AI IN THE AUTOMOTIVE

INDUSTRY
 KEY TRENDS DRIVING AI ADOPTION
IN THE AUTOMOTIVE
INDUSTRY

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 2

 THE DRIVERS OF AI TECHNOLOGIES IN THE AUTOMOTIVE
INDUSTRY

Reduced Latency
Near real-time processing a nd analysis for
mission-critical use cases

Analytics Increased Automation

Sensor fusion an d d a t a analytics with With increasing levels of autonomy, reliance
AI solutions is helping in decision on h u m a n drivers is reducing
making

Hybrid Computing
Models Deploying AI in hybrid cloud a nd KEY DRIVERS Self-learning Capabilities
Advancements in AI techniques are giving rise
edge computing models for different AI in Automotive to self-learning systems
workloads

Enhanced User Digital Factory

Experience Digital assistants, infotainment, AI-based tools are providing a standardized
an d integrated AI cockpit are driving a nd efficient manufacturing setup
technology adoption

Detection and Classification

Object detection a nd classification is accelerating
roadmaps for self-driving cars

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 3

 The au tomoti ve industry is shifting fr o m ADAS applications to the next other con nected vehicle use cases. Organizations are leveraging different
level of a u t o n o m y for self-driving cars. Autonomous vehicles as a trend is techniques to optimize allocation of vehicles to passengers in a setup
strengthening – fr o m personal cars a n d ride sharing, to public transport a n d with robo-taxis, a n d are extrapolating the trend of a u t o n o m o u s vehicles
tru ck- ba se d logistics. There is a growing consensus t h a t a u t o n o m o u s vehicles for effective a u to n o m o u s fleet m a n a g e m e n t . Furthermore, co mp a n i e s
are the future of transportation. focused on logistics a n d B2B ( a n d B2C) p ro d u ct delivery-related services
are also investing in a u t o n o m o u s capabilities to ga i n a n a d v a n t a g e f r o m
Any discussion regarding a d v a n c e d ADAS applications a n d a u t o n o m o u s
intelligent mobility a n d delivery. Many of these mobility solutions are, however,
vehicles, however, is incompl ete without including the level of AI integration
incomplete without a cloud backhaul supporting complex c o m p u t a t i o n needs.
required. For every car m an u fa ctur e r m a ki n g inroads into the self-
driving space, m a n y m o r e software a n d technology co mp a n i e s are Cloud technologies are driving digital transformation in the automoti ve
focusing on AI solutions th a t cater to the different aspects of the sector with several use cases relying on cloud for connectivity, over the air
implementation. Apart fr o m driving scenarios, these software a n d updates, route optimization, mobility m a n a g e m e n t , analytics, a n d various
technology co m p an i e s are ADAS applications. Integration of AI in cloud is b e c o m i n g a g o - t o strategy for
also developing solutions for mobility use cases, which are in dire need of participants in the value chain to vertically integrate software solutions in a
intelligent options. self-driving ca r setup.

AI-driven offerings are helping unlock new potentials in the existing vehicle
mobility solutions related to ride sharing, public transportation, a n d the

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 4

 Autonomous vehicles are e q u i p p ed with a multitude sensors, antennas a n d several
software packages, which facilitate the collection of in-vehicle data. Integration
of AI with cloud is simplifying analysis of heterogeneous d a t a a n d accelerating
grow th of predictive analytics a n d m a i n te n a n ce in the au tomoti ve sector.
Participants
are increasingly b e c o m i n g interested in predictive m a i n te n a n c e b a se d on
cloud solutions – m a k i n g it one of the key trends in the au tomoti ve space.

Predictive analytics is also being run on innovative platforms for delivering real
ti m e results using e d g e c o m p u t i n g solutions. Such pl atforms are introducing
new ways of monitoring vehicle health without relying on internet or c l o u d -
b a s e d computati on. With this trend of hybrid architecture of c o m p u t i n g
resources, the integration of AI technology is fast e me r g i n g as a n imperative.

Apart f r o m hybrid c o m p u t i n g architectures, the d e m a n d for on the m o v e

c o m m u n i c a t i o n for conne cted vehicles is leading to the devel op ment of a hybrid
connectivity infrastructure where terrestrial a n d satellite networks c a n work in
tande m. Organizations are increasingly developing solution for vehicles th a t
c a n support multiple networks a n d seamlessly switch between them, potentially
eliminating downtime. AI solutions are helping in this sm o o t h handoff betw een
the networks, with intelligent an te n na technologies a n d b e a m f o r m i n g techniques
increasing the efficiency of com mu ni ca ti on. Such hybrid solutions are typically
expected to stay functional round the clock for effective c o m m u n i c a t i o n
requirements a n d a n increase in automation.

IoT covers a wide variety of applications t h a t need always on operation to ensure

o p t i m u m outcomes. With a u t o n o m o u s vehicles a n d conn ected cars formi ng a n
integral p a rt of the IoT ecosystem, the trend of always on systems in the au tomoti ve
industry is shaping up. New power m a n a g e m e n t systems, n o - l o a d stand by
conditions, a n d seamless connectivity solutions are c o m p l e m e n t i n g always on
functionalities for improving the overall self-driving car experience.

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 5

 Another significant trend is the evolution of the a utomo ti ve retail space. The evolution is
being supported b y the increase in targete d marketing a n d advertisements, i mproved
customer experience in car ecommerce, devel opm ent of centralized dealer hubs, a n
en d to e n d retailing experience with intelligent pl atforms t h a t streamline customer
communication, a n d i mproved supply chain m a n a g e m e n t . AI-based technologies are
instrumental in this direction, enabling real ti m e response to customer requirements,
predicting d e m a n d through customer behavior analysis, a n d offering precise
personalization b a se d on consumer preferences.

Hybrid
Key Trends Driving AI In Connectivity
Automotive

Car Retailing Always On

Solutions
Operation

Autonomous Cloud
Vehicles Services

Mobility
Solutions

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 6

 TRANSFORMATION IN KEY BUSINESS MODELS

BUSINESS MODELS Mobility As A Service (MaaS)

WITH INTRODUCTION OF
MaaS-based models incorporate the different services related to ride-hailing, self-
driving, connected vehicles, fleet management, a n d electric vehicles. Disruptors
like Uber a n d Lyft have a n upper ha nd in terms of monetizing their MaaS model,

AI as they are the early adopters. Traditional car rental providers are already
reinforcing their implementation techniques a n d are becoming a part of the
In order to incorporate AI algorithms across different products, solutions, mobility ecosystem.
a n d services, the a utomo ti ve industry needs to e m b r a c e a n effective OEMs, automakers, system integrators a n d solution providers are also aiming to
approach. The different participants in the au tomoti ve value chain will build new business models revolving around MaaS. Strategic collaboration a n d
have to transform their traditional operating models a n d strengthen investment can help OEMs a n d manufacturers to galvanize their experience in
capabilities for developing intelligent products a n d for creating value the industry a n d address the market need for mobility services.
through innovative technologies. Automotive co m pa n i e s need to redesign
their organizational strategies for identifying investment opportunities Data monetization
t h a t address technological g a p s a n d help in a d o p t i n g new business This m o d e l creates a n opportunity for core automotive entities as well as for
models. companies adjacent to the automotive market, such as insurance, infrastructure
Transformational models t h a t c a n provide reduced operational cost, higher a n d other retailers, to capture new revenue streams by monetizing automotive
revenue, customer-centri c solutions, a n d lower risk c a n help create a a n d related data. With the integration of AI technologies in the industry the
r o a d m a p for the industry to i m p l e m e n t potential AI-enabled use cases t h a t d e m a n d for d a t a is increasing for a d e q ua te d a t a training a n d structuring
cap ture the different trends in the auto moti ve sector. purposes. Such requirements are allowing entities to generate revenue by selling
d a t a related to different features including vehicle diagnostics, m a p usage,
Startups a n d disruptors are already trying to address the technical a n d
mobility services, infotainment systems, a n d other i n-car technologies a n d
ma rket challenges a n d develop effective business models t h a t address it.
background processes. Such datasets are perceived according to the customer ’s
Incumbents, including auto moti ve suppliers a n d manufacturers, need
privacy a t different levels of implementation. Additionally, the different entities
to redefine business goals to sustain a n d thrive in the future
in the automotive value chain c a n also consider monetizing by selling d a t a to
transportation market.
companies in different verticals like IoT a n d telecom.

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 7

 Various Data Sources in
Data from
an Automotive Conversational AI
Environment

Data from
Navigation Data From
Systems Cloud

Connected car
environment generates
Vehicle massive amount of data Consumer
Behavior
Diagnostics under different Data
Data
categories across the
automotive ecosystem. Leading to Data
Monetization
Vehicle Traffic Data Opportunities Between
Related to
Sales Stakeholders
Related Weather
Data

Fuel
Monitorin
g Data

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 8

 Companies across various sectors are assessing the i m p a c t of AI in the acquisition trends are bringing business transformations with the incorporation of
automotive industry a n d are accelerating acquisition strategies in the d o m a i n new business models around AI products a n d solutions.
to unlock new AI-based business opportunities. The increased m o m e n t u m of the
Detailed below is a comprehensive perspective of the different technologies
M&A activity is a key evidence of ho w organizations are focusing on AI
that are being acquired in automotive manufacturing, operations, supply chain,
strategies to reap maj o r benefits as the new trends in the automotive sector
marketing, sales a n d for customer-experience a n d support. This signifies that
proliferate.
automotive com pani es a n d entities fro m adj acent markets are ai mi ng to lay the
Strategic M&A for AI technologies in the automotive sector is extending across the foundation of AI-enabled solutions in the entire ecosystem.
value chain with key technology areas i m pa cti ng different functional areas. The

KEY AI-BASED TECHNOLOGY AREAS IN THE AUTOMOTIVE VALUE

CHAIN

Manufacturing & Operations Supply Chain Marketing & Sales Customer Experience

• Product Design & Engineering • Inventory M a na ge m en t & • Customer Engagements • Interaction

• Co mp o ne nt Development Quality Control • Pricing Strategies
• System Integration • Sales forecast
• System Integration

COMPUTER VISION AI-BASED ANALYTICS AI-BASED ANALYTICS CONVERSATIONAL AI

AI HARDWARE & SOFTWARE CONVERSATIONAL AI SECURITY

SELF-DRIVING SOFTWARE STACK COMPUTER VISION AI-BASED ANALYTICS

MAPPING TECHNOLOGY CLOUD GESTURE RECOGNITION

GESTURE RECOGNITION

AI-BASED ANALYTICS

CLOUD SERVICES *Color of the bars signify the activity across the value chain in the acquisition trend
DATA TRAINING HIGH ACTIVITY MEDIUM
ACTIVITY LOW
ACTIVITY

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 9

 Companies are also following different integration strategies for these AI acquisitions for their business unit a n d functions. Integration strategies deployed b y
the acquirers are largely d e pe n d en t on the degree of integration required a n d the nature of the deal. The effectiveness of the transactions is evident through the
operational synergies du e to the integration strategies. According to the M&A trend in AI in a utomo ti ve space, the transactions c a n b e outlined into five m a j o r
categories as shown in Table 1.

TYPE OF DEAL INTENT DESCRIPTION EXAMPLE

Tuck-in Acquisitions Capability Addition Large c o m p a n y acquiring smaller co mp a n i e s to acquire Majority of the deals are tuck-i n type;
capabilities like technology, patents, skills, customers, Apple acquired Drive.ai a n d VocalIQ; Intel
etc., focusing on the integration of ga in ed capabilities acquired Mobileye; Velodyne acqui red
into the acquirer ’s operating model. Mapper.ai

Business Line Expansion Largely C o m p l e m e n ta r y Buying c o m p a n y to g e t into a new line of business Samsung acquired H a rm a n International
a n d build new business m o d e l

Vertical Integration Stack Expansion Acquiring a c o m p a n y which is a supplier to the buyer or a Xilinx buyi ng Deephi
d o w n s tr e a m service provider within the value chain

Horizontal Integration Reduced Competition Acquiring a c o m p a n y th a t is operating a t the s a m e level in Nuance acquired Voicebox Technologies
the value chai n or in the area of a n industry

Defensive Strategy Retain Market Share Acquiring a c om p an y to maintain position in the value chain Ola acquired Pikup.ai

Table 1 : Integration Strategies in AI in Automotive

The subsequent sections of the report provide a detailed trend analysis of these acquisitions with a focus towards key technology
areas.

M&A Trend Analysis: Artificial Intelligence in the Automotive Industry 10