The Role of Emerging Technologies for Business Model Innovation in the Automotive Industry

Type de publication:

Conference Paper


Gerpisa colloquium, Paris (2021)


In today's networked world, digital technologies, in particular, are key drivers for business model innovation (BMI). Digitization is disrupting the automotive industry in several aspects with a significant shift from "business as usual" to "business unusual" for incumbents (Rachinger et al., 2019; Wollschlager et al., 2015). Since its origins, continuous innovation and further developments, and comparatively high market entry barriers have characterized the automotive industry (Wollschlager et al., 2015). This has enabled incumbent automotive companies to achieve competitive advantages through constant mechanical and electrical engineering advances and thus to attain dominant, clearly defined market positions vis-à-vis their competitors (Wollschlager et al., 2015). Whereas the traditional business model of the automotive industry was filled with engineering heritage, aspiration to own cars, and one-time transactional sales, the upcoming business model asks for non-traditional partner collaboration, alternatives to ownership markets, lifetime customer value, sharing economy, and new forms of retail and services businesses (Rachinger et al., 2019; Svennevik, 2019; Wollschlager et al., 2015). Thus, automotive companies must break with their tradition of technology development and their focus on product and process innovation and invest in BMI's disruptive approach (Wells, 2015). Paradoxically, this shift away from a technology focus is triggered by the broad availability of digital technologies. Emerging digital technologies such as artificial intelligence (AI), blockchain, and the internet of things (IoT) are the basis for the disruption of the entire automotive market.
Today, the same high entry barriers that kept out competition from outsiders of the industry are leveraging digital-driven market opportunities for new market entrants and, thus, are leveraging disruptive innovation. In this vein, AI, IoT, and Blockchain are the key technologies (Athanasopoulou et al., 2019; Sharma et al., 2019; Yun et al., 2016). With collaborative bots for industrial automation, AI is already transforming manufacturing processes, while at the front-end, autonomous driving sheds its lights on the industry. Numerous new market opportunities can be opened up by networking the automobile with other digital systems. IoT makes machines networkable and controllable, and, thus, connected cars improve different areas such as mobility management, commerce, vehicle management, breakdown prevention and safety, entertainment, driver assistance, and well-being. In this way, the driver experience is increased. Current traffic information avoids traffic jams, goods and services can be purchased on-the-go (parking, tolls), information about vehicle condition, and service reminders reduce unexpected breakdowns and increase safety, while operational assistance or autopilot support driver assistance. As a consequence, connected cars produce a high volume of data which is estimated to be up to 30 terabytes of data each day (Sas, 2019) – (personal) data which is the basis for new value propositions in the automotive industry (Buck & Reith, 2020; Júnior et al., 2019). Therefore, connected cars are based on digital services, which will reinvent traditional business models, change the automotive ecosystem, and redesign customer engagement, expectations, and experience (Wollschlager et al., 2015). The tamper-proof and traceable properties of blockchain technology offer, based on AI and IoT, a wide range of possible application areas in the automotive sector. Thus, trustworthy supply chains, documented sales and repair history, smart contracts, and smart insurances are just prominent application areas to reliably secure transactions and, therefore, enable new value propositions.
While the automotive industry embraces emerging digital technologies, their impact on automotive companies, the logic of value creation and delivery, and the associated business models are still under-researched, despite their enormous importance for the companies' future survival. Thus, we ask the research question: How do emerging digital technologies impact the automotive industry's business models?
To answer the research question, we present a methodologically sound structured literature review as the basis of our work. We analyze 63 high-quality papers from the fields of AI, IoT, and Blockchain concerning their influence on business model components in the automotive industry. We bring these three strands of literature together to form a unified picture of emergent technologies' impact on automotive business models and discuss the results against current automotive market developments.
The results of our multi-level literature study show that the influence of emerging digital technologies on the logic of value creation in the automotive industry is only examined in a very isolated and partial way. A holistic view and analysis of the structural changes and potentials of emergent technologies has not been done so far. Our results make a valuable contribution to academic discourse and practical application. Our analysis shows which components of the business model emergent technologies address and generate substantial added value and thus have the potential of a disruptive innovation. We show what impact the three technologies AI, IoT and Blockchain have on each other through our three-pronged literature review. Furthermore, our analysis shows which disruptive changes the automotive industry can expect through combining the three technologies.
While technologies and their influence on value creation are usually only considered in isolation, we bring the considerations together to form a coherent target picture. We show technological developments connected with value creation at different business models in the automotive industry and inform future business model innovation based on emergent digital technologies. Thus, our work can help shape future business model innovation and support decision-making in the automotive industry.

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