Technologies in the automotive industry

2022: Gartner names 5 top trends in the automotive technology market

In mid-February 2022, Gartner analysts identified five main technological trends in the automotive sector. The study notes that as digital technologies become a hallmark of the car, software will become the main driver of profitability growth for automakers.

Gartner Senior Research Director Pedro Pacheco noted that since 1922, automakers have concentrated on the mechanical side of car development and mainly left software to other companies, but in 2022 the goal of manufacturers of original equipment (OEM) will be to turn into technological or software companies. The trends in automotive technologies are as follows:

As digital technology becomes a hallmark of the car, software will become the main driver of profitability growth for the automaker

Automakers reconsider their approach to finding equipment suppliers

Automakers are overestimating their long-standing just-in-time (JIT) inventory strategy, which has led to OEMs and Tier 1 suppliers not having buffer stocks to rely on during various chip shortages. As a result, automakers are reviewing their relations with chip manufacturers and are considering the possibility of developing their own chips.

According to Gartner forecasts, by 2025, 50% of the 10 largest manufacturers of components for cars will develop their own chips and establish direct, strategic, long-term working relations with chip manufacturers, while abandoning JIT inventory management practices.

"'Digital giants are integrating the car into a holistic ecosystem

In 2022, tech giants such as Amazon, Google, Alibaba or Tencent will constantly expand their presence in automotive technology. According to Gartner forecasts, by 2028, 70% of cars sold will use the Android Automotive operating system, while as of February 2022 this figure is less than 1%. Gartner also says that since it is difficult to develop technology and software independently, automotive companies can either collaborate with digital giants or use huge internal resources to achieve this mainly on their own.

Open data and open source collaboration models are gaining momentum

In 2021, several technology companies created open source operating systems for car architecture and an open platform for electric vehicles. In 2022, this approach to the adoption of partnership models in the automotive sector will be strengthened. In addition, automotive companies will increasingly look at data in the same way as the technological world.

In mid-February 2022, Gartner analysts identified five main technology trends in the automotive sector

Established automakers expand OTA as the main channel for digital revenue

In 2021, there were significant changes in the market for software for cars updated by air (OTA). Since most automakers have updated the hardware of cars to allow software upgrades, they will now begin to switch to a service-based revenue model rather than selling assets.

According to Gartner analysts, by 2023, half of the 10 largest automakers will offer unlocking and updating capabilities through software updates that can be purchased after the sale of the car.

Autonomous vehicles - more regulations, but barriers to commercialization remain

Despite the improvement of sensor technologies, the complication of perception algorithms and the development of regulations and standards, developers of autonomous vehicles continue to struggle to scale autonomous operations in various cities or geographical regions.

Automakers began to announce autonomous cars of the 3rd level and are working on the introduction of autonomous trucks of the 4th level, as well as commercial robotaxis. However, it takes a long time to prove the safety and effectiveness of autonomous technologies, and extensive modeling and testing in real conditions make commercialization slow and expensive. In addition, issues such as liability in the event of an accident, related legal and social considerations, such as how people will interact with cars driven by artificial intelligence (AI), exacerbate the problem. Gartner analysts predict that by 2030 there will be four times more autonomous level 4 robotaxis in the world than taxis in 2022.^[1]

2020: How technology turns cars into smartphones

Technology giants have turned smartphones and televisions into permanent sources of income. Now the companies want to cooperate with automakers to turn the car itself into a smartphone, according to a Reuters publication on January 9, 2020.

In anticipation of the boom in unmanned vehicles, the automotive and IT industries decided that cars should provide all the services available to users of ordinary smartphones. These services - upgrades, performance improvements, unlocking new services - can meet the needs of manufacturers themselves, who need to find a stable source of income from long-sold products. Technology companies, in turn, see cars as an opportunity to expand their influence.

Tech giants have turned smartphones and TVs into permanent sources of income

Automakers and technology giants in early 2020 introduced new automotive technologies and machine concepts. In particular, Amazon and Microsoft cloud market leaders who want to use data streams coming from connected cars (Connected Car) showed their developments.

General Motors President Mark Reuss has already spoken about revenue opportunities after selling a car using streaming services and wireless updates: "The potential is simply huge."

It is assumed that 2020 should be a turning point, because world automakers are already looking for new sources of income amid slowing sales and rising costs due to stricter emission standards. Shares of veteran automakers such as Ford Motor and GM fell significantly in 2019, while Tesla's market capitalization for the first time exceeded the total value of Ford and GM.

Not surprisingly, Tesla is already actively using a new type of services - it was this company that first proposed a model for wireless charging, and now asks customers to pay $6,000 to activate the option of autonomous driving. Following Tesla and other automakers are striving to turn cars into modernized, revenue-generating gadgets. And technology companies are teaming up with automakers to help them implement this idea.

The new M-Byte sedan of Chinese manufacturer Byton is equipped with a 48-inch screen as an dashboard, a display on the steering wheel and a digital tablet for passengers

The new M-Byte sedan of the Chinese manufacturer Byton is equipped with a 48-inch screen as an dashboard, a display on the steering wheel and a digital tablet for passengers. In the parking lot, the car can become an office with a videoconference function or a roadside cinema. And BMW demonstrated in early 2020 the concept of a future car with folding chairs and a windscreen with augmented reality.

Existing automotive processors are inefficient in terms of costs, so the manufacturer of automotive components Aptiv has proposed a new Smart Vehicle system that combines most of the functions of a gadget car. Harman, a division of Samsung Electronics, is also promoting a similar digital platform for managing data flow inside and outside the car. According to a company representative, a centralized system will also help protect the car from hackers, as it will limit access to many gadgets.

Qualcomm, which already manufactures chips that allow cars to connect to the Internet, introduced a comprehensive computing system in 2020 that can control data flows and help a driver with control. At the same time, innovations offer automakers and their partners a variety of sources of income when updating functions, for example, in the form of unlocking a powerful audio system built into the car initially, but not available without a subscription.^[2]

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