next Decade Executive Summary

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Finding a new balance in the automotive industry Driving responsible innovation and transformation for the next decade Executive Summary

The automotive sector’s already dizzying pace of change is accelerating. This report gives Capgemini’s perspective on the most important changes that can be expected between now and 2030, and the adaptations that automotive companies will have to make to ensure continued success.

2 Finding a new balance in the automotive industry Following eras of industrialization these requirements: Subscriptions (1920s to 1970s), globalization (late and agency sales will become more 1970s to 2015), and digitalization, a common, for example. new era of change is emerging, driven • Intelligent Industry: The next by three megatrends that automotive generation of digital engineering companies are recognizing as critical to and manufacturing will build on their future: technologies such as artificial intelligence (AI), cloud, and the • Sustainability: Societal and internet of things (IoT) to create a regulatory pressure means that data- and software-driven industry. companies need to adopt an end-to- Intelligent products and systems, end approach to sustainability that operations, and services will improve addresses not just the environmental uptime, reduce costs, and boost impact of the vehicle, but that of efficiency, and hence increase value every aspect of their operations and for companies, their customers, those of their partners. To tackle this and their partners. Software will issue adequately, Original Equipment play a crucial role in the automotive Manufacturers (OEMs) will need industry and influence it radically. to change their culture. They will also have to rethink the way they Increasingly, too, automotive companies collaborate with their suppliers and need to operate and establish a partners to realize the concept of a clear position within a wider mobility circular economy. ecosystem that includes providers of • Customer centricity: Companies public transportation as well as enablers need to cater to changing of mobility such as infrastructure and customer preferences, such as utility providers, and local and national younger individuals’ requirement governments. for personalization and online transactions. Connected services will play an increasingly important role as software proliferates inside and around vehicles, not least to support personalization. Sales models will need to accommodate

3 Success within the mobility ecosystem culture that facilitates continuous Our research indicates that the depends on three main factors: change, and aligning IT ever more automotive industry is moving towards closely with the business. Companies a new “Responsibility Era” where • Technology & software will also need to develop resilience, companies must shoulder responsibility competency: To succeed within the reacting to disruptions in a controlled for a whole range of environmental mobility ecosystem, companies will and efficient way. and social objectives. Even when new have to focus at least as much on industry trends and preoccupations software as on hardware. Automotive Building a position in the mobility come along, these responsibilities will companies will increasingly resemble ecosystem will imply adoption of be here to stay, affecting every player in technology companies such as new business models, for example the mobility ecosystem, every stage of Google, Microsoft, or Amazon. Topics around mobility services and digital the automotive value chain, and every that are likely to need high levels of mobility solutions. Any new model aspect of customer experience. competency include cloud, data and must, however, be aligned with the AI, and cybersecurity. requirements of each company’s Automotive companies must • People & organization: This new customer base, and with the demonstrate that they understand world will require new skills and company’s own core competencies and accept their new responsibilities competencies, both hard and soft, and profitability objectives. Success in while balancing them against existing new styles of leadership, and new, the mobility ecosystem also depends business priorities. By doing this, they more collaborative ways of working on complementing vehicles with the can both build a credible position within that increase agility. right range of services in the areas that the developing mobility ecosystem and • Operational excellence: A customers value most: connectivity, safeguard their future profitability. disciplined approach to the flexibility, and convenience. management of costs and efficiency will be vital and can be achieved by, for example, using analytics and AI to improve processes, developing a

TRANSFORMATION FRAMEWORK FOR THE NEXT AUTOMOTIVE ERA

Customer centricity

Technological Software Competency Mobility

People Organization Ecosystem

Operational Excellence Success Factors Success

Sustainability Intelligent Industry

4 Finding a new balance in the automotive industry Contents

06 INTRODUCTION 0 9 THREE MEGATRENDS THAT ARE SHAPING THE NEXT AUTOMOTIVE ERA 18 THE MOBILITY ECOSYSTEM OF THE FUTURE AND ITS SUCCESS FACTORS 28 PREPARING FOR THE RESPONSIBILITY ERA

5 Introduction

In recent Capgemini studies, such as our report on the Agency Sales Model1 and our Connected Vehicle Trend Radar 2,2 we analyzed specific topics within the automotive sector. But what does the big picture look like?

1 https://www.capgemini.com/wp-content/uploads/2020/11/Automotive-Agency-Sales-Model_POV_Capgemini-Invent.pdf 2 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2020/09/ConnectedVehicleTrendRadar_2_Report.pdf

6 Finding a new balance in the automotive industry How will the automotive industry as a The industry’s recent whole evolve in the short and medium term? Will automotive players offer history and current status similar products and services to today’s, Introduction or something completely different? Will The automotive industry has been in they operate their businesses in the a state of constant change since the same way as they have done in the start of the “Industrialization Era” that past decade? began in the 1920s and lasted until the 1970s. Since then, manufacturing This new study tackles these questions, and production processes have been looking into the future of automotive enormously improved in terms of their and analyzing the whole field of mobility efficiency and effectiveness through – including not just vehicles but also automation of operations, reductions mobility-related services – from the in the length of vehicle cycles, and perspective of the automotive industry increased specialization. Within this and from different angles of the value era, the industry had a clear product chain. Based on this analysis, we share focus and specialized its operations our industry predictions for the period with regard to the purchasing, logistics, up to 2030. engineering, and manufacturing phases of the product. To provide context for these predictions, we first discuss industry The “Globalization Era,” from megatrends of both today and approximately the late 1970s until tomorrow, describing their impact, 2015, saw the end of geographic challenges, and meaning for industry boundaries that previously constrained players. Focusing on the effect of sourcing, logistics, manufacturing, and technology on key megatrends, we will sales. By opening up world markets not only assess the big picture from and establishing international trade the perspective of automotive players, alliances, products have been made but also consider the implications available to customers all over the for the most important component world and OEMs have benefited from of the automotive ecosystem: the local advantages through access to new customer. Customers’ dramatically talent, materials, and demand. This has changed behavior is the ultimate driving given OEMs the chance to develop from force for the transformation of the national or international producers entire industry. focusing on specific markets into global or multinational players.

7 The “Digitalization Era,” which began leading market is pulling the automotive technology company – and probably around 2014 and continues today, is industry out of the crisis with a V-shaped rightly so, given the need for customer characterized by disruptive innovations pattern of development. centricity and the increasing importance in the automotive market. New of software within their business. technologies have affected not only the All transformation stages, from the internal operating model of suppliers Industrialization Era onwards, have As if these factors did not put enough and OEMs, but also customers’ use brought significant new opportunities pressure on automotive players, of products. A significant proportion with them, always putting efficiency they also need to deal with clients’ of the portfolio has changed as the and adaptability at the forefront. unprecedented expectations about Digitalization Era has given birth to Nevertheless, each evolutionary stage is sustainability, convenience, affordability, digital products and services. From this also associated with challenges. Digital and personal experience among others. era onwards, OEMs and suppliers can no transformation is not an incremental Customers do not perceive vehicles and/ longer focus on engine-based vehicles innovation with minor changes, but or mobility as standalone products, but have widened and shifted their a revolutionary one – at least when it but as an essential part of their own portfolio to focus more on product- comes to the impact on people and ecosystem that needs to be seamlessly related services. These services now on the working methods of traditional integrated and personalized. As people represent an additional source of automotive players. experience different customer journeys revenue for OEMs. Also in this era, the in other industries, they develop similar concept of the mobility ecosystem has With regard to digital transformation, expectations about OEMs and mobility emerged with new business models of certain companies are clearly leading players in general. Offering an appealing its own such as car sharing, widening the the field. In every conference on digital and appropriate customer experience scope of automotive players’ operations innovation or panel discussion on in the automotive world is currently and enlarging their battleground. digital capabilities, the same leading one of the biggest preoccupations and tech players are mentioned as state-of- challenges for OEMs. From even a brief look at the past few the-art examples: for instance, Google, decades, it is clear that the automotive Amazon, Uber, Alibaba, and Tencent. As always, the point of departure is industry has been undergoing constant Alongside innovative and successful clear, but the destination and roadmap change, culminating in today’s digital startups, these same players are now are less so. Drawing on Capgemini’s transformation. Throughout its history, entering the automotive market and research and client experience, this it has been a profitable industry challenging traditional OEMs and report looks into the future to predict and major contributor to the global suppliers on their home ground. The what the automotive industry’s next economy; outside times of crisis, it has boundaries between technology major era will look like. But let’s start grown constantly in terms of volume, companies and other industries are by looking at the megatrends that will revenue, and number of market players. fading away. New players are entering shape that era. With the COVID-19 pandemic, the digital markets, both as competitors for transformation of the industry has been established players and as their further accelerated throughout the collaborators. In addition, virtually every entire value chain. Even more than after automotive company nowadays seems the 2008/2009 financial crisis, China as a to have the ambition of becoming a

1970 1980 1990 2000 2010 2020 2030

1970s 1979 2014 The end of the The beginning of the The beginning of the Industrialization Era Globalization Era Digitalization Era

8 Finding a new balance in the automotive industry Three megatrends that are shaping the next automotive era

Alongside the challenges it has posed for the automotive industry, the pandemic has made positive contributions to its digitalization. Companies’ agility and digital maturity have increased at unprecedented rates, as seen in the rapid introduction of contactless sales and flexible offers. By providing an impetus for more rapid transformation, COVID-19 has accelerated the digital transformation that was already under way. This transformation is enabled by new and still developing technologies, such as artificial intelligence (AI), analytics, and cloud platforms, and by the increasing levels – and growing importance – of software within the vehicle and in the underlying processes. This period of rapid change is bringing different megatrends to the fore.

9 CASE

CONNECTED AUTONOMOUS SHARED ELECTRIC

Until now, the industry’s main To help companies tackle this As we have seen, the three megatrends megatrends have been summarized transformation, we have developed identified by our framework define the by the acronym CASE, representing a framework (see Figure 1) that broad themes that automotive players “Connected, Autonomous, Shared, incorporates the three megatrends, need to understand and address. Only Electric” vehicles. along with three success factors that by dealing with these three megatrends will determine companies’ ability to sufficiently and equally can they remain Although CASE topics are still very much succeed in the mobility ecosystem: competitive and secure their market on the agendas of the board members Technological & Software Competency, position as mobility ecosystem players. and shapers of the automotive industry, People & Organization, and Operational Let’s now look at each megatrend companies’ focus has shifted. While Excellence. In this framework, the in turn. connected and electric vehicles are megatrends broadly represent the still on the priority list, autonomous “what” of the new era (what companies driving vehicles and shared mobility are need to do) while the success factors receiving less focus from traditional represent the “how” (how companies OEMs. For the “autonomous” category, can realize the megatrends). The the term automated driver assistance megatrends are discussed below, and (ADAS) more accurately represents the the success factors in the next chapter. current market direction.

Rather than emphasize CASE, our FIGRE 1 research shows that automotive companies are increasingly recognizing TRANSFORMATION FRAMEWORK FOR THE NEXT AUTOMOTIVE ERA three megatrends as critical to their future: Sustainability, Customer Customer centricity centricity, and Intelligent Industry. Companies know that they need to establish a position – and then remain relevant – in a mobility ecosystem that also includes providers of public Technological Software Competency transportation, together with mobility Mobility enablers such as infrastructure and utility providers, and local and national People Organization governments. Companies’ ability to Ecosystem address the three megatrends will influence their ability to succeed in this Operational Excellence mobility ecosystem. Factors Success

Sustainability Intelligent Industry

10 Finding a new balance in the automotive industry MEGATREND 1Sustainability

With environmental awareness on the variety of challenges remain regarding Against this background, other rise, nearly 80% of customers are now the sustainability of battery technology, alternative power sources also look making sustainability-based purchase ranging from the requirement for interesting. Apart from BEVs, advances decisions, according to Capgemini rare earths as ingredients for battery in technology have paved the way for Research Institute.3 Companies from production to a lack of recycling the development of electric vehicles all industries are starting to react with solutions. All in all, BEVs will not powered by solar energy or hydrogen/ comprehensive programs aiming at become mainstream until customers fuel cells, as well as for vehicles whose reducing their environmental footprint are offered the usability, convenience, engines can run on biofuel. These and reaching a net-neutral impact in and affordability that conventional alternatives all have their attractions. terms of CO2 and other greenhouse gases. vehicles offer.4 The use of hydrogen as an alternative fuel is of interest because the energy For the automotive industry, in addition It should be noted that increasing released from hydrogen only produces to a general societal demand for adoption of BEVs will ultimately have water as a by-product. Solar roofs could sustainable behavior, there is a major an impact on sales (different sales take electric vehicles to another level of regulatory aspect. In Europe, the first models, probably with leasing options sustainability by leveraging the power regulations regarding vehicle emissions for batteries) and aftersales (reduced of the sun, making them completely were issued in the early 1990s and they service requirements due to decreased emission-free. have been repeatedly tightened ever complexity of the whole powertrain), since. In recent years, awareness has requiring adaption, at least, in these focused on CO2, with increasingly strict areas as well. requirements for fleet emissions.

We expect this trend to continue. A net- zero CO2 impact for internal company operations will be the standard by 2030. Similarly, by then we expect all major OEMs to offer vehicles driven by mechanisms other than internal combustion engines across their model ranges.

Already today, battery electric vehicles (BEVs) are gaining customer acceptance, with companies such as Tesla showing the way. Rapidly improving battery technology provides a more reliable experience and instills confidence in this new way of driving, partially allaying concerns about charging infrastructure and reach. However, a

3 https://www.capgemini.com/us-en/wp-content/uploads/sites/4/2020/07/Final-Web-Report-Sustainability-In-CPRD-2.pdf 4 https://www.iea.org/reports/global-ev-outlook-2020

11 These alternatives would need further To realize these improvements, investment – for example, to set up the transparency and culture change are required fueling infrastructure in the required. Collecting and aggregating case of hydrogen-powered vehicles. the right data about the sustainability For hydrogen, there are also storage footprint of all steps along the value challenges, which have delayed adoption chain provides a solid foundation for so far. A recent Capgemini report5 improvement. A culture of sustainability discusses some of these issues in detail. awareness can ensure that sustainability is not just a concept within operations Returning to the overarching topic of and production, but rather a mindset sustainability, according to a Capgemini and responsibility to be followed and Research Institute report, 62% of lived by each player within automotive organizations claim to the ecosystem. have developed a comprehensive sustainability strategy with well-defined In taking steps towards a more goals and targets.6 This is necessary, sustainable mobility ecosystem, the as sustainability in automotive goes concept of a circular economy will beyond e-mobility. An end-to-end become an increasingly important approach to sustainability needs to part of the CxO agenda. Emerging consider the entire impact of the technologies can help to realize the value chain, ranging from product resulting comprehensive sustainability development, sourcing and logistics, ambitions. Examples include the manufacturing, and marketing and sales, attempts made by leading OEMs to use to aftersales and recycling solutions. 3D printing to reduce manufacturing Improvements in terms of climate, waste by eliminating scrap, AI to enable environmental, and social impact are more efficient energy consumption, and possible and required at each of data forecasting, analytics and green these points. IT to help evaluate the environmental impact of operations.

of automotive organizations claim to have sustainability targets

5 https://www.capgemini.com/gb-en/wp-content/uploads/sites/3/2020/12/Commercial-vehicles-study-Capgemini-Invent.pdf 6 https://www.capgemini.com/wp-content/uploads/2020/03/The-Automotive-Industry-in-the-Era-of-Sustainability.pdf

12 Finding a new balance in the automotive industry MEGATREND 2Customer centricity

Sustainability is not the only area where Furthermore, customers today A customer-centric approach to vehicle customer expectations are changing. are showing an increased sense of sales has also led to the emergence of With 59% of younger consumers (below independence and self-determination. subscription models, which provide the age of 35) considering buying They want to decide for themselves customers with more flexibility. Various a car, up from 35% in April 2020,7 a which products to buy, which decisions OEMs have been testing the benefits generation change is happening among to take, and which data to share of a subscription model through small- automotive customers and a reversal with whom. scale programs such as Access by BMW of their historical preference to avoid or Porsche Passport. By 2030, vehicle vehicle ownership. As a new customer This has important implications for subscription programs could account for base emerges, customer preferences the development of future sales in nearly 10% of all new vehicle sales in the are shifting from offline to online the automotive industry. Improved US and Europe.9 channels and from standard services to use of technology will help to cater personalized customer journeys. to customer expectations both in With regard to operation of the sales dealerships and at home. Especially process, an important transformation As a result, customer centricity is key, during the pandemic, contactless sales, lies ahead, affecting both the customer not only when talking directly to the deliveries, and aftersales represent experience and existing roles in customer, but in all communication top priorities and objectives for automotive sales. The agency sales channels, and also internally, during automotive players8 in order to satisfy model (see Figure 2) can be viewed the development of new products and the newest customer expectations. To as an evolution of traditional three- the setup of new processes. Customer realize distance commerce, immersive tiered sales towards an integrated centricity needs to be the main driver in technologies such as augmented reality online/offline sales model. OEMs the physical as well as the digital world, (AR) and virtual reality (VR) are key; interact directly with customers seamlessly integrated into both internal they allow customers to explore vehicle and take responsibility for the sales and external processes. features and even take test drives from transaction. The dealer remains the the comfort of their homes. face that the customer sees, but acts as an agent rather than a contractual partner. Especially with activities that require physical interaction, such as coordinating and executing test drives and handling service appointments, the agent plays a decisive role by managing the customer experience.10

13 Transformations in automotive sales monetize the data gathered. The high Vehicle Trend Radar 212 indicates that will also encompass aftersales service. potential of secure and trusted vehicle around 44% of customers do not yet Using technology, the traditionally data is reflected in global revenue have any connected services in their burdensome steps in the aftersales predictions for 2030 ranging between cars, and only about half of those that customer journey can be seamlessly and $80bn and $800bn.11 do use them frequently. Simplifying effortlessly integrated into customers’ interfaces and promoting the lives. As an example, AI will help OEMs Many potential future use cases in capabilities of connected vehicles will monitor connected vehicles in real aftersales rely on the connectivity not only help gain access to insightful time to predict and prevent vehicle features of vehicles. Additionally, data but also increase the value of malfunctions. Additionally, over-the- data generated by connected vehicles vehicles for customers. air (OTA) updates will be a quick and is expected to increase, providing effortless way to remotely update opportunities for OEMs to monetize With the right technologies, vehicle software. digital insights. Technology adoption organizational changes and by other industries will enable a partnerships, superior customer In the past, the usage phase of the connectivity model that allows vehicles experience, personalized sales, and vehicle was characterized by a limited to communicate with almost all the effortless aftersales, services will relationship and communication physical assets in the surrounding become key differentiators that help between the OEM and the customer. environment (V2X). OEMs maintain a competitive advantage However, connected services and the in automotive sales. entire in-car experience now represent Although connected services have great a new battlefield for OEMs and a new potential, it is not yet being realized. revenue source. To succeed in this OEMs need to adjust their portfolio field, OEMs need to make sure they to take advantage of the fact that offer valuable services to customers, customers are often willing to pay for integrate third-party services, and these services. Capgemini’s Connected

FIGRE 2

TRADITIONAL SALES MODEL (THREE-TIERED, MAINLY OFFLINE) VS AGENCY SALES MODEL

Traditional sales model Agency sales model

OEM/Importer OEM/Importer

1 2 4 Online for fulﬁlment of 1 Dealer Agent 3 4 1 3 2 1 3

Consumer Consumer

7 https://www.capgemini.com/wp-content/uploads/2020/04/COVID-19-Automotive.pdf 8 https://www.capgemini.com/wp-content/uploads/2020/05/Automotive-Sales-A-Bumpy-Road-to-Recovery-1.pdf 9 https://www.forbes.com/sites/sarwantsingh/2018/07/30/your-next-car-could-be-a-flexible-subscription-model/?sh=7ba8d7974ffa 10 https://www.capgemini.com/wp-content/uploads/2020/11/Automotive-Agency-Sales-Model_POV_Capgemini-Invent.pdf 11 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2020/09/CapgeminiInvent_VehicleDataMonetization_POV_Sep2020.pdf 12 https://www.capgemini.com/wp-content/uploads/2020/09/ConnectedVehicleTrendRadar_2_Report.pdf

14 Finding a new balance in the automotive industry MEGATREND 3Intelligent Industry

Moving from the customer to the OEM With the help of key technologies such • Intelligent operations, reflected perspective, new technologies have as AI, cloud, and IoT, automotive players in the digitalization and data-driven constantly been disrupting product have the potential to address the topic optimization of automotive core development and manufacturing. Lately, of Intelligent Industry in a targeted functions and processes, can reduce an increased level of connectivity and manner. This can be realized via a complexity and add efficiency automation was introduced under the threefold digital approach: through, for example, smart factories heading of Industry 4.0. However, the or digital engineering approaches. future will rely not only on automated • Intelligent products and systems, • Intelligent services, ranging from factories but also on closer collaboration being smart and connected, can now connected services to monetization between machines, workers, and be continuously improved thanks use cases based on data, can extend customers to cope with the increased to real-time feedback. This means classic profit pools and provide value level of product complexity. The next greater uptime, reduced costs, and to customers and partners alike. generation of digital engineering and improved efficiency across product manufacturing, Intelligent Industry,13 and system development. Intelligent Highly automated processes, platforms, promises great shifts in industrial products and systems span everything and procedures result from the processes and in business and from product engineering (e.g. of threefold approach. They enable OEMs consumption models, and offers OEMs powertrains and vehicle architecture) to create new digital business models, the opportunity to take the lead in the to software engineering (e.g. of products, and services, and more race to a data- and software-driven embedded software or telematics) – efficient processes both internally and automotive world. and more. in working with partners. Intelligent

15 Industry brings potential business Digital twin/ digital shadow technology can add a further level and efficiency benefits beyond those of speed and efficiency by bringing of Industry 4.0 and can help OEMs to To enable end-to-end digital continuity, relevant computing operations remain competitive in the long run. digital twins are now used across even closer to a vehicle or a manufacturing and warehouse production facility. We believe that Intelligent Industry operations to manage material flow, will be the norm for automotive complete order-to-delivery processes, Automation & robotics OEMs by 2030. We are already seeing and realize efficiency and quality encouraging movements in this improvements in vehicle production. Intelligent Industry will make further direction: For example, the percentage Digital twins help in use cases such as progress with automation and of organizations with ongoing smart what-if planning or the prediction of robotization in the value chain. More and factory initiatives increased from 43% in behavior under operational changes. more, advanced algorithms are used to 2017 to 68% in 2019.14 Through IoT sensors, the twin can also automate basic tasks and decisions. This receive continuous, real-time data from increases efficiency and enables split- This finding suggests that companies are the object. Digital twins will therefore second decisions that can, for example, evolving towards Intelligent Industry, accelerate product development, reduce trigger actions to avoid interruptions in for which data is the most important defects, troubleshoot equipment, production. Robots can now accomplish input. Together with AI-based analytics, increase uptime, and decrease an ever-growing number of tasks in readily available data creates the right manufacturing costs. The digital twin production, and sometimes also in conditions for realizing Intelligent will be further extended into the repair and maintenance. These robots of Industry’s primary benefit: flexibility in usage phase of vehicles and beyond. today usually have to be programmed to manufacturing and across the whole Transparency of each component within perform specific tasks, but tomorrow’s value chain. Intelligent Industry helps a vehicle throughout its entire life smarter, data-powered robots will OEMs to adjust their business models in cycle will be key to staying relevant in be able to carry out a whole range of real time in reaction to change while still the future. tasks, so that for example the same acting in accordance with regulations, production facility can be used flexibly such as safety or cybersecurity premises, 5G & edge for a variety of vehicle models and even and sustainability paradigms (including for different types of powertrain. CO2 emissions and reuse of materials). The right level of connectivity is crucial for fully realizing the benefits The three megatrends described in this As well as ensuring that they have the of flexibility in an Intelligent Industry chapter reflect the topics that are clearly right data processing and analytics setup. The above-mentioned sensor already on the agendas of automotive capabilities, automotive players data is ideally transmitted and players. But it is not enough to just aiming for an Intelligent Industry analyzed in real time to enable fast consider these aspects and integrate approach must not underestimate the and effective reactions to unforeseen them into the product and service transformation processes required. changes. 5G technology promises to portfolio. Each player also needs to Throughout their journey towards provide this benefit with a previously define its own business model around Intelligent Industry, they will need to unheard-of transmission speed and these megatrends and in the context address issues such as management bandwidth.15 The fact that 5G is a of the mobility ecosystem. The next processes, employee enablement, and mobile communication standard brings chapter explains how this can be done. appropriate organizational structures. additional benefits. Not only can a factory be fully connected, but vehicles While Intelligent Industry is facilitated by in use on the road can also constantly various technology enablers, including feed live data about their status into IoT, AI, and mobile communications, the predictive maintenance systems, for following three enablers are particularly example. In use cases where very important: fast reaction times are required (e.g. autonomous driving), edge computing

14 https://www.forbes.com/sites/dereknewton/2018/12/28/the-myth-of-jobs-that-dont-exist-yet/?sh=7590220270ec 15 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/06/Digital-Report-%E2%80%93-5G.pdf

16 Finding a new balance in the automotive industry INTELLIGENT INDUSTRY PROMISES GREAT SHIFTS IN THE INDUSTRIAL PROCESS LEADING TO A DATA-DRIVEN AUTOMOTIVE WORLD.

17 The mobility ecosystem of the future and its success factors

In the previous chapter, we discussed three megatrends – Sustainability, Customer centricity, and Intelligent Industry – which together are driving the next major transformation for the automotive industry. We outlined Capgemini’s framework for helping automotive companies address the megatrends. Companies, we believe, must define their desired position in the evolving mobility ecosystem and then establish and strengthen this position by addressing three essential success factors: Technological & Software Competency, People & Organization, and Operational Excellence

18 Finding a new balance in the automotive industry In this chapter, we will start by So far, though, these novel business Customer demand considering what might constitute models have seen varying degrees a viable business model within the of success. The challenge is to find In an increasingly customer-centric mobility ecosystem, then analyze the models that meet customer needs ecosystem, customers’ needs must be three key success factors, and finally while at the same time offering a cost/ considered first. This means that the consider likely future developments in revenue structure that allows profitable business model should define a position the mobility ecosystem itself. operations. within the mobility ecosystem that is driven by customer demand, and not by Business models in the Car sharing services are a good technological possibilities. mobility ecosystem illustration of this challenge. Although customer demand clearly exists, Connection to core business With the megatrends discussed in traditional OEMs seem to find the and core competencies the previous chapter shaping future services difficult to run profitably. mobility, automotive companies will However, traditional rental companies As the car sharing example discussed need to establish and protect their such as SIXT are apparently more above shows, it is worth considering position in a constantly changing successful, and continue to target this which already-established core mobility ecosystem. This will necessitate market, along with Uber and other ride- competencies a company brings to the new business models. Whereas a couple hailing companies. The explanation may table before deciding which business of years ago automotive companies be that traditional rental companies, models to adopt. Being able to leverage were mainly just selling vehicles, they are which are used to focusing on vehicle those existing core competencies has now adopting business models around utilization rates, are better adapted to apparently helped the rental companies mobility services and digital mobility this new business model than OEMs, to develop their new business model solutions. These models are as relevant with their historic focus on engineering, faster and to operate it more profitably. to the established market players as manufacturing, and selling vehicles. they are to the innovative startups that Profitability often initiate them. So, what does it take to define a successful and profitable business Establishing a new business model can model in the mobility ecosystem of the bring high upfront costs as well as a future? Three criteria are key: persistently negative cashflow over the first couple of years. If the financial reality does not meet the upfront expectations, the result can be the early termination of the model. This is why it is essential to establish clear profitability requirements before starting out. Fundamental questions are: Where is the revenue coming from? How can we balance costs with revenue? What is the timeline for this? What are the investors’ or shareholders’ expectations?

19 The three success factors

To successfully realize their chosen business model, mobility ecosystem players need to be structured and organized internally in an appropriate way. The success factors that we are about to discuss represent this internal perspective, including the capability, talent, and operational dimensions. They all need to be tackled simultaneously if a company is to deal successfully with the megatrends.

Success factor 1: Both internal and external perspectives improved ongoing operating are important here. As well as providing expenditure. We expect the trend Technological & the right services to customers, IT and towards cloud technology to continue Software Competency technology functions also need to and accelerate over the coming years, achieve scalability and cost optimization. with further increases in flexibility Collaborative platforms can help by and the emergence of a growing For vehicles to become smarter and making it easy for central and regional range of cloud-based solutions for the more autonomous, the underlying stakeholders to work together; this can industry. technologies need to become more drastically reduce time to market while innovative. The shift from hardware to ensuring almost instant scaling and • Data & AI software excellence is currently one of global coverage. With more and more data being the key challenges for the automotive collected right along the automotive industry. Over the past 100 years, Apart from the need for general value chain, companies are realizing product engineering and production software excellence, a variety of they need capabilities to analyze this achieved incredible progress with ever specific technologies are becoming data and use it to trigger intelligent more sophisticated, well-designed, and increasingly relevant. In addition to actions. AI already plays an important high-quality vehicles. In recent decades, those already mentioned in connection role in this context and will increase however, software components are with Intelligent Industry, the following in relevance in the future. AI increasing in relevance. Technological technologies are key: technologies will be crucial in every competency nowadays implies product part of the value chain, from design • Cloud and software excellence in equal Cloudification (the migration of data to aftersales services. Additionally, AI measure, since both are needed to and applications to the internet in can strengthen driver assistance and fulfill increasing customer expectations. order to enable cloud computing) driver risk assessment systems, both As discussed below, this shift also has is currently a hot topic in many of which can have an impact on the talent and organizational implications. departments of OEMs and along the customer experience. whole value chain. Success stories Furthermore, the shift also has an here include the use of cloud-based impact on ways of working. In line with Though AI has been applied in software in operations (e.g., for ERP agile methodologies from software many parts of the automotive value systems) and marketing and sales development, both software and chain, there is a lack of integration, (e.g., CRM systems or customer hardware need to be developed at an with most AI projects implemented interaction solutions). By taking accelerated pace, frequently creating selectively and not at scale. In the advantage of cloud’s configurability, incremental value for the customers. 16 adaptability, and scalability, and the supply chain area, just 4% of AI Examples include the release of new pay-as-you-go commercial model, solutions get scaled up to be used by hardware- and software-enabled the OEMs concerned have reduced more than one function. The most services via over-the-air (OTA) updates upfront investment, improved successful AI implementations have to a vehicle that has already been sold. performance and resilience, and tended to take place in functions

20 Finding a new balance in the automotive industry where workflow and processes benefits with the risks of increased Technologies such are more standardized, such as connectivity. But now other aspects The three success factors manufacturing/operations. of the operation are also at risk. as AI and machine

Overall, however, the potential in Looking first at the product, future learning will play this area is huge. We expect that vehicles will be highly digital, and their a pivotal role in AI will enable more and more use in-vehicle and back-end systems will cases, especially in areas such as the make them into data goldmines. With protecting vehicles automation and standardization the adoption of 5G and IoT solutions, of workflows in labor-intensive even more valuable vehicle and against cybercrime operations along the entire value customer data will be generated; chain. In parallel, “lighthouse” (i.e., see Figure 3 for the cyberthreats high-profile) use cases for machine that will arise. It will be imperative value chain, including the finished learning, blockchain, and quantum to implement strong cybersecurity product – the vehicle itself. computing will become more measures to protect all this data. common. OEMs need to secure their electronic Technologies such as AI and systems, communication networks, machine learning will play a pivotal • Cybersecurity algorithms, software, users, and role in protecting vehicles against With the increasing prevalence underlying data from unauthorized cybercrime. In the future, vehicles of software components and access and manipulation. will be equipped with operational connectivity features, a variety of Over and above the cybersecurity profiling mechanisms featuring risks need to be managed along the measures that OEMs themselves machine learning and deep learning automotive value chain. Production decide to put in place, other technologies to detect security and product development facilities safeguards will be dictated by future anomalies. This will help OEMs have traditionally always been well cybersecurity regulations. These detect and diagnose cyberthreats in protected, though they face the are likely to affect not only the real time. challenge of balancing the potential manufacturing process but the entire

FIGRE 3

VEHICLE CYBERTHREATS

OBD-II Hacking Personal Data Spam and Advertising Vehicle-to-Vehicle (V2V)

Malware and Exploits Vehicle-to- Infrastructure (V2I) Third-Party Apps

Key Fob Hacking

Oversight

16 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2020/11/Fast-forward_Report.pdf

21 Success factor 2: • Establishing new sets of values and to take advantage of the relevant People & Organization shared beliefs across the organization, technologies. Training and upskilling together with collaborative and agile are already an ongoing challenge for So far, we have emphasized technology ways of working18 automotive companies, requiring and automation, especially with regard • Introducing, and then living, a data- a structured and well-integrated to the concept of Intelligent Industry. driven, change-friendly culture approach to continuous learning and However, the automotive companies of • Implementing a structured, development. Gone are the days when the future will still clearly be driven by comprehensive change management employees might spend their entire human talent. Having the right people approach working lives in the same job using the to steer the organization through the same tools. Automotive OEMs now ongoing transformation remains a Most importantly, though, this is a need workers to be both continuously crucial success factor. And attracting leadership topic. The automotive developing the hard skills required the right talent is no longer just about company of the future needs a for their job and able to transition hard skills. Every function will require leadership that embraces change and into other functional areas of the people with the mindset and soft drives transformation. The leadership company, thereby enhancing a shared skills to work unremittingly towards a team needs to embody the newly understanding and culture. superior customer experience in an ever- established values and to champion changing environment and as part of an both technological excellence and With automotive companies interdisciplinary team. customer focus. These two perspectives becoming increasingly dependent must be combined by driving on digital technologies, special attention For traditional companies that are collaboration between the technology- needs to be paid to the IT function oriented towards product engineering focused engineering and production and its integration with the wider and organized in functional silos, this departments on the one hand and, on organization. It is crucial to ensure that is an ongoing challenge that will have the other hand, the customer-driven the IT function is equipped to fulfill to be addressed in the coming years, sales and marketing areas. This will be its purpose of providing software both through recruitment and by a key task for OEM leadership in the excellence for the entire organization. transforming the corporate culture. new era. Doing this needs not only the right However, as reflected in the Capgemini skills and people, but also a seamless Research Institute study on Digital Beyond cultural and leadership aspects, integration between IT and business Mastery,17 automotive organizations the new wave of automation and functions. have in fact already made significant digitalization makes it vital to train the progress over the past two years workforce in the digital skills required towards achieving the digital and Success factor 3: leadership capabilities required. Almost Operational Excellence 69% of automotive players now believe they have the required capabilities The third and final success factor compared to only 32% in 2018. governing the transformation of the automotive industry for the new era Organizationally, automotive players relates to the discipline of operational will find that they need to transform to excellence. This is primarily about doing achieve the total customer centricity more with fewer resources, i.e. better of a technology company while also of the jobs that resource utilization, but it should be equipping themselves to cope with the more than that: a holistic philosophy constantly accelerating transformation Generation Z (born that makes it possible to improve and of their industry. These major challenges 1996 and after) will maintain an efficient and resilient will mean: work in have not yet automotive organization. been invented19

17 https://www.capgemini.com/wp-content/uploads/2021/01/Digital-Mastery-Report-1.pdf 18 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/02/Capgemini-Invent_Agile-Organization-PoV.pdf 19 https://www.capgemini.com/wp-content/uploads/2019/03/Ai-in-automotive-research-report.pdf

22 Finding a new balance in the automotive industry FIGRE 4

KEY TECHNOLOGIES FOR AUTOMOTIVE DIGITAL TRANSFORMATION

88 80 8 0 68 6 6 63

Cloud 5G Automation Non-cellular AI/Machine AR/VR Robotics Analytics Additive Computing connectivity Learning Manufacturing (Wired, WiFi, LPWAN)

Source: Capgemini Research Institute, How automotive organizations can maximize the smart factory potential, anuary 202017

Financials has recently diversified, with new come under scrutiny. Contrary to the incumbents offering differentiating expectations of a few years ago, level 5 Even before the start of the COVID- products and a wide variety of autonomous driving is still not available 19 crisis, most OEMs faced increasing additional business propositions, in any regular vehicle – a fact that calls challenges such as changing buying ranging from digital service features into question the rationale behind behavior, and societal and political delivered OTA to provision of high- large investments in this technology pressure towards greater sustainability. voltage charging infrastructure. Many (see Figure 4). The past decade has also seen many of these initiatives quickly gained missed opportunities to improve customer acceptance, and traditional Resilience productivity or to supply missing links OEMs too are now adding these items in the digital supply chain.20 to their agenda. Crucial though financials are, they represent only one aspect of To fulfill the growth and profitability Stabilizing or increasing profitability operational excellence. Another major goals that they have set themselves, through operational excellence is aspect is resilience, particularly (but OEMs now need to get the financials a challenge in many of these new not only) in the supply chain. right. Faster, higher, stronger revenue business areas, however. For example, ambitions have emerged as a business when offering shared mobility services Change and disruptions are standard imperative over the past few decades. such as car sharing, it is still difficult in a world of volatility, uncertainty, to achieve the utilization levels complexity, and ambiguity (VUCA). Traditionally, automotive OEMs required to make a profit, even with Therefore, value streams such as the mainly relied on new vehicle sales strong customer take-up. Similarly, supply chain and logistics processes and aftersales business to generate investments in fully autonomous need to be constantly ready to react to revenues. However, the portfolio driving technologies have recently new circumstances. Resilience must be

20 https://www.capgemini.com/wp-content/uploads/2018/12/Report-–-Digital-Supply-Chain’s-Missing-Link-Focus-Digital.pdf

23 comprehensively embedded in all value • Focusing on process efficiency IT and business are of critical streams, including R&D, product design, through continuous improvement importance. Building close and and demand and supply planning. This and cost reduction efficient collaboration will help to will lead to continuous improvement Systematic process management, drive efficiency and productivity in each stream while also preparing and the use of tools such as advanced gains and avoid the disadvantages organizations for whatever the future analytics and AI technologies, can of working in silos. Individual IT may bring. help to continuously identify areas departments will largely disappear for efficiency improvement, leading because most departments will Steps to excellence to cost reduction in all parts of the contain a substantial level of IT business. capability, seamlessly integrated to We expect a disciplined approach to the • Accelerating future change improve execution excellence. management of operational excellence To change established behavior, it • Driving innovation with disruptive in all areas of the business to be a key is essential to build an organization business and IT models success factor for the automotive where continuous improvement is A disruptive and innovative industry in the coming years. Investing the norm; this will make it possible to organization requires the right in operational excellence will build manage transformation faster and business and IT models if it is to process efficiency and improve capacity more efficiently. Customer centricity achieve operational excellence. Future utilization across an automotive will result in a stronger competitive work must emphasize continuous business’s core value streams. advantage, and a change- and data- change and close internal and Organizations need to take a number driven organizational culture is also of external collaboration while always of steps to ensure that their investment great importance. retaining a clear focus on process and pays off:21 • Aligning IT and business to create system efficiency. Companies must real value put in place an open learning culture Given that all parts of the business to facilitate the necessary behavioral now have a strong technology shift towards more innovation and component, alignments between idea creation.

21 https://www.capgemini.com/service/technology-operations/admnext/

24 Finding a new balance in the automotive industry FIGRE

AUTOMATION LEVELS

evel 0 evel 1 evel 2 evel 3 evel evel 5 Driver Partial Conditional igh Full No Automation Assistance Automation Automation Automation Automation

Driver performs Driver performs Driver must remain The vehicle monitors Vehicle performs all Vehicle performs all tasks related driving tasks with alert, engaged in the the environment and driving tasks and all driving functions to driving. assistance from environment and in can perform driving monitors environment under all conditions. built-in safety control. Vehicle can tasks. Driver is not under limited Driver is not features. The perform one or more required to remain conditions. Driver may required. driver maintains driving tasks constantly alert, but still be required control of the simultaneously. must be ready to take to intervene. vehicle. control as needed.

• Strengthening resilience22 Especially in urban areas of the a well-engineered hardware product. Organizations must determine the world, mobility options have recently Connectivity, flexibility, and convenience mix of resilience they want to build diversified strongly. Where individuals are just as vital and are mostly provided into the supply chain and other key previously only had a choice between in the form of services. areas, and make this into a strategic walking, taking the car, or using public goal. Resilience targets need to transport, many new services have now What exactly does this mean for the be clearly defined up front so that been added, ranging from ride hailing vehicles of the future? Most customer- performance can be measured. and car sharing to bike and e-scooter focused use cases can be grouped under Developing continuous improvement rental. While the pandemic has our three headings of connectivity, and learning capabilities, and adversely affected new car sales, they flexibility, and convenience: establishing a collaborative, problem- increased again after early lockdowns. solving mindset, will make it easier China’s V-shaped sales development Connectivity to anticipate, resist, and recover even led to better sales performance in from disruptions. New technologies the fourth quarter of 2020 than in the A high level of general connectivity is a such as AI should be used to create corresponding quarter of the previous prerequisite for many use cases. Some transparency through data and year. During subsequent phases of the do not require the active involvement further improve contingency pandemic, these patterns continued, of the user: For example, vehicles can planning capabilities.23 with consumers continuing to favor communicate with one another and with personal mobility over shared or relevant infrastructure to create a more If all this is paired with execution public transport.24 convenient experience for the customer. excellence, operational excellence will Other use cases do need the customer’s result. Both profitability and resilience Customer expectations have evolved involvement: Examples that are already will improve. accordingly. Accustomed to highly available include connectivity use cases flexible, easy-to-use, and digitally such as remotely checking the vehicle’s Shaping the mobility enhanced experiences in many areas status, starting certain functions such ecosystem of their lives, customers expect the as heating or charging, and opening or same in the area of mobility. This is closing the vehicle. Future use cases Let’s turn our focus back to the heart of why the hardware component of a will build on these ideas, as well as the future of automotive: the mobility vehicle is only part of the picture and on infotainment and safety features ecosystem and its meaning for the why future mobility customers will enabled by connectivity services. automotive industry. not accept a vehicle just because it is

22 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2020/11/Fast-forward_Report.pdf 23 https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2020/11/Report_Supply_Chain_Resilience.pdf 24 https://www.capgemini.com/wp-content/uploads/2021/01/Shifting-Gears-Automotive-Research-Note.pdf

25 Today’s customers are already very almost 80% of new vehicles shipped This requirement will have to be interested in connectivity-enabled globally will be equipped with at least approached in a similar way to the advanced safety features such as level 2 autonomy (see Figure 5).26 architecture of PCs or smartphones, collision warnings and emergency where an underlying operating calls.25 Interestingly from a financial Although this certainly represents great system provides a basic functionality perspective, these are also the types of progress, it also indicates a modification and connectivity platform on which connectivity services that customers are of ambitions. While a couple of years applications for dedicated use cases most likely to be willing to pay for. ago, the hope was to have full (level 5) can run. autonomy commercially available by Flexibility now, many OEMs have re-evaluated Developing this type of software the scale of the technological and legal architecture for vehicles is a major While flexibility is of course a key challenges that must be overcome plus task for the next few years, requiring motivation for some customers to the magnitude of investments needed. a drastically improved skill level and opt for a more multimodal mobility Our current expectation is therefore organizational setup within OEMs approach, there is also a range of use that level 1–3 driver assistance systems and even Tier 1 suppliers. Success cases that enable a customer’s own will become available in most cars by may depend on collaboration or vehicle to become more flexible. In 2030, providing a significantly increased “co-opetition” between OEMs terms of purchase options, subscription degree of driver convenience while and suppliers. models are a promising development; avoiding some of the obvious risks. they may provide customers with Connectivity features the possibility of changing their car All the use cases mentioned above rely frequently, for example in order to on a range of enabling technologies. Second, most advanced vehicle use adapt to changing seasons or changing Let’s now look at two of the most cases rely heavily on connectivity mobility requirements. important technological aspects, features allowing all types of which provide the foundations for a communication: vehicle-to-vehicle The lines between car sharing and car range of use cases: first, a software- (V2V), vehicle-to-infrastructure (V2I), ownership will be blurred further, for based approach, and second, and vehicle-to-everything (V2X). This example by the option for car owners connectivity features. communication is crucial to enable to provide others with a “sharing token” advanced driver assistance features enabling them to open the car via a Software-based approach as well as increased comfort and mobile phone app. That way, customers automation in areas such as charging can easily and remotely lend their car to Most innovative functionality in future or parking. To realize the necessary family and friends, or even potentially vehicles will be software-based. This connectivity infrastructure, two main rent it out commercially. fact greatly increases the need for a components are required: connectivity comprehensive and consistent vehicle technology and a communication Convenience software architecture. Historically, a standard. With regard to connectivity highly modular approach to in-vehicle technology, we expect 5G to play Beyond the possibilities of accessing and software prevailed, with individual a major role, becoming the leading partially operating a vehicle remotely via suppliers usually providing the software medium for communication among a mobile app, driver assistance systems required to run their components. vehicles, and between vehicles and are a key convenience factor for the car OEMs then engineered at least basic relevant infrastructure. of the future. With the ultimate goal communication and interaction between of full automation, great progress has components. To leverage the full potential of been made related to providing the connectivity, a standard that enables convenience of a more assisted driving That level of integration will not be communication between vehicles experience. While a large proportion sufficient to realize the software- and infrastructure components of of the cars currently on the road have based use cases of the future: Instead, various kinds and from various OEMs no, or only very basic, driver assistance comprehensive and well-integrated is required. So far, there are no clear systems, Gartner expects that by 2030, software architecture will be required. trends observable in this regard, but

25 https://www.capgemini.com/wp-content/uploads/2020/09/ConnectedVehicleTrendRadar_2_Report.pdf 26 https://www.gartner.com/en/documents/3987644/hype-cycle-for-automotive-technologies-2020

26 Finding a new balance in the automotive industry we expect efforts to increase, with the first consortia around possible shared standards formed soon. History shows that success in establishing a shared standard (e.g., Bluetooth in the electronics industry) is possible.

Outlook

Looking at the mobility ecosystem overall, we expect to see constant change over the coming years. Because of the effects of the pandemic combined with increased environmental awareness, there is likely to be less long-distance travel than in the previous decades, and perhaps more complex patterns of local travel. Customers will appreciate the flexibility provided by a range of accessible mobility services and vehicles. If the parties involved get things right, the vehicle of the future will remain a highly relevant part of future mobility ecosystems worldwide.

27 Preparing for the Responsibility Era

Why a Responsibility Era?

We have analyzed the development of the automotive industry from the Industrialization Era, through the Globalization Era, and into the Digitalization Era. We’ve also looked at the key elements defining the further transformation of the industry, and introduced our framework explaining the megatrends shaping the mobility ecosystem and the success factors that OEMs must address to carve out and maintain a position in that ecosystem.

28 Finding a new balance in the automotive industry From this analysis, it is clear that the Rethinking the business to develop, adapting to new state-of- automotive industry is on its way to a model around technology the-art technologies, innovations, and Preparing for the new era. We call this the Responsibility customer expectations, with one era Era because it will be characterized Additionally, automotive companies succeeding another. Throughout all by a strong sense of responsibility and will be driven to constantly rethink these transformations, the key message purpose. Social and environmental their current business models and is that profitability and cost efficiency Responsibility Era responsibility will be at the heart of value proposition. To benefit from must be optimized. companies’ agendas; a focus on issues newly emerging technologies such such as the carbon footprint will guide as AI, 5G, or IoT, and address radical In order to remain competitive in the their internal and external initiatives changes happening in the VUCA world, long term and to maintain a relevant and mindset. companies will need to define and market position, profitability is key, and prioritize which fields are of strategic should be the focus when evaluating The sustainability challenge relevance and which need to be possible investments. Of course, developed in-house. Companies will investment is virtually mandatory in Above all, sustainability will represent definitely not be able to implement the certain areas. These might include the a clear and lasting priority for the complete range of activities and topics further development and improvement automotive industry. The sustainability by themselves, and so they will need of electric vehicles and their batteries movement is much more than a fashion. strong partners with proven expertise (including recycling processes); It will continue until sustainability in areas where the OEMs have acquisition of resources to cope with becomes the standard at each stage less capability. the growing role of software in and of the automotive value chain and around vehicles; creation of unified throughout the customer experience – Given the increased importance of operating software architecture for and it probably won’t stop there because software within vehicles and along vehicles; and initiatives to mature the the standard will get ever higher. OEMs the value chain, OEMs will need to sustainability of the value chain. But and other automotive players will no become technology companies to even in these mandatory investment longer be able to get rid of a problem a certain degree. There are related areas, profitability goals should always in this area by transferring it to other organizational challenges in terms of be a priority. countries – whether by exporting old new and different skills that need to be vehicles, non-reusable parts such as developed, new talent to be acquired, A balancing act batteries, or indeed the entire and internal movements of employees disposal process. between departments. Automotive To succeed in the coming Responsibility players are now competing with leading Era, automotive companies need to find The sustainability challenge is a complex software and IT companies for scarce the right balance between their core one that goes beyond company talent; however, by developing the businesses and the new opportunities boundaries: It is of a societal and right strategic partnerships with these and challenges. In this way, they can global nature. OEMs will need to join companies, and then collaborating ensure continuing relevance for their forces with other industry players, and and co-innovating with them, they can industry and a long-term competitive maybe with players from different gradually develop into digital masters in advantage for themselves. industries, to jointly find a sustainable, their own right.27 Strategic partnerships socially accepted, and environmentally will also be a vital tool for developing The automotive industry now needs friendly way to realize the concept solutions efficiently and, even more every single traditional OEM and new of a circular economy. Tackling this important, scaling them successfully. player, and all of their partners and challenge will require major investments stakeholders, to adapt to this new world. by automotive players – financial Keeping profitability The challenges of the Responsibility investments, yes, but also less tangible center stage Era need to be taken on board by each ones such as investments of effort to player within the mobility ecosystem, transform their corporate vision The transformational directions and to become part of daily life for all and purpose. and boundaries for the automotive of us. industry’s Responsibility Era may be clear, but the transformation journey will not end there. The industry will continue

27 https://www.capgemini.com/wp-content/uploads/2021/01/Digital-Mastery-Report-1.pdf

29 THE AUTHORS

MARKUS WINKLER DR. RAINER MEHL [email protected] [email protected]

CONTRIBUTING AUTHORS:

KATHARINA SCHUBACK [email protected]

DAVID RISSMANN [email protected]

30 Finding a new balance in the automotive industry For more information, please contact:

Capgemini Group Capgemini Invent Alexandre Audoin Sebastian Tschödrich [email protected] [email protected] Markus Winkler [email protected]

China Germany Spain Chu Yan Ralf Blessmann Carlos Garcia Santos [email protected] [email protected] [email protected]

Huu Hoi Tran Christian Hummel [email protected] [email protected] UK Rob Pears [email protected] Brazil India Giulio Salomone Maneesh Pant Nathan Summers [email protected] [email protected] [email protected]

France Italy US Arnaud Bouchard Eraldo Federici Mike Hessler [email protected] [email protected] [email protected]

Franck Dansaert Michael Darr [email protected] [email protected] Japan Hiroyasu Hozumi [email protected]

Global Marketing Monika Hespe Nordics [email protected] Caroline Segerstéen Runervik caroline.sergersteen-runervik @capgemini.com

Hakan Erander [email protected]

31 About Capgemini

Capgemini is a global leader in consulting, digital transformation, technology, and engineering services. The Group is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. A responsible and multicultural company of 265,000 people in nearly 50 countries, Capgemini’s purpose is to unleash human energy through technology for an inclusive and sustainable future. With Altran, the Group reported 2019 combined global revenues of €17 billion.

Learn more about us at www.capgemini.com

https://www.capgemini.com/industry/automotive/