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5G cars and the mobility technology ecosystem

The current whirlwind of disruptions buffeting the automotive world have created a massive value-chain disconnect. When viewed through the lens of tomorrow’s product requirements, one thing becomes clear: you can’t easily get there from here.

McKinsey has identified four major disruptions facing the industry today (Exhibit 1). Collectively known as “ACES”—for autonomous vehicles, connected cars, electrification, and shared mobility—these trends will ultimately drive a change in the way the automotive industry develops cars (see sidebar “ACES: The four trends shaping tomorrow’s cars” for more detail).

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By 2030, though, the ACES will dominate, and we’ll see developments that may be as profound as those that emerged when the automobile was invented. The characteristics of mobility at the second great inflection point will be significantly, not just marginally, better. The industry’s focus will move away from past differentiators, such as powertrains, and concentrate on the car’s embryonic technology stack—a term borrowed from the technology industry that describes the layers of software and hardware that comprise a vehicle’s operating system. As a result, the industry will shift from linear value chains with OEMs at the end of the assembly line to networked ecosystems with multiple players interacting with each other and the end consumer. New customer interfaces and services, as well as a dramatically different competitive landscape in which tech giants, start-ups, and OEMs mix and mingle, are just a few of the shifts in store. Radical improvements in cost effectiveness, convenience, experience, safety, and environmental impact will, taken together, disrupt myriad business models on an almost inconceivable scale.

Furthermore, enabling the new use cases the four ACES trends promise will require significant investments in new capabilities, such as network infrastructure, data-management platforms, and edge-computing power. This article will explore the underlying technological challenges facing the automotive industry in the ACES era and describe the roles different players can take in shaping an ecosystem to solve these challenges. We will also discuss why collaboration and partnerships across traditional industry boundaries will become more important than ever.

The new automotive technology stack

The car of the future will feature lots of high technology, and in-vehicle systems as represented by connectivity comprise only one layer in the technology stack required to enable ACES. Many technical challenges remain across the stack, including many interdependencies (Exhibit 2). A review of some of the key issues follows.

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In-vehicle and roadside technology

We see a continuing trend to integrate car functions and related electronic control units (ECUs) into central domain controllers, with premium OEMs leading the technological push toward more integrated and connected infotainment systems. Moreover, the number of applications has increased significantly as the industry moves toward a service-oriented architecture with interdependent services.

We have also noted a significant spike in the number of in-vehicle sensors. The next two to three vehicle generations will feature sensors with similar functionalities to ensure functional safety through redundancy. In the long term, however, some OEMs might opt for more intelligent sensor solutions to reduce the total number of sensors and costs. Some sensors will also become more intelligent as computing power migrates from ECUs. In the future, such sensors can preprocess data for simple calculations, trigger actuators directly, and inform ECUs retrospectively about their actions.

In addition to making the car itself more connected, stakeholders need to build roads and infrastructure capable of supporting the car of the future. We envision a multitude of connected “devices” along the roadside, including cameras to monitor traffic situations, sensors to gauge temperature and driving conditions, temporary roadwork signs, and so on. All these devices will have to communicate—with cars as well as central intelligent traffic-management systems. While some of these devices will have a fiber connection and a reliable power source, many will rely on wireless links and battery power.

Telecom operators have a role to play to build networks with wide coverage and low energy requirements, based on narrowband Internet of Things course, Cat M1, and…

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