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Challenges and Opportunities for Existing and New Players in Automotive

More and more startups and new comers are rushing into the automotive industries to expect automotive to be the next big things that affects our daily life. I happened to have a chance to discuss with existing auto suppliers and spent some time on conferences and market research for the current trends and environment changes in the automotive industry. I am trying to figure out what environments existing OEMs are facing and how friendly the traditional auto industry are treating these new comers.

Market Potential

Let’s briefly look at the what the marketing research firm says about the current automotive industry:

“Global connected car market revenues are likely to increase sixfold by 2020” – McKinsey

“Car connectivity will require fundamental changes to some of the core processes of automotive OEMs as well as new partnerships” – McKinsey

“Connected car services revenues are expected to grow from $20.7 billion in 2017 to $42.8 billion in 2022 with 28% annual growth rate” – PWC

Challenges for Existing Auto OEMs and Hardware Suppliers

If the predictions from those marketing research firms are true, there are some fundamental changes in the industries for existing auto OEMs and hardware suppliers. They can’t keep their profits any more since there are lots of new comers with advanced technologies in sensors, connectivity, algorithms to significantly enhance driving safety, convenience, or automation, at affordable cost.

After Tesla, we have now seen several new auto makers such as NIO (NextEV), FMC, Renovo, Uniti, Weltmeister, Lucid, Elextra, etc. Some of them has demonstrated amazing performance and technologies in the limited production car. Most of them are targeting for pure electric car with zero pollution with full autonomous capability.

Besides full car platform, there are lots of startups providing technologies and products in the car including smart driving, telematics, connectivity, prediction maintenance, OTA software and data management, security, fleet management and of course, autonomous driving (ADAS).

The questions for the existing auto players, including both OEM and suppliers, how do they either compete with the new comers, or partner with them, to secure or extend their product offering. If they don’t do anything, it’s much likely their existing position or advantage will be disappeared soon!

In order for existing player to keep their strength, they are facing the following challenges:

  • Demands driven by the customers, not manufacturers
    • Business vehicle customers need real-time monitoring for safety, cost saving and new business opportunities
    • Personal vehicle customers needs convenience and peace of mind (tracking, parking, etc)
  • Transformation to software and big data company
    • Collecting real-time data from vehicles become necessary
    • Data analysis becomes critical and valuable
    • Machine learning on every data collected for intelligent prediction, warnings, and trending
  • Real-time monitoring and notification on the edge
    • Communication may be costly or un-reliable in the vehicle, local warning and monitoring is necessary
    • Real-time monitoring on tire pressure or brake pattern for driving safety and cost reduction, especially for professional drivers

The need for deploying connectivity and intelligence are critical for all the vehicles now!


I can see huge opportunities in the automotive industries for now. Not necessary in building a new car platform to compete with Tesla, BMW, Toyota those big player, but also supplying technologies in all kinds of vehicles including passenger car, bus, agricultural machinery, etc. The traditional automotive industry starts to work with startups or embrace new technologies from other companies to provide unique functionality to continue improve their production cars.

The other trend in the auto industry is that they start to believe in open source and standards such as GENIVI, AUTOSAR and AutoGrade Linux (AGL), IoTivity. Therefore, startups or new comers can easily get familiar with the platforms and starts to make innovations on top of that. Of course, those open source projects can be either the foundation or building blocks, companies need to provide the unique, customized and meaningful implementation based on their own resources and strength.

One of the most important parts of the new implementation should be machine learning, part of the artificial intelligence. How do we apply the machine learning in the vehicle to help the drivers, passengers, fleet managers, vehicle owner or operators, to gain safety, lower maintenance cost, feel comfort and convenience? There seems to have lots of opportunities here!


The potential is huge, the next question is: how do we pick the right direction, right platform and right technologies? I think it’s all depending on the resources, which including existing connections, know-how, and execution! Once you can a device, a vehicle, or module, to start collecting data for you, for your customers, or for your business, the story just begins!

Also published on Medium.

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