By Michael Entner-Gómez | Digital Transformation Officer | Entner Consulting Group, LLC.
The Impact of Electrification on Automotive Design Strategies
As the automotive industry accelerates its shift towards EVs, the landscape for traditional OEMs is undergoing significant transformations. Electrification ushers in a new era of streamlined system designs that promise substantial long-term production savings. However, this move towards simplicity, while economically advantageous, simultaneously steers the industry towards a concerning trend of product homogenization. Such uniformity in design poses a threat to the unique brand differentiation and identity that have historically been pivotal in securing market share.
Concurrently, this trend towards design uniformity is reducing the barriers to entry in the automotive sector. Emerging OEMs are now equipped to source essential components, such as batteries and motors, from the same Tier-1 suppliers as their more established counterparts. These suppliers include familiar names like CATL, Panasonic, Samsung, Bosch, Nidec, and Continental. This shift not only democratizes access to key technologies but also intensifies competition. It enables new entrants to effectively assemble these components and challenge long-standing industry leaders.
Complicating this situation further, the rise of outsourced manufacturing is adding a new layer of complexity, with industry giants like Foxconn, known for manufacturing personal electronics, venturing into automotive production. This is evident in their discussions with Volkswagen about a potential collaboration to manufacture vehicles for the Scout brand and their ambitious partnership with Fisker Inc. under 'Project PEAR' (Personal Electric Automotive Revolution), aiming to develop and produce over 250,000 electric vehicles annually for global markets. Furthermore, Foxconn has joined forces with Stellantis to design and sell new flexible semiconductors for the automotive industry, leveraging their semiconductor and software capabilities. At the same time, Magna-Steyr, a division of Magna International, renowned for automotive manufacturing, continues to explore the expansion of its electric vehicle production capabilities, with notable projects in the hopper.
These trends — the push towards streamlined EV design and the lowered barriers to entry — mark a transformative period for OEMs. They are now challenged to navigate a landscape where maintaining brand uniqueness in a homogenizing market is as crucial as adapting to an increasingly competitive environment where new players can enter and establish themselves with relative ease. This rapidly evolving scenario compels OEMs to innovate and strategically rethink their approach to design, supply chain management, and market positioning, ensuring their relevance and success in the dynamic era of electric vehicles.
Skateboard Chassis: The Catalyst for Automotive Homogenization
The skateboard chassis, a pivotal innovation in the realm of EV design, aptly derives its name from its resemblance to a skateboard. It features a flat and elongated deck, with four wheels attached at the corners. This simple yet effective arrangement houses crucial components like the battery and electric drivetrain, offering a versatile platform for various vehicle bodies to be mounted on. Beyond its visual similarity to a skateboard, this chassis design marks a significant departure from traditional vehicle manufacturing. While platform sharing is common in modern times, traditionally, each model required a distinct chassis. By standardizing this foundational element, the skateboard chassis simplifies the manufacturing process, reduces costs, and speeds up the development of new models, providing substantial benefits to automakers.
However, the shift toward a standardized base presents a significant challenge: the homogenization of automotive design. As vehicles increasingly share a similar structural foundation, the distinct physical characteristics that have historically set apart different models and brands are at risk of being blurred. A case in point from the ICE (Internal Combustion Engine) world is the Fiat 500X and Jeep Renegade. These models share the same underpinnings, yet, while the Fiat 500X embodies the design DNA of the Fiat 500, its ride quality leans more toward that of Jeep, not fully aligning with either brand's hallmark. Notably, both models are scheduled for retirement in 2024, a decision influenced by lackluster sales. This trend poses a significant dilemma for OEMs, who have long depended on unique design elements to establish and bolster their brand identity. In response, OEMs are shifting their focus to other areas of vehicle design for differentiation, such as innovative exterior aesthetics, advanced in-car technologies, and distinctive software-defined features.
As the skateboard chassis continues to gain popularity, its impact on the automotive industry is increasingly significant. This design approach is not only revolutionizing traditional manufacturing practices but is also likely to blur the distinctions between different vehicle categories. This trend poses new challenges and opportunities in marketing, brand positioning, and consumer engagement. Furthermore, the concept of the skateboard chassis opens up exciting possibilities for customization and innovation. It's even conceivable that skateboard chassis could be offered 'à la carte,' enabling customers, builders, and enthusiasts to design and build their own unique creations. This level of customization could usher in a new era of personalized transportation, where individuals have the freedom to create vehicles tailored to their specific preferences and needs in conjunction with additive and generative manufacturing technologies. As a result, the skateboard chassis is not just a shift in automotive design; it's a potential catalyst for a more diverse and personalized automotive experience.
Lower Barriers to Entry and the Rise of Tech Companies in Auto Manufacturing
The automotive industry is witnessing a paradigm shift, driven by the entry of technology companies into the realm of software-defined EVs. A prime example of this trend is Xiaomi, the Chinese tech giant known for its smartphones and electronic devices, which has now expanded into car manufacturing. This move is highlighted by the involvement of notable figures in automotive design. Chris Bangle, a name well-known to enthusiasts for his work with BMW, has taken on a role as a design consultant for Xiaomi’s car division. He's lending his expertise to shape up Xiaomi's future EVs, including involvement in promotional activities for the SU7, Xiaomi’s first model. The SU7's lead design was undertaken by former BMW designer Li Tianyuan, showcasing a significant melding of technology and automotive design expertise. This foray by Xiaomi underlines the seamless integration of consumer technology expertise into vehicle production and sets a precedent for other tech companies to follow in the automotive sector.
The speculation around Apple's potential foray into the automotive sector is adding a significant level of anticipation to the evolving automotive landscape. Known for its groundbreaking work in consumer electronics, Apple has been making strategic moves in the automotive domain, as indicated by its patents, talent acquisition, and investment in relevant technologies. Apple's entry into the automotive industry could potentially revolutionize it with its renowned industrial design expertise, its ability to create comprehensive ecosystems, and its history of market disruption. The prospect of an Apple car suggests a seamless extension of its ecosystem into automotive, offering a user experience that integrates with its existing suite of devices and services.
Additionally, Apple's reputation for disruptive innovation, coupled with its extreme brand loyalty, positions it to significantly impact the automotive sector. This potential move could bring about a new era of user-centric vehicle design and technological integration, reshaping the traditional dynamics of vehicle manufacturing.
Other technology giants like LG, Samsung, and Huawei are also making significant inroads in the automotive industry, albeit with different approaches. LG and Samsung, for instance, have a longstanding presence in automotive components and are expanding their influence in the EV and SDV sectors through strategic partnerships and innovations in battery technology and electronic systems. Huawei, on the other hand, is tapping into its expertise in telecommunications and AI to contribute to the development of connected and intelligent vehicles. These companies' involvement signifies a broader trend where the boundaries between automotive manufacturing and digital technology are increasingly blurring.
This influx of tech companies into the automotive sector presents traditional OEMs with both challenges and opportunities. As the market becomes more homogenized due to the standardization of EV and SDV components, OEMs are compelled to redefine their strategies for brand differentiation. Emphasizing unique design aesthetics, advanced technological features, and enriched customer experiences has become crucial for traditional automakers to maintain their competitive edge. Simultaneously, the entry of tech giants heralds new collaboration possibilities, combining automotive manufacturing prowess with cutting-edge technological innovation. This dynamic convergence is expected to yield advanced, consumer-focused vehicles, marking a new era in the automotive industry where digital technology plays a central role.
Brand Differentiation Becomes More Challenging
Those who remember or cherish the cars of yesteryear, like me, can attest to the unique 'feel' of a specific car model, brand, or era. This distinct blend of design, performance, and emotional connection once set each manufacturer apart. Today's automotive industry output, however, is starkly different. Influenced by global production and company consolidation, we are witnessing an era of homogenization. This isn't entirely new, as cross-pollination between companies (and OEM divisions) has been prevalent, but the shift toward EV architecture is intensifying this trend. The drive toward a universal vehicle design, excluding the traditional notion of a platform, is evident. In the near future, maintaining the distinct "je ne sais quoi" and individuality of car brands will become increasingly challenging. This could trigger a race to the bottom in pricing, as minimal differences separate various lines, models, or brands.
Consider Geely's portfolio, which includes Volvo, Polestar, and Zeekr, as a case study in the industry's struggle for brand differentiation amid shared technologies. Volvo, known for its premium build, shares its CMA platform with both Polestar and Zeekr, yet targets distinct consumer segments. This creates a dilemma: how to justify Volvo's premium pricing when its technological foundation is similar to its siblings. For Geely, the solution lies in forging unique identities for each brand, perhaps through distinctive design aesthetics or customer experiences.
The strategy for differentiation now extends beyond traditional engineering into branding and marketing. Questions arise, such as whether the only difference between Volvo and Zeekr lies in 'Scandinavian design aesthetics'. For Volvo, once celebrated for its unique character, the challenge is substantial as it seeks to define its identity within Geely's overarching strategy. Distinguishing these brands in the market demands a focus on unique interior features for Volvo, performance for Polestar, and technological innovation for Zeekr. This scenario highlights the intricate dynamics of modern automotive badge engineering.
In a recent move by OEMs towards 'skateboard building', Stellantis has introduced the BEV-native STLA Large platform. It promises an impressive 800 km/500-mile range and will initially be used for Dodge and Jeep in North America, followed by Alfa Romeo, Chrysler, and Maserati. With eight vehicles slated for launch between 2024 and 2026, the platform boasts remarkable energy and charging efficiency, along with enhanced performance. However, experts are concerned about potential brand identity losses among these vehicles, particularly for iconic brands like Jeep. Jeep enthusiasts value the brand's uniqueness, customizability, and off-road prowess. They fear the skateboard design might render their vehicles more generic and less adaptable for extreme conditions. Stellantis faces the challenge of leveraging the skateboard design's benefits while preserving the distinctive qualities that Jeep's loyal customer base cherishes.
The Differentiators in Modern Automotive Design
Like tofu or yogurt, which are essential yet plain foods forming the base for many delightful dishes, the EV skateboard chassis serves as the foundational infrastructure for modern vehicles. Just as yogurt needs added flavors or toppings to appeal to a broader palate, the skateboard chassis requires significant differentiation to attract consumers, even those seeking basic transportation. This need for distinction becomes crucial as the price point escalates. In the truck segment in the USA, for example, base models around $35,000 differ significantly from luxury variants priced at upwards of $70,000. These higher-priced vehicles, much like gourmet yogurt enhanced with rich flavors compared to their plain counterparts, must offer unique features, advanced technology, and luxurious elements to justify their higher cost and boost profit margins. Essentially, while the skateboard chassis provides a vital, yet bland foundation akin to yogurt, it is the additional features and refinements that transform a basic vehicle into a sought-after, high-value product.
So, how does one differentiate in this world of homogeneous underpinnings? The solution lies in concentrating on aspects that can be customized to align with diverse consumer desires and expectations. The customization of exterior and interior design is pivotal. Distinctive styling cues, innovative lighting, and unique color schemes can distinguish vehicles. The interior differentiation can involve diverse materials, infotainment options, and comfort features. Moreover, a unique driving experience, including custom handling, acceleration, and even vehicle sound, can reinforce brand identity. Opportunities for differentiation also lie in advanced technology offerings such as augmented reality heads-up displays, personalized AI assistants, and exclusive app ecosystems. Additionally, sustainability can serve as a differentiator, with some brands focusing on eco-friendly materials and practices to attract environmentally conscious consumers. Ultimately, in a market characterized by similar technologies, attention to detail, brand-specific values, and the overall user experience will be pivotal in defining success and fostering customer loyalty.
While some argue that these universal platforms can adapt to various use cases and provide noticeable differentiation, the core essence of the platform typically remains unchanged. Attempts to modify it, such as raising, stretching, or lowering, may not effectively conceal its central design. While altering these platforms is possible, excessive deviation from their intended homogenization can lead to efficiency losses. Such divergence may increase costs, cause part variations, and compromise vehicle integrity and performance. Each modification adds complexity, necessitating additional testing and certification, and could reduce the economies of scale that standardized platforms initially offer. Furthermore, significant deviations from the base design can complicate the manufacturing process, requiring specialized tooling and potentially disrupting efficient production lines. Therefore, automakers face a crucial balance between customization and the efficiency benefits of a universal design. Achieving this balance is essential to meet diverse consumer needs while maintaining cost-effectiveness and production efficiency.
Digging Deeper into Differentiation through Software Definition
Beyond merely focusing on design elements aimed at capturing visual attention, the automotive industry is witnessing software definition emerge as a critical avenue for differentiation, mirroring the evolution seen in the cell phone industry. Despite a wide variety of devices, most mobile phones adhere to the 'candy bar' shape, with exceptions like Samsung's and Google's foldable models showcasing notable innovation (I’m a fan). This trend is driven by both functionality and design considerations. Over time, certain features become commonplace across brands, as companies often adopt successful elements from their competitors.
In the automotive realm, software's role is becoming increasingly crucial. As physical vehicle designs tend toward efficient or aesthetically pleasing forms, the embedded software opens up vast possibilities for uniqueness. Software extends beyond controlling basic functionalities; it significantly shapes the user experience, including the user interface's responsiveness, the customization of driving modes, and the integration of infotainment systems. The vehicle's success may hinge on the effectiveness of its software. Even cars with the most ingenious physical features can disappoint if the software execution is flawed. Software-defined features need to showcase seamless integration and user-friendly interfaces rather than being perceived as clunky or disjointed.
Furthermore, akin to smartphone software, automotive software facilitates continuous updates and improvements. This dynamic aspect ensures that a vehicle remains technologically relevant, secure, and tailored to user preferences long after its purchase. Software's flexibility and adaptability provide automakers with a distinct opportunity to differentiate their products and foster brand loyalty, surpassing what static, hardware-based features can achieve. However, caution is necessary; improper software implementation can have significant repercussions. For instance, Rivian's recent infotainment update debacle, requiring physically applied software fixes due to system failures, underscores the risks involved. Over-The-Air (OTA) updates, while convenient, may not suffice for the intricate updates essential to the sophisticated, software-driven aspects of next-generation vehicles. Automakers must skillfully balance these factors to leverage software's full potential in automotive design.
As vehicles become more focused on software, the opportunities for differentiation expand. Software not only enhances the driving experience but also transforms vehicles into platforms for ongoing innovation, personalization, and evolution. This mirrors the trajectory seen in the mobile phone sector. The comparison of an SDV to a ‘cell phone on wheels’ might initially seem overblown, but it is quite fitting. Consider the customization in mobile phones, with their unique screens, sounds, wallpapers, and even physical modifications (bedazzling anyone?). This leads to an intriguing question: Is your car as configurable as your phone or computer? Would you appreciate a similar level of personalization in your vehicle? Automakers are betting that consumers will value this degree of customization. Otherwise, the industry could face a race to the bottom in vehicle pricing, where differentiation is less about unique features and more about cost competitiveness.
Sustainability and Recycling in the Context of Homogenization
The trend towards homogenization in vehicle design, particularly evident in the adoption of the skateboard chassis in EVs, heralds a significant sustainability advantage. This evolution is seen in various forms, ranging from the use of recycled materials to opportunities for battery swapping and modular upgradability. The skateboard chassis' uniform design enables the integration of recycled materials more seamlessly. By utilizing components that are universally suitable across different models, automakers can more effectively repurpose materials. This strategy reduces waste and the environmental impact of new material production, aligning with the growing consumer demand for environmentally conscious products.
The skateboard chassis concept significantly enhances vehicle adaptability, potentially allowing for the replacement of an existing body with a new one to suit changing user needs (pardon the oversimplification). This flexibility means that replacing or repairing a worn-out body or chassis does not necessitate discarding the entire vehicle, which contributes to sustainability and provides practical benefits for consumers. Additionally, features like battery swapping facilitate the quick replacement of depleted batteries, extending the vehicle's life and reducing the need for new battery production. This is not only eco-friendly but also adds user convenience. Also, the modular nature of the skateboard chassis aligns with the principles of a circular economy by allowing continuous updates with the latest technology or features, thereby significantly reducing waste and emphasizing product longevity, reuse, and recycling.
The sustainability and durability inherent in the design of modern EVs, while advantageous, also present a unique challenge for automakers. This dilemma is akin to what's been observed in the smartphone industry, specifically with models like the Apple iPhone. As these devices have advanced, offering only incremental updates in newer models, a noticeable decline in sales has emerged. The automotive industry may face a similar situation. If vehicles are built to last indefinitely with minimal maintenance requirements and only incremental upgrades, consumer motivation to purchase new models might dwindle. This trend, though highlighting a strong commitment to sustainability, also poses a crucial question: How can automakers continue to drive consumer interest and market vitality, ensuring that vehicles remain appealing even as they become more enduring and environmentally friendly? Addressing this question will be key to the future success of the automotive sector, as it seeks to navigate the delicate balance between long-lasting sustainability and ongoing market relevance.
Consumer Perception, Market Trends, and Future Outlook
The discussion of homogenization in the automotive industry, especially concerning EVs and their skateboard chassis, poses a crucial question: Does this trend resonate genuinely with consumers, or is it primarily an industry-centric concept? Understanding consumer perceptions of these trends and their impact on car buying behavior is vital.
From a consumer standpoint, the initial appeal of homogenization may appear limited. Car buyers often seek vehicles that reflect their personal style, status, or values, and the idea of driving a car with foundational elements common to numerous other models might seem at odds with this desire for individuality. However, this perspective is complex. Reliability, sustainability, and cost-effectiveness are also valued by consumers, and these are areas where homogenization offers significant benefits. Thus, the critical factor is how these universal platforms are perceived: as a compromise on uniqueness or a foundation for reliable, sustainable mobility.
Market trends indicate an increasing acceptance of homogenized designs, driven partly by growing environmental concerns and the emphasis on sustainability. As consumers become more conscious of their ecological footprint, there may be a shift towards vehicles that prioritize sustainable production and longevity. In this context, modular designs and the possibility of easy upgrades could attract consumers who value these aspects over unique aesthetics.
Looking ahead, the automotive industry must navigate the delicate balance between the homogenization trend and the enduring consumer desire for distinctiveness. This situation may lead to a market bifurcation: one segment driven by cost, sustainability, and practicality favoring homogenized designs, and another where luxury, performance, and individuality attract a premium. Automakers must skillfully cater to these diverse consumer preferences while focusing on innovation and sustainability.
As technology advances and consumer preferences evolve, the industry might experience a dynamic interplay between these trends. The possibility of adding personalized features through software on a standardized platform presents a potential compromise. It could allow consumers to enjoy the benefits of homogenized designs, such as lower costs and enhanced sustainability, while still experiencing a sense of uniqueness and personalization. This evolving scenario suggests that while the concept of homogenization may continue, its perception and implementation are likely to change significantly, aligning with shifting consumer expectations and market dynamics.
Adaptation to Shifting Design Techniques
The shift towards EVs is ushering in a new era of modular and flexible vehicle platforms, driven by a trend towards electrification and standardization. This evolution in vehicle design offers substantial economic and environmental benefits but also presents challenges for OEMs in maintaining brand identity, aligning with changing consumer preferences, and adapting to evolving market dynamics. The move towards standardized EV platforms, like the skateboard chassis, is reshaping the automotive manufacturing model, promoting cost efficiency and sustainability while compelling OEMs to seek new differentiation methods. In this homogenized market, the role of software, design innovation, and brand-specific features becomes crucial in preserving distinct brand identities.
The entry of technology giants into the automotive sector introduces a blend of digital innovation and traditional manufacturing, likely to catalyze advancements in vehicle technology, connectivity, and user experience, setting new industry standards. These companies, skilled in creating personalized and intuitive experiences in smart appliances and consumer electronics, are poised to excel by shifting their focus towards automobiles and leveraging their strengths in design and feature innovation. This signifies a major transformation in the automotive industry, emphasizing vehicle aesthetics, functionality, and digital integration as essential as traditional performance and engineering aspects.
This paradigm shift necessitates that existing automotive companies adapt to a development model where design and feature-centric approaches are increasingly significant. These elements, traditionally secondary to mechanical and engineering considerations, will now be key differentiators in a market demanding smarter, more connected, and user-friendly vehicles. As technology companies enter with their expertise in user experience and advanced technology integration, traditional automotive manufacturers must enhance their capabilities in these areas, focusing not only on transitioning to EVs but also on how these vehicles interact with users and integrate into their digital lives, shifting from viewing cars as mere transport modes to smart, connected devices.
OEMs must also remain mindful of global market variations, regulatory environments, and the economic implications of these changes. Educating consumers about new technologies, adapting supply chains, and exploring new financial models and ownership trends are critical in navigating this transformation. The industry's ability to adapt while aligning with sustainability goals and environmental considerations will be key to its future success.
Wrapping things up, the automotive industry's journey towards electrification and software-defined vehicles represents a fundamental change in vehicle perception, manufacturing, and experience. Embracing this change, while navigating its complexities, is essential for OEMs to thrive in this dynamic and new era of the automotive industry. This journey is not only about technological evolution but also a redefinition of the consumer-vehicle relationship, offering an exciting opportunity for OEMs to innovate and lead in this transformative period.