Automotive Industry Outlook 2023: The value of a startup mindset

2023 will be a critical year for automotive companies. Automakers will be required to transform fundamental aspects of their businesses and organizations to meet the needs of the future of mobility. Years of development in advanced driver assistance systems (ADAS), vehicle electrification, software, electronics, and other technologies are coming to fruition, driving a massive shift in the composition of the automotive market.

As the industry pushes to bring increasingly advanced mobility solutions to market in 2023, it will also have to overcome significant challenges. Traditional automotive supply chains will need to adapt to support the growing need for batteries, electronics, and other electrical components in modern vehicles. In the face of shrinking development timelines, a growing need for innovation, ever-evolving consumer demands, and unpredictable supply chain disruptions, automakers of all sizes must become more agile, collaborative, and responsive in an increasingly dynamic automotive landscape. The shifting nature of vehicle development will continue to reshape the core skills and competencies demanded by automotive engineering teams.

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https://www.sw.siemens.com/
EVs, an important tool in global efforts to reduce emissions,
have been cemented as key piece of the automotive market
of tomorrow.

 

Trends in the automotive market driving change
The automotive industry is amid a widespread transformation of both the nature of vehicles and the ways in which they are used by consumers. This transformation is the result of technological, regulatory, and societal changes all pushing for greater safety, sustainability, equity, and convenience in human mobility. The result has been a rapid rise of vehicle electrification and continued development of automated driving features and autonomous vehicles.

Automakers are already feeling the impact of autonomous vehicle development in the marketplace as the competition to produce new and advanced vehicle features continues to mount. Automakers today must focus on the development of advanced features and functions to stand out in a competitive marketplace. As the emphasis on advanced vehicle features continues to grow, so too does the importance of software and electronics to vehicle functionality and desirability among consumers.

For automakers, the development of these advanced features and self-driving capabilities should not be a “full autonomy or bust” proposition. In pursuit of the vision of true self-driving vehicles, companies can develop new vehicle features and implement them in the real world. The explosion of advanced driver assistance systems, or ADAS, is a good example. These systems help drivers by automating specific driving tasks in very limited conditions, such as an automated emergency braking system bringing a vehicle to a stop from low speeds, if it’s about to collide with an object ahead.

Electric vehicles (EVs) have been cemented as a key part of the automotive market of tomorrow. EVs are an important tool in global efforts to reduce emissions and the overall impact of our transportation and mobility systems on the environment, a fact which is increasingly motivating the buying decisions of consumers around the world. At the same time, many governments, from the municipal to the national level, are adopting new regulations that incentivize or mandate the production and use of EVs. In response to these pressures, automakers are developing entirely new product lines of electrified, attractive, and technology-laden vehicles.

As the automotive market is reshaped by the combined forces of technological advancement, consumer demands, and government regulations, the demands on automotive companies are also changing. Supply chain disruptions are likely to continue to cause difficulties for automakers in 2023. This will be particularly true as EVs become more widespread, placing additional demand on the supply of key materials and components for battery packs. The skills required by automotive development teams are also in flux as the nature of vehicles continues to change. Software engineering is an increasingly important process in overall vehicle development. Automotive companies are therefore aggressively expanding their software teams and capabilities to offer the features and functions demanded in modern vehicles.

© Siemens Digital Industries Software
| https://www.sw.siemens.com/
Startup companies tend to have smaller engineering
departments and teams that support frequent collaboration
and agile workflows.

 

 

 

Adapting to the automotive industry of tomorrow
As we move into the new year, how can automotive companies adapt to these new challenges? The key is to embrace the mindset of an automotive startup. Startups have the advantage of agility and responsiveness to a highly dynamic automotive market. They can develop and implement solutions or new vehicle features quickly and, as a result, they often can deliver exciting ideas before the competition. Startups often also foster frequent and effective collaboration across domains and teams, helping to drive rapid innovation and novel engineering solutions.

Startup automakers exhibit a few characteristics that help them to achieve the collaboration and efficient engineering required by tomorrow’s automotive market. First, they are relatively small when compared to large automotive OEMs. Engineering departments may be only a dozen people, instead of a few hundred, and these various teams are often collocated, all working in the same office and able to converse and exchange ideas frequently.

Startups also tend to employ more young engineers, who have been raised, educated, and trained in a digital world. These employees can quickly adapt to new digital tools and are already familiar with the many computer and software systems any modern company will inevitably rely on. They also possess skillsets in line with the future direction of the automotive industry. Finally, startups focus their development efforts and resources on innovation. Their best chance in a competitive automotive market is to create vehicles that have innovative features, designs, and more. In fact, they are often fully focused on the creation of one vehicle, with all efforts of the company going towards the production of one exciting and innovative vehicle.

Clearly, not all aspects and characteristics of a startup will be helpful for other companies to try and instill in their culture and processes. Instead, automotive companies of all sizes should focus on two key aspects. First, companies should seek to improve their ability to collaborate across domains and teams both internally and with partner organizations. Second, companies should foster innovative designs and thinking to stand out in an increasingly crowded marketplace. And the best method of adopting these characteristics is through the digital transformation of the company’s culture and processes.

Digital transformation is the key
Digital transformation enables companies to adopt a new approach to mobility solution development and engineering. Digitalization enables companies to connect their entire lifecycle through a digital backbone, with information flowing bi-directionally throughout the organization. Even partner companies can be incorporated securely into your digital backbone, ensuring faster and easier collaboration between organizations, and supporting accountability to overall sustainability goals. Key to this approach is a comprehensive digital twin that captures every aspect of the vehicle design and production. Using such a digital twin, automotive companies can connect engineering teams from across the electrical, electronic, software and mechanical domains. This not only helps companies overcome the complexity of future vehicles, but also fosters a new culture of collaboration and innovation in the company that will carry it through the challenges of tomorrow.

Digitalization is a powerful enabler of technological innovation, collaboration, and informed decision making. By investing in digital transformation, companies of all sizes can tackle the challenges of developing the vehicles of the future by removing longstanding boundaries to collaboration and by fostering innovation through the maximization of available data. These capabilities will be crucial to all automakers as they pursue the future of mobility.