Automotive Landscape set for a 180-Degree Overhaul

BANGALORE --- Leading Management Consulting firm, Zinnov, today released its latest study, titled the 'Global Automotive Start up Scan', an in-depth overview on disruptions in technology, business models and value chain of the Automotive industry. Investor funding in the area has increased at a 14% CAGR in the last 6 years and it has an amazingly active start-ups ecosystem with 650 VCs, 380 Angels and 60 Start-up Accelerators. Over the last century, automotive industry has passed through key progress phases (Craft, Mass, Lean, Smart) from 490 players to 43 players & back to 1000+ players. Additionally, in the era of Gen-Y and Millennials and with the advent of internet and smart products, the changing consumer preferences have made it less about the car and more about the service.

Divulging details on the geographical spread, the report mentioned that America is still the leading hotspot for funding ($21.2B) but Asia (China & India - $15.5B) with its several emerging start-up hotspots, is quickly catching up. India has encouraging numbers with a total of 152 start-ups and $1.9B in funding with presence of top investors like Tata Capital, GIC and RNT Associates. Europe is also growing rapidly with a total of 225 start-ups and with $1.1B in funding.

The hottest areas of investment are Transport Tech and Electric & Autonomous OEMs. Transport Tech with an investment of $30M per Start-up engaged the first slot, followed by Electric & Autonomous OEMs at $10M per Start-up. Across OEMs, Tier1s & Start-ups, Autonomous car technologies are a big focus area with an R&D spend of $6B; and as the industry structure changes, OEM & Ride sharing companies are also getting into partnerships with Autonomous Tech companies.

Another key area is the battery technology, Electric Vehicle (EV) OEMs & Charging Infrastructure, are the most prominent with a combined funding of $2.8B. Still, traditional auto makers like GM and Ford dominate about 88% of the Electric Vehicle market except for Tesla which is at 12%.

On the M&A front, there has been a significant increase in activity in the last two years. Tier1s have become very aggressive and are focusing on Connected Car & Infotainment, as compared to OEMs. With its all-cash $8B acquisition of Harman International, Samsung has made a major move in the automotive sector. This makes Samsung an entrant and major competitor in the connected services and infotainment sector traditionally dominated by OEMs/Tier1s and the likes of Apple Carplay and Android Auto.

Moving towards Revenue Models, Commission & Advertising are becoming more prevalent in the Auto Landscape today and have grown by 9% & 3% respectively over last 5 years. Licensing Model has still not taken off considerably with a decrease of 3% although it is expected to do so with higher penetration of software in cars.

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