Automotive and Mobility Sector 

A once-in-a-century change in technology 

Most industry analysts expected significant challenges with the fundamental shift in the driving experience and new sources of revenue enabled by connectivity, sensors, and software. The challenges that most focused on were the technology and its capacity. While fundamental, those challenges were – and are – only part of the story. 

Taking a profound shift in technology into the mainstream is always a complex undertaking, but it is particularly so for the automotive and mobility industry. The industry is massive, operates on a global scale, and is economically important in all major markets. The industry’s size is not, however, in itself the challenge. 

Global scale and economic importance mean the industry is the focus of government policy and of activists, and safety and environment related functions are very heavily regulated in all major markets.  Consequently, the industry does not have the luxury of focusing solely on commercial issues by “merely” working to modulate technological development and change while fostering consumer acceptance in a way that reasonably ensures acceptance and profitability. Instead, government policy is a constant and increasingly significant factor for the industry. 

Geopolitical issues 

The automotive industry has always been highly regulated, but geopolitical factors are now very important in government policy impacting the industry’s core operating parameters. AV and driver assistance technology uses advanced sensors and software and runs on extremely advanced silicon chips. All of these technologies are increasingly the focus of competition and regulation between China and the “Global West.” All want to develop these technologies to develop a strategic competitive advantage for their nation and its “friends” because these technologies are economically important and can have military uses. The advanced sensors and the accumulation of personal information may also be of use to intelligence services so, particularly in China, these technologies and their use are heavily regulated. 

The shift to electrification only increases the risks and related regulation, as battery technology is very much dependent on raw materials and battery cells or modules originated or produced in China. The recent EU/China EV trade case is just one example of this latest trend. 

Cybersecurity and privacy 

As advanced driving features expand and connectivity becomes even more robust, vehicles generate ever more massive amounts of data that is economically valuable, at least potentially.  

As the value of data expands, so does concern about privacy. Again, government policy is a critical actor. Europe’s rules are more rigorous and focused on individuals, and are expected to remain so. China’s rules optimize for national security with little real concern for individual privacy. Rules in the US are less aggressive than in Europe but evolving. 

With connectivity comes concern about cybersecurity, both to protect sensitive data and to ensure the safe operation of the vehicle. In this area, government policy is again key but reasonably stable over recent years. 

Safety, environment and consumer trust 

Safety and environment related automotive technology is heavily regulated in all major markets. AV and EV technology presents novel issues for regulators. Each major market is taking a different approach that reflects local structure and needs. These rules continue to develop. Their status and structure are beyond the scope of this publication but meeting local safety rules in a market are not only a condition for bringing technology to market, it is essential to consumer trust and acceptance.  

Layers of trust 

While consumer trust is essential to market success, in the automotive industry companies do not get to bring their products and services to consumers until they have cleared many regulatory hurdles after they are confident in their technological solution. 

While consumers are accustomed to the risks of driving, profound technological change that removes increasing amounts of their “hands on” control creates a new awareness of risk. Many will gain some comfort from the belief that as cars are regulated heavily they must be safe if these capacities are brought to market. 

Still, surveys indicate real apprehension in many. Once consumers experience these technologies and normalize the feeling that they are not performing certain driving functions, or even driving at all, then they fairly quickly become comfortable. That comfort and acceptance will be relatively fragile until broad market penetration is achieved. That foundation of trust could be destroyed if early applications are perceived as dangerous. Market acceptance and commercial success will be a dynamic process of escalating layers of trust over time.