Artificial intelligence as auto companies’ new engine of value

Artificial intelligence as auto companies’ new engine of value

What opportunities does AI open up for mobility, and how can OEMs capture them in the short and long run?

For more than two years now, the automotive industry has been talking about four disruptive and mutually reinforcing major trends—autonomous driving, connectivity, electrification, and shared mobility. These trends are expected to fuel growth within the market for mobility, change the rules of the mobility sector, and lead to a shift from traditional to disruptive technologies and innovative business models

Artificial intelligence (AI) is a key technology for all four of the trends. Autonomous driving, for example, relies on AI because it is the only technology that enables the reliable, real-time recognition of objects around the vehicle. For the other three trends, AI creates numerous opportunities to reduce costs, improve operations, and generate new revenue streams. For shared-mobility services, for example, artificial intelligence can help to optimize pricing by predicting and matching demand and supply. It can also be used to improve maintenance scheduling and fleet management. Improvements realized through AI will play an important role for automotive companies, enabling them to finance innovation and cope with the trends ahead of them.

One expected result of the four major trends is a marked shift in the industry’s value pools. This change will have an especially large impact on big automotive original equipment manufacturers (OEMs) and their business models, but the impact will be felt throughout the industry and beyond. The products and services made possible by the trends will not only affect the business of all incumbent and traditional industry players but also open up the market to new entrants. Many companies such as technology players, which previously focused on other industries, are heavily investing in the mobility trends and the underlying technologies. As a result, a new ecosystem of players is emerging. New players will be important partners for traditional automotive companies. While automotive OEMs can use the technology expertise of new players to unlock the potential value of artificial intelligence, new players will have opportunities to claim their share of automotive and mobility markets. To master the four trends, OEMs need to invest substantially in each of the trends and in successfully integrating them.

Read more : https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/artificial-intelligence-as-auto-companies-new-engine-of-value