OEMs must collaborate

OEMs must collaborate with diverse players to establish a future eMobility market according to Frost & Sullivan’s Mobility Team.

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 claims Frost and Sullivan.

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 $345bn on ACE R&D.

‘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 show that autonomous technologies are the largest investment segment, averaging $1.43bn in estimated investment per OEM from 2015 to 2025, whilst 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. He continued, ‘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 programme.