How will AI impact the automobile industry?

How will the automobile industry benefit from Industry 4.0?
16 July 2019 | 27 Shares

The Mercedez-Benz F 015 concept car will be fully autonomous (level 4). Source: Shuttestock

Technology today has given rise to many tools and services that simplify the way we live.

In the case of transportation, the rise of e-hailing services, self-driving cars and automated public transportation gave many the option of choosing to have a transport of their own or commute with others.

While some might think this spells bad news for car makers, the AI in Transportation Report released by Business Insider takes a different tone, as it notes that opportunities await for carmakers by embracing artificial intelligence (AI).

Shifting trends in commuting

Commuting trends have shifted dramatically since the introduction of e-hailing apps with more people opting out of owning a car because transportation has become easily accessible from just a few taps on the phone.

Lyft’s Economic Impact report from 2017 confirmed this when it reported that 250,000 of its passengers sold their vehicles in favor of ride hailing.

Some even abandoned the idea of owning or replacing cars altogether since this service came to be. And, with more countries now researching on automated public transportation, expect that number to keep growing as researchers dig deeper into AI.

The favor for e-hailing and automated public vehicles stems from the fact that it offers commuters a simpler and less taxing way to get to their destinations.

Lyft’s latest Impact report noted that its passengers saved 175 million hours to date in commuting. While the report also said that 46 percent of its commuters do own a car, it appears that more people prefer to commute with Lyft compared to driving on their own.

It’s not just e-hailing that saw towering numbers. A study by Radiant insights revealed that autonomous vehicle sales will see a global revenue spike at 41.61 percent by 2022; in the US alone, self driving tech will grow from US$54 billion to US$556 billion by 2026. 

Stemming from the fact that autonomous driving can eliminate road fatalities and reduce traffic, the growth of the autonomous driving industry is further fuelled by investments from both government entities and private alike. 

Car makers and AI

For automakers, the increasing market demand for autonomous vehicles should be good news as it generally involves them. AI technology offers automakers the opportunity to lower their operation costs, while creating new revenue streams for the company.

Noted in our previous article, autonomous driving creates opportunities for automakers to venture into other playing fields by diversifying their business model. Some sectors that currently are in-demand for autonomous vehicles are the food delivery industry and public transportation, to name a few. 

Companies like Toyota and Volkswagen have begun researching AI to capitalize on the benefits it’s said to bring. Toyota AI ventures, a venture capital subsidiary of Toyota Group, is one such company that received US$100 million fund this year for it to invest in startups focused on robotics and self-driving technology. Volkwagen, on the other hand, has rolled out over 100 AI applications to 120 of its plants for trials and testing. 

The entire OEM supply chain will see a positive change too. According to the report, automotive manufacturing should expect a US$173 billion cost saving from a variety of processes ranging from procurement to research and development.

However, manufacturing requirements would soon change, since autonomous cars are built differently compared to traditional powertrain cars. This may present some major hurdles to some automakers for them to overcome; such as a new workforce, new infrastructure and an updated security protocol to protect their data.

Opportunities lie beyond challenges

Advances in technology will be the reason why manufacturing processes “evolve” overtime. Just over 20 years ago, GPS was considered “state-of-the-art”; now almost every car and phone have  navigation apps installed.

This huge shift came when the automotive industry experienced Industry Revolution 3.0. Now that it’s time for Industry Revolution 4.0, automakers and part suppliers would need to up their game and embrace the change if they are to sustain in the future.