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Center For Automotive Research (CAR) Hot Topics With Alan Amici CEO February 24, 2023

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Automotive Industry Hot Topics

February 24, 2023

This week I discuss navigating the balance between innovation and quality as the Software Defined Vehicle enters the playing field. Recent EU mandates are accelerating the phase-outs of internal combustion engines (ICE), yet OEMs continue to rely on ICE sales to fund electronic vehicle development. I also comment on the opportunities and attraction of new global technology partnerships.

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Software Defined Vehicle: Balancing Innovation and Quality

My thoughts:

Software Defined Vehicle (SDV) opens a new playing field for engineers, planners, and manufacturers. In the future, automakers will be able to design and develop a new vehicle and release the full feature set shortly before production. Products and processes will be continually improved, even after the car has been delivered to the customer. Engineers will have more time to perfect their products and planners can react quickly to competitive changes in the market. Improvements and feature upgrades can be provided to the customers using over-the-air updates without visiting a dealer. However, there are a few potential downsides. Dealers may be faced with a reduction in service or upgrade revenue and lose a valuable touch point with customers. OEMs may face increased customer dissatisfaction that accompanies software that is not fully matured and defect-free.

OEMs across the globe are embracing the concept of SDV as automakers bring software development in-house. Considered a strategic asset, software will play an essential role in future product and process development. Getting it right is the challenge

Global Phase-Outs of Gasoline Cars:

My thoughts:

Europe continues its transition to electric vehicles (EVs) accelerated by EU mandates. Phasing out sales of internal combustion engine (ICE) vehicles makes the transition inevitable. Pushback from Germany and Italy is centered around allowing more time for phase-out.

Mandates have reached the US, though on a state-by-state level, with California taking the lead. GM and Ford have set their own targets for a “fully electric” future. As OEMs grapple with the dual challenge of making EVs affordable and profitable, ICE sales, ironically, are funding EV development.

New Automotive Technology Partnerships:

My thoughts:

The OEM-start-up partnership model has proven effective in bringing innovation into large companies. Firms have recognized alternatives to internally developed innovation, taking advantage of incubators and venture funds to scout, partner, and occasionally acquire start-ups. Access to and the application of new technology provides firms with an opportunity to improve product performance, move to adjacent products, or fill whitespace in their portfolio. This is not an easy feat, as the integration of a start-up into a large firm can result in culture shock if not managed properly. I expect an increase in partnerships and a continuation of start-up innovation feeding pipelines of large firms.

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Best Regards,

Alan Amici
President and CEO
Center for Automotive Research