Gartner has identified the top five technology trends for 2022 that the CIO should consider to better prepare for the software, hardware, and digital transformations occurring in the automotive industry.
“For the past 100 years, automakers have focused on the mechanical side of automotive development and mostly left the software to other parties,” said Pedro Pacheco, senior research director at Gartner. “As digital becomes the car differentiator, software will become the primary driver of growth in automaker profitability. Ultimately, the goal for original equipment manufacturers (OEMs) will be to transform in technology or software companies.
The top five automotive technology trends for 2022 are:
Trend 1: Automakers are rethinking their approach to material sourcing
Automakers are reassessing their longstanding just-in-time (JIT) inventory strategy, which has resulted in OEMs and Tier 1 suppliers not having buffer inventory to fall back on during the various chip shortages. As a result, automakers are reviewing their relationships with chipmakers and considering designing their own chips.
Gartner predicts that by 2025, 50% of the top 10 automotive OEMs will design their own chips and establish direct, strategic, long-term working relationships with chipmakers, while abandoning the practice of JIT inventory management.
Trend 2: Digital giants integrate the car into a holistic ecosystem
2022 will see digital giants, such as Amazon Web Services (AWS), Google, Alibaba or Tencent, continually expand their footprint in automotive technology. “These technology companies are bringing the car closer to their respective ecosystems, which, in turn, is opening up new services connected to the vehicle,” Pacheco said.
Gartner predicts that by 2028, 70% of vehicles sold will use the Android Automotive operating system, up from less than 1% today.
“As developing technology and software on their own is difficult, automakers can either partner with digital giants to successfully turn software into a primary revenue stream, or create vast in-house resources to achieve this. mostly on their own,” Pacheco said.
Trend 3: Open data and open source collaboration models are gaining ground
In 2021, several technology companies have created open source vehicle architecture operating systems and an open electric vehicle (EV) platform. This approach to adopting new partnership models in the automotive sector will be reinforced in 2022.
Additionally, automakers will increasingly look at data in a way similar to that of the tech world. “Their goal is not to sell data, but to build or integrate ecosystems that will allow them to access a greater diversity of data, with the aim of developing more compelling digital features or services”, Pacheco said.
Trend 4: Established Automakers Make OTA Their Main Digital Revenue Channel
Last year saw major changes in the automotive over-the-air (OTA) software market when several automakers started offering software updates.
As most automakers have updated vehicle hardware to allow for software updates, they will now begin to transition to a revenue model based on services rather than selling the asset.
Gartner analysts predict that by 2023, half of the top 10 automakers will offer unlocks and capability upgrades through software updates that can be purchased after the vehicle is sold.
Trend 5: Autonomous vehicles – more regulations in place, but barriers to commercialization persist
Although sensing technologies are improving, perception algorithms are becoming more sophisticated, and regulations and standards are advancing, autonomous vehicle developers continue to struggle to adapt autonomous operations to new cities or geographies.
Automakers have started announcing Level 3 self-driving cars and are working to roll out Level 4 self-driving trucks and commercial robotaxis. However, proving the safety and effectiveness of autonomous technology takes a long time, and numerous simulations and real-world tests make commercialization slow and costly. Additionally, issues such as liability in the event of an accident, associated legal and societal considerations, such as how human-driven vehicles will interact with an AI-driven vehicle, add to the challenge.
“The very high R&D costs involved for robotaxis or level 4 trucks hinder the speed of adoption in terms of coverage, but also return on investment. This is ironic given that one of the main benefits associated with autonomous driving is reduced transportation operational costs,” said Jonathan Davenport, research director at Gartner.
Gartner analysts predict that by 2030 there will be four times as many Level 4 autonomous robo-taxis operating globally as there are taxis in 2022.
Read: Six million electric cars will ship in 2022 – Gartner