digitization of the automotive industry: connecting the new mobility value chain

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September 23, 2015 Digitization of the Automotive Industry: Connecting The New Mobility Value Chain Andreas Mai, Director Smart Connected Vehicles

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Page 1: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

September 23, 2015

Digitization of the Automotive Industry: Connecting The New Mobility Value Chain Andreas Mai, Director Smart Connected Vehicles

Page 2: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 2 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Internet of Cars: $700 Billion Benefits per Year

250

210

160

80

Worldwide Benefits

$700 Billion

Note: Core Regions NA, EU, AP, Excl. 22% RoW, @ $1,400/ vehicle & 67% penetration of vehicle population

Society § Less Congestion Cost § V2V Addressing 80% of Crashes § Lower Traffic/ Road/ Toll

Operation Costs

Vehicle User § Lower Operation &

Insurance Cost § Less Time Stuck in Traffic

Internet of Cars Service Providers § Chip-to-Cloud Cyber Security § B2B2C Service Platform § “Context at point of decision”: Parking,

UBI, Navi, Traffic, LBS, Modes, etc.

Automotive Industry §  Remote Diagnostics §  Secure OTA-Update §  Connected CRM/ VRM

Source: Cisco IBSG Automotive and Economics Practices, 2011

Worldwide Benefits from Connecting Road Vehicles Per Year [$ Billion]

Page 3: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 3 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Five Drivers and Control Points of Future Mobility

Source: Cisco Smart Connected Vehicle, 2015

Clo

sing

the

Inno

vatio

n G

ap

Autonomous

2

Price Value Chain From Building Cars to Selling Personal Travel Time Well Spent

1

Technology Cost Customer Data

Value Creation Market Access

Requires New Innovation & Business Models

Control

Share

From Owning to Sharing 3

Multi-M

odal Mobility

4

5

Page 4: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 4 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Autonomous Life Saver: Low Residual Liability Risk

150

100

50

0

59

Driver behavior

118

Natural disas-

ter

1

Mfg Defect

12

Total claims

131

Automobile insurance claims in the U.S.A. (USD Billion)

Environ. process.

20 Driving style

39

50% Auto- pilot

59

50% Human

Exclude mistakes autopilot would never commit §  Ignoring right of way (19%) §  Speeding (18%) §  Tailgating (17%) §  Wrong behavior towards

pedestrians (6%) §  Drunk driving (5%)

Crash causes

Source: Warranty Week; Conning; WardsAuto; Alliance of Automobile Manufacturers; Federal Statistics Office Germany; expert interview; World Economic Forum; BCG analysis

Producer already liable

Frequency in which autopilot makes same mistake as a human driver?

Potential liability cost per car sold (USD)

0.01% 0.50%

$ 2 $ 112

Rough Estimate WEF Taskforce/ BCG, 2014

~ $400-$1,300 warranty accruals per vehicle 2013

Page 5: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 5 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

‘Sharing’ Will Make Mobility More Affordable for Billions Passenger Vehicle Stock

(Millions)

Reduce Cost to World Average of 24%

Source: EIU Data, Cisco IBSG Automotive 2010

Transportation & Communication Cost (Percent of Personal Income)

58% 54%

50% 43%

42%

Brazil India

Thailand China

Mexico

17% 15% 15% 15% 14%

12%

United Kingdom Germany

France Italy

Japan United States

Mature Markets Emerging Markets

Today Eco-Mobility

13% 750

1,750

59%

Page 6: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 6 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Data Fuels the Future Mobility Business – Example Vehicle Insurance

Regular Same Higher Very High

ADAS Lower Lower Higher

Autonomous Very Low Very Low Very Low

Regular ADAS Autonomous

Nearby Vehicles

Vehicle Health

Driver Behavior

Road Risk

Traffic

Weather

360° Real Time Risk

Driver mainly drives …

Vehicle is…

Insurance Risk

Rental Car, Car Sharing: Risky combinations…

Source: Cisco Smart Connected Vehicle, 2015

Page 7: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 7 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Expanded Data Scope

Enriched Output

Trusted Relationship

Wave 1 Wave 2 Wave 3

Data Plane

Control Plane

Customer Plane

Ecosystem

Sensing/ AI

Market Maker

Siloed

Reporting

Data Keeper

Intra-company

Action

Conditional Use

Big Data Industry Evolution: Path Towards “Infomediary”

Increasing Challenges Source: Cisco Systems, 2013

Page 8: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 8 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

More Congestion in Network than on Road: Infrastructure Is Key to Deliver Future Mobility Services

City Operator Applications

Lighting Control

4

Energy Reports

Parking Enforcement

City Safety/ Security

Incident Detection

Citizen Services

Public Wi-Fi

Parking Availability

Traffic Light Alerts

Incident Detection

!

City Air/Noise/ Pollution Maps

192 Exabytes = 192 x 1018 Bytes = 65 Trillion images = 6 Trillion video clips

By 2019:

Mobile Data

Source: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

CIM Cloud

Power

Wi-Fi Mesh

FOG Analytics 3

1

2 DSRC

Wi-Fi Mesh

Page 9: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 9 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

THE “Finance-Application” for the Future Mobility Infrastructure?

Smart Road Pricing

Congestion Occupancy

Road Condition

Time of Day

Weight

Speed

CO2

Emissions Fuel Economy

Source: Cisco IBSG Automotive 2011

Page 10: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 10 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Food for Thought: From Roadblock to Market Driver

City/ State/ Federal

Infrastructure Operators

Outsource

Infrastructure REITS

Public Assets (Partial) Cash-out

ITS Service Operators

Users

Big Data To Optimize

ITS Services Invest

Invest in My Roads

Fuel Tax Smart Road Fee

=ROI

Source: Cisco Smart Connected Vehicle, 2014

Page 11: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 11 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Things

Data

People

Processes

Internet of Cars: Four Digitization Phases

Value

Home LBS ITS

Health

Value Added Ecosystem

Service Energy UBI

Modes

Value Chain Enterprise Product

Hyper-Connectivity

Source: Cisco Smart Connected Vehicle, 2015

Page 12: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 12 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Cisco Digital Business & Application Enablement

Business Continuity & Optimization

Connected Analytics

Collaboration

Connected Processes

Contact Center

IoT Cloud Connect

Connected Experiences

Fog Cisco Infra Data Center WAN Access Mobility

Key Enabler: Scalable Modular Digitization Platform

Cisco ONE Network Automation Cloud Orchestration Policy/Intent (ACI)

Process Automation

E-2-E Security

Management

B2B -

Cloud -

Vehicle

+ ConMan DiMo Security Cisco Client

Factory Utility Vehicle Retail Health

Cisco + Partner Solutions Dealer Home Insurance Transport

City

Source: Cisco Smart Connected Vehicle, 2015

Page 13: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 13 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Evolution of a Revolutionary Business Model

“If you don’t pay, you are the product”

“Big Brother” “Big Mother” “Don’t be evil”

Getting People What & Where They Want 4 Free B2B Fee 4 Getting People To Websites & Stores

Web Road

Source: Cisco Smart Connected Vehicle, 2014 Note: is a proxy for “The Valley”

Page 14: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Cisco Confidential 14 © 2015-2016 Cisco and/or its affiliates. All rights reserved.

Revolution for an Evolutionary Business Model?

Web Road

Source: Cisco Smart Connected Vehicle, 2014

Beat Them? Join Them?

Note: is a proxy for “The Valley”

Page 15: Digitization of the Automotive Industry: Connecting The New Mobility Value Chain

Thank you.