What will the automotive industry look like in 2025? A Q&A with Volvo’s Andreas Strasser

“Once electric cars have a 500km range and a 30 minute recharge time, we’ll see a changing of the tide in consumers’ attitudes towards electric” says Volvo’s Head of Research and Automotive Strategy, Andreas Strasser.

As part of the Market Research Society’s Automotive Research Conference our Head of Automotive Research, Bianca Abulafia, and Account Director, Orlando Woods, were lucky enough to discuss the future of the industry with a panel of automotive experts, including Volvo’s Head of Research and Automotive Strategy, Andreas Strasser. We caught up with him to hear his views on where he thinks the automotive industry is heading and the implications for research.

Q: Andreas, thank you very much for joining us today. We hear a lot in the press about the trends affecting the automotive sector. Which of these do you think will really impact the industry by the year 2025?

A: I think the first thing we’re going to see is greater connectivity. In the past, automotive manufacturers thought about connectivity primarily in terms of mobile apps that would allow your phone to talk to your car. But I think what we’re going to see is connectivity on a much larger scale as cars become part of the wider Internet of Things.

The other big trend that will really make an impact by 2025 is electrification. Innovation in this space over the next few years will see automotive manufacturers meeting consumers’ demands for a longer driving range which I think will really drive uptake.

Q: What barriers to purchase remain for electric cars? At what point do you think they will be overcome?

A: I think there are two fundamental barriers to purchase: infrastructure and range anxiety. Currently the availability of charging points isn’t yet advanced enough to support mass uptake of electric vehicles.

The other key barrier is range anxiety. When people buy cars, they often think about extreme use cases, taking a one-off road trip, for example, might be something they consider. Because of this there’s a perception amongst consumers that they need a much greater range than is actually the case causing them to doubt whether electric is fit for purpose. Once electric cars have a 500km range and a 30 minute recharge time, we’ll see a changing of the tide. This, combined with government legislation and incentives for those who buy electric, will drive uptake.

Q: What about driverless? What impact will this have by 2025?

A: We’re already doing a lot in the driverless car space with our Drive Me programme but I think 2021 will be the year that autonomous driving will really come of age. At this point, the technology will be at a point where it can be offered to customers. The big question now though is whether the legislation and customers themselves will be ready to bring autonomous driving to the roads.

Q: We’re seeing a number of new business models springing up from ride hailing to car sharing and even subscription services that give customers access to a range of different transport options for one monthly fee. Does this spell the end for car ownership?

A: Whilst we might see a decline in car ownership amongst urban dwellers, I think the premium car market will survive this trend. For many drivers owning a car is not just about getting from A to B, it’s a status symbol. Car sharing or ride hailing services just can’t replace that pride in ownership. But of course this doesn’t mean we should turn our backs emerging business models– it’s about assessing the value for customers and for us as a business. I see free floating car sharing as having real potential. Imagine the value that this business model will have when it’s combined with driverless cars. It’s certainly one to watch.

Q: The pace of the change facing the automotive industry is almost unprecedented. What implications does this have for the way that automotive manufacturers conduct research?

A: Research will have to be conducted at a much faster pace than it has been previously. There are a number of ways we can do this.

The first is to reduce the length of the vehicle development cycle to as short as 24 months and then reconsider how and when we conduct research within this. Personally I see automotive manufactures moving away from researching each model separately and instead conducting more exploratory work or looking at features or technology across models.

Secondly, I predict that we’ll start to see researchers in automotive companies exploring new technologies in an effort to reduce the length of the research process. For example could virtual reality or augmented reality act as a substitute for time consuming car clinics? This is something that we’ve been experimenting with at Volvo. We’re trialing VR and AR technology to understand if it can be applied to vehicle development research.

This is the second in a series of blog posts. Read our interview with Dan Freedman, Direct Line’s Director of Motor Development as we ask him what’s in store for the automotive industry and the implications this will have on the world of insurance.