Anticipating the Future

Autonomy, connectivity and electrification are things that OEMs and suppliers are making non-trivial commitments to.

So you meet with Jeremy Carlson in the large, quasi-permanent tent-like structure that’s being called the “Technology Pavilion” at the L.A. Auto Show, which has remained itself as “AutoMobility LA.” You’re in the exhibit area where there are companies ranging from Abalta (platform to connect smartphones to vehicle infotainment systems) to Xperi (driver monitoring systems to infotainment) with more well-known names like Garmin, Honda, Hyundai, and Intel in between.

Inside the auditorium-like space there are presentations being made by people including Peter Schwarzenbauer, BMW Group board of management member responsible for Customer Engagement and Digital Business Innovation, and BMW Group, and Tom Gebhardt, chairman & CEO, Panasonic Corp. of North America. Later in the day there will be Gill Pratt, CEO of the Toyota Research Institute, and John Krafcik, CEO of Waymo, taking the stage.

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Carlson? He’s the principal analyst and manager at IHS Markit (ihsmarkit.com), the guy who provides the firm with insights related to things like autonomous vehicles.

Given the venue, given the exhibits, given the speakers, it is clear that autonomy, connectivity and electrification are things that the OEMs and suppliers are making non-trivial commitments to.

A couple weeks earlier, in mid-November, IHS Markit released information regarding a global study they’d conducted titled “Reinventing the Wheel.” In it, the researchers and analysts write:

“By 2040, several changes will have occurred:

  • One-third of new cars sold in the four major markets will be electric—up from 1% today.
  • Driverless technology will be a vital part of the transport system.
  • The mobility as a service (MaaS) industry will be a major force in the automotive business.”

All of which is to say that there are potentially massive changes aborning.

Carlson tells you that when it comes to autonomous vehicles, “I tend to believe automakers who say, ‘We’ll do this by 2021.’” But he also tells you that initially it is likely to be a comparatively few number of vehicles at the start (by way of percentages, even the 24,000 vehicles that Volvo is providing Uber isn’t that great a number—heck, Ford sells about three times that many F-Series trucks in a given month), and that they’re likely to be in ride-hailing services, not individual garages, at the start.

But after 2025, Carlson says, things are likely to take off, especially in-service applications.

Carlson says that things are somewhat trickier today for OEMs than it had been in the past, when they all pretty much knew what the expectations were from their customers (a faster, bigger, more-stylish car, truck or SUV, for example).

Now it is not so straightforward. On the one hand, they can’t overlook the requirements of the MaaS providers. On the other, there will still be private car ownership, so the needs there must be addressed, too.

What’s more, he tells you, that another challenge for automakers takes the form of fewer cars handling more people through MaaS. “We’re not talking one vehicle for one individual.” The upside, though, may be that because it is expected that vehicle miles traveled will increase, which means that any given car is going to be in service more than is the case today, that there will be a greater demand for replacement vehicles.

Still, there isn’t necessarily an offset from all of those people who have calculated that ride hailing is more cost effective for their household than that second (or third) car.

So, all of that investment being made in autonomy and connectivity and electrification that the OEMs are shoveling in as through they’re using a Caterpillar D10T2?

“I don’t think they’re looking at it as a great opportunity to expand their business. This is the reality. This is where we expect the market to go. This is where we expect all of the megatrends influencing the technology segment to take the automotive industry. If that is reality, you can adapt and hopefully succeed or not and lose position steadily and probably not have as long a future,” Carlson tells you.

It may be hype. It may be exaggerated for the sake of headlines. It may be efforts based on traditional OEMs wanting to get some of the same exuberant investments from Wall Street like the Silicon Valley firms seem to get.

But it may be the future. It may be that IHS Markit is absolutely zeroed in with its forecast about the state of vehicular transportation in 2040.

“The automotive world today is at a critical juncture,” they write in “Reinventing the Wheel,” facing the greatest period of change in its 120-year history.

And you realize that what you don’t understand about those exhibits and what you think might be more than a little hot air coming from the podium are worth understanding and coming to grips with.