In five years, 60 percent of the added value in cars will come from software.”

In five years, 60 percent of the added value in cars will come from software.”

The automotive industry is experiencing a transformation; the big trends are e-mobility, connectivity and automated driving, and possibly also alternative usage models such as car subscriptions. How do you assess developments and does the corona crisis have an impact?

Claus Gruber:The industry is indeed undergoing a transformation. In this context, one often speaks of four essential digital drivers, which are called ““CASE” can be abbreviated. CASE stands for Connected Car, autonomous driving, shared mobility and electromobility, i.e. for the core topics of digitalization in the automotive industry. As in almost all areas, COVID-19 also had an impact on the digitalization of the automotive industry. At the start of the pandemic, car sales plummeted. In response, some projects were stopped or slowed down. But this has essentially hit the non-digital projects. Some of the digital topics were even accelerated by COVID-19. 

The chip shortage is currently causing concern in the industry. How did this come about and what does it mean specifically?

Peter Trögel:According to current industry estimates, around one to two million cars worldwide cannot be produced this year due to a lack of semiconductors. These delivery bottlenecks have, among other things, the following reason: In the wake of the Corona crisis, cars sold less well, which is why car manufacturers' suppliers ordered fewer chips. The semiconductor manufacturers then converted their production facilities and increasingly supplied other industries - especially those that had high customer demand despite Corona, such as the consumer electronics sector. After the first lockdown in 2020, customer demand recovered strongly, driven in particular by the Chinese market. The auto industry then adjusted its planning. However, the chip industry was unable to make the necessary increase in capacity in the short term. You have to expect a lead time of three to six months. That's exactly what we're still feeling right now. But things will get better in the second half of the year.

Of course, more and more chips are needed. The CASE area mentioned is the growth area in the auto industry. What does this mean for value creation?

Gruber:There is clearly a shift taking place here. Not so long ago, the proportion of software in cars was still very small, but in the medium term - I estimate around five years - around 60 percent of the value of a car will be accounted for by the software area. You will be able to make less money with hardware, but there will be more and more lucrative services in the area of ​​software, including regular software updates in the areas of media, but also autonomous driving, comfort and health

Can you imagine that cars will one day be free and that monetization – similar to smartphones – will only take place via connected services?

Gruber:. I don't think that will be the rule. Because the price or value of a car is much higher than that of a cell phone.

With software or electric motors and batteries for electric vehicles, the growth areas are precisely those that are not exactly among the core competencies of established car manufacturers and their suppliers. Will corporations fall by the wayside and new players emerge?

Gruber:Software expertise must be further developed in the automotive industry. Those who do not transform will have a difficult time in the future! There are some examples from other industries in which even large companies have failed due to digital transformation. And yes, new players will also emerge, and not just Tesla. Companies like Apple and Google are already pushing into cars.

Trögel:But what is particularly interesting for Austria with its medium-sized structure and many highly specialized suppliers: In contrast to hardware, which is complex to produce and is usually only lucrative in large quantities, the software sector also opens up opportunities for small companies. All of this makes the automotive industry extremely exciting and interesting.

What do all of these developments mean for workshops? Will the classic screwdriver soon no longer be needed?

Gruber:Of course, development is moving towards software. This has already happened a long time ago, if you just think about various diagnostic devices and software that reads error memories in the systems. All of this will continue to grow. But the classic mechanical activities will also continue to exist.

However, the workshop business becomes more difficult when there are more and more assistance systems and many maintenance tasks such as oil changes are no longer necessary for electric cars...

Trögel: Here too you have to differentiate. There will probably be fewer serious accidents in the future simply because of the increased safety features, but the minor damage in city traffic will remain. Electric cars need other services, for example in the area of ​​batteries. On the other hand, one has to say: There will also be volume models in the futureover-the-top–air-Get updates, completely independent of workshops. But fundamentally, what applies to industry also applies to workshops: transformation also opens up opportunities. New business areas are opening up.

Like for example?

Gruber:For example, through car sharing there will be a greater need for maintenance, preparation and cleaning of vehicles.

Speaking of sharing: So far, relevant ventures, such as joint ventures between large car companies, have developed rather disappointingly. Isn't that the end all be all?

Gruber:The business cases were not yet what had been hoped for. But that will come along with the development of autonomous driving. Then the cars can drive to the people, the utilization of the vehicles is increased and the business is therefore more profitable. You can then also operate a little outside of the cities; car sharing currently only works across the board in the inner cities of larger metropolises.