Mobility industry outlook 2024

The automotive and transportation industries are in the midst of a period of turbulence, transformation, and opportunity. New technologies, consumer demands, environmental pressures, and a changing workforce are pushing companies to reinvent fundamental aspects of the business. This includes developing more advanced and capable vehicles, new revenue sources, better customer experiences, and changing the ways in which features and functionality are built into vehicles.

This push to bring increasingly advanced mobility solutions to market is changing the composition of the automotive market. Vehicle electrification has continued to see growth in the U.S. and around the world. The U.S. is expected to achieve a record in electric vehicle (EV) sales, with EVs accounting for an estimated 9 percent of all new vehicle sales in 20231. The growth in EVs is also spurring production growth in vehicles and batteries as companies look to respond to the demand for advanced, green transportation options.

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EV sales have seen growth around the world. In the U.S., EV sales are projected to reach their highest share of new vehicle sales ever. 

The software-defined vehicle
Electrification is only one part of a broader change in the nature of the automotive and transportation industries for workers, customers, and businesses. Electrification is a subset of a larger progressive shift in the automotive and transportation industries from the physical (or mechanical) to the digital. Consumer appetite for advanced vehicle features is higher than ever and buying decisions today are increasingly based on the innovative electronic and software features available in the vehicle. These features include in-cabin comfort and convenience features, such as smartphone-infotainment integration, advanced driver assistance systems, and increasing levels of vehicle automation.

The popularity of these features and functions represents the arrival of a new paradigm in the automotive industry, built on the capabilities of software and electronics systems. As these features become more desirable, the mechanical specifications and capabilities of the vehicle recedes in importance in the buying decisions of vehicle shoppers.

Highly aware of this trend, automakers are shifting the focus of their vehicle development programs. Traditional mechanical systems remain important, but program time, budget, and resources are moving increasingly towards the development of vehicle software and bespoke electronics. In concert, the availability of powerful and ever affordable integrated circuit devices and faster in-vehicle data networks has enabled automakers to evolve in-vehicle software. What used to be low-level embedded applications are rapidly developing into sophisticated vehicle-level operating systems or software platforms upon which various higher-level functions can be built.

With these software platforms at their disposal, engineering teams have increasingly elected to root various vehicle functions in software. Today, that results in vehicle platforms relying on software to control all or most of their features and functions, even seemingly basic ones such as steering systems or climate control. This is what has come to be known as the software-defined vehicle.

Moving forward, the software-defined vehicle (SDV) is the bridge in vehicle evolution between EVs and autonomous vehicles (AVs) of the future. Particularly for self-driving systems, the SDV provides a foundation for several critical technologies, including integrated advanced driver assistance (ADAS) and control systems, faster in-vehicle data networks, and the ability to update vehicle software remotely (commonly called over-the-air or OTA updates).

The role of digitalization in the transition to the future of mobility
The automotive and transportation industries are on the precipice of a major transformation in both the products they create and how they manage the vehicle across its lifecycle. The SDV is the first step of this transformation, laying the groundwork for further innovation in the future, notably in the form of vehicle automation and, possibly, true transportation-as-a-service business models. While great opportunity exists in the future, the road there is impeded by several obstacles. These include growing vehicle complexity, labor shortages in engineering and manufacturing roles, and a persisting unease around the resiliency of global supply chains.

It is our belief that innovation in vehicle design, production and lifetime support, and business models will enable the industry to overcome these challenges and facilitate the arrival of more efficient and exciting mobility for future customers. Digital transformation can help companies enable and accelerate innovation across departments and functions to address the pressures in the immediate future and beyond. Companies that build and execute a long-term digitalization plan will evolve beyond connecting data into higher level functions such as automation of data management and eventually the closed-loop optimization of vehicle platforms, software, manufacturing, and more through generative artificial intelligence (AI) technologies.

In discussions with my colleagues at Siemens Digital Industries Software, we have begun to formalize the five major stages of digitalization (figure 1): configuration, connection, automation, generative design, and closed-loop optimization.

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Figure 1: The digital transformation journey includes five key maturity milestones.

Most automotive companies in digital transformation today are generally entrenched in the first two stages of this process of maturation. These stages are configuration, or the switch from a document-based to a model-based data framework, and connection, which focuses on breaking down siloes that isolate model-based data. These two stages vastly improve the traceability and accessibility of data throughout the organization, helping to increase process efficiency, improve engineering flexibility, and enhance results even on aggressive project timelines.

Configuration and connection represent a critical threshold of digitalization maturity for automakers as they undertake the development of the SDV. These stages lay the foundation for connected engineering of multiple vehicle domains, robust traceability and design management through software and systems engineering (SSE) methods, and the cross-domain verification and validation of vehicle systems. These capabilities will enable engineering teams to co-develop hardware, software, and mechanical systems, ensuring that the increasingly important software systems are well integrated with the rest of the vehicle, particularly in safety-critical scenarios.

However, realizing the full potential of the SDV and continuing progress towards even more advanced transportation modes will demand that manufacturers pursue higher levels of digitalization – automation, generative design, and closed-loop optimization. These stages rely on the growing power of AI to transform engineering processes, enabling each engineer to accomplish tasks that once required several.

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This all begins with the automation of mundane tasks that are necessary but deliver incremental value to the products or company at large. Over time, more complex tasks will be completed automatically, eventually leading to the generation of multitudes of complete vehicle designs. This is stage 4, generative design, and it is based on the ability of AI systems to create new designs based on company data. Ultimately, companies will also be able to implement generative AI design technology in a closed-loop process of generation, evaluation, iteration, and selection of an optimized design.