A key characteristic of the fourth industrial revolution is that conventional machines and electronics are reinvented or combined into “smarter” all-in-one products, blurring their original definitions. For instance, the smartphone was reinvented by combining a conventional cellphone and a computing device. The smartwatch was created by combining a conventional watch and a computing device. The smart speaker was a combination of a conventional speaker and a computing device. The list goes on. Instead of drawing new things out of scratch, the fourth industrial revolution seems more like an overhaul to our existing world, where we reinvent existing items and redefine their purposes, often by combining them with computing capabilities and connecting them to the cloud. What’s more interesting is how people’s perceptions and attitudes towards these products change as they experience and interact with them. Since these reinvented products tend to serve a variety of purposes that overlap with one another, users have more options available at their hands to do the tasks needed, making daily lives more seamless.
The automotive industry is no exception. However, changes here are less visible as they occur at a slower pace. Perhaps it is because cars are relatively expensive items with longer lifecycles, or because cars directly determine our physical safety, or that cars have been around for much longer compared to other electronic devices and appliances. Indeed, since the world’s first engine-powered vehicle was invented by Carl Benz in 1885, essentially the same car concept has been with us for more than a century now. Yes, the appearance of cars has evolved considerably, but their functionalities and benefits have remained unchanged. For over a century, people have viewed the car as a mode of transportation for people and goods from point A to point B.
With the fourth industrial revolution, we are finally starting to witness a change to the century-old definition of the car. This enormous paradigm shift can be characterized by several seemingly unrelated industry trends.
2000s: Car Tech
For many decades, the only digital technology the average car had was the radio. Yet, starting in the 2000s, new technologies began to emerge, one after the other. From GPS navigation to Bluetooth, hands-free calls to voice command, phone mirroring to video streaming, the car had become a sophisticated computer with countless features.
As people interacted with these new features, their perceptions and expectations changed. These changes made it more challenging than ever for automakers to build a satisfactory car. In the past, a car was judged only by quality, comfort, and performance. Excelling any two of the three aspects would pretty much guarantee success. This was how big and prestigious automakers survived all these years of competition. But even the big names are facing difficulties today because consumers are so used to car tech and demand more and more of these tech features manifested in the most intuitive and useable manner.
The increased demand for car tech signaled the beginning of the paradigm shift; cars were no longer a simple means of transportation, but an experience to enjoy.
2010s: The Growing Popularity of SUVs
This is by far the most visible change that can be easily observed by anyone attentive to the road – sedans are being taken over by SUVs. Almost every automaker worldwide has reduced sedan lineups, favoring prioritization of the rollout of SUVs. Even OEMs that traditionally focus on the niche market are now abandoning sedans and moving to SUVs as an attempt to capture the mass market. Porsche is a typical case where the brand repositioned itself from a sports car brand to a brand focused on luxury SUVs. Even Rolls Royce, Bentley, and exotic makers like Lamborghini are adding SUVs into their flagship lineups.
Statistically, the market share of SUVs has increased dramatically over the past decade. Between 2010 and 2019, the global market share of SUVs in total car sales increased from 17% to 41%, with the figure reaching as high as 50% in the US. In a matter of a decade, SUVs have become the most popular car segment on every continent.
Why are SUVs becoming more popular? While there are many hypotheses, most of them point to a change in the general public’s perception. SUVs can make people feel more powerful, and while sedans are built with performance in mind, SUVs allow for more space and a greater onboard experience, rather than the drive itself. Therefore, since the paradigm of the car is shifting away from driving and more towards the onboard experience, there are simply fewer and fewer reasons to buy sedans over SUVs.
2020s: Environmental Responsibility
For decades, cars have been blamed as a major culprit for climate change and global warming. This forced the industry to seek more sustainable options, going from gasoline to hybrids and now towards electric. The electrification trend is less related to the car itself, but more of a result of external pressure.
Why has the electric car gained popularity in such a short period of time? This can be attributed to multiple reasons, such as better battery technology, success in Tesla’s marketing campaigns, and increased environmental awareness worldwide. But the most critical reason behind this trend is that people are gradually seeing cars as more of an innovative tech than a conventional machine. Since the paradigm shift has already blurred the definition of the car and changed public perception of what a car should be like, it is now a lot easier for people to adopt electric vehicles. It is also easier for EV makers to experiment with bold and exotic designs.
An interesting phenomenon is that the more people interact with electric cars, the more their perceptions of the car will shift towards them. This again further accelerates the process of EV adoption. Based on this effect, it certainly won’t be long before EVs surpass ACE vehicles in sales.
2020s: Autonomous Driving
Autonomous driving has been one of the most controversial topics in the automotive industry due to a wide range of concerns on safety and legality. Now, with the advancement of big data and artificial intelligence, along with the increased stability of the cellular network, the public is now finally ready to trust the car to drive itself. Even though most of the current semi-autonomous vehicles rely on cameras and sensors, this is about to change as V2X technology starts to roll out in newer vehicles. When V2N technology gets adopted by the mid-2020s, many of the vehicles on the road are expected to reach full autonomy.
Again, the public’s increased acceptance for autonomous driving is not only due to technological advancement, but rather, caused by the paradigm shift. Reemphasizing the point that cars are now more associated with their onboard experience rather than the driving experience, people are more willing to let the car do the driving and focus themselves on the cabin experience.
2020s: Mobility as a Service
The paradigm shift has redefined the car to become less of a transportation tool and more of a mobility experience. Now some may ask, what about those who only want a simple transportation tool without having to own a bunch of add-on features? Those needs can be answered by a new market: mobility-as-a-service (MaaS).
For those who choose to not purchase the complete experience and only want a minimalistic ride, MaaS is becoming an appealing alternative to owning a car. With the help of big data and machine learning, ride-hailing and ridesharing services are becoming increasingly popular among those who do not like owning cars. Advanced fleet management systems allow the operator to perfectly match vehicle supply to passenger demand, dispatching the perfect number of vehicles to each area in need, and automatically carpooling those on the same routes. These on-demand services will completely transform public transportation so that people no longer need to look for bus stops and are no longer confined to living near subway lines.
The New Paradigm: A Lifestyle on the Go
In essence, the car is becoming less and less of a transportation tool and more of a mobile home characterized by entertainment, convenience, and comfort. With more and more workers working remotely, people are now having more time and freedom to live and travel to any place they like. The car represents this dynamic lifestyle, offering a private space that feels like home, with all the enjoyment, convenience, and comfort of home. Only automakers that can best adapt to the paradigm shift will survive the 2020s.