Automobile industry investing in 5G R&D can drive business growth : Know how

Studies by Qualcomm said that by 2035, 5G will generate more than $2.4 trillion across the automotive industry. It is also slated to create more than 22 million jobs. When 5G is rolled out, it will be able to transfer hundreds of megabytes per second, as opposed to the low tens of megabytes that 4G offers. One of the basic requirements of 5G is that it should be able to handle at least 20 billion bits of downloaded data per second. Let us look at 5G in a bit more detail. 

 

What is 5G?

The 5th generation of cellular technology is set to change our lives in ways that we would have never imagined. Its ever-reliable connectivity allows millions of devices to use and transfer data everywhere. 5G is meant to deliver ultra-low latency, massive network capacity, increased availability, uniform user experience, and peak data speeds. It will result in higher performance, empower users and change the way how many industries operate. In this article, we will look at 5G’s impact on the automobile industry. 

 

5G in the automobile industry:

Every day, millions of vehicles leverage mobile technology for real-time innovation, connected infotainment, emergency services, etc. With the advent of 5G, a new range of applications will spawn Vehicle-2-Vehicle, Vehicle-2-Infrastructure (V2I), Vehicle-2-Network (V2N), and Vehicle-2-Pedestrian (V2P) communications. 

 

According to Gartner, the share of 5G-enabled cars actively connected to a 5G service will reach 94% in 2028. 5G will bring a windfall of sales in the automotive sector, but its impact is beyond just that. 

 

Partnerships for 5G autonomous vehicles:

 

Benefits of 5G in the automobile industry:

Let us look at the different ways in which 5G will impact the automobile industry. 

  • Makes manufacturing cars easier:

Thanks to 5G’s secure and real-time connectivity, the manufacturing of automobiles also gets a fillip. Ericsson recently tied up with Telefonica Germany for 5G car production through a private 5G network for Mercedes Benz. Jörg Burzer, Member of the Divisional Board of Management of Mercedes-Benz Cars, Production and Supply Chain, said: “With the installation of a local 5G network, the networking of all production systems and machines in the Mercedes-Benz Cars factories will become even smarter and more efficient in the future. This opens up completely new production opportunities.”

 

5G will be able to usher in an era where efficiency and profitability will be achieved by automobile companies by creating new innovations in the processes. It could be due to the continued automation of robots, warehouse transportation, or cutting cables for more flexibility. The 5G mobile technology will lower costs, greater flexibility, shorter lead times, etc. 

 

  • 5G will result in safer cars:

The mobile technology’s greater throughput, availability, and reliability will enable safety-sensitive applications known as V2X, or Vehicle-to-Everything. V2X, with the help of 5G, will play a huge role in bettering traffic efficiency and reducing car-related accidents. How? Vehicle-to-Vehicle communication gives vehicles the ability to look beyond just what is in their line of sight. 

According to Morgan Stanley, V2V communication could save more than $500 billion from accident avoidance. This will make commuting every day safer and make travel a less time-consuming affair. It is estimated that more than $2.7 billion worth of hours will stop being wasted.  Autonomous vehicles will know where the parking spots are, determine alternative parking areas, and reduces congestion, thereby saving another $140 billion by avoiding congestion. 

 

  • Smarter cars:

The key to developing autonomous vehicles is artificial intelligence, but its biggest enablers are communication and connectivity. Machine-to-machine requires an incredible amount of bandwidth. Thankfully, 5G supports it. 5G’s high bit rate will enable high volumes of 3D data exchange. The speed and reliability of 5G data allow for sharing of sensory data, and it is of huge significance in improving situational awareness, thereby expediting the process toward autonomous automobiles. 

 

  • Advanced auto manufacturing:

The impact of 5G in the automobile industry starts in the assembly line itself. 5G will allow remote factories to have better communication and connectivity. It will make the production of cars faster, cheaper, and more efficient. In the future, you will see wireless and connected assembly lines that build parts and the complete construction of the car’s body using cables and wires. 

 

  • Better freight and shipping:

With 5G, the logistics industry will see a complete makeover too. It is expected that autonomous trucks will become a reality by 2027. Road assistance will be possible through virtual reality. Companies will manage their fleet using a remote mechanic. It will reduce the time taken to care for trucks, thus getting them back on the roads faster, and improving delivery times. There are times when it becomes impossible to find broken-down trucks. With 5G’s advanced geo-location technology, vehicles will be easier to track. Such route optimization improves delivery speeds and reduces the time taken to travel. 

 

  • Will be of huge significance for electric vehicles (EV):

With many legacy brands jumping onto the electric vehicle bandwagon, whether it is launching pure or hybrid EVs, 5G is set to play a major role. Better connectivity leads to greater control, analysis, and performance. 5G will facilitate the infrastructure to assist EV deployment, such as monitoring battery levels, identifying better routes, and finding charging stations quickly. 

 

  • Will rejig the automobile industry:

While we are still not sure about the extent of change that 5G will spawn in the automobile industry, there is no doubt that automobile manufacturers will have a lot to think about. For example, the advent of autonomous cars means that car manufacturers and OEMs should concentrate on the rider’s experience while in the vehicle. You might see a wave of in-vehicle apps and other forms of entertainment, and the 5G network will act as an enabler here. Manufacturers will have to find ways to redefine the purchasing experience. You will see newer products and business models. 

 

  • Advanced self-driving:

5G helps leverage the full potential of advanced CASE (Connected, Autonomous, Shared, and Electrified). Autonomous cars use hundreds of sensors to make vehicles faster and smarter. 

 

Conclusion:

The automobile industry is going through a massive transformation. In a few years, cars will be more connected, autonomous, shared, and electric (CASE). Automotive manufacturing would go well beyond just manufacturing cars, and will have to focus more on technology-side features too. They should partner with technology companies to optimize and better the existing facilities in automobiles.

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Comparative intelligence for component manufacturers

Comparative intelligence for component manufacturers: Step to enhance business, market, and growth

Various companies present in the market are competing themselves at a high pace in terms of growth, business, sales, no. of assets, supply and demand chain, etc. Now a days, each company specifically the OEM (original equipment manufacturers) are manufacturing their products based on the supply chain which means that OEM is dependent on Tier 1 and tier 2 of the supply chain to manufacture and provide a complete product. For example, Automobile companies like Nissan, Toyota, and others (OEMs) are dependent on tier 1 suppliers which provide various components or systems to implement in the vehicles such as HVAC systems, solutions for implementing electric cars, haptic display enabled systems, automatic car parking systems for vehicles. There are lots of tier 1 suppliers in the domain which are running in the race to provide their services to OEMs. Now the biggest challenge arises when choosing the right Tier 1 supplier out of several Tier 1 suppliers in the market comes into the picture and which tier 1 supplier an OEM shall opt for him.

Various types of analysis can be done to identify which tier 1 is best to select.

  1. Financial analysis: (Revenue-based such as no. of assets, net income (profit/loss), equity, etc.): Each company has its financial data that define growth in terms of profit and loss of a particular company. Hence to decide which Tier 1 supplier, an OEM should approach, financial analysis has to be performed for that particular company. Financial analysis can conclude the following data which is given below:
  • Revenue (Less than 100 million or more than 100 million)
  • of assets
  • Net Income (comparison with the last financial years to calculate net profit/loss):
  • Equity Margin
  • Production cost
  • Current price
  • Expenses and Liabilities
  • Cash flow
  1. R & D budget based: Each company invests some amount of its share to R & D for new advancements or inducements, whether it’s a manufacturing industry, software company, or any suppliers. The amount of R and D budget invested by a particular tier 1 can be the deciding factor for an OEM to approach a tier 1. For example, R & D budget of Bosch is high that means it is investing more money for R & D which means it is approaching new technology and developing an excess of equipment. Hence an OEM like ford or Nissan can approach Bosch for supplying components or technology to them.
  2. Technological advancement (new technology or innovation in the market): The first and foremost factor which an OEM will look for is the type of innovative technology, tier 1 is providing to them. Hence, those companies (tier 1) who are working majorly on new technologies or creating some innovative ideas to implement in their system, can be approached by OEMs to provide products to OEM. Example: Continental automotive AG is working on AI for vehicles. Hence, OEM can approach to them to implement the new innovative technology into vehicles.
  3. M/A activities: Merger and acquisition activities (like small companies (tier 1) collaborating with MNC (such as OEM), joint venture agreement between two companies, a small company being acquired by a big company) can be a deciding factor for an OEM to approach tier 1. A tier 1 company who have been approached by maximum no. of other OEMs, can be approached for supplying products or services to OEM. There are specific terms and conditions under which if there is a joint venture agreement between an OEM and a Tier 1, then any other company (OEM) cannot collaborate with tier 1 for supplying products to them. In this case, an OEM can approach the major competitors of the relevant Tier 1 suppliers.
  4. Opportunity Cost: The cost of product and services offered by a tier 1 is also a deciding factor by OEM to approach to a particular tier 1 supplier. A particular tier 1, provides their products and services at less cost, simultaneously maintaining product quality, services, the volume of production, timeline and other factors can be approached by OEMs for providing services to them.
  5. Share market (share sold by the companies or share in profit or loss): Each company holds a particular share market and different types of vendors; individuals or small startups buy the share of different companies to invest money in the required direction. Different types of tier 1 companies present in the market have a different share of market value. Particularly their market keeps on increasing or decreasing based on other competitors. Hence, those companies (tier 1) who have a high value of share market can be focused more on collaboration and other joint venture agreement purposes. The small companies whose shares are more and more bought by the other companies are much relevant for OEMs.
  6. Volume production rate & active market concerning region: A company (tier 1) which provides low volume production rate is the most relevant company rather than the other companies who directly focus on targeting high volume production. This is because lots of new concepts and ideas have to tested first in the pilot market before large volumes are necessary. Also, a small volume of production, in the beginning, provides the idea of market scenario whether this equipment can stay stable in the market or not and various types of demonstration has to be done. Therefore, the companies which are more focusing on low volume production rate, in the beginning, are more relevant than the companies who focus on large volume production. The market of a product manufactured by the company varies concerning geography. For example, a company A manufacture product in Russia but its market is highly active in Japan. Hence, an OEM in Russia cannot approach that company. Those companies who have a high market of components in respective companies, are highly favorable with government regulations and hence are highly relevant for OEMs.
  7. IP assets (IP portfolio): IP portfolio defines various types of patents or IP activity, that holds by a company. The small startups or other tiers 1 companies who have a high patent portfolio, more innovation in their respective technology domain or more licensing and intellectual legal activities are highly relevant. There are some of the IP factors that come into the picture for deciding which component manufacturer is more relevant.
  • Portfolio of patents filed by a company
  • Strength of the patents based on quantitative analysis
  • Licensing activates of a company
  • Products/ Application present in the market for patents
  • Patent reassignments activities

 

Hence, concluding all these factors into the picture, a particular manufacturing company (OEM) can intelligently decide its most relevant component manufacturer (tier 1), when a lot of comparative component manufacturers are exits in the market.

 

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