These five trends drive automotive innovation
The study identifies five technological trends that will keep automotive engineers busy over the decade ahead. These are
- Electrification. By 2030, the market share of vehicles with some kind of electrical powertrain will rise to 65 percent – up from 2 percent in the present time. The rise will be driven by sales of hybrid electric vehicles.
- Connectivity. By 2025, fifty million vehicles will be connected. Currently, about 18 millions have access to the Internet.
- Autonomous driving and software complexity. Software will be the distinguishing feature of cars. And the complexity of the software will further increase. Whereas today the cars contain “only” some 100 millions lines of code, the market watchers expect the software content to grow to 300 millions lines of code.
- Internet-based production organisation, aka Industry 4.0 or Industrial Internet. The digitisation of industrial production enables further cost reductions. The costs for quality control can be reduced by as much as 20% through data-based real-time production process monitoring and, as a consequence, fewer rejects.
- New materials. The content of lightweight construction materials such as high-tensile steel, aluminium and carbon-fibre reinforced polymers will increase from 21 to 67 percent.
Another significant finding of the study is that the engineering value chain is undergoing major shifts. The suppliers will sharpen their profile as innovation drivers. “Suppliers increasingly will become the motor for the technological progress in the automotive industry,” explains Andreas Cornet, Director of McKinsey’s Munich office and responsible for consulting the supply industry. “In innovations like connected car and autonomous driving, progress is driven by suppliers in the first place.” About 50 percent of the innovations in the automotive industry within the past decade have been developed by suppliers, he added. In 2014 alone, the 100 largest suppliers invested more than 40 billion euros into R&D. Cornet added that high investments are necessary to continue this innovation pace. Nevertheless, the suppliers will not be spared if the market in China could experience a possible decline.
During the past decade, the supply industry experienced a significant consolidation. Whereas in 2004 the 100 largest suppliers accounted for 36 percent of the industry’s total sales volume, they accounted for 50 percent in 2014.
Globally, Asia holds the highest number of automotive suppliers. Within the group of the 100 largest suppliers, 36 are based in Asia, 34 in the Americas and 30 in Europe.