Going digital. The long road of the automotive industry towards its last revolution

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Abstract:

The lingo of ACES shaking the automotive industry (autonomous driving, connected, electric, and shared mobility) has instilled among automakers and high-tech/newcomers leading the sector’s current evolutions (McKinsey&Co., 2017-2019; Covarrubias, 2018; Kassen et al., 2018). Digital technologies (DTs) are a cornerstone of ACES´ developments and most firms are heavily investing in them as there is a growing awareness of its wide range applicability and potential disruptive power. Simultaneously, customer’s increasing demand for seamless connectivity and high-performance further force firms to accelerate the introduction of DTs (Wollan et al., 2017; Kachan 2019; Tillemann, 2006, Covarrubias & Ramirez, 2020). Though, comprehensive studies on the extent to which DTs are penetrating and transforming the automotive industry are still to come.
One of the few studies with that reach is McKinsey (2019)’s The Future of Mobility (..). In it we learn that high-tech and newcomers have invested more than 220 billion in ACES´s since 2010, focusing on E-healing, semiconductors, autonomous vehicle (AV) sensors and advanced driver-assistance systems (ADAS), components, connectivity/infotainment, electric vehicles and charging, batteries, AV software and mapping, telematics and intelligent traffic, back end and cybersecurity, human-machine interface (HMI), and voice recognition.
From this perspective, a plausible proposition is that ACES will be key to force a radical reorientation of the industry and DTs will be the underlying technology shaping the contours of a transformed sectors’ new industrial regime. In this scenery, the second automotive revolution foresaw by Freyssenet (2009) will turn into the last one “industrial divide” as from ACES will come out a new mobilities, services-oriented sector that moves radically away from the traditional industrial paradigm.
Yet, it would be a (new) technological determinism to consider that DTs´spread is all that it takes to complete the transformation of the industry. Such a determinism is underway. As a part of a heap of grand narratives (GN) that have pervaded for half a century the interpretations of the industry´s change, DTs fills presently the place of grand accounts that lean production, the post-Fordist debate, systems innovation and global value chains filled in the past –or are still filling as in the case of these last two. In these accounts the transformation of the industry is a matter of fact or is at the corner. A renew, more efficient, high performance/labor committed (lean GN), flexible/prosperous, high road (flexible specialization GN), globally and regionally interlinked through learning, complimentary-integrated competences, upgrading and spillover effects (systems innovation and global value chains GN), smart-robotized, totally connected, and innovative (production) ecosystem is to emerge from the dust of the old one (DT-GN).
Drawing on Covarrubias & Ramirez (2020) and confronting the above GNs’ shortcomings –i.e., their ethnocentric, short-term/one sided views, unidimensional determinisms-- this re-conceptualization-building paper look at the transition of the automotive industry from a long view perspective. It argues that the industry´s evolution is close to complete an epochal transformation –a socio-technical transition-- under the lead of the entrepreneurial state and the disruptive breath of digital technologies. After half a century of having started in the middle of the oil-socks of the 1970s, the opening up of the Fordist-mass production´s crisis, and the transplant of the Japanese-lean production model in the 1980-90`s, the AI is now driven by new organizational and institutional frontiers and geographies of power at the market and industrial relations levels (see the Graph-Framework below).

Still, to complete the transition, a number of markets, political, and industrial relations constraints in which the industry is embedded as well as locked-in and path-dependent mechanisms in which firms are anchored are as yet to be overcome.
Key at these evolutions is the fact that the axis of the automotive market has moved towards emergent, Asian countries along with the fact that ACES´ transformations require substantial investments in I&D and infrastructures and definition of rules, institutions and standards at different levels –i.e., international, national, regional, local and city. As a result, the role of government’s digital/industrial policies gain prominence.
The paper feeds its argument by looking at the strategic programs to digitalize the automotive industry in each ACES lever (autonomous driving, connected, electric, and shared mobility) the Chinese, German, Mexican and US governments are instrumenting. Through a method of contrasting cases (Przeworski, 1987), it compares such strategic programs’ main traits, regularities and reach. Then it addresses the question as to what role these governments place on the digital transformation in the race for taking the lead in the societal transition of the automobile industry towards a new paradigm of sustainable mobilities.