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“Connectivity” Means Safe But Dull Computerized Driving.

“Connectivity” Means Safe But Dull Computerized Driving.

“maybe “connectivity” will enable easy verbal contact between cars to make sure your cursing at that outrageous, thoughtless driver won’t fall on deaf ears. Perhaps not”

Automobile manufacturers traditionally needed to generate passion in prospective buyers to visually nail the sale. That is all about to change as technology gradually takes over and makes cars more like a mobile phone on wheels than products expressing individuality, personality and excitement.

This will be great for safety. Not so good if you want wind-in-your hair thrills. It means traditional auto manufacturers will have to recruit technology and software companies if they are to remain competitive.

Every year the North American International Auto Show (NAIAS) and later its equivalents around the world unveil various stunning sports cars, nifty SUVs, affordable runabouts and amazing technology. This year, crowds at the Cobo Center were knocked out by new dream products like the Ford GT and the Honda Acura NSX, or might in more realistic moments be thinking about getting a down payment ready for an improved Chevrolet Volt extended range electric vehicle or Ford F-150 truck.

But according to Detroit-based McKinsey Senior Partner and Automotive Practice Head Hans-Werner Kaas, technology is bringing a convergence of major new opportunities for car makers, and big changes for drivers.

This will mean that new cars perhaps won’t look too different in 2020 or 2025, but what’s under the skin will count as technology sprints ahead in preparation for the ultimate aim; the car fully controlled by computers. The potential excitement of driving a car will be replaced by the utility of the computer systems and how they transport you from A to B while reading a book, doing business, sleeping or relaxing.

The first step to this brave new world is “connectivity”.

All the big manufacturers are claiming to be at the forefront of “connectivity”, the harnessing of computer power to allow cars to find route and safety information, enhance safety by keeping to speed limits, warn of and avoid approaching vehicles, wayward pedestrians or cyclists, wake up dozing drivers, improve driver reaction by priming brakes and steering, or curb accidents by identifying unsafe speeds as a sharp bend looms. If you want a gas station, restaurant or hotel, you can talk to your new car and it will direct you there. Bad weather or car crashes in the way? You’ll be directed around it. If a problem is brewing under the hood, the car’s computer will find out before it becomes a threat, liaise with the manufacturer and fix the problem online, or book it in for treatment. Who knows, maybe “connectivity” will enable easy verbal contact between cars too. That would make sure your cursing on the way to work this morning at that outrageous, thoughtless driver won’t fall on deaf ears. Perhaps not.

Other issues shaping up as roadblocks for the unwary manufacturer include the central government clamor for improved fuel consumption leading to more electrification. There will also be pressure from cities keen on making clogged up traffic flow, and expect this to also include more pressure to conform to environmental rules. We will also see computerised solutions seeking to combine individual transport to the mass variety.

All these pressures will also force global car makers to consider closer alliances, driven by the need to pay for these new requirements and technological improvements. Current automotive leaders might be joined by non-auto technology or software companies.

“Manufacturers now must have at least a 10 year view, with fuel consumption and regulation and the need for them to advance powertrain technology. Engaging in electrification is absolutely paramount,” Kaas said in an interview.

“The battle for car connectivity will not just be for vehicle hardware and software sales, but also for customer loyalty across consumer electronics and cloud services, meaning that online advertisers, telecom companies and handset manufacturers cannot afford to sit out in this battle,” Kaas said. 

“Consumer electronics companies are recognizing that the car presents a critical “break point” at which end customers may be exposed to alternate operating systems, potentially encouraging them to switch hardware and operating system providers and this could lead to lost revenues for associated products/services.”

“Car companies and suppliers see the connected car as the next battle field, particularly as on average 20 per cent of new car buyers would switch car brands for better connectivity, though willingness to switch differs largely between automakers. Automakers are facing four major challenges that will require more than $3 trillion in investments over the next ten years: complexity and cost pressure, diverging markets, evolving demands and a shifting industry landscape,” he said.

Luxury challenge
The battle for connectivity will provide mass car makers with the ability to mount a fresh challenge to the luxury manufacturers. Currently, the German luxury makers are fending off challengers with ease as they demonstrate their superiority in performance, quality and handling. But connectivity could be the gateway in theory for wannabees like Ford’s Lincoln, GM’s Cadillac, Honda’s Acura and Nissan’s Infiniti, not to mention Hyundai and Kia, to match BMW, Audi, Mercedes and Porsche. In Europe, Ford is introducing the Vignale premium brand, Renault of France has Initiale Paris, compatriot Peugeot Citroen has DS. Expect the Germans to swat away with ease this attempt to storm their profit margins, although the challenge from British based and Indian owned Jaguar Land Rover might gain some traction. Toyota’s Lexus is the German’s most effective competitor.

Kaas takes this seriously, and believes connectivity could provide a new area for new entrants to provide an attractive differentiation.

“The profit pools in the luxury and premium sector will be growing in the next five years as more middle class consumers appear in emerging and developing markets. We will see increasing investment to play in that space. The Asians are moving in too and want to take their fair share from the Germans. The competition is intense and will intensify. The trick will be, will the new entrants come forward with more differentiated products,” Kaas said.

Debating 2025
Kaas doesn’t see the current fall in the oil price as providing an excuse for any watering down harsh U.S. rules for 2025, which stipulate average fuel consumption of 54.5 miles per gallon by 2025.

“I do not think there will be substantial dilution of regulatory requirements, but the timing could be subject for debate,” he said.

As for moves to electrification, Kaas wonders whether they will ultimately be powered by batteries or fuel cells.

“Which technology will win? That’s up for debate between fuel cells and batteries. We see today electric cars, plug-in hybrids and hybrids and these have made advances for consumer adoption, but all the major car manufacturers are continuing their investment in fuel cell research and industrializing fuel cell technology that is still the big question,” he said.

Electric cars and hybrids are becoming ubiquitous, but fuel cells are only just emerging. This month Toyota of Japan launched the Mirai fuel cell vehicle in its home market, which will gradually go on sale across the world.

All these new technologies and opportunities demand huge investments of capital and this will force mainstream manufacturers to seek to meet this by collaborating, not only with other car makers, but with new entrants too which provide the new technologies required.

“When you look at the scale of the investment required for powertrain research, autonomous driving and active safety, we will see more deals between auto and non-auto companies. There will be more entrants in the auto space – from electronics and software companies which have a lot of expertise, so expect more technology partnerships and collaboration,” Kaas said.

So if it’s close-to-the limit thrills and passion for driving that excites you about your car, make the most of it while you can. The computer is about to take over.


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