Connecting the Unconnected in the Automotive Industry Four Ecosystems that are Reshaping Automotive Industry Collaborations

By Hervé Legenvre and Erkko Autio

Connectivity is a defining feature of digitalisation. As companies increase their use of digital technologies in their products and processes, digitalisation will ensure that, ultimately, all economic activities are interconnected, thereby enabling companies to innovate in more systemic ways. Many industries are not there yet and, in many sectors, data and software remain largely trapped within isolated islands of machinery, products, and companies. To harness the full potential of digitalisation, new forms of collaboration are needed where non-profit foundations orchestrate data and innovation ecosystems to the advantage of industry participants. In this article, we describe four such non-profit foundations and explain why they are expected to play an important role in shaping the future of the automotive industry.

For decades, automotive manufacturers have relied on complex networks of suppliers to solve technical challenges, innovate components, and coordinate supply chains. While it’s good for designing, selling, and servicing cars, this pipeline logic now appears inflexible and wasteful, as innovation is slow and incremental, and the resulting value chain lacks circularity. Today, however, digitalisation is beginning to rewrite the rules of innovation in the automotive industry. New automotive entrants such as Tesla are ‘born digital’ and adopt a much more horizontal and open approach to organising their business activities. Companies like Tesla interact with their clients directly through digital channels, and they experiment with innovations such as subscription business models. They also favour vertical integration to cut though the complexity of the industry. This unorthodox competition is now challenging traditional OEM manufacturers to adopt new, more transparent approaches to collaboration, something they aren’t used to. With advances in digitalisation, innovation in the automotive industry is no longer a solo game or a two-party collaboration where everyone concentrates on their own process and products. Advances in digitalisation facilitate more open and flexible multi-party collaborations and the emergence of industry-level ecosystems. These ecosystems enable the tracking of the carbon footprint of vehicles, they drive circularity through more effective refurbishment and recycling of car parts, they enable digital twins that support product design, transform supply chains and after-market activities, and they provide the software foundations for electrified, autonomous, and connected vehicles. These transformations are made possible by holistic industry-wide initiatives that build new standards, new systems, and new tools that enable the creation of shared data and shared code, and that connect corporations together. We identified four non-profit organisations that, in driving these changes, orchestrate ecosystems of automotive players and play a significant role in delivering the digital future of the automotive industry.

Manufacturing: the Open Manufacturing Platform and the Industrial Digital Twins Association

The Open Manufacturing Platform (OMP) brought together manufacturing companies and software providers so they can enable smart manufacturing capabilities. This organisation was established as part of the Linux Foundation in 2019 and its key projects were transferred to the Eclipse Foundation early 2023. The Open Manufacturing Platform projects are available not only to members of OMP, but to all industry players. Although a global alliance, it has attracted strong participation from leading German automotive companies such as BMW, ZF, Robert Bosch, and Schaeffler. The equipment and digital tools acquired by automotive manufacturers are typically proprietary solutions, which makes it difficult to integrate data from different pieces of machinery in a common cloud platform. Data ends up trapped locally and can only be accessed with specific software. This data insulation inhibited large-scale analysis and systemic improvements. By making every piece of data accessible in a shared cloud platform, frameworks and tools developed on the OMP allow the dots to be connected across entire factories and beyond. For instance, as a defect is identified by a client, it will increasingly be possible to rapidly track the sequence of events along the supply chain that surrounded the defective part. Digital twins of a production environment can be created to train employees, while other digital twins can help predict when and where unwanted events might occur. The Open Manufacturing Platform drive the development of new industry standards thanks to open source reference architectures and common data models.

The Industrial Digital Twins Association (IDTA) shares some of the goals of OMP. Digital twins are digital replicas of physical industrial equipment and products. They can be used to deliver multiple use cases, to simulate and optimise real-world systems. IDTA is a member-based organisation that aims to help companies integrate data across different systems and assets through the implementation of open standards and the development of open-source software. IDTA brings together industrial and technology companies to advance these developments.
Collaborative developments such as OMP and IDTA reduce obstacles to the implementation of integrated smart manufacturing solutions such as digital twins. They create the necessary foundations to build platforms that are independent of any proprietary provider and eliminate data silos, thus helping move beyond local optimisation to address industry-level challenges such as sustainability and circular economy.

Data sharing along automotive supply chains: Catena-X

Catena-X is a data sharing initiative dedicated to the automotive industry and supported by the German government. BMW, Mercedes Benz, Robert Bosch, Siemens, Volkswagen, and ZF are among the 130 companies who have joined Catena-X and who encourage companies of all sizes to participate in data sharing. To improve their operational performance and to strengthen their product development activities, many corporations have harvested large amounts of data from their operations. To enhance resilience, sustainability, and systemic capacity to innovate, data sharing throughout the automotive industry is now perceived as the Holy Grail. The recent component shortages that have disrupted automotive companies have convinced every decision maker that no automotive company can solve such problems alone. However, sharing data with other industry players, including clients, competitors, and suppliers, is not an easy decision to make. Decades of focus on intellectual property have reinforced an industry mindset where no company wants to lose control over its own data by sharing it with others, even if the sharing is for mutual benefit.
Furthermore, creating systems costs money, and companies also fear cybersecurity issues. To help address these obstacles, Catena-X seeks to simplify data exchanges. It does this by creating protocols for data sharing and providing open-source software that facilitates data interconnections. Catena-X also promotes data sharing to automotive companies of all sizes, especially to small firms with limited resources. As every company is concerned with security and potential misuse of their data, Catena-X treats data sovereignty as an important priority. With Catena-X, automotive companies can retain control of their data even when sharing it. No information is uploaded onto a central platform. Instead, data remains on the system of the company that agrees to share it, and exchange occurs using peer-to-peer interconnections. To reinforce data sovereignty, usage policies are enforced by the system. Companies agree that their data can be used solely for specific use cases, and the system ensures that their data can only be used for the purpose they choose.
So far, ten use cases have been agreed by the board of Catena-X. These range from initiatives to improve sustainability, recycling, traceability, and quality, to supply chain orchestration and smart manufacturing. Connecting a multitude of datasets across an entire industry will be a long and challenging journey that requires all players across the industry to be incentivised and mobilised. Nevertheless, data sharing offers opportunities that cannot be ignored within an industry that faces new competitive challenges and that needs to address its environmental impact.

Software-defined vehicles: an Eclipse Foundation working group

The Eclipse Foundation is an open-source foundation which announced, in 2022, a new working group on software-defined vehicles or SDVs. This working group brings together companies including Cariad, Volkswagen software company, Toyota, ZF, Robert Bosch, Continental and several software and hardware specialists. More participants are expected to join in the coming years. Cars and vehicles of the future will be software-defined, where all hardware components will be orchestrated as a unified system.

This is a dramatic advance, as the automotive industry has been used to creating dedicated chips and software separately for each component in a vehicle, and now it needs to reverse its thinking and build an intelligent architecture that will swiftly orchestrate entire sets of interconnected car components. The digital infrastructure of software-defined vehicles will be hosted on a few powerful chips that will control entire zones of the vehicle. This will reduce the density of in-vehicle connections, the amount of hardware, and the overall cost, while processing broader and more complex flows of data. This in-vehicle digital infrastructure will allow users to buy and manage, over the air, subscriptions for differentiating features. It will also allow car manufacturers to aggregate data and sell digital services to other companies. Such in-vehicle digital infrastructures will comprise millions of lines of code and AI models, and most of it will consist of non-differentiated software. Thus, instead of multiplying proprietary solutions, the Eclipse Foundation working group aims at creating both open-source software for software-defined vehicles and the associated development tools to implement and expand in-vehicle digital infrastructure. The competitive stakes are high. Car manufacturers cannot afford to do this alone, and nor can they afford to depend on proprietary solutions for this digital infrastructure. Hence the choice of an open-source platform that provides car manufacturers with both cost benefits and freedom to innovate. As of today, the Eclipse Foundation working group has presented an overall template for the in-vehicle digital infrastructure, and seven software projects have been initiated. Participants in this working group are also learning how to operate with open-source principles of openness, transparency, and vendor neutrality. The working group is in its early stages, and it still needs to reach a critical mass of active participants to become a success. While automotive companies now recognise the imperatives of such large-scale collaboration, achieving it nevertheless requires a major culture change in an industry where all the players are used to operating their own proprietary systems.

Monetising connected car data: regulation ahead

To provide a complete overview of data sharing and data monetisation stakes in the automotive industry, we now briefly describe how software-defined vehicles will power a large amount of data flow. Beyond selling subscriptions, in-car advertising, and features as a service to vehicle drivers, car manufacturers are also planning to monetise data to build, for instance, aftersales, insurance, fleet management, and road management applications. By 2030, Stellantis plans to generate €20 billion every year from data, software, and subscriptions. If car manufacturers are best placed to use the data generated, they have already committed to share a basic volume of data with diverse industry players. However, these car manufacturers are perceived by some other industry players and by user associations as holding an unfair advantage. So forthcoming regulations could oblige car manufacturers to go beyond their current plans and force them to share more data with other companies in the future. This will be the result of intense lobbying activities. So, while car manufacturers ask other industry players to share data, they are also aiming at keeping control, as much as they can, over the data they can access in cars. This could have an impact on the willingness of everyone across the industry to play the data-sharing game.

Conclusion

Today the automotive industry is working hard to connect the unconnected. We have highlighted how four not-for-profit foundations support this effort by orchestrating data and innovation ecosystems. These industry-wide collaborations create new technologies and a seamless flow of data that will power the performance of all industry players.

Will these four not-for-profit foundations be successful? To what extent will data sharing occur seamlessly at each stage of the value chain? Will open source software dominate the automotive software stack? This remains to be seen. The four not-for-profit foundations presented here are pointing in the right direction. They are creating a complex web of digital infrastructures that could reshape the automotive industry. Connecting the unconnected will be on the agenda of the automotive industry and other industries for the years to come. And many not-for-profit foundations will continue to set common goals and mobilise complete ecosystems to make this happen.

One certainty is that connecting the unconnected will not be achieved through bilateral relations along value or supply chains. It requires ecosystems that mobilise many industry players around common goals, and calls for industry-wide actions and global ecosystem orchestration. Our knowledge of how this can be done successfully on the scale of industries such as automotive, health, agriculture, and aerospace remains thin and calls for further research.

About the Authors

Hervé Legenvre is Professor and Research Director at EIPM. He manages educational programmes for global clients. He conducts research and teaches on digitalisation, innovation, and supply chain.
Lately Hervé has conducted extensive research on
how open-source software and open hardware are transforming industry foundations.
(www.eipm.org)

Erkko Autio FBA is Professor in Technology Venturing at Imperial College Business School, London. His research focuses on digitalisation, open technology ecosystems, entrepreneurial ecosystems, innovation ecosystems, and business model innovation. His research has been cited over 49,000 times in Google Scholar. He co-founded the Wicked Acceleration Labs (www.wickedacceleration.org).