3. Industry platforms II
A separate post to discuss a quite different sort of platform, the car platform. It has been used by the car manufacturing industry for over 50 years now as a way to decrease the cost of production. The idea is to have a common base: floor pan, drivetrain, suspensions and axles, and to build on that different cars. The customer will see, choose and pay on the bases of what is built on the platform. Indeed, most customers, and users, will not even realise that their Cadillac has exactly the same “platform” as a much cheaper Chevrolet. That is the beauty for a car manufacturer: decreasing cost and decoupling them from the price the market is willing to pay.
In the beginning the platform was designed to be used by a specific car manufacturer but since the decoupling was so good several manufacturers agreed to share the same platform, to further decrease cost.
Now, I guess you may wonder why I should be mentioning something that is rooted in the classical “old-time” industry, what could the relation be with the present industry evolution. Good question. As a matter of fact the car in this last 60 years has evolved dramatically, more in terms of production than in terms of end result (although it is a perceived fact that today’s cars are way more performant, energy savvy, safer than their 60 years ago relatives).
Sure, robotisation in the assembly line is now an accomplished fact as is the computer design of cars and computer simulation of their performance. Even more important, the whole supply and delivery chain is now computer controlled and many of the car’s functionality are software based.
Over these decades cars have become more and more computers with 4 wheels. Today the cost of a car is unbalanced towards the software and electronics, both in terms of design as well as in terms of manufacturing. The shift towards the transformation of cars from product to services as started and this is part of the digital transformation of the industry.
However, most remains to be done. The software in our cars is a collection, mostly uncoordinated, of software designed and produced by different companies with plenty of duplication. An average car you buy today may have over 100 million lines of code and they are expected to double, treble, in the next decade. These lines of code are distributed over 30-50, sometimes more in top of the line cars, ECUs (Electronic Control Units) communicating across CANs (Controlled Area Networks, note the “s” plural for networks). Now if 100 million lines of code seem many, consider that an air-fighter plane like the F-22 has less than 2 million lines of code and the newest Boeing 787 has “just” 14 million lines of code. In comparison the number of lines of code in a car become even more staggering,
Is it because cars are more complex than a Boeing 787? No it is because cars are not an integrated system, they are an assembly of many systems. Rather than having a single software you end up adding a variety of softwares and your number of lines of code skyrocket.
Car industry has evolved linearly over these decades but now it is facing a revolution, actually a double revolution. On the one hand electric motors will be replacing internal combustion engines and on the other autonomous driving systems will be replacing the driver. Both revolution will occur over the next two decades.
As shown in the first graphics in 2029/2030 the car industry expects to sell 40 million electric cars, that is 1 car out of 3 will be an electric car (assuming 60 million cars sold per year in that period – we reached a peak in 2016 with 72 millions cars sold -excluding commercial vehicles – and over the last 3 years we have seen a reduction in sales with a small but growing erosion created by electric cars sale) . In the following decade the impact of electric cars will be significant on today’s car manufacturers and on their manufacturing processes. An electric car requires different kind of labour skills and it is even more apt to automated production and assembly than conventional cars. Looming job reduction is already generating concern in Unions in the US. Electrical vehicles will rely even more on software for their management.
The revolution in driving (autonomous driving) is flanking the electric cars revolution and it will lead to an even more radical change in the architecture of the vehicle. More and more software will be involved but, most likely future cars will have fewer lines of code than today’s cars because their software will be designed top down as an integrated system.
Both evolutions/revolutions will give rise to new platforms, this time oriented to support software creation and integration. Here we are going to see the digital transformation taking full effect, also in its business implication leading to the creation of an ecosystem of (software) features providers.
There are already several companies offering software for connected cars, there is an initiative for a car operating system (Automotive Grade Linux) and a few platforms are emerging in the area of self driving cars.
Additionally 4 companies, Apple, BlackBerry, Ford and Google are working (and delivering) platforms to create and host smart cars applications.