Organic to Inorganic Growth: Autonomous Driving Forcing Industry Players to Look Outside the Box

Benny Daniel, Arunprasad Nandakumar & Liana Colombelli

Changing consumer buying patterns and regulatory reforms aside, the single biggest trend that is impacting the way the automotive industry is evolving is the tech-invasion into an otherwise slow innovating sector. This impact is compounded when the boundaries are stretched to the development of autonomous vehicles and the plethora of business solutions that accompany this mammoth disruption.

At the heart of this complex transformation though are very integral and simple realignments within industry players, some established and some new, that are focused on owning the largest possible piece of the pie. But what exactly does this pie comprise of? Well, to understand that, we will need to understand how autonomous driving will enable industry players to monetise this technology. Beyond the positive impacts on improving safety, reducing congestion and pollution, the underlying driver for innovation in this field is the huge monetization potential this technology holds. But despite the potential being high and the opportunities currently indefinite and infinite, the philosophy is simple and defined on two core parameter: time and data.

Any business model or product that caters to the autonomous driving industry focuses on either or both of the utilization time and the data generated by the consumer. With this underlying philosophy in mind, the focus then is to understand how this can be achieved, and this is where the multitude of mergers, acquisitions and partnerships either makes sense or becomes questionable. But going forward, from our understanding of the industry direction, there are four key promising areas that can yield maximum returns in terms of investments for the traditional car makers and tier 1 suppliers.

1. One of the most relevant areas of focus in the short to medium term is likely to be that inside the car. The cockpits of the future will be the most potent interface between consumers and the digital world and so a large share of the data generated and time spent are likely to be directly related to the infotainment systems and HMI modules in tomorrow’s cars. Potential aggregators of tomorrow like Bosch, Continental and ZF currently have minimal to no exposure to this market while companies like Harman, Delphi and Visteon, who today are strong players in this market, could be cause for consolidation in the industry, along with a long list of SMEs in this space like Israeli start up BNC, and some American innovators like Navdy, High Mobility, Mojio, Movimento, iNago.

2. A significant piece to the autonomous driving market is the brain that drives it, and this is the space that is currently dominated by the likes of MobilEye and NVIDIA. But There are many promising disruptors in this space as well that could make a significant leap forward to the development roadmaps of current suppliers and OEMs. Companies like nuTonomy,, Oxobotica, Zoox, Nauto and ADASWorks and many more offer strong value proposition to the table along with a unique skill set of designing full-fledged autonomous driving control modules, a capability that the current industry players lack significantly.

3. Up next is positional awareness and high definition mapping, which is crucial for navigation as well as more futuristic data delivery modes like augmented reality. This too is a fast evolving section of the market, and though OEMs are taking stands on how they wish to position themselves in this market, a new wave of offerings from start-ups like SwiftNav and Exo Technologies bring a tough fight to the traditional map suppliers. A massive shift catapulting the importance of position systems is the growth of map based suppliers like Baidu who are developing autonomous technology tools that increase the value of their offering in this space.


4. Retrofit solutions could play a vital role in expanding the penetration of connected and autonomous solutions to existing parc and has the potential to be a catalyst to the current technology wave. This is very feasible proposition to invest in for many tier 1s and OEMs, the data aggregation prospective it holds and the consumer reach it could possibly have compared to new product innovations. This is currently a crowded space with many solutions that could fizzle out in the near future, there are a few interesting companies like CloudCar, Vinli, Nauto, and Navya that provide solutions that will benefit todays’ suppliers and OEMs to expand their horizons.

What the above four technology verticals indicate is that there are many more focus areas for the current value chain to look into for them to future proof and this is the prime reason for OEMs and suppliers’ to look outside of their existing development team for researching on autonomous driving projects and the GM-Cruise or the Continental-ASC acquisition are great examples emphasising this shift in approach to system development. The last two years has witnessed over $75 billion worth of net transactions in automotive supplier deals and the next two are likely to see that value cross $100 billion.

This is by far the most interesting period for industry transformation and one that will yield high rewards for companies who makes the right moves going forward in terms of aligning their product offerings for tomorrow’s consumers.

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