What Does Digital Maturity Look like for the Automotive Industry?

The global automotive industry is among the most complex and technologically advanced and has evolved rapidly over the decades. Digital maturity is the foundation on which automakers integrate innovative features for new vehicles.

However, companies face challenges on the path to automotive digital maturity such as supply chain disruptions, raw material shortages, geopolitical tension, economic uncertainty, trade wars, component shortages, and other challenges that automakers monitor continuously. 

Join us as we explore the challenges facing the automotive industry, and how Supplyframe’s new Maturity Model and Self-assessment can help identify the path forward.

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Is The Automotive Industry Ready For Autonomous Vehicles? 

According to a recent Deloitte study, the automotive industry’s future by 2035 will be characterized by dynamic changes driven by shifts in customer preferences, climate protection, and technological advances. Internal combustion cars will give way to electric cars with more intelligent features. 

However, fully autonomous vehicles are unlikely to hit the streets anytime soon. The full technology suite to enable autonomy is still years away, and many drivers lack confidence in zero-emission vehicles built from ultralight parts. Personalization and the ease of customized comfort solutions will become key conditions for success in the auto market. 

The nascent electric vehicle (EV) auto market is gaining ground on the combustion engine; however, it is nowhere near eclipsing it. One estimate of the 2023 EV share of the US auto market was about 5.7%. A major challenge to the short-term growth rate of EVs is the shortage of engineering talent required to grow the EV market. However, this challenge is a short-term issue and will be addressed in the next few years.

Another challenge for automakers is compliance with environmental sustainability goals. Regulatory compliance requires more sustainable supply chains. There are also opportunities for supply chain sustainability to help reduce carbon footprints. 

Are Automakers Ready to Kickstart Their Digital Transformation? 

The automotive industry is experiencing rapid evolution, impacting both automakers and their supply chain partners. Supplyframe has updated the auto industry’s digital maturity model, providing a roadmap for more robust organizational capabilities. 

The automotive industry is amongst the most technologically advanced industries in the world. It constantly adapts to customer expectations for more sophisticated technology while complying with new government regulations. In 2024, the industry primarily invests in the latest technology to meet customer demand.

However, automotive manufacturers are facing challenging times in four areas: 

Economics: Inflation is increasing the cost of materials and technology, which in turn is increasing vehicle prices. Interest rates for monthly auto loans have also risen, leading some buyers to refinance their loans.

Technology: The auto industry must adapt to new technological services, such as digitization and artificial intelligence (AI).

Environment: The auto industry needs to reduce CO2 emissions caused by the auto manufacturing process and switch from gasoline to alternative fuels such as hydrogen and solar power.

Building on the lessons from a transformative 2023, this outlook delves into the expected developments and strategic adjustments that automotive manufacturers and suppliers might face. Here, we explore anticipated trends, supported by last year’s data, to provide a comprehensive view of what’s to come.

Making Supply Chain Adjustments in 2024

The automotive industry will likely continue experiencing supply chain challenges throughout the year. With lingering delays from the previous year, automakers will likely maintain and expand their diversification strategies and localization of supply chains. 

Learning from the average 10-week delay in parts delivery that negatively impacted auto production in 2023, automakers invest more in local sourcing and nearshoring to safeguard against global disruptions and ensure a more stable supply network. 

The complexity and dependency on global supply chains present significant challenges, requiring a strategic response to evolving global conditions. Adopting lean and agile supply chain strategies helps manufacturers respond to dynamic consumer demand and economic uncertainty. 

One of the automotive industry’s most important objectives in the coming years is to reduce vehicle emissions in compliance with government sustainability and ecological requirements and increase customer demand for greater safety and comfort. 

Automakers are investing in smart factories and other sophisticated manufacturing solutions to remain competitive. They are embracing new technologies and material solutions to offset the limited availability and steadily rising prices of raw materials. However, the automotive industry faces various issues that require flexible adaptation to challenging economic and geopolitical conditions and tightening environmental requirements.

To remain competitive, automakers need to constantly innovate with new technology and electric vehicle (EV) designs. These technologies are also used in a variety of other electronics verticals, putting pressure on the supply of components required to enable new features and designs.

This is difficult given talent shortages that strain teams that need more bandwidth to focus on innovation while maintaining production. It’s all a balancing act. One of the most important challenges the auto industry faces is decarbonization, which will reduce CO2 emissions by using alternative fuels such as green electricity and hydrogen. 

At the end of 2023, the stage was set for applying the stringent Euro 7 standard, which accounts for not only exhaust system emissions but emissions generated during braking and the durability and battery life of electric and hybrid cars. 

As a consequence, automakers need to balance a vehicle’s CO2 emissions and weight. In parallel, technological changes and artificial intelligence (AI) development are leading customers to expect vehicle individualization and greater driving comfort. Of course, just as important in the purchase decision is the experience of using a battery-powered vehicle.

Decreasing Vehicle Weight to Reduce Emissions

A major trend in vehicle design is to reduce the vehicle’s total weight so it complies with the auto industry’s increasingly stringent environmental standards. For most vehicles that run on internal combustion engines, this reduces exhaust. 

Lowering the weight of electric and hybrid cars increases the range and reduces the frequency of charging the battery. The European Union’s emissions requirements also require considering particulate pollution from braking. 

A recent forecast predicts that in 2030, European new car sales will rise by 40%, and Chinese sales will increase by 50%. The European Union’s new standard requires electric and hybrid car manufacturers to have a minimum battery life of 80% up to five years from operation or 100,000 km and 72% after eight years. 

In many cases, the battery life of new cars is increasing and is expected to continue to increase in the coming years. Auto parts manufacturers must adapt production lines, logistics processes, and quality management systems to the new technical and environmental requirements. 

Pressure to Innovate

Automakers must constantly innovate and experiment with new technology and EV designs to remain competitive. This balancing act is difficult given today’s talent shortages that are creating additional strains on design teams that focus on innovation while maintaining production.

High-quality housings for electric batteries and covers for hydrogen tanks can be produced from foamed polypropylene. The EPP foam material is very lightweight and resistant to mechanical damage, chemical damage, or electrical breakdown. As an excellent thermal insulator, it protects sensitive components from extreme temperatures and thus prevents failures and extends their life. Our battery kits include housings, module insulators, and fasteners that successfully replace traditional metal mounting components. 

Challenges of Sound Insulation in Vehicles 

The requirements to reduce vehicle dead weight and increase the proportion of recyclable raw materials are causing manufacturers to use far fewer insulating materials. The thick layers of felt, sponges, and bituminous materials used a dozen years ago have been replaced by small fragments of carpet or thin felt, which can only be found in sensitive areas. 

Meanwhile, effective cabin soundproofing is important in cars with internal combustion engines and electric vehicles. In such vehicles, wheel rolling or wind noise is audible at higher speeds. 

EPP is an excellent soundproofing material, making it an ideal alternative to traditional damping solutions. Its foam structure absorbs sound waves and reduces their reflection. Its trunk linings, door linings, and floor fillings cushion all vibrations, ensuring optimal driving comfort. At the same time, the components produced from nanomaterial are 100% recyclable, complying with the requirements of the circular economy. 

How Does Your Organization Compare to Other Automakers?

Supplyframe’s new DSI Digital Maturity Model ranks organizations on a 5-level scale and helps today’s industry leaders develop their roadmap forward. According to our recent industry survey, automotive digital maturity is only at level 1.

Download the full report to learn more about the survey and maturity model, and click below to take our new self-assessment and recieve your own unique score!