In an exclusive interview with Industry Outlook, Thalavai Venkatesan, Head of Sales and Key Account Management, Continental Automotive India shares his insights on the global automotive industry, problems and innovations in automotive supply chain, the future of mobility and more.
How is the global automotive industry adapting to the undergoing revolution in mobility?
The year 2018 was the real benchmark for the automotive industry
in terms of production and sales. The global automotive leaders
are focused to level up with this benchmark. There were several reasons for the impact on the industry growth. For instance, the automotive industry itself was going through a transformation phase with electric vehicles coming into the equation, changing architecture, and an increase in the vehicle software content, among others. These were the disruption factors that pushed the industry to redefine the way forward.
As the industry was just coping with this transformation, the COVID-19 pandemic hit us hard by bringing the industry to a standstill. The pandemic created a further ripple effect in terms of impairing the supply chain and causing other adverse effects like shortage of semiconductor components. On an outlook, the immediate priority for the leaders is to bring stability to the industry, address the supply chain concerns and semiconductor shortage by reducing single region dependencies.
What problems have you encountered in the automotive supply chain worldwide which surprised you?
The disruptions caused by the coronavirus crisis have caused extreme volatility in the supply chains in the automotive industry. After the industry shut down in the early phase of the crisis and the resulting abrupt drop in demand, automobile manufacturers across all regions increased their production volumes much faster than expected by market experts. The entire automotive industry is facing three major challenges at the moment – semiconductor shortage, complications in the supply chain because of the China lockdown earlier, and inflation because of the Ukraine war.
Talking about the semiconductor shortage itself, with the lead times of 6 – 9 months, the semiconductor industry has not been able to scale up fast enough to meet this unexpected growth in automotive demand. This is largely attributable to the overbooking at the semiconductor sub-suppliers (silicon foundries) from other industries - like consumer electronics e.g., in the telecom and home automation area - which remained stable or grew during the same period.
Future investment in these foundries is critical so that the automotive industry can avoid such supply chain upheavals in the future. In the case of large investments in chip production systems, it takes 18 to 24 months before production can seamlessly scale up. Overall, the situation remains very dynamic. The delivery bottlenecks from the semiconductor industry have been continuing through 2021 and we do not even expect a large increase in capacity before 2023. This will unfortunately cause continued disruptions in production.
Manufacturers who had adopted Industry 4.0 practices were in a better position to handle COVID-19-induced challenges. Supply chain processes are becoming digital, smarter, and connected. This will help in optimizing costs, increasing productivity, and identifying areas for improvement in the process. However, effective implementation would be critical to reap benefits. The full potential of SCM 4.0 will be realized through maximum digitization in the coming years. The COVID-19 pandemic has further acted as a fuel to speed up this transition internationally.
How is the future of mobility shaping up in India? Are we moving towards more shared mobility, and mobility as a service? Or will the automobile continue to be a highly personal expression?
Automobiles have always been the preferred mode of transportation and have been used by people for centuries to travel from one destination to another. Earlier, the auto industry was highly evolved, organized, and tightly controlled with well-defined boundaries but with the advancement of newer technologies, the ecosystem has begun to change.
These days, modern customers expect a seamless and tailored automotive experience and features. Due to the advent of digitization and connectivity, the automotive industry has completely transformed.
Connectivity is one of the emerging trends that are currently shaping the future of mobility. Today, nearly all vehicles have some form of connected device. Connectivity in automobiles is being used for a variety of purposes, ranging from safety to comfort. Improved human-machine interfaces, technologies that improve passenger and vehicle safety, improved performance, efficiency, and emission compliance have now become the standard features.
Autonomous driving is one of the most significant future fields for the automotive industry. After all, driverless technologies offer the previously unimagined potential for making mobility more sustainable, more comfortable, and, above all, safer. Personal mobility poses some significant challenges, especially in urban environments across the globe where many people spend copious amounts of time on the road in transit.
Mobility is changing along with the needs of end-users. Interior design and user experience (UX) are becoming decisive factors in the vehicle buying decision. Accessibility, aesthetics, beauty, and usefulness are all characteristics that are closely related to User experience (UX). UX is playing an increasingly important role in product and service development, and especially in the case of digital products, it is the decisive criterion for success and approval.
Smart technologies are now changing mobility too. Connected vehicles that analyze data in real-time will reduce traffic congestion in metropolitan regions in particular. Cars have been transforming beyond just offering the capability to drive, with connectivity to the internet being a major factor. Technological disruption has been taking place in the automotive industry over recent years in terms of digitalization, automation, and connectivity and this will continue to happen more aggressively.
Architecture and Networking steer seamless connectivity and modern, high-performance electronics architecture in the vehicle. A software-based end-to-end vehicle architecture is an “electronic backbone”. Digitalization is omnipresent and is, therefore, the current driving force behind the entire market. As vehicles are also becoming part of the Internet of Things like smartphones, over-the-air updates are becoming the standard here, too. This enables add-ons like new features, as well as essential firmware and cyber security updates to be rolled out remotely.
The vehicle, which has been a convenient means of transportation or a status symbol, is now undergoing radical change in the form of digitalization and connectivity. Software is immensely important since already over 90 percent of automotive innovations come from software development, which holds enormous growth potential ahead.
Why do you think the future of automotive industry is electric? What are some of the major challenges that are hindering the growth of electric vehicles?
In India, the journey towards electrification began nearly two decades ago, with the introduction of a small car for the city commute. In recent times, however, there is visible traction in the EV segment, with OEMs projecting ambitious plans and launching new EV models in the market. EVs are now showing a lot of promise, especially in terms of battery, look & feel, practicality, and, most importantly, matching with the ICE (internal combustion engine) vehicles in sheer power and capabilities. The widespread adoption of EVs is still taking a slow course primarily because of range anxiety, lack of infrastructure, uncertainty in terms of maintenance or ownership, misconceptions, and negative news prevalence due to the popularity of the subject.