Digital Transformation Monitor

Adoption of novel
technologies across the
automotive value chain

May 2017

Internal Market,
Industry,
Entrepreneurship
and SMEs
 Adoption of novel
technologies across the
automotive value chain
© chombosan/Shutterstock.com

The automotive industry is one of the oldest of the industrial era, having gone through various revolutionary phases
throughout the decades. Initially requiring a high level of manual labour, the industry increasingly introduced robots
into its production cycle and is currently boosting its integration of highly innovative smart technologies to further
optimise its design and production process. European automotive producers are facing growing pressure from low-
cost vehicles produced in emerging countries; the integration of smart technologies is therefore becoming crucial to
guarantee the continued sustainability of European carmakers.

To further build on this technology, a driver to receive help following an

manufacturers are currently adopting
1 ultra-high frequency (UHF) RFID in areas
where bar codes and high frequency
(HF) RFID do not work. While the HF
Novel technologies band ranges from 3 to 30MHz and
operates with read ranges between
accident as the car automatically
contacts the nearest emergency centre
once a crash has been registered.
The further development of M2M
technology will allow for ever greater

currently being 10cm to 1m, the UHF band covers the

range from 300MHz to 3GHz and can
interaction between producer,
consumer, and government and thus

adopted reach up to 12m. The adoption of UHF

While technologies such as radio-
frequency identification (RFID) and
Machine-to-Machine (M2M) have already
been implemented on a broad scale, the
automotive industry is expected to
increasingly push for the adoption of
smart technology and innovative
practices in its future development. In
this context, big data and analytics tools
are expected to become major enablers
of progress, together with novel
technologies such as social media, 3D
printing, robotics, web platforms and
mobile.
However, to assess the potential the
increased digitalisation of the
automotive industry represents to
European carmakers, current
technologies might offer a good overview
of the progress being realised.
RFID – optimising automotive
production
The adoption of bar codes and high
frequency (HF) RFID tags has allowed
carmakers to collect data automatically.
This has led to enormous efficiency gains
for both supply-chain and assembly-line
processes as carmakers use the data
gathered to adapt their systems.
RFID will significantly improve the
overall utility of RFID in the automotive
industry and demonstrates carmakers
desire to innovate the producer-
customer relationship.
M2M – innovating the automotive
experience
M2M technology is being used in various
ways and offers many options for further
development. Some carmakers have
adopted M2M to provide connected car
services such as telematics (user
assistance-like services) and
infotainment (mobile internet-like
services).
Others are using M2M to optimise
customer service after the sale of the
vehicle. Added sensors will allow for the
introduction of new applications that
will give carmakers the option to
perform remote diagnostics and
preventive maintenance, promoting a
closer customer-producer relationship
as carmakers keep in contact with their
clients, thus binding them to their brand.
Lastly, M2M is also changing the
influence national governments can
exert over the safety of drivers. In
Europe, for example, the introduction of
the eCall system in each new vehicle is
expected to shorten the time it takes for
fundamentally change our automotive
experience.
3D printing – increasing effectiveness
and customisation
Manufacturers use 3D printing to build
prototypes and make product testing
more efficient by reducing the need for
product recalls. 3D printing allows
engineers to test the products build more
efficiently, thus allowing for greater
analysis of potential fabrication and
quality issues.
3D printing can also be of interest
regarding the reproduction of
replacement parts. 3D printers will allow
suppliers to recreate car parts that are
no longer being produced and make it
possible to adapt each piece to the exact
specificities of the vehicle, in turn
allowing for ever greater customisation
of vehicles.
The increased used of 3D printing in the
automotive industry is hence expected to
boost the efficiency of the production
process while simultaneously allowing
customers to customise their vehicles to
their specific aspirations. This increase
in interaction between both parties will
change the way customers interact with
car manufacturers, again creating a
closer customer-producer relationship.

2

Robotics in the automotive industry
The introduction of robotics in the
automotive industry significantly
changed the vehicle production process
by automising and standardising the car
assembly process. Technology in this
area keeps improving, expanding the
utility of robotics in the automotive
industry.
Robotic vision (i.e. a robotic arm with
‘eyes’), for example, facilitates the exact
positioning of car parts, while
collaborative robots serve to heighten
productivity by working together
efficiently and with little interference.
Robotic painting, on the other hand,
takes care of toxic painting while
reducing waste material. Finally, the
robotic or ‘bionic hand’ reduces the
weight applied on the human hand, and
reduces the stress produced by
repetitive movements. Robotics thus not
only increases efficiency but also
protects the well-being of manual
workers.
The rising influence of social media and
web platforms on the automotive
industry
The rise of social networks as a
communications medium has been
phenomenal, and is being used as a
communication tool by various brands.
The automotive industry has been
actively working on integrating the use
of social platforms into its marketing and
sales strategies. Social media could, for
example, be used to pre-order
forthcoming vehicles hence stimulating
higher sales volume. At the same time,
with the continued push for connected
vehicles, the car is increasingly turning
into ‘a tablet with wheels’. This move will
require the automotive industry to boost
its cooperation with web platforms such
as CarPlay (Apple) and Android Auto
(Google) to continue meeting their
customers’ needs. Simultaneously this
continued push for digital integration is
expected to strengthen the further
development of innovative technologies
by uniting digital and automotive
developpers.
The automotive industry will be one of
the largest generators of data
Manufacturing companies often use
predictive analytics to monitor and
maintain in-plant assets for better
availability, utilisation and performance.
The gathering of high levels of data
allows both car makers and dealers to
optimise quality and supply chain
processes, while minimising warranty
costs. Telematics can provide in-motion
Adoption of novel technologies across the automotive value chain
data (e.g. vehicle speed, tire pressure,
etc.), all of which can be potentially
monetised. The analysis of data
regarding customer opinions and moods
and driving experiences can also bring
business benefits.
2 to whether people are willing to pay for
Drivers and limits
to innovation
.Regulation is the main driver
The introduction of driving regulations
in Europe has been boosting
technological development in the
automotive industry. The major
regulatory driver is the eCall Initiative of
the European Commission, aiming to
encourage Member States, public safety
access points (PSAPs), automobile
manufacturers, mobile network
operators, service providers and
automotive suppliers to collaborate in
developing an in-vehicle automatic crash
notification system that will decrease the
time it takes for drivers involved in a
crash to receive assistance. The car will
automatically contact the nearest
response center, reducing the time
needed until assistance by 50% to 60%.
At the same time, regulations concerning
CO2 emissions continue pushing the
automotive industry to adopt
increasingly environment-friendly
technologies.
New revenue opportunities through
servitisation also attractive
Novel technologies are expected to lead
to more innovative services, particularly
towards a more service-based business
model, or servitisation. This is based on
recurring revenue solutions (such as a
monthly subscription) in addition to
traditional one-shot product revenues
(selling the car). GM, for example, has
successfully deployed such a strategy
through its OnStar connected service.
OnStar data plans description
Moving forward
Source: OnStar
Return on investments in technology
remain uncertain
While new revenue opportunities do
arise, the technology cost both in terms
of CAPEX (module integration and the
underlying platform) and OPEX
(connectivity costs) remain high. There
remains a certain level of uncertainty as
such services in the first place, with
smartphones already being seen as a
strong substitute to subscriptions to
connected car services.
Privacy issues and user unwillingness to
share their data
Many of the new revenue opportunities
involve the use of personal data.
However, questions remain concerning
who can access and manipulate the data,
and how he can do so. According to
Capgemini, user willingness to share
data is growing over time; consumer’s
willingness to share information having
grown to 81%, up from 75% in previous
years. That said, “Yes without
restriction” answers actually shrank
from 20% to 16 %; suggesting a growing
concern among consumers regarding the
use of the data gathered. This could
hinder the future technological
development of the automotive industry.
Willingness to share connected car
data with manufacturer or dealer
(all markets)
Source: Capgemini
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❶ Support the development of
technology standards within the
automotive industry for connected
and automated driving to ensure
the interoperability of data systems
❷ Review regulatory frameworks
to take into account data
ownership of car related data and
associated privacy concerns
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About the Digital Transformation Monitor
The Digital Transformation Monitor aims to foster the knowledge base on the state of play and evolution of digital transformation in
Europe. The site provides a monitoring mechanism to examine key trends in digital transformation. It offers a unique insight into
statistics and initiatives to support digital transformation, as well as reports on key industrial and technological opportunities,
challenges and policy initiatives related to digital transformation.
Web page: https://ec.europa.eu/growth/tools-databases/dem/

This report was prepared for the European Commission, Directorate-General Internal Market, Industry, Entrepreneurship and SMEs;
Directorate F: Innovation and Advanced Manufacturing; Unit F/3 KETs, Digital Manufacturing and Interoperability by the consortium
composed of PwC, CARSA, IDATE and ESN, under the contract Digital Entrepreneurship Monitor (EASME/COSME/2014/004)
Authors: Vincent Bonneau & Soichi Nakajima, IDATE; Laurent Probst, Bertrand Pedersen & Jill Wenger, PwC

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official opinions or statements of the European Commission. The Commission does not guarantee the accuracy of the data included in
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might be made of the information contained in this publication. © 2017 – European Union. All rights reserved.