Why the automotive industry will be disrupted by 2030

There's a wave of disruption headed for the automotive industry, and it's going to look quite different in a few years
16 October 2018

There’s a wave of disruption headed for the automotive industry. Source: Shutterstock

The automotive industry has been quite the same for many decades, despite the arrival of interesting automation and technologies.

This has primarily been the case as the advancements in automotive technology are, thus far, limited to enhancements and upgrades to the vehicle itself, and not the method of production.

However, with automation, robotics, artificial intelligence (AI), and many other interesting technologies, the industry is set to be completely disrupted.

According to a new study by PwC’s Strategy&, shared mobility and automation are expected to drive a revolution in the automotive industry workforce and production by 2030 that is expected to radically transform how the industry works.

In the near future, the automotive market is expected to show a clear split between mass-market, largely no-frills “cars on demand” that will be rented journey-by-journey and more customized vehicles for those who still want to drive, or be driven in, their own vehicle.

A high level of automation will be needed to produce both types of vehicles, and every process will be affected.

According to the study, the industry workforce will be cut by at least 50 percent by 2030, and employees who remain will need very different skills.

There will be a rise in demand for data engineers, robotics and industrial automation engineers, and smart machine maintenance engineers in the production department, and industrial data scientists, software engineers, and 3D printing experts in the R&D department.

Fewer mechanics, health and safety managers, shop floor managers, shop floor logistics coordinators, operative production staff, and line managers will be required by the automotive production unit of the future.

In essence, automakers will become data managers and mobility service providers in addition to transforming into vehicle assemblers.

Operating tomorrow’s automotive industry

This shift not only has enormous implications for personal mobility but will cause dynamic changes to existing business models in the automotive industry.

To serve these two types of markets — mass-market “cars on demand” and customized vehicles for individual ownership — as efficiently as possible, two new types of factories are envisioned.

The first, a highly automated “plug and play” plant, produces large volumes of vehicles with minimal variation between vehicle types, and with cost as the main distinguishing feature for ride-sharing companies buying these vehicles in bulk.

The second type of plant, dubbed the “flex champion” by PwC, is envisioned to produce driver-owned, customized vehicles.

Strategy& argues that today’s production lines, while allowing for some degree of product customization, are not flexible enough for this new scenario, where autonomous guided vehicles (AGVs) will take each car on its own unique route between assembly stations.

Original equipment manufacturers (OEMs) might retrofit some of their existing factories, but they will need to decide on a case-by-case basis whether and how this makes economic sense.

Both these models, unfortunately, also create a strain on the relationship between auto manufacturers and their suppliers.

While competition for profits started to intensify two decades ago when suppliers began doing more of the work that automakers (OEMs) had traditionally done, such as building interiors and dashboards, PwC’s Strategy& feels that competition will step up a gear in the new era, as suppliers take on even more of this work, leaving OEMs to figure out where they should best play.

The think tank also studied the technologies available and the shift in the personal mobility market and made some key predictions for 2030:

# 1 | New workflows, processes, and operations

Standardized, shared vehicles — used simply to get from A to B — will account for at least 30 percent of the market in Europe, concentrated at the lower-price end. In the US and Asia, an even greater proportion is expected.

In fact, PwC expects that the time required between R&D and the point of production will shrink from the current three to five years down to two years, to keep pace with technological changes.

# 2 | Impact of new technologies on the workforce

The size of the workforce on assembly lines and in body and paint shops will be halved because of automation and the new types of vehicles being assembled.

The number of shop-floor logistics roles will be reduced by around 60 percent, partially because humans will be replaced by autonomously guided vehicles.

# 3 | New jobs and the need for new talent

The number of data engineers required will almost double in some types of plants, and increase by 80 percent in others, while the number of software engineers needed will rise by as much as 90 percent.

These new jobs will help the industry make better use of the technologies at their disposal, reducing labor costs, operating expenses, and other overheads — making sure they’re competitive in the digital age.