Analyst Insight: Consider the terrain. Mother Earth is calling the shots. Government leaders, globally, are tasked to pave the way to a sustainable future. Simultaneously, widespread digitization unlocks exponential value for consumers and enterprises. These two phenomena combine to offer the chance for ARCS — an autonomous, renewable, connected and shared future for the automotive business network. The future will see a transformation from a product-centric to a consumer-centric ecosystem. With this shift, an omnichannel “phygital” network is unleashing new products and business models.

Climbing to the pole position in this reincarnation, organizations are honing-in on their value proposition. From the ARCS perspective, we are starting to see leaders, challengers, visionaries, and niche players stand out, based on their completeness of vision and ability to execute. Leaders like Tesla stormed into market by showing the art of the possible with ARC capabilities. They ruled in the realms of product innovation and consumer orientation, and are now focusing on achieving operational efficiency. 

Visionaries like Rivian have started capturing mindshare with product innovation in the adventure category, and are starting to unleash a distribution strategy to advance consumer orientation. Challengers like Ford and GM are focusing on the mass market, and are differentiating on operational efficiency by achieving economies of scale — leveraging their large manufacturing and distribution network. There is a niche segment of flying taxis and electric vertical take-off and landing (eVTOL) aircraft that are rethinking the consumer experience and sustainability; but we are yet to see their reach in vision and execution.

Organizations can improve their positioning as leaders in the following ways. On the consumer market front, they can create behavior-shaping one-stop-shop experiences with their products and personalized digital services. A differentiation built on such innovation will drive new consumer acquisition and loyalty. 

On the supply chain front, in times plagued with extreme uncertainty due to regional lockdowns, geopolitical tensions, interest rate fluctuation and fickle consumer behavior, organizations must employ strategies to assure supply, and guarantee demand fulfillment. They should:

• Stop thinking and acting as individual organizations and start thinking about themselves as the Keiretsu (business partner ecosystem), by cross-investing vertically and horizontally.
• Expand the Keiretsu controllably, both in physical and digital ways, simultaneously and keep digital collaboration as a forethought.
• Move from total cost of ownership to total value of ownership, for the Keiretsu to develop ecosystems’ IQ and assurance of supply.
• Promote localization of manufacturing across major markets to ensure diversity, equity, and inclusion in global growth.
• Focus on creating an ecosystem knowledge graph (EKG) including their products, services, and supply network, enabled by internet of things.

The Winds of Change. The tailwinds for ARCS adoption in the automotive industry, comes from improving awareness, desire, knowledge, ability and reinforcement (ADKAR) scores of consumers around digitization and sustainability, which in turn provides return-on-investment increases for ARCS-based investments by the ecosystem. In addition, government investments through policies like the CHIPS Act are promising strategies for supply chain resilience.

Likewise, headwinds and hyper-centralization of suppliers in limited regions will present bottlenecks for critical parts availability. Increasing mining of minerals like lithium, cobalt, and manganese to support critical part manufacturing like batteries present sustainability challenges. Finally, the telecom infrastructure supporting ARCS capabilities faces higher cybersecurity risks.

Outlook: In the long run, the focus on renewable business practices will drive investments in carbon-neutral transportation options. The transportation, parking and re-fueling infrastructure in cities of the future will evolve to support renewable and shared mobility. The increase in data from IoT enabled devices will advance Quantum Computing and Cybersecurity technologies to ensure secure delivery of digital services on the go, and entry into the Autoverse!