May 26, 2023
Welcome back for part three of our Investment Tensions for Legacy vs New Tech series. We’ve already explored two tensions automakers must address as they drive their vehicles and companies into the future. The first was the costs associated with new vehicle architectures and technologies, and the second was funding sources and cost reduction. This leads us to our next tension: uncertainty in timing.
OEMs who wait too long to invest in the latest architectures and BEV technology will be late to market and leave millions in profits on the table for the competition. Those who invest too early will likely sink millions of dollars into being the first mover only to find the market isn’t ready to provide adequate returns. So, when is the right time?
New vehicle architectures bring a vast array of novel computing capabilities. Unfortunately, many OEMs don’t yet see clear paths to increasing revenues and margins from software and connected services. Waiting patiently to realize those avenues could cause them to lose out to proactive competitors. Thus, it would seem better to invest in development now, gain expertise, and lay the foundations that will result in future scalability and cost reductions.
Timing the implementation of downstream revenue opportunities (such as usage based insurance and subscription services) can be planned out. However, determining when customer acceptance and demand will prove highest is a bit trickier. One way to ease this tension is to leverage real-world data to examine customer preferences, trends, and needs. Adopting a connected vehicle product, like Deep Logger, enables the flexible collection of real-world data to provide OEMs with actionable insights based on how owners are using their vehicles.
Another factor that impacts investment timing is the adoption of new regional and international regulations. These regulations impact everything from the physical hardware that impacts vehicle design, to the software housed on the vehicle and data produced by the vehicle. To stay ahead of these regulations, OEMs must invest vast sums to ensure their products’ compliance. They must also understand what the regulations will be, what they impact, or how they must be implemented.
Investing early in enabling technologies, such as OTA update capabilities, enables manufacturers with the ability to react quickly. Thus, when new regulations are passed, automakers with connected vehicle platforms, such as Sibros’ Deep Connected Platform, can leverage their solutions to streamline compliance. Without such technology, adapting all units is not easily accomplished, particularly for larger-scale, legacy OEMs.
Determining the best time to invest in BEVs and software defined vehicle technologies and architectures might be a challenge. But finding a safe, reliable, and scalable connected vehicle platform doesn’t have to be. Learn more about Sibros’ hardware agnostic solution, contact us today.