Crash-Proof, Emission-Free – Even Driverless Cars

IESE's Automotive Industry Meeting: 30 years mapping out the future

06/11/2015 Barcelona

James D. Farley

Autonomous, Electric and Shared? A New Car for the Next 30 Years

What should we expect to see during the next 30 years? Which technologies will define the cars of the future? How will the industry's value chains look like? What business models will dominate? If we knew the answers, what conclusions should we draw for our companies today? This year?s 30th edition of IESE's annual industry meeting of the automotive industry, IESE AUTO, we shed some light on these questions. Get inspired! Subscribe to IESE's YouTube Channel:

“The key is in brand differentiation,” James D. Farley, Ford's president and CEO in Europe / Photo: Jordi Estruch

Cars are not yet quite as Robert Zemeckis imagined they would be by now in Back to the Future Part II.

I'm sure cars won't be flying in 30 years' time, but they'll be doing pretty much everything else,” predicted José Luis López-Schümmer, president of both Mercedes-Benz España and the Spanish Association of Car and Truck Manufacturers (ANFAC).

He was speaking at IESE’s 30th Automotive Industry Meeting, which, as in previous years, was co-organized by KPMG and brought together some of the sector's leading players along with IESE professor Pedro Nueno. The aim of the event was to anticipate how things might be 30 years from now. This was no easy task, not least because, as López-Schümmer observed, the industry could change more in the next five years than it has in the last 50.

Cars of the Future

Experts envision a future in which cars serve a multitude of functions. They’ll be crash-proof, thanks to autonomous driving technology. And emission-free, thanks to alternative drive systems (electricity and hydrogen fuel cells). They’ll also be connected, thanks to the Internet of Things and the proliferation of devices and networks.

With Tesla, Google and Apple already making waves in the market, new competitors will emerge over the coming years. There will also be new practices, such as car sharing and other “imaginative” initiatives that do not necessarily involve buying vehicles.

These changes will come about in response to the private mobility needs of a world population largely concentrated in megacities, as well as increasingly demanding emissions regulations that will require manufacturers to press on with research into alternative technologies.

All the above makes abrupt changes in business models a very real possibility, says López-Schümmer. For some time now, the industry's main companies have been preparing for the model based on vehicle manufacturing and sales to evolve towards a greater focus on smart mobility solutions.

Zero Accidents, Zero Emissions

In terms of technology, prioirities for manufacturers are putting an end to fatal road accidents and doing away with polluting emissions.

López-Schümmer believes that “autonomous cars” hold the key to reducing emissions. “The technology is practically ready,” he said, “although there's still some way to go in terms of legal and ethical aspects.” These include whether an autonomous car's driver or manufacturer would be held liable in the event of a collision.

IESE professor Pedro Nueno also built on this idea. “Billions and billions of dollars are being pumped into these technologies,” he said.

Nueno cited the example of Volvo, which is aiming to make deaths in its vehicles a thing of the past by 2020. The Swedish firm's confidence in its technological advances is such that it has announced it will accept full liability for any accidents involving its driverless cars.

Nissan's goals are similar. “Zero accidents, zero emissions,” said Frank Torres, CEO of Nissan Motor Ibérica. He stressed his comment and emphasized his company's commitment to autonomous driving and the manufacture of electric cars.

Keeping the Magic Alive

There will be more to the cars of the future than just technology though. James D. Farley, Ford's president and CEO in Europe, spent much of his speech advocating what he calls “magic.” By magic he means the feelings inspired by certain models, such as the Volkswagen Beetle, which have gained a cult following. With no qualms about talking up a rival, he stressed the importance of the emotional factor, of perpetuating the association of car ownership with freedom and pleasure. Technological excellence is a factor in such “magic", he explained. But so too is brand differentiation, a prime example being Apple's iPhone.

This is where the battle for the future of commercial vehicles will be won or lost. A company like Ford,” he said, “can compete with premium brands, such as BMW and Audi, as long as we're operating in the emotional arena.”