How Will Autonomous Vehicles Change the OEM Industry?

Autonomous Vehicles (AVs) mark an immense transformation for both the consumer driving experience and for the automotive industry as a whole. We are rapidly approaching a new digital era where manual operation will soon be surpassed by self-driving capabilities. The vision of enhanced personal mobility and safer roadways is quickly becoming a reality, and Original Equipment Manufacturers (OEM) will need to stay up to date on the latest advancements in regulations, industry partnerships and technology. This blog explores the question, “How will autonomous vehicles change the OEM industry?”

AV Regulations Mean Increased Spending for OEMs

As autonomous vehicles rapidly move closer to being a normal part our public roadways, the U.S. Department of Transportation, in conjunction with National Highway Traffic Safety Association (NHTSA), has established the U.S. Department of Transportation's Federal Automated Vehicles Policy. This regulatory framework will become the official blueprint for guiding OEMs on how to safely and legally design, develop, test, and deploy AV technology for public use. In addition to outlining the best practices for OEMs to follow during the AV pre-deployment design, development, and testing phases, the policy discusses the current regulatory tools at NHTSA’s disposal for enforcing OEMs to abide by these guidelines.

The Federal Automated Vehicles Policy also details the Society of Automotive Engineers’ (SAE) International classification system for levels of automation, which will require OEMs to segment each of their autonomous vehicle systems from 0 (i.e. the system can perform no driving tasks autonomously under any conditions a human driver could perform them) to 5 (i.e. the system can perform all driving tasks autonomously under any conditions a human driver could perform them).

These regulations and guidelines will likely result in OEMs investing a considerable amount more into development and maintenance for their AV systems and vehicles, significantly increasing operating costs.

How AVs Will Change the Way OEMs Strategically Operate

Autonomous Vehicles will change the ways that organizations- even entire industries- do business with one another. As society moves towards digitization and autonomization, the strategic composition of the automotive industry is sure to be reconstructed as well.

Telecommunications and tech companies will begin to play a larger role in the design, development, and testing processes, leveraging their technology or infrastructure with OEMs to create safe, forward-thinking AV systems. This can already be seen in the recent partnership between Delphi, the automotive software-developing titan, and Mobileye, an Israeli based emerging leader in computer vision systems. At this year’s CES, an annual global consumer electronics and tech tradeshow, the firms will conduct automated driving’s “most complex, real world demonstration”, illustrating the evolving landscape of relationships within the automotive industry.

As the automotive industry is revolutionized by new strategic cross-industry partnerships, long-standing arrangements between OEMs and automakers may need to be revisited, either to be improved or renegotiated altogether. This puts the impetus on OEMs - as well as on the entire supply chain, from transportation to remanufacturing - to provide the highest quality service in order to remain relevant.

As more stringent regulations and compliance requirements are introduced along with more serious consequences for violations, new partnerships will become even more critical strategic areas for OEM businesses to consider. Only the most competent, focused, and customer-centric organizations will succeed.

OEMs Must be Dedicated to Developing and Testing Safe AV Technology

One of the most crucial implications to consider as a result of autonomous vehicle technology is the effect it will have on OEM liability.

Imagine this scenario: an OEM classifies an AV system as Level 5 under the SAE International guidelines. A driver takes his AV on a ski trip to the mountains, and, while driving, skids across black ice, getting into a fatal accident. It is discovered that the AV software was not thoroughly tested under these specific conditions, because the OEM had not expected the car to be driven on black ice. Because the system was classified, however, as being Level 5 (i.e. completely autonomous), and expected to be able to perform all driving tasks under any conditions, the OEM is held liable for the driver’s death, and, in addition to being forced to pay out a large settlement, is critically chastised by the public.

In the near future, this scenario may seem less like a fantasy, as AVs and AV technology become more common. The ubiquity of autonomous vehicles will not only place additional accountability on OEMs to properly and expertly classify their AV systems, but also result in OEMs investing a substantial amount into testing, so that the software fits the diverse needs of every type of driver from millennials to the elderly.

What AVs Mean for the Rest of an OEM’s Value Chain

As Autonomous Vehicles and their corresponding technology revolutionize the ways OEMs and other stakeholders operate within the automotive industry, remanufacturing centers, too, will need to adapt to the changes.

Remanufacturing centers must look for new opportunities to provide the best quality repair services in order to remain an integral part of an OEM’s value chain. This may mean focusing on newer technologies being implemented in cars, such as radar, lidar, sonar, and Wi-Fi technology.