Value chain ecosystems in transition: reconfiguration of capabilities in the automotive sector

Résumé:

Significant changes are undergoing in the industrial world, with sustainability and digitalisation as the main drivers. Automotive is one of the industries where it is more evident that companies must completely redesign their products and processes and rethink how they generate revenue. The well-defined ecosystem developed over a century, with companies in the value chain assigned a determined role, is about to change. Electrification and connectivity trends are considered in this research, leading to changes in critical capabilities and the value chain’s key players.

Theoretical framework
There are two main theoretical blocks of this research. First, capabilities are analysed and considered departing from the analysis of Andreoni (2018), who developed a framework to analyse supply chain level capabilities that are clustered in a business ecosystem. While this study is based on multiple supply chains in the Emilia Romagna ecosystem, our paper focuses on one industry, i.e., automotive. It provides a further analytical step to study the sector dynamically, comparing the current scenario in the auto sector with the future one with specific reference to new software capabilities that will be increasingly needed in the next generation of EVs. Our second block of the literature specifically analyses the present and future landscape of automotive production and it provide analytical and technical lenses into the main debates and challenges about the changing systems at the sectoral level.

Methodology
Scope interviews were conducted to focus on where there is a more significant gap in understanding the capabilities transition within the EV. Two steps were taken following these interviews with BEIS (Business Energy and Industrial Strategy). First, a systematic analysis of secondary data was conducted to analyse the changes brought by software (identified as the segment where there is a bigger gap) and how the industry is preparing for these changes. Second, interviews with actors in the automotive value chain were collected in the UK and Italy. A total of 12 interviews provided data for our analysis.

Findings
The main contribution of this paper is a framework that allows analysing the changes occurring in a value chain systematically. The element of novelty of the proposed approach is the possibility to implement the tool dynamically, comparing the current and future value chains and where the key capabilities are likely to be found. The framework also allows to investigate this change in capabilities across different countries. The framework is a matrix of value chain stages and a list of capabilities, allowing to map out where capabilities can be found and present the sector’s new dynamics. The framework proved to be very valuable in presenting the movement of capabilities occurring in the automotive industry, including the need for new software capabilities from different sectors such as aerospace, Big Tech and IT. At the same time, it revealed differences in how different countries react to the new automotive trends. These are the main contributions of the framework, which provides insights for policymakers to consider when strategising for the sector’s future competitiveness. Challenges in developing these capabilities are also explored in the study. Future work should investigate more in detail these new dynamics, consider ways to develop high-value software capabilities in-house and propose innovative ways to prevent or solve the identified challenges.

What can policymakers do?
This study reveals that the scenario for the automotive sector will shortly involve some new actors – and existing actors – with many moving parts in terms of capabilities and value creation. Policymakers in countries where the automotive sector is one of the backbones of the productive structure (beyond the UK and Italy) will have to consider how the reconfiguration of the sector will impact existing value creation and distribution processes across different regions. Our paper indicates roadmapping as a tool that can facilitate this process, as it brings together actors involved in the process and facilitates effective dialogue and communication within and between the organisations that engage in the knowledge creation and knowledge dissemination processes in the sector. Roadmapping is a tool to support the strategic dialogue to develop consensus, align action, and identify challenges, risks and tensions among actors and organisations in the automotive sector.