With 5G communication getting popular, software updates through the Internet is common. The emerging V2X services have been triggered by the rapid development of EVs. Many countries have been devastated by problems of port congestion and in short of truck drivers. Take Taiwan as an example. According to The Directorate General of Highways, the average age of bus drivers in Taiwan is 48.3 years old. After stricter labor laws were implemented, the salaries of drivers as a percentage of operating costs have increased from 29% to 52%.
Since the EV system applies the "drive by wire" model, the speeds and stops of each vehicle are monitored; it can be highly integrated to merge with unmanned self-driving vehicles. Consequently, "software-defined vehicles" will enable such an operating model for EVs. We can expect a significant reduction in car accidents. The traditional after-sales service mechanism will be transformed, and the life span of the car will be extended. The longer the car runs, the more valuable the car may become. The service mechanism of the software updates will take shape, because the car has become the third living space for modern people. The business model and revenue structure of the carmakers will henceforth change.
It is expected that 2022 will be a year for the digital giants to combat neck and neck in the markets of V2X services. In the past, the carmakers relied on Tier 1 suppliers to do the software integration. With the emerging demand for related services such as in-car infotainment, ADAS, navigation, etc, the tech giants from the Internet world have the upper hand to lead the development of new businesses. Google's Android is the most important existing operating system. Companies including Nissan, Honda, BMW, Stellantis have developed services under an open operating system. But Tesla, which accounts for about 15% of the world's market share, and Apple are working with Google to use the Android Grade Automotive architecture as the OS directly built into the vehicle. Is this highly anticipated architecture going to change the EV ecology?
Who can launch an appealing complete development program for self-driving cars in 2022? It is rather difficult to outpace the early birds for late-starters like Toyota, VW, Daimler, Hyundai that have all tried to build their own platforms. It is not easy for Taiwan enterprises to deploy the operating system from inception. Even if they are interested in developing the whole vehicle, they must come up with a smart choice among diverse business alternatives.
Overall, the growth of the automotive market is limited, but EVs are expected to maintain an annual growth rate of 50% over the next five years. We project that the penetration rate of EVs may exceed 30% by 2025, which is a business salvation for traditional carmakers. But the ICT players and other new forces are all coveting the pie. The era of the traditional automotive industry is gone. What we see is an emerging all-in-one industry forged by integration of software and hardware enabled by the manufacturing and service industries. The development of artificial intelligence (AI) entails unlimited fascinating possibilities for the V2X services and self-driving cars. The topics of application and algorithm for various data would pose a new challenge to flip human's life patterns of the past centuries.
