Allied automakers Renault and Nissan Motor tagged four areas of technology that are overturning the entire industry in their medium-term plan announced Friday, shedding light on a growing need for fresh business models and cross-industry collaborations.
The plan, covering six years through 2022, creates the acronym CASE: connected cars, autonomous driving, sharing and electrification. These waves of change are carrying the industry to a new phase of competition.
Electric drives change the game
Matthias Mueller, chairman of Volkswagen, has declared electrification as the company’s future. The German automaker plans to sell 3 million electric vehicles in 2025, accounting for one-quarter of its global sales. Meanwhile, Sweden-based Volvo Car has committed to a fully electric product lineup in 2019.
Stronger environmental regulations around the world are pushing manufacturers to lower vehicle emissions. The U.K. and France have announced plans to ban sales of gasoline and diesel cars by 2040. China, the world’s largest auto market, has begun considering when to ban such vehicles as well. Many countries are working to curb air pollution and greenhouse gas emissions.
For many decades, innovation and sales competition in the auto industry were led by a few key manufacturers from Europe, the U.S. and Japan. But as the industry transforms and the focus shifts to electric vehicles, new players like Tesla of the U.S. and BYD of China have emerged quickly. Traditional automakers are losing their advantage among these many electric-vehicle startups.
Manufacturers of core components for electric vehicles, such as battery maker Panasonic, are a growing presence in the autoparts sector. But those making parts related to conventional engines risk losing business.
Greater safety, convenience
Along with the shift to electric drives comes advancement in self-driving technologies. Autonomous driving supported by advanced sensors and other equipment would seemingly be safer than manual driving, and such systems would be highly compatible with electric drive vehicles. Technology companies like Google, with expertise on data analysis, are leading their development, along with semiconductor makers such as Nvidia.
And fully autonomous driving requires connected-car technologies — which help identify the precise location of vehicles and enhance the convenience of riders using the internet. General Motors, for example, envisions offering restaurant recommendations using IBM’s artificial intelligence platform Watson when riders are in an unfamiliar area.
Renault-Nissan highlights industry upheaval as business models transform
Another sea change involves the global rise of ride sharing, which lets strangers ride together to save money. Ride-hailing service providers such as Uber Technologies of the U.S., China’s Didi Chuxing and Grab of Southeast Asia also offer ride-sharing services.
As people move from car ownership to shared vehicles, Deloitte Tohmatsu Consulting projects the number of owned cars may be cut by half around 2030.
Cross-industry collaborations are increasing, such as Toyota Motor’s team-up with Grab. Major automakers face the challenge of exiting the old business model of large-volume production and sales.