Automotive & Commercial Vehicles

The MADE (Shared Mobility, Autonomous Driving, Digitalization and Electrification) continue to drive disruption in the automotive industry. Especially Electrification has seen dramatic acceleration over the last year with whole countries, states or cities announcing bans of internal combustion engines just one or two product cycles away and new pure play BEV OEMs enjoying staggering valuations, often surpassing many legacy players. While the exuberance has dissipated to some extend the main challenge for legacy automotive manufacturers persists – unlike the new start-ups they have to deliver expected profits every quarter, while future proofing and transforming today's core business, and while innovating and building the future business model enabling tomorrows profits. We support legacy OEMs navigating this uncharted water and develop strategies to optimize and future-proof today's core, while ensuring long-term business viability and future growth.

Demographic, societal, and technology trends are driving change in customer expectations regarding product specification/features, customer experience or ownership models. Both new and legacy automotive manufacturers have (re-)define the brand positioning, key differentiation elements and how this translates into products, services, and the overall customer experience. We support new start-up and legacy OEMs in defining brand and products/services strategies that ensure sustainable differentiation from competition and meet evolving customer expectations.

While technological change is rapidly disrupting traditional supplier business models, like putting broad swath of ICE-related products under immense pressure from capital markets or breaking apart software and hardware sourcing in automotive electronics, it is also creating vast opportunities. Automotive software is a great example of such opportunities where suppliers now have a chance to build new product and service portfolios and tap into business models with potentially much higher profitability than traditional "software & hardware bundle". Similarly, the electrification trend gives suppliers an opportunity to own a larger share of traditionally OEM-dominated powertrain systems. Another example is the rapid growth in vehicle connectivity enabling new product-as-a-service and function-on-demand models where suppliers can participate in value creation along with the OEMs.

The transformation of the commercial vehicle and off-highway market is in full swing. Electrification, fuel cell, autonomy, connectivity, etc. all combine to drive an unprecedented change in capabilities, technologies, processes and business models for OEMs and suppliers alike. New and innovative ways to service customers will move players from a pure product to a product and service play. Agility and the capability to integrate with partner ecosystems will be key differentiators going forward. We help our clients in charting this uncertain future, develop robust strategies and drive operating model transformations to ensure future success.

Software-based services such as automated driving and in-vehicle digital immersion enabling seamless journeys between physical and digital worlds become more important differentiators for OEMs than the car as such and create new revenue streams. Centralized zonal hardware electronic architectures using high performance computers HPCs ) are the basis for an micro-services software architecture as they enable these services in a scalable and upgradable way across domains They reduce costs with further standardization of HW components and the use of open-source software code. The change towards the software-defined vehicle (SDV) requires a full transformation of the industry – a journey we support:

• With deep technology know-how, we help OEMs to redefine their organization, processes and supplier relationships.
• While OEMs develop differentiating elements in-house, semiconductor players integrate upstream, tech hyper-scalers enter automotive and E2MS-giants drive commoditized hardware costs to significant lower levels, making traditional E/E-supplier business models obsolete. We help suppliers to define new business-models to sell software, IP and services.
• Innovative tech players enter the space – we help them defining their go-to-market strategies and acquiring fresh capital explaining their technology and competitive positioning to prospective investors.
• Leveraging our partners, we optimize software-development and implement digital tools to measure SW development efficiency.

Innovations in battery technology made BEVs the standard solution to comply with increasing pressure to reduce CO2 emissions. As a result, the market for battery cells increases 10-fold in the next decade. Using the most economic battery cells and packs, produced in a sustainable way, is a prerequisite for OEMs to offer competitive vehicles. The battery supply chain becomes the Achilles heel that could jeopardize the OEMs business model around EVs. Upstream partnerships, and potentially integration (down to mining level) to secure supply and the optimization of total costs along the supply chain becomes crucial to survive. The same is true for cell manufacturers to provide full solutions at stable prices to smaller OEMs. To avoid being pushed in a toller role, CAM suppliers need strong client cooperation and access to raw material at stable prices. Closing the loop with battery recycling helps to ease the supply situation and opens opportunities for additional value streams. We support

• OEMs in their supply chain- / partnering and battery cost reduction strategies,
• Cell suppliers in financing their expansion, international localization strategies, ramping-up new plants and optimizing their processes,
• Automotive and other players to position themselves in the pack business, and
• CAM suppliers and mining companies in market entry, cooperation and pricing strategies.

The production and supply chain structures for many automotive OEMs stem from a time when markets strongly favored certain products, and production of favored vehicle types were allocated locally.

Today‘s market is different. Demand structures have shifted and there is much greater product variety. As a result, automotive production has become a highly complex global operation. Parts and products are shipped across the globe to meet rapidly changing demands as part of highly efficient just-in-time supply chains. But all this transport comes at a growing logistical cost and vulnerability of transport chains. Additionally, sustainability and emissions targets now play a vital role in global production networks.

So, how should automotive players react? To tackle this challenge, Roland Berger developed a framework to analyze the key pillars of global production networks and the current setup of OEMs and suppliers. Our key takeaways and recommendations will bring new perspectives into the discussion.