The 2017 SMMT Open Forum event looked at the future of the automotive industry, and electric, connected, and autonomous vehicles were seen as three of the key areas of change over the coming years.
A number of speakers gave their views about their vision for the future, with Mike Hawes, CEO, SMMT, providing an introduction to the day. Mike also covered the subjects of ultra-low emission and connected vehicles, including the opportunities for the UK from manufacturing batteries. Brexit was also on Mike’s agenda, with the SMMT wanting a globally competitive business environment, and acknowledging the importance of the government’s industrial strategy. The Open Forum took place two days before the general election. Since the election there is now greater uncertainty around the UK government and Brexit, which is exactly the opposite of what the automotive industry needs.
Judith Richardson, Vice President of Purchasing, Nissan Europe: Supplying Nissan – a vision for the UK
Judith Richardson said the next 10 years would be a ‘decade of disruption’, with lots of big changes happening. Customers are also changing, as they imagine new things – such as having more time to do other activities rather than drive, thanks to autonomous vehicles.
Nissan is not just bringing electric vehicles to market, it’s also now moving into the area of energy. Nissan’s xStorage system, developed with Eaton, re-uses LEAF batteries, and when used in the home, has the potential to help lower energy bills.
But Nissan’s big vision for the future is intelligent mobility. This is building on Nissan’s EV expertise and taking it to the stage where everyone can benefit from zero emission driving. The company says that it sees a clean, bright, positive future, and linked in with this there’s an opportunity to transform the UK into an ‘automotive powerhouse’ – not just in the North East, but across the UK. And Nissan is looking for suppliers to help it achieve this vision – now. If you’re a UK automotive supplier, are you ready?
Alan Draper, Director, Purchasing, Ford of Europe and Global Team Value Management, Ford: Ford and the UK supply chain
Air quality was a central theme of Alan Draper’s presentation. Appalling levels of air quality in cities around the globe are driving the emerging megatrend of vehicle electrification. Diesel sales are now dropping across Europe. Therefore Ford, like Nissan and other manufacturers, needs to expand its supply base to manufacture new advanced propulsion powertrains. A vehicle that Ford is currently developing with such technologies is the Transit Plug-in Hybrid.
Ford is engaging closely with the UK government and organisations such as the Advanced Propulsion Centre to develop the next generation of products, including electric vehicles, autonomous vehicles, and lightweighting technologies. Not surprisingly, Brexit – along with exchange rates – is also an issue for Ford.
Sarwant Singh, Senior Partner, Frost & Sullivan: Transformative trends reshaping the future of automotive aftermarket and supply chain
Connectivity was Sarwant Singh’s first topic: by the end of the decade we’ll have 5G, which will allow ‘machine to machine’ communication, which in turn will help enable highly/fully automated driving. It will also mean ‘big data’ will come to cars, with car manufacturers – and others – looking to develop business models to monetise such data. There will also be around 250 million cars that won’t be connected, which provides an aftermarket opportunity.
We will also be entering the ‘cognitive era’. Vehicles will be able to park themselves at airport car parks – more efficiently than people can. By connecting cars with smartphones, you’ll be able to ask your phone which car parking bay your vehicle is in. Motor racing will feature cars without drivers, as it transforms from a sport into a game (something that most car enthusiasts can’t see the point of). New companies are entering the automotive service space, such as Facebook and Amazon. As well as drones delivering Amazon parcels for the ‘last mile’, flying cars are also getting ever closer. In terms of the automotive supply chain, this will also be more connected, thanks to Industry 4.0.
The digitalisation of the retail network is also underway, with a huge growth in the value of car parts sold online: 4% in 2009, 11% in 2011, and 16% today, with £1bn of car parts currently being sold online. Tyres are a big success story, but even BMW is getting in on the act with its online store, selling £1 million of parts in year one. Online is the future of aftermarket; Amazon and ebay are entering the market, and the UK is seen as the place to launch new channels. Sarwant claimed that there are currently over 1,700 start-ups disrupting the industry, with very high valuations.
Michael Flanagan, Vice President, Adient: Future automotive technology and market trends – the view and response of Adient
Adient is an automotive seat manufacturer – a company that may not be an obvious candidate to transform its business as a result of all the emerging technological developments in the automotive industry. However the company is an excellent example of how all supply chain businesses need to monitor industry developments very closely and identify the opportunities for themselves – regardless of the nature of their business.
Michael Flanagan opened his presentation by saying that although seats for cars basically haven’t changed over the last 100 years, the next 5-10 years will see major revolutions in seats, interiors, and in the automotive industry as a whole. This will reflect an ever-growing rate of change in the world, where two billion more people will move to cities, which will become overcrowded and deteriorating environments, and more polluted. Time – rather than possessions – will become the highest value luxury commodity.
It won’t make sense for lots of individuals to own their own cars, they will instead share them. Cars won’t be allowed to emit pollution from their tailpipes, so they’ll have to be electric: Germany passed a resolution in October 2016 to ban the internal combustion engine by 2030. And it will be safer for cars to be autonomous rather than be driven by humans. There are currently 1.2 million vehicle-related deaths every year globally, which equates to $1.2 trillion lost in productivity, medical and property damage, with 93% of accidents attributed to human error. Autonomous vehicles can dramatically reduce the numbers of fatalities and their cost.
So how does all this impact on a seating manufacturer? Due to electric vehicle platforms being like ‘skateboards’ and thanks to cars that don’t need to be driven, rather than having the driver’s seat – and passenger seats – all facing forward in a traditional arrangement, seating can be more flexible. Continued increased demand for SUVs will provide more space for ‘business class’-style seating. As seats move, door controls need to move dynamically with them.
Shared mobility will result in a need for removable seat covers. Increased connectivity will lead to more functionality in seats, for example tablets and smart phones could be more integrated. Car seats will enable more sleeping to be done in vehicles.
There are still a number of challenges facing the widespread uptake of autonomous vehicles, including cost, infrastructure, poor road markings, technological limitations, bandwidth, consumer trust and human behaviour. However one thing is guaranteed; the automotive sector, and its supply chain companies, will be faced with change and disruption, or an opportunity, depending upon how this is viewed. To demonstrate the value of the opportunity, traditional auto revenue is forecast to be worth $2.3 trillion, but revenue from ‘other transportation services’ will be $5.4 trillion.
Chris Turner, Director of Advanced Technology Marketing, ARM: As cars become computers on wheels, where will they take us?
As we move to autonomous driving, cars will become computers on wheels. The computing element and the amount of data in vehicles will be huge compared to today’s typical car, and the resultant car/computer will develop the ability to think like humans, allowing it to make intelligent self-driving decisions.
To achieve this, collaboration will be required – between the automotive industry and the computer industry, and with other sectors. This will mean massive changes for procurement in the automotive industry, which will no longer just be sourcing conventional vehicle components, but instead it will need to work with suppliers of products and services as diverse as semi-conductor manufacturers or cloud providers.
Prof. David Greenwood, Advanced Propulsion Systems, WMG, University of Warwick: The UK supply chain for automotive batteries
Sales of electric vehicles are continuing to increase; we’re now beyond the stage of early adopters. The costs of batteries are reducing, from $1,000 per kWh to $2-300 per kWh today. However batteries still represent a much larger proportion of the total cost of a vehicle than a traditional engine, which was around one-third of a vehicle’s value. If the UK makes two million cars per year, each with a battery worth £5,000 to £10,000 based on the scenario of heading towards the majority of vehicles being battery electric, then that equates to a business opportunity worth up to £10-£20 billion per year.
Do you need to be an expert in battery chemistry to be part of the battery supply chain? No. Batteries are comprised of cells, which form modules, and are built into a pack. There are many other components that make up the finished battery pack, including elements such as the battery cases which are made from steel.
There’s a big opportunity for a Tier 1 battery supply chain to emerge in the UK, and we’ll need thousands of people in the UK trained in dealing with this new technology – including in the areas of design, engineering, sales, after-service and recycling.
Although battery production costs have been falling, we still need to reduce costs to $50 per kWh, ie. less than half of what they are today. The UK research community is working on this.
Dave ended by suggesting that the market for electric vehicles will grow faster than some commentators anticipate. This offers many opportunities for UK automotive supply chain companies.
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