The year 2030 is a decade and a half away. However, that 15-year time frame incorporates just two vehicle model cycles in traditional automotive terms – while from the consumer electronics (CE) industry’s perspective, it’s as many as 30 model cycles away. This creates considerable challenges for an automotive industry seen from the outside as slow and cumbersome, an industry that knows it must adapt to the changing needs and aspirations of consumers used to regular and frequent over-the-air software updates and rapid product replacement cycles.
Not only is the year 2030 just two model cycles or 30 CE product cycles away, it’s also the timeframe for one single generation of children, points out Sheryl Connelly, Global Trends and Futuring Manager at Ford. “The new-borns or the toddlers of today will be entering college or the workforce in 2030.”
In this exclusive interview with Megatrends, Connelly provides a vehicle manufacturer’s perspective on how the automotive industry must adapt its sales and marketing strategies – and even its product offerings – to remain relevant for the future. For so long a convenient, vague, far-away target, 2020 is suddenly just around the corner, and so 2030 has been selected to give the discussion focus.
“We’re already at 7 billion people and the number is going to grow. It is estimated that we’ll have anywhere between 10 or 11 billion people by mid-century, so by 2030 we’ll have a billion more people if that forecast proves to be true.” That, says Connelly, will have a disruptive, albeit revolutionary effect. “Much of that population growth will be in parts of the world that are not well suited to handle such change, where there may be widespread poverty, an extraordinary gap between the haves and the have-nots, malnutrition, and limited access to education. All this could add up to some major social problems.”
Ageing population and the dependency ratio
Interestingly, although Connelly suggests this growth will affect emerging economies, she does not believe it will directly impact North America and Europe. “One of the reasons that the population growth isn’t going to affect North America and Western Europe is that we’re having fewer children. An ageing population is probably the biggest thing that we’ll be dealing with in 15 years, and for some time after that.”
Age is one of two components of a major problem, says Connelly; the other is the so-called dependency ratio. “Economists use the dependency ratio as an index to determine how many workers are supporting a country’s non-working population. I’m getting beyond 2030 here, but around 2050 there will be some countries that are upside down, and so a country like Japan – which will have a dependency ratio of 108 retirees supported by 100 workers by 2030 – will be halfway there. And a country with an ageing population will have an imbalance that could negatively impact its economic output and bring down its GDP, leaving less money for investment and innovation.”
Those will be among the key determinants of where political, economic, technological and social influence will exist in the world, adds Connelly.
The challenge, then, is for countries on one level and companies on another level to work out how to deal with this change. One way is through immigration, says Connelly, and that is one of the reasons why some countries are very eager to bring in immigrants, while others are not. “From the pure mobility standpoint, however, we have to think about the physiological changes that come with ageing, including reduced response time, impaired vision and limited range of motion.”
Cars and quality of life
Car companies like Connelly’s employer, Ford, are already thinking about mobility, she says. “Our designers and engineers have a number of technologies that are in the vehicle today to address those issues. But I think it’ll become more acute. One of the best business cases you can make for autonomous vehicles is for an ageing population. Around the world, the baby boomer generation created the modern day car culture. They love their cars. And the oldest baby boomer here in the United States is 69. So, 15 years from now they will be 84. Are they going to continue to drive, and, if so, how can they do so safely?”
The freedom to move about whenever, wherever and however you want is a major aspect of human dignity, and essential for a decent quality of life, believes Connelly. “If we can come up with a solution, and if autonomy helps us to allow people to age graciously, I think that’s something that will be well-received by the market.”
As to when we can expect autonomous driving solutions, Connelly is reluctant to commit. “I can’t predict when that will happen because I believe the issue of autonomy doesn’t lie solely in the hands of the OEMs. There are so many other stakeholders. You have to think about legislation, litigation, insurance and urban planning. I think the technology is not our biggest obstacle – the obstacle is figuring out how to put a fleet into operation. And I haven’t even touched on the very hot topic of how we make sure the communications components are secure in a way that protects us.
“Also, I do not believe that means that autonomous driving will become ubiquitous. I think it will be in pockets and I think it will be where it’s needed, where it makes sense. For that matter, I’m not sure there will be a universal powertrain solution. I think that people will use different energy sources and it’ll be based on what is most convenient, affordable and accessible to the region.”
Emerging markets are essential to any OEM’s future growth strategy; those emerging markets might also lead product development, since people’s needs in those markets could well be for entirely different products than those offered in mature markets like Europe or North America. “If you are dealing with an emerging market,” suggests Connelly, “the chances are high that it will have a megacity. There are some 25 megacities in the world today. The US has two, namely LA and New York, depending on how you draw the boundaries. China has eight, ten or 12, depending on how you count those boundaries. By 2030, there’ll be at least ten more, and maybe more than that, so we’ll have to think about mobility more as an ecosystem. We’re going to see new forms of mobility solutions, many of which will be multi-modal.”
From selling cars to…not selling cars
Something else that OEMs will need to factor into their future strategies is the trend away from ownership and towards ‘usership’, and the impact that the growing sharing economy will have on companies that at the moment aim to sell as many cars as possible. “We’re lucky, because at Ford we have the vision of some really extraordinary leaders,” says Connelly. “Bill Ford, our Chairman and the great-grandson of Henry Ford, gave a talk in 2011 in which he shocked the audience when he said that for the last 30 years of his life, he would wake up every day and think, ‘how do I sell as many cars as possible?’ But in recent years he had started to worry about, ‘what happens if we continue to sell as many cars as possible?’ He talked about global gridlock, and asked, climate change, carbon footprint and CO2 notwithstanding, what happens if we continue adding more vehicles to the road? Who will that serve if those cars don’t move anywhere?”
In that talk, Ford said he wanted to be part of the solution, and began discussing a blueprint for mobility, using sensors in the vehicle for more automated features that could eventually lead to autonomous features.
“Then we have Mark Fields, who is certainly not new to the company but is now Chief Executive,” adds Connelly. “He is really pushing the organisation to be as innovative as possible.”
In January 2015, Ford announced 25 global experiments to try to better understand mobility. “In addition to those 25 experiments, we have sponsored a programme called ‘Techstars Mobility, Driven by Detroit’, where for the next three years we will bring ten start-ups each year to the city of Detroit, and people within Ford will act as their business mentors. We will help them develop their plan. We will even teach them how to pitch their innovations towards the investors.”
Ford is taking an approach unlike any it has taken before, says Connelly. “Ford Credit announced a couple of months ago that it will offer peer-to-peer car sharing. And we’ve been a long-time sponsor of Zipcar, the car-sharing platform. What I am really proud of as a Ford employee is that we are seeing ourselves being not just a manufacturer but an enabler of mobility in the many different shapes or services in which that might manifest itself.”
It’s time for some outside-the-box thinking
Perhaps external, outside-the-box thinking is an essential requirement for the automotive industry’s future product development? “Yes, definitely,” says Connelly. “I see evidence of that already in Ford. But speaking as a futurist, I think you’re going to see categories start to collapse in ways that are surprising and unexpected. When we published the Ford trend report for 2015, we had one trend called The Many Faces of Mobility. That highlighted the fact that, if you ask somebody over 30 years of age what mobile means to them, their first instinct is probably going to be somewhere in the domain of transportation. But if you ask someone under 30 what mobile means, they think about communication.”
The connection people had to their cars in decades past is also changing, says Connelly. “The car today is more of a computer on wheels. Years ago, people had a great affinity to their vehicle. Baby boomers would get under the hood, tune their engine, change their oil and replace a fan belt. Today, most people don’t even look under the hood. The way that emotional affinity comes to the car is based on the way that it connects people to those they love and the things that are important to them. I think software is a conduit to feeling that emotional connection to your car.”
Listen to the futurists
Predictions made by futurists like Connelly are far from unique to the automotive industry; but how willing is the corporate world – and specifically the automotive industry – to accept the ideas presented by futurists? “I think that a better way to describe what futurists do for Ford is to serve as the polite contrarian, challenging existing assumptions. I don’t have a stake in it, and I don’t say someone’s point of view is right or wrong, but in a meeting, if someone says something will never happen, part of my role is to suggest that, rather than debating whether it will or won’t happen, we should focus on how well prepared we are if it did happen.”
The need for visionary leadership to shape corporate culture and a company’s willingness to change and adapt to new ideas is oft debated. “It doesn’t necessarily have to start at the top,” says Connelly, “but if it’s not embraced at the top, then it can be very difficult. Even those organisations that don’t have a futurist in title probably have a futurist in function somewhere in the company. Anyone who develops strategy, works in product development or long-term planning, marketing, design or engineering – even those consumer electronics companies that have a six month turnaround cycle – they are all thinking about what’s in the future.”
