Spotlight Industry PoV- Automotive pptx.pptx

INTERNAL
Aug 2021
Industry Point of View - Automotive
IMM Insights & Analysis

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INTERNAL
© 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Table of Contents
Industry Trends
and Outlook
Challenge from
Big-Techs
Sustainability and
Circular Economy
New
Transformation
Framework for
Automotive
SAP Unique Value
Proposition
How Technologies
are being used to
improve entire
value chain of the
industry

4
INTERNAL
The Automotive industry is indispensable to the global economy and resulting
prosperity
27
million employees globally
(14mn in Europe; 8mn in US;
5mn China)
1.1mn
of a total 2.6mn direct automotive
manufacturing jobs were affected by
plant closures in the EU in March 2020
The Automotive industry’s turnover exceeds
7% of EU GDP and
3 – 3.5% of the overall GDP in
the US and
10% in China
Linking industry with extensive
interconnections to
upstream (e.g.
steel, chemicals, textiles) and
downstream
industries
(e.g. repair, mobility services)
25%
of world’s global CO2

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Connectivity, digitalization and sustainability are key trends which will define
Automotive industry in the current decade
Connectivity
Automation
and
autonomous
driving
Shared
mobility
Charging
infrastructure
Circular
econom
y
MaaS
Batteries
production
Electrification
Alternative fuels
Energy
supply &
distribution
Subscription
models
Car ownership
decrease
Liability
Safety
Homologation
(testing and certification)
Platooning
Cybersecurity
Data
monetization
New business
models
Servitization
Telecommunications
Access to
data
Urban
ecosystems
Decarbonization
Sustainability
Urbanization
Globalization vs.
regionalization
Digitalization
Automation
GLOBAL
MEGATRENDS
AUTOMOTIVE MEGATRENDS
Servitization
 The industry has been
evolving constantly and
moving towards mass-
scale connected,
autonomous, shared,
and electric (CASE)
systems, where the
new business models
are supported by
artificial intelligence
(AI), machine learning
(ML), 5G, cloud
computing, and big data
 While focusing on
CASE, Sustainability,
Customer centricity,
and Intelligent
Industry is also critical
for companies to be
ready for next
automotive era
Source: Business Sweden and I&A Analysis

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Information-centric technologies will play a central role in the future of the
industry
Connected Car Platform
5G
Micro-mobility
Virtual Assistant
Automotive Real Time Data Analytics
In-Vehicle Services
Electric Vehicle Charging
Continuous Software Deployment
Over-the-Air Software Updates
Data Marketplaces and Exchanges
Blockchain and IoT
Digital Personalization
In-Vehicle Advanced UX and UI
Mobility-as-a-Service
Autonomous Lidar
Vehicle-to-Vehicle Communication
HD Maps
Electric Vehicles
Flying Autonomous Vehicles
Autonomous Vehicles
Autonomous Vehicle Perception System
Emerging Technologies for Connected Vehicles and Smart Mobility
STAGE 1
Basic hardware
connectivity
2009-2015 2020 2025 2030
STAGE 5
Holistic traffic
optimization
STAGE 4
Real-time driving
safety guards
STAGE 3
Live car-driver
interaction
Links drivers’ external
digital devices to
achieve in-car
interaction
INFOTAINMENT / TELEMATICS-ORIENTED
In-vehicle interaction
STAGE 2
Smartphone-empowered
connectivity
DRIVING SAFETY & TRAFFIC EFFICIENCY
Out-vehicle connection
2035-2050
Mainly for vehicle
monitoring
Multisensory interactions
for occupants, such as
voice and gestures
Proactive and
precise danger warnings
and collision avoidance
in both normal and
complex
scenarios
Intelligent decision making
empowered by AD
function seamlessly
integrates environmental
factors for route selection
and modification
Now Next New Beyond Horizon
Source: Capgemini and I&A Analysis

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Automotive industry expected to double by 2030 with high increase in software
and emission compliance
2660
3500
850
1300
90
200
2000
2018 2030
Product
business
Connectivity
services
Aftermarket
Mobility
solutions
Connectivity
Data-enabled services
Shared
mobility
Non-autonomous
and autonomous
One time sales
Components to full vehicle
sales, one time, incl. EV and
AV
• Revenue related to ICEV
expected to drop
significantly, but e.g. EV
will grow substantially
Eur 3, 600 bn
50%
Of industry
revenues in
service-
oriented
value chains
Growth will be primarily driven by service-oriented business
Eur 7,000 bn
Global automotive revenue pool, EUR bn
90 %
Software will account for 90
% of innovations in the
vehicle, and lines of code will
be a hundred fold what they
are today
of all revenues could come
from mobility services
25 %
Total fines auto companies
could face from EU for
missing emissions targets
$ 37bn
By 2030
Source: Business Sweden & Web-Search

Challenges Coming From Big Techs and
Automakers Response

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Automotive players need to adopt new technologies and business models to
take on challenge coming from tech-players
Tech players moving deeper into
Automotive space
Challenges For
Traditional Players
Source: Roadzen and I&A Analysis
Examples of
Automakers Response
At $631B, Tesla is now worth more than the
next top six car companies combined
Microsoft has been focused on connectivity,
through partnerships with major automakers such as
Nissan, Volvo, and Toyota to deploy its Azure-based
connected car platform
Apple aims to launch electric car production for
the mass market by 2024
Google, already a player in the automotive
space with its self-driving subsidiary Waymo, has
been investing in-Vehicles connectivity
Amazon has been focused on EVs as part of
company’s commitment to reaching carbon neutrality
by 2040
Adapting quickly to newer
technologies such as AI,
Blockchain, Cloud and 5G
Big Data Analytics
Software driven vehicles
Product-to-service
business model
Customers digital services
Create a positive brand
perception through value-
added services
GM, Renault, Nissan, Mitsubishi
have preferred to build strategic
partnerships with tech companies to
compensate for missing technological
competencies
Volkswagen Group has invested
heavily in developing their own
operating systems. Volkswagen
created its own automotive cloud and
new electric vehicle architecture.
The GENIVI Alliance is a non-profit
automotive industry alliance, which
several automakers and suppliers
have joined to develop an open-source
solution based on Linux.
Cybersecurity

Use Of Emerging Technologies In All
Aspects Of Automotive Business

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Industry leaders are redefining the Automotive value chain, creating new
business segments and transforming traditional activities
Source: Accenture, I&A
IN-CAR SOFTWARE
100M lines of code
per car, validation,
testing, cybersecurity
SUPPLY CHAIN
From globalization to
region-specific; circular
economy impact
MANUFACTURING
From ICE with
predictable volumes to
electrification
— with uncertainty
ENGINEERING
From waterfall
mechanical components
to agile software
defined features
PURCHASING
From Tier-1 original
equipment suppliers to
high tech companies
AFTER SALES
From mechanical
repairs to over-the-air
upgrade
MARKETING
From dealer-mediated
brand awareness to
direct 1:1 customer
experience
SALES
From traditional dealers
to a direct or omni-
channel world
MOBILITY SERVICES
Passenger economy; selling
multi-model service to
consumers
CONNECTED VEHICLE
SERVICES
In-car services for
consumers; data
monetization
FINANCING & INSURANCE
From lump sum financing to
lease, rental, subscriptions, etc;
usage-based-insurance
FINANCE
Funding ”the new”
HR
Talent Challenge
CORE IT
Transformation
Cloud Platforms,
Vehicle-to-Cloud,
IOT, Cybersecurity
NEW!
NEW!
Degree of Change by Value Chain Segment Very high High Medium Low Very low
MANUFACTURING
PURCHASING
IN-CAR
SOFTWAR
E
ENGINEERING
SUPPLY
CHAIN
SALES
CONNECTED
VEHICLE
SERVICES
FINANCING
&
INSURANCE
MARKETING
MOBILITY
SERVICE
S
AFTER
SALES
NEW!

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INTERNAL
Industry 4.0 is being used in automotive manufacturing to improve processes
Internet of things (IoT)
Artificial intelligence (AI)
Drones
Robots
3D printing Blockchain
Virtual
reality (VR)
Augmented
reality (AR)
Industry 4.0
Technologies
Key Value Drivers
Flexible routing, scheduling, and
load balancing 30- 40% lower capex
achieved by Porsche by deploying
flexible Automated Guided Vehicle
(AGV)-based assembly line to
optimize its electric vehicle
production
AI and automation in routing, scheduling, and
load balancing can reduce idle/wait times and
lead to increases in labor productivity and
throughput in final assembly
Closed control loops through
sensor-based in-line quality
inspection
90% improvement
in defect detection
by Ford by automating quality
control through camera-based
in-line quality inspection
Sensor-based in-line quality inspection facilitates
rapid feedback loops for process parameter
correction
Extension of automation to final
and pre-assembly
<20 month
amortization
Bosch increased end-of-line parts
inspection efficiency through flexible
and collaborative robotization by
Rexroth
This flexible automation solution was
amortized in less than 20 months
Extending automation to final and pre-
assembly ultimately reduces labor costs by
enabling lights-out areas in this phase of
production
Source: PWC, I&A Analysis and Web-Search

Sustainability in the driver’s seat

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Sustainability is now a strategic priority for the Automotive industry
Wearable technology, EksoVest to
reduce risk of injury during the
conduct of overhead work
Drones with cameras for
overhead inspections, cutting
accident risk
Employee Health &
Safety
Michelin rethreads old truck tires and
create new tires. 85% of a tire is reused,
saves 30 kg of rubber and 20 kg of steel
per tire, as well as 60 kg of CO2
emissions
Circular Economy
Toyota set up a joint venture with Maruti
to establish vehicle dismantling units
across India
Green Supply Chain
Improve traceability in its global,
supply chains Through increased
integration using AI & blockchain
Only uses renewable energy sources – worldwide.
Aims to reduce supply chain CO2 emissions per vehicle by 20% ,
production emissions by 80% CO2 per vehicle by 2030 and use phase
emissions by 40% CO2 per vehicle by 2030 from 2019 levels by 2030.
Uses average 36% recycled materials
and 10–20% recycled plastics
Renewable Energy
Tata Motors’ value from hazardous
waste initiative successful in reducing
hazardous waste to landfill or
incineration by 19.3 % in 2020 vs. 2019.
Source: Company websites press releases/Blogs

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Automotive industry implementing sustainability practices across business
operations
R&D and engineering
1. Sustainable R&D and
product
development
2. Product sustainability
Supply chain
3. Sustainable supply chain
4. Environmentally
responsible sourcing of
metals,
5. Due diligence of all material
and product procurement
Manufacturing & operations
6. Sustainable manufacturing
7. Recycling of waste
and easy returns for
end-of-life disposal
8. Sustainable power
procurement
Mobility services and
vehicle usage
10. Mobility and
digital services
11. Lower emissions and
improved vehicle safety
9. Sales, marketing, and
after-sales sustainability
Marketing & sales
Supporting and promoting a circular economy
Fair labor policy for automotive value chain
Sustainability in IT
R&D and Engineering
• Groupe PSA consolidated its R&D e orts to
ff two platforms, designed to limit
CO2 emissions by reducing weight and improving aerodynamics.
• Volkswagen uses renewable raw materials such as the natural fibers, flax, cotton,
wood, cellulose and hemp to produce components, wherever possible.
Supply Chain
• Scania co-founded a consortium to encourage the roll-out of bio-gas (from waste
and residues and 90% less polluting) fueled trucks. It will build a network of gas
filling stations across major commercial routes in Europe
Manufacturing & Operations
• Yamaha Motors achieved zero waste, both direct and indirect, to landfill by using
thermal recycling processes to create materials to be used as combustion
improvers and using post-combustion residue in making cement and roads.
• General Motors runs its SUV assembly plant in Texas, US, on 100% clean wind
energy.
Marketing & Sales
• Tata Motors took back an equivalent of 26,993 vehicles for refurbishing and reuse
in the year 2017-18
Mobility Services And Vehicle Usage
• Daimler-owned moovel Mobility-as-a-service platform makes it possible to
purchase and pay for public transport tickets in German cities and it also o ers
ff
users access to other mobility options such as carsharing, ride-hailing and bike
rentals.
Source: Capgemini, I&A Analysis

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Automotive Industry need to adopt best practices of sustainability leaders to
drive sustainability programs forward
Demonstrate
progress
Pursue sustainability
as an organization-
wide mission
Bring
accountability and
robust governance
Use technology
for sustainability
Envision and spread
sustainability across the
automotive value chain
Strengthen
alliances/
partnerships
Around 80% of automotive
companies publish a
sustainability report every year.
However, often the data reported
are not comparable across different
companies or consistent from year-
to-year. In addition, it is estimated
that almost 42% of sustainability-
related metrics go unreported
by large organizations
Ralf Pfitzner, head of sustainability,
Volkswagen Group, outlines how they see
sustainability as critical to their long- term
value: “If we approach it the right way,
sustainability is not a cost factor, but rather
an investment in a viable company,”
Sustainability leaders are putting in place
the governance mechanisms needed to
drive their sustainability goals.
For 64% of leaders, sustainability is a
C-level or board- level agenda
General Motors appointed its first chief
sustainability officer to lead the company
as a global advocate for climate-
sensitive manufacturing and mobility
operations and direct the design and
implementation infrastructure for EVs
Companies are collaborating with their
suppliers to develop greater supply chain
transparency. Volvo is a case in point. The
company partnered with two of its EV battery
suppliers to create a digital ledger that tracks
the source of rare-earth materials such as
Cobalt
Automotive organizations have traditionally
focused on using technologies to improve
vehicle efficiencies (such as reducing waste)
and developing innovations in EVs and AVs.
Substantial value can also be unlocked by
using forecasting and analytic techniques to
calculate, track, audit and publish
environmental impact.
Leading organizations are introducing
technologies to promote sustainability and
employee welfare.
Critical initiatives – such as the circular
economy and developments in EVs – will not
come to fruition without active participation of
all players. Collaboration will be key. For
example, BMW, Scania, Volvo, and
Volkswagen were lead partners to promote a
harmonized approach in driving
sustainability in automotive
Source: Capgemini and I&A Analysis

Transformation framework for the next
automotive era

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Transformation framework for the next automotive era
Customer centricity
Mobility
Ecosystem
Sustainability
Success
Factors
People & Organization
Technological & Software Competency
Operational Excellence
Intelligent
Industry
Source: Capgemini, Microsoft, I&A Analysis
Key Focus Areas To
implement Transformation
Framework
Resilient Operations
Differentiated Customer
Experience
Emerging Mobility
Services
Accelerate Vehicle
Innovation
Increased Organization
Productivity
Sustainability
 underlying technologies need to become more
innovative
 shift from hardware to software excellence
 Collaborative platforms
 need to transform to achieve the total customer centricity
of a technology company
 also equipping themselves to cope with the constantly
accelerating transformation of their industry
 doing more with fewer resources, i.e. better resource
utilization, but it should be more than that:
 a holistic philosophy that makes it possible to improve
and maintain an efficient and resilient automotive
organization

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SAP unique value proposition can help automotive industry to implement
transformation framework and be ready for next era
Source: I&A
Resilient
Operations
Differentiated
Customer
Experience
Emerging
Mobility
Services
Accelerate
Vehicle
Innovation
Increased
Organization
Productivity
Sustainability
Connected Factory
Connected Supply
Chain
Intelligent Decision
Making
Intelligent Reality
Customer 360
Digital Marketing
Customer Experience
Management
Connected Field
Service
Dealer Management
Systems
Predictive
Maintenance
Fare & Toll
Management
Traffic & Transit
Management
Fleet & Asset
Management
Parking Management
Data Management
Vehicle Service
Connectivity
Location-Based
Services
Speech Services
In-Car Productivity
Over-The-Air
Modern Workplace
High Performance
Computing
Low-Code
Development
Quantum Computing
Circular Economy
Sustainability
Reporting
Material Circularity
Utilization
Improvement
Key
Elements
SAP Value
Proposition-
Venture
Services
Focus
Areas
Sustainability
Service Package
Sustainability
Reporting, Resource
Recovery & Reuse,
Responsible Design
& Production
Business Process Intelligence
Provide process insights to customers based on the findings, process improvements are suggested and can be implemented
BoSH
AI platform to support automation in the business operations self healing space from self-help, self-service to self-healing
Cross-Company Collaboration
Cross-company collaboration with the use of blockchain helps to provide trust and authenticity within the supply chain.. Blockchain can also enable better recyclability
XR
Provide situational awareness, enhanced perception and hands free system access

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© 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Source: I&A Analysis
SAP Venture Services offerings to help Automotive industry to be efficient,
resilient, customer centric and environmental friendly
Business Process
Intelligence
Business Process
Intelligence
End-to-end capabilities for strategic process transformation. It can help visualize
process reality by running in depth process analysis for enterprise transformation, help
reimagine processes by enabling organization to quickly respond to unpredictable
business and regulatory changes and gain complete visibility and governance over
your workflows
 Optimize the re-organization process
 Improve resource allocations
 Improve Go- to market processes
 Digital touch point improvements
 Reduce business disruption
 Reduce resolution time
 Improve service quality
BoSH
Business Process
Automation
Comprehensive out-of-the-box AI platform to support automation in the business
operations self healing space from self-help, self-service to self-healing
Sustainability Service
package
Sustainability
Service package is used to introduce and position SAP innovations for Sustainability
pillars such as Circular Economy, Sustainability Reporting and Steering and Climate 21
Accounting
 Drive more sustainable business growth
 Improved compliance with new sustainability
norms
 SDG Initiatives Prioritization
 Satisfy investors who are integrating more
ESG data into their investment decisions
 Manage risks
 Improve productivity of collaborating entities
 Improve decision making by gaining insights
across the Programs
Cross Company
Collaboration
Emerging
Technologies
This solution combines Business Technology Platform workflow with blockchain
services to enable cross-company collaboration and create an audit trail of key
activities linked to program contracts and key dates logged by the program participants.
Key Theme Ventures
Venture
Overview
Venture Value
Proposition
XR
Provide unmatched situational awareness, enhanced perception and hands free SAP
system access in Design to Operate scenarios (e.g. for field technicians) Experience
SAP business processes and implementation options in a virtual business process
showroom
 Decrease in maintenance/service execution
cost
 Less onsite travel for field technicians
 Reduced cost for development of XR apps

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INTERNAL

Thank you.
Kuljit Singh
IMM – Insights & Analytics
Kuljit.singh@sap.com
M: +91 9988297659
Deeksha Nigam
IMM – Insights & Analytics
Deeksha.Nigam@sap.com
M: +91 8884359007

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