11 March 2021


3 Biggest Tech Trends Driving the Automotive Industry in 2021

The automotive industry has long been a leader in technological innovation, dating back to Henry Ford’s assembly line revolution at the beginning of the 20th century. The car itself hasn’t fundamentally changed since then—it’s still four wheels and a steering wheel, after all—but technology has transformed the way automobiles are manufactured and operated. And with every new development cycle, vehicles become safer and more fuel-efficient.

The technological changes of the past few decades, though, are ultimately minor compared to what’s coming around the corner, especially over the next ten years. The automotive industry has begun leveraging new technologies, especially artificial intelligence and the Internet of Things, to fundamentally reshape not only how we drive cars, but how we conceptualize them.

It’s a promising future, as automakers will find themselves generating new streams of revenue (even as people own fewer cars) while consumers enjoy novel driving and interactive innovations.

3 Biggest Technological Trends Driving the Automotive Industry

Here are the three biggest technological trends driving the automotive industry in 2021.

1. Electrification

Electrification refers to shifting vehicles from mechanical to electrical power. In this process, some form of electric motor is installed within the vehicle to either fully power the car or to enhance a gasoline engine.

Electric vehicles are often presented as a new technology, but in fact, they were once quite common. In 1900, electric cars accounted for a third of vehicles on the road. Henry Ford’s Model T, however, dealt a near-fatal blow to the electric car, as it was both more affordable than electric models and more widely available.

Interest in electric vehicles would emerge again periodically over the following decades, but the technology was never efficient enough to support consumer products. The first signs of a real revival didn’t occur until the turn of the next century, when battery technology advancements, smart grid developments, and simple energy economics suddenly made electrification much more appealing.

The shift back towards electric vehicles has been gradual, but the tide is about to turn. As recently as 2010 there were only about 17,000 electric cars in use across the globe, according to figures from the International Energy Agency. By 2019, though, that number had surged to 7.2 million, with 47% of these vehicles located in China.

Changes over the next decade will be even more pronounced, as countries around the world have committed to phasing out gasoline and diesel internal combustion engines. Deloitte, in fact, predicts electric vehicles will secure nearly a third of the total market share for new car sales by 2030.

2. Connectivity

Any vehicle with components that connect over wireless networks to other devices or systems can be referred to as a connected vehicle. This technology is, of course, already common—and is almost certainly in your own car right now.

Vehicle connectivity is generally controlled through a console dashboard, which places phone apps, navigation maps, and music streaming options all within easy reach while minimizing driver distractions. Software like this will only grow more sophisticated (and ubiquitous) in the near future.

Business Insider Intelligence expects connected car shipments to reach 77 million by 2025. And McKinsey predicts that as cars become further connected, new dimensions of value will unfurl for drivers, auto manufacturers, and service providers—especially once lightning-fast 5G internet is factored in.

The cars of tomorrow could well be mobile living rooms—at least for passengers—as developers are working on augmented reality and other immersive experiences that will transform in-car entertainment options.

Increased connectivity is also reshaping the way we drive. Some cars today, for instance, are using high-bandwidth networks to communicate with other vehicles and highway infrastructure—including traffic signals, cameras, lane makers, streetlights, and parking meters—to improve traffic systems and increase driver safety. This technology is still in its early phase of development, but vehicle-to-vehicle and vehicle-to-infrastructure communication will ultimately be critical to autonomous driving.

And one of the most promising automotive IoT developments is predictive maintenance. Sensors installed throughout connected cars already collect performance data for diagnostic purposes, but in the near future, this information will be processed in the cloud to predict when parts will require maintenance long before they fail.

3. Autonomous driving

Autonomous driving has been “just around the corner” for so long that many have taken its development for granted or simply dismissed its plausibility altogether. The rapid adoption of the technology over the next decade, then, may seem shocking to those who don’t follow the industry closely. PricewaterhouseCoopers predicts that autonomous vehicles will account for around 40% of overall traffic (in terms of miles driven) by 2030. That number may be even higher in China, which is poised to outpace Europe and the US as the leading market for autonomous driving.

The real transformation won’t be in the cars themselves, but in the world around them: self-driving technology promises to make our roads substantially safer, reduce traffic and pollution, increase car-sharing, and trigger a renaissance in urban design as prime real estate once reserved for parking becomes available for development.

Autonomous driving will also change our relationship with vehicles. Though we associate cars with the freedom of mobility, the truth is that today’s automobiles are simply parked somewhere 95% of the time. This inefficiency is part of the reason why some analysts believe the combination of autonomous driving and ride-sharing will effectively kill private-car ownership.

Other analysts disagree, however, noting that cars still function as status symbols and that personal vehicles will likely always offer benefits that shared or rented simply can’t match.

Regardless, autonomous vehicles will fundamentally change the business models of Uber, Lyft, and other ride-hailing services. Right now, gig economy drivers own and maintain their own vehicles, but the switch to autonomous will likely require these companies to own or lease large-scale fleets. (They could also simply be supplanted by Waymo, Tesla, and General Motors.)

The (Automotive) Technology of Tomorrow is Here Today

All of the technological shifts described above have been supported or driven by recent developments in artificial intelligence, machine learning, deep neural networks, and related fields of research.

Autonomous vehicles, for instance, rely on AI to mimic the decision-making expertise of an experienced driver while making complicated inferences about appropriate rule application. This technology is already being implemented in vehicles that aren’t autonomous. AI-based driver assistant software can check blind spots, communicate with other vehicles and road infrastructure, monitor driver behavior (and tell when somebody is falling asleep), and even enable “autopilot” driving in limited situations.

By 2030, AI technology like this is expected to be included in 95% of new vehicles.

AI is also transforming how we build cars. On factory floors, for instance, AI is currently being used to optimize schedules and workflows, help robots operate safely alongside assembly line workers, and identify defects in key vehicle components. These applications (and others) are helping manufacturers reduce costs, increase efficiency, and deliver better products to consumers.

Wrapping Up

Artificial intelligence has applications across the entire automotive value chain, from design to production to operation. Aftermarket services, including predictive maintenance and driver insurance, are also being transformed by AI. There are clearly endless opportunities to leverage the technology and unlock value, but the particulars are going to vary significantly by use case.

If you’d like to read more about some of the ways that AI and ML are impacting the manufacturing industry—as well as others—check out 50 Ways to Impact Your Business with AI.

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