Next-Gen Business Models for the Automotive Industry stepping into Connected cars and services

Paper #:
  • 2018-01-0045

Published:
  • 2018-04-03
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Abstract:
Ford Motor’s Allan Mullaly said in a Consumer Electronics Show in Las Vegas “we are a car company, but we are learning how to think like an electronics company”. As mobile data traffic expands 10-fold from 30 Exabytes to 292 Exabytes in 2019, and the total mobile services subscription reaches 6.8 billion, in a global population of 7.3 billion, there is a compelling move towards connected cars and services. Though SDB research suggests US$ 18 billion additional revenue from these services, but most important question is “Are the consumers, who buy cars, willing to pay extra for these services”. Traditional business models of OEMs buys parts from Tier-1 suppliers, and selling the vehicles to consumers as a one-time sales revenue per consumer, is not the successful model. Telematics services, introduced in early 2000, bears testimony. For the New Business Models, the OEMs have to work with the ecosystem of service providers, who themselves have different business model. The Technology Ecosystem includes mobile equipment players (like Samsung), telecom service providers (like Vodafone), telecom network providers (like CISCO), Internet OS provider (like Microsoft), Search engine providers (like Google), cloud providers (like Amazon) and a combination of such providers (like Apple). The OEMs have to devise Business Models monetizing data, keeping the confidentiality compliance into consideration. This paper looks at the alternatives available with the OEMs and Tier-1 suppliers, in partnership with the Technology Ecosystem, to define mathematical business models, with the parameters, constraints and options, which be adopted by the Automotive Industry.
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