The Automobile Revolution

The automotive industry is undergoing a profound transformation with the arrival of new types of vehicles, services, requirements and uses that break away from the traditional model of cars. The very nature of mobility is changing. User behavior is shifting; social symbols connected to vehicle prestige and journey priorities are not the same. The aspiration attached to private cars is also in the process of changing. A look back at the history of the automobile reveals how our relationship to the car object is altering. It also reveals the need for a different approach to the current concept of mobility. New services (car-sharing, carpooling, self-service cars) are making a significant contribution to the emergence of a new ecosystem. The resulting industrial, economic and ecological situation involves all of the traditional stakeholders in the sector, i.e. car manufacturers, parts manufacturers, recyclers, energy and fuel suppliers, as well as market newcomers like engineering, computing and communications companies. In this new mobility ecosystem, manufacturers are changing their strategies. They find themselves obliged to reinvent an entire industrial model and work with companies far removed from their core business. Are these strategies sufficient to respond to the economic transformations affecting the automotive industry? Is this mobility transformation the basis of a paradigm shift? And lastly, how can public authorities accompany this technological and societal rupture and establish mobility that is ecological, responsible and more shared?

Meeting the need for transportation when the population will reach nine billion people in 2050 will be challenging for our societies: Driven by external costs like global warming, noise or congestions and supported by new policies and growing customer awareness, the current mobility paradigm based on cheap fossil fuel energy and high CO₂ exhausts comes to its social, economic and environmental limits. Innovation can provide value propositions to meet the mobility needs of future generation. Innovation in products will foster new energy efficient, low CO₂ emitting electric vehicles. Innovation in services, triggered by the net economy, will simplify travels, improve the value of time, the use of assets like cars, bikes, parking, taxis, plane etc. while driving or parking and emphasise environmental aspects. Customers can in this way cut costs, extend the mobility means, meet people etc. Bundling mobility solutions will further facilitate access to seamless mobility experience. Jugaad innovation and reverse innovation finally can meet the needs of developing countries and subsequently of developed countries and provide methods on how to do more with less. The value propositions of mobility solutions will therefore deeply impact the future: new raw materials, components, vehicles and services will emerge; new players will reshape the value chain, capture competitors’ customers and customer value, thus challenging traditional OEM’s with new products and services; even customer will be part of the value chain and become prosumer (either consumer or producer, as the case may be). Simultaneously sustainable mobility will rise and propose an answer to the current systemic challenges and externalities our societies are facing.

This chapter focuses on the role of governments in the transformation of the automotive industry into the ecosystem of sustainable mobility 2.0 and how this transformation is taking place by putting governments as key players in mobility challenges, endorsed with a new structuring role. We shall show how public policies help to move from the old mobility paradigm based on cars proliferation associated with multiple nuisances to a new paradigm embracing new needs and offers designing mobility in a sustainable environment. The States, the European community as well as local authorities are implementing urban mobility policies, leveraged either by incentives (such as inter-modality and tax reduction) or coercion (such as speed limits, urban tolls), imposing global guidelines aiming at reducing noise or pollution.

Faced with a drastically modified social and economic context and a highly competitive global market, the automotive industry must redefine its strategy but is struggling to find the right positioning. While cooperation with traditional players is necessary, carmakers find themselves obliged to form alliances with new entrants, often far removed from their core business. The automotive sector currently faces numerous challenges, i.e. master and develop new technologies to respond to new usages, and ensure steady production volumes to make their activity long-lasting, while adapting to an uncertain, globalized economic world. In this situation, an analysis of carmaker strategies should consider the mobility ecosystem, which results in new partnership approaches. The scope of partnerships is widening, the automotive industry’s former production models are no longer suitable and new economic models are emerging. Car manufacturers’ traditional strategic choices, fluctuating between competition and cooperation, are already outmoded because the automotive sector needs to anticipate a future ecosystem whose epicenter will be the intelligent and autonomous car. In this respect, the challenge of capturing value remains crucial and worrisome, in particular when most profits are made from mobility services. A reorganization of all players in the industry is currently taking place, and one of the features of this transformation is the emergence of coopetition strategies, presented in this chapter. This is a new era in which value creation fits not just into the relationship dynamics between partners in innovation ecosystems, but also into a system jointly built with other allies, from outside the automotive industry. Will this interweaving of companies be profitable for all in the long run?

Sociodemographics are transforming the world into an ‘archipelago of cities’, with over 70 % of the world’s population concentrated in urban environments by 2050. This trend brings as many threats (impact of pollution on public health, economic losses caused by congestion) as perspectives for new urban organizations. In this context, ‘smart cities’ are emerging. Although heterogeneous, smart cities have in common the optimization of data management to improve urban services, i.e. transport, energy, waste, habitat, health, education and culture. The issue of transportation crosses over all aspects of smart cities, whether in terms of urban design and social organization (more compact towns and distance work to reduce flows), or organizing new ways to manage vehicle capacities and infrastructure (shared fleets, car sharing, urban charging, road lane management), combined with the mid- or long-term dissemination of incremental innovations (electric vehicles) or disruptive innovations (autonomous vehicles). For the traditional automobile ecosystem (car and equipment manufacturers, etc.), the emergence of smart cities constitutes a potentially disruptive challenge with the calling into question of combustion cars in towns, new competition with other industrial players (information technology, community services, utilities, etc.) and the diversification of economic models (reliance on big data, less ownership, more service-rich).

There is a need to reflect on the autonomous vehicle, a newly emerging type of vehicle, from a historical perspective in terms of the automotive industry as a whole. Rapid and robust technological evolution has made it a tangible concept—taking it from the realm of fiction, into reality. But that’s not all. The combined awareness of energy issues and extreme pollution within cities have also participated towards this emergence. Regulations have imposed a de facto restriction of vehicles in cities and the relationship between the user and the vehicle have changed and will continue to change. In major urban centers, the concept of ownership of the vehicle replaces its use. As the relationship to everyday objects turned into customary contract—with the mobile phone, the laptop computer, the idea of becoming a single user of a means of transport is highly seductive; especially in view of the explosion of new transportation choices and the emergence of new business models. Desiring to extend their influence to new clienteles, traditional manufacturers are preparing for the future by investing heavily in the autonomous vehicle. In the US, several states have already authorized the use of vehicles without drivers, as have circuits in Europe. With onboard communications technology, the “smart” car becomes the vehicle of the future, allowing vehicles to communicate and paves the way for a radically new relationship between the user and the mobile object on wheels. Unquestionably, this revolution in mobility poses questions. Future users find themselves ready to adopt this new way of mobility while obstacles both regulatory and technological and social remain. Can manufacturers compete with their new competitors (Google, Tesla, Uber) desperate to meet the challenge of the driverless vehicle and impose new business model?

The lithium-ion battery technology as the today’s best available technology is a key in accompanying vehicles electrification. Its end-of-life recovery is lever in overcoming technical challenges towards electromobility deployment, such as battery cost, environmental impact, the availability of constituent materials and the mandatory recycling rate. In this chapter, we focus on economic aspects, in order to assess the end-of-life recovery impact: we analyze the end-of-life cost evolution of lithium-ion batteries to determine whether it will be a source of cost or profit for car manufacturers. We define and analyze two recovery options: on the one hand, simply recycling which is mandatory by regulation and, on the other hand, repurposing for reuse in many second life applications (from residence related applications to energy storage and grid stabilization). To account for the complexity and the long-term horizon of our study (2030), we combine the use of System Dynamics with the Stanford Research Institute Matrix for building scenarios that mix relevant factors such as the electric vehicle market and the proportion of repurposing for reuse. Finally we show that repurposing could lower the battery’s initial cost—under certain conditions regarding the future battery price and the repurposing cost—where recycling might increase it.

A modular framework is used to analyze how Grid Integrated Vehicles (GIVs), i.e. bi-directional plug-in electric vehicles that are able to modulate their charging rate and have bi-directional capabilities, could be managed efficiently to deliver grid services for transmission operators and conversely, how these new services could be set aside by the design of the current rules in some regions. Based on a detailed analysis of the rules implemented by some representative TSOs, we discern two modules that gather the essential rules for GIV development: the rules towards aggregation of EVs, and the rules defining the payment scheme of the services provided by GIVs. We deduce an optimal combination among these rules that could define the ideal organization for GIVs. Finally, we confront this ideal TSO organization with the European guidelines under construction.

At the Universal Exhibition in 1889, the first steam car was presented by Serpollet Peugeot. This amazing invention has had considerable resonance throughout society. It resulted in a total upheaval of individuals over space and time, a new era of freedom, of pleasure and a luxury symbol. The automotive industry was soon after born as one of the most successful economic and industrial sectors of the twentieth century. Its growth showed us that the transport of people and goods can be thought differently. And the car makes us dream.