Tencent recently commissioned tech research and consulting firm Gartner to produce a white paper titled “Coping with New Challenges and Preventing New Risks, Digitalization Helps Car Companies Turn Crisis into Opportunity”. The paper outlines critical changes in the auto industry, the pathway to digital transformation, and why and how technology companies and cloud services are part of the solution for car makers.

The Auto Industry Is Undergoing a Digital Transformation

Massive changes are taking place in the global auto industry. Shifting consumer expectations, increasing regulatory scrutiny, the quest for autonomous driving, and other technological innovations are pushing automakers to rethink their business model and their relationship with customers.

The whole value chain, from research and development to manufacturing, must be re-evaluated through the lens of digitalization to win over new and existing customers and drive growth. Technology companies are now an essential part of the automaking ecosystem along with car and parts manufacturers.

Key to the digital transformation are cloud-based technologies that handle the sector’s unprecedented data needs. To succeed, AI, cloud, big data, consumer connectivity and other capabilities must be integrated, bridging every unit across the automotive industry chain digitally. Only then can brands respond to the evolving market.

Three Trends Upending the Market

1. Cars become greener and more intelligent

In the drive for smart, sustainable vehicles, autonomous driving has become a new industry trend. Electric and other new energy vehicles are growing at scale too in a bid to phase-out fossil fuel-powered cars. Software and computing power are now as important as the hardware and will become the core competitiveness of automobiles. As more countries commit to cut carbon emissions, auto makers are expected to take a leading role in driving sustainability through the products they create.

2. Consumers are in the driver’s seat of change

The digitally-native Generation Z consumer is an influential segment among first-time car buyers in which they rely on online channels and word-of-mouth to make decisions. Car companies must align their marketing strategies to digital touchpoints to directly engage users while creating a flexible digital supply chain.

3. The value of cars extends to after-sales experiences

According to a white paper by consulting firm Deloitte, the automotive aftermarket will account for 55 percent of the full value chain by 2025. This highlights the importance for car companies to invest in offering high quality, personalized after-sales service to improve user experience throughout the vehicle’s whole life cycle in order to build and maintain customer loyalty.

The People-Centric Path to Digital Transformation

Human-centered digitalization means that everything from product design and manufacturing to digital marketing should revolve around users. It’s a new business model that defines the future of the auto industry.

Our white paper showed that a successful, people-centred digital transformation will occur when the entire product and service supply chain is designed by taking the end-user’s perspective into account. To do this, companies should build a digital network that links R&D, design, production, manufacturing, sales, and after-sales, and provide users with global access and closed-loop, full-cycle digital services.

To facilitate digital transformation in the auto industry, a new generation of digital infrastructure is critical. This includes an efficient and stable cloud computing service, a robust data infrastructure, and stringent security measures to boost cyber resilience. Such changes will not happen overnight but companies should take steps to spearhead digital transformation with stakeholders that are critical to facilitate this process, including with parts and components suppliers, auto dealers, service providers and users.

Minimizing Risk Through Product and Enterprise Digitalization

Auto companies can boost their resilience to supply chain disruptions through product digitalization. Enterprise digitalization, underpinned by data-based, modular systems can also optimize the whole supply chain to increase efficiency and promote sustainable growth.

Cloud service providers have become strategic partners to auto companies as they look to integrate their operations with cloud management across the value chain. To facilitate the transition, cloud services must meet enterprise’s needs for:

1. Urgent cloud native and agility requirements;

2. Strict data compliance and security requirements;

3. Deeper integration of technology and business;

4. Flexible and open continuous evolution capabilities; and

5. Autonomous and controllable data asset management.

The digital transformation of car companies will only occur when an intelligent cloud network is in place. This enables the real time delivery of computing power and services efficiently and securely.

R&D and Design Speeds up

Technological changes and fierce market competition have shortened the R&D cycle for new cars to as little as two years. With digital twins becoming the standard to evaluate the full life cycle of a vehicle, manufacturers need to process and evaluate a massive amount of data.

Our white paper found that each autonomous driving test vehicle generates more than 1TB of data per day and that requires specialized storage solutions. In addition, auto companies need sophisticated digital infrastructure to perform large-scale simulations.

Powerful, flexible, low-cost and environmentally friendly solutions can be found with HPC (High-Performance Computing) tools that can be adapted to different types of CAE (computer-aided engineering) simulation software that are now considered essential by car makers. These solutions cut the amount investment needed in R&D and improve efficiency.

The Race to Autonomous Driving

The road to commercialized self-driving cars will be met with several hurdles, such as strict data regulations as well as the need to have superior computing and data storage facilities to support the launch. To get there, cutting-edge technologies such as AI, the Internet of Things and HPC must be integrated to standardized operations.  

Tech companies play a critical role in supporting car companies on their road to autonomous driving through the use of autonomous, scalable hybrid cloud platforms with pluggable network components and modular design.

Tencent’s autonomous driving cloud platform provides a one-stop solution to support auto makers in their research and development on self-driving. The platform provides key capabilities in:

1. Efficient data management and retrieval;

2. Auto labelling of data sets using AI;

3. Automated scenario construction;

4. High-performance storage; and

5. Efficient operation of all R&D aspects of autonomous driving. 

Sales and Marketing Becomes a Two-Way Relationship

Marketing by car makers used to be one-way. However, the rise of digitally savvy consumers has led to a shift to the use of interactive digital marketing solutions that combine paid public traffic,  including e-commerce sites and social media accounts pre-sale, with private traffic sources such as WeChat, mini programs, and a company’s own official website to maintain relationships with customers throughout the product cycle.

By leveraging interactive channels, car makers can establish ongoing connections with customers, creating value for them through targeted marketing and introducing value-added services.

Empowering the Auto Industry to Future-Proof Themselves

The white paper concludes that smart manufacturing partnerships empower the car industry to automate, customize, go green, and flexibly upgrade production lines based on data and AI capabilities.

With the rise of cloud computing that has grown in scale and revolutionized the industry, it is critical for automakers to consider updating their strategy, integrating this new type of infrastructure with their operations in order to keep up with the everchanging industry landscape.