Passenger vehicles today are more than a mechanical means to move people from Point A to Point B. They have evolved into a new species: powerful computational devices that are truly mobile. The sophisticated technology at the heart of modern vehicles, including hardware, software, data and machine learning, has sparked nothing less than a second transportation revolution.
Immense computing capabilities, sophisticated sensors, advanced driving assistance systems and high-speed connectivity have taken the automotive industry into a new era, characterized by unprecedented opportunities.
This transformation is a defining moment for the industry. Every automotive company needs to rise to the challenge. No business can be assured of holding its position because new technology-enabled capabilities are maturing quickly and so are consumer preferences. In such a fluid world, companies must stay focused yet be agile and open to choosing and deploying the right technologies at the right time. The competition is not just standing at the gate — they have already passed through it, embracing new technologies, quickly rolling out new capabilities such as hands-free driving, and offering unique and engaging user experiences designed for a truly captive audience. Companies that embrace technology as they plan for the future will flourish. Those that fail to build their future plans on new technology may have no future.
We’d have to look back to the very start, more than a century ago, to find another moment as extraordinary as this one. This is one of the most exciting times to witness the renaissance of the automobile.
In a 2023 report, McKinsey & Co. suggests that advanced technologies offer “tremendous potential to provide new levels of safety and convenience for consumers, generate significant value within the auto industry and transform how people travel.” However, some automobile makers may need “a mindset change” to tap that potential. “Simply put, the old ways of doing things are no longer valid,” the report said.
Many new emerging automakers started out with this mindset and are beginning to leapfrog traditional vehicle manufacturers. These companies also continue to further advance and deploy new technologies such as advanced driver-assistance systems and autonomous vehicles — Level 2-plus and Level 3 — with plans to launch vehicles boasting more leading-edge technology capabilities in 2026 and 2027.
But first things first: This is a pivotal time for car makers to plan precisely how they will leverage technology to ensure their future success. This year, forward-looking companies will dedicate themselves to evaluating their technology plans and redefine their organizational and development approaches accordingly.
Automakers must plan for developing their ecosystems as well. In this new era, no company can do it all alone. Large auto manufacturers are experts at doing everything in-house but don’t have the latest technologies at their fingertips. Small tech companies on the other hand are powered by creative ideas and a culture of innovation but need the opportunity to scale. To keep moving forward, both must join to form productive automotive technology partnerships.
Consumers are already demanding technologies that deliver greater safety and convenience and provide them with exciting in-vehicle experiences. Horsepower and performance alone are no longer the only draw. Instead, drivers are seeking smart cars that make their lives easier safer, more productive and more entertaining, for example, by helping them park, merge, drive and even cut fuel costs. They want robust assisted and automated driving experiences, and to immerse themselves in sophisticated audio experiences and expect to converge their digital lifestyles to the car.
Further, technology answers regulatory requirements for modern safety features beyond seat belts and airbags. For example, NHTSA recently proposed requiring automatic emergency braking on all new passenger cars and light trucks, expecting those systems will dramatically reduce pedestrian-related and rear-end crashes. In another example of technology increasing safe driving, sophisticated 360-degree radar can monitor emerging or immediate threats from blind spots all around a car in all weather conditions whether a driver is negotiating heavy city traffic, making difficult left turns or merging onto highways.
While consumers are enthusiastic about automotive technology, it is still new to them. The industry can earn consumer confidence by making them comfortable with technological advancements that work reliably and consistently. For instance, when drivers understand that sensors perceive the surrounding environment even when their own attention is focused elsewhere, they’ll recognize the importance of such sensor technology to build a foundation of safety that goes beyond their own capabilities.
In this new era of technology-defined vehicles, it’s essential to at least somewhat future-proof vehicles by anticipating the requirements driven by technology advancements today, so automakers can apply the most innovative technologies tomorrow. By equipping vehicles from the start with hardware that supports their future requirements, car makers will be able to continuously offer a wide array of new and enhanced features — even if the requirements and capabilities of those features have yet to be developed.
This is unmistakably a defining moment for every company in the automotive industry — the moment to get clarity on technology goals and set new, higher goals is now. Automakers that stick with back to basics rather than leveraging the latest hardware and software technologies are making a grave mistake. Technology is the key to succeeding in the automotive market in the years ahead. In this remarkable second transformation, this amazing renaissance of the automobile, industry leaders that figure out how to fit all the technology pieces together will be the ones to thrive.
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