SEPTEMBER 2024

SEIZING THE ER&D ADVANTAGE

FRONTIERS FOR 2030

Automotive Sector
Deep Dive
Boston Consulting Group partners with leaders in nasscom represents the voice of the $250 billion+
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 EXECUTIVE SUMMARY (1/2)

1 ER&D spending in Auto: Increasing ER&D intensity across sectors expected to drive global ER&D
spending at 8-9% CAGR till 2030; ER&D spend in the Auto sector to be $460-$540B by 2030,
with growth at par with industry
• Additionally, share of digital engineering spend is expected to increase by 22pp (share of total Auto
ER&D spending)
• Three key mega trends expected to shape Auto ER&D spending: 1) Increasing in-vehicle digitization/ Digital
vehicles, 2) Climate & Sustainability requirements, and 3) adoption of AI/ Gen AI to expedite vehicle
development

1a Digital Vehicles: Increasing demand for "Digital Vehicles" given rising adoption of AV/ ADAS tech,
EVs, and customer demand for smart vehicles
• Demand for above technologies expected to drive higher in-vehicle software content to support variety of use
cases: e.g., ensuring seamless real-time data connectivity to support autonomous vehicle development
• Critical for OEMs to optimize software development costs by using agile methodologies, VAVE focused software
design, which provide competitive advantage to lower cost locations like India

1b Sustainability: Sustainable mobility needs to be serviced through customer-centric and data-

backed design while ensuring integration with other sustainable technologies
• Customer preferences of sustainability depend on type of use (E.g., Truck fleet operators more focused on
Hybrids, Fuel efficiency vs EVs); Need data backed design to incorporate customer preferences
• Sustainable vehicle technologies need to be integrated with other sustainable infrastructure (grid, charging infra etc.)
• ICE powertrain will continue to need sustained ER&D spend to be compliant with ever stringent pollution norms

1
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 EXECUTIVE SUMMARY (2/2)

1c AI adoption: Auto OEMs and ER&D players need to integrate AI into design, development and
testing of vehicles, and partner with tech companies to benefit from the AI-revolution
• Critical to integrate AI into vehicle features such as safety as well as vehicle development (AI-based code, AI-
based software integration etc.), and deliver increased personalization of user experience
• Co-development with tech companies (Google, AWS etc.) needed to ensure AI integration into vehicles as
well as development of seamless interfaces between vehicle stacks and other software stacks

2 Key challenges: Flexible development and organization level upskilling (organic and inorganic) are
critical for Auto OEMs and ER&D players to stay competitive in an ever-changing industry
• Higher regional and use-case based variances, fast paced technology changes, and shift from products to
services are causing a fundamental shift in the Auto industry
• Clear need for flexible platform development (with high ability to customize according to customer need) and
organization wide upskilling (through training, on the job learning and external collaboration)

3 Path forward: Critical for Auto ER&D players to reimagine product strategy, talent models and
operating structures to take advantage of emerging opportunities
• Multiple opportunities emerging at the intersection of three megatrends – Digital Vehicles, Sustainability, and AI,
while creating an integrated ecosystem with allied industries (e.g., integrating EVs, with renewable grid)
• Critical for OEMs to re-imagine Talent Strategy, Product Strategy and overall Operating model to capitalize on this
trend
• Potential for Indian Auto OEMs, Tier 1s and ER&D Service Prodviders to capitalize on these trends by focusing on
research and innovations (via COEs), investing in Talent and co-creating with wider ecosystem players (Tech
companies, SIs)
2
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 Table Of Contents

1 MEGA TRENDS – WHAT IS SHAPING AUTO ER&D?

1a 1b 1c
DIGITAL VEHICLES SUSTAINABILITY AI

2 CHALLENGES AND WAY FORWARD

4
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 1
MEGA TRENDS - WHAT IS SHAPING AUTO ER&D?

6
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 Automotive ER&D spend expected to reach $460-540B by 2030 driven by
xEV, connected mobility, and vehicle software priorities

Automotive b u sin e ss ER&D sp e n d ... With electrification, connected ... Accompanied by sh a r e of digital
E xp e ct e d to inch towards ~$460- ve h icle s & software a s top 3 engineering increasing by 22%
540B by 2030 growing at 8-9% CAGR ... ER&D priorities for the sector ...

+8-9% Electrification & xEV 60 +22%

AV & Connected Mobility 53 61%

$460B -$540B

Software & Connectivity 38

39%
Vehicle Design
28
$250B -$300B Innovations
Enhanced Vehicle Safety
26
&ADAS

Mobility-as-a-service 17

Subscription-based
15
ownership
Circular Economy 2023E 2030F
13
2023E 2030F Initiatives
3D Printing &
9 % of sector's ER&D spend on
Additive Manufacturing
Sector's Business ER&D Spend ($B) digital engineering
VR &AR in
Showrooms & Training 4

%sector respondents who selected the topic as

one of top 3 ER&D priority in coming 5-10 years

7 Source: CapitalIQ, BCG ER&D Survey 2023 n=281; Press Search; BCG Analysis
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 As the world looks forward, three key mega trends are expected to shape
the future of global auto sector
Digital
Mega Trends
Vehicles
beyond 2024

Climate & Sustainability

1 Digital Vehicles:
increasing prominence
2 ambitions are key driver 3 AI augmentation:
Generative engineering
for ER&D spends
Holistic autonomous vehicles: Customer centric mobility: Integrating AI into Vehicle
Increasing focus on safety, Mobility solutions to be designed Development: For accelerating
reliability and accuracy basis customer requirements/ vehicle development, and
applications and regional nuances supporting vehicle safety initiatives
Connected vehicles: Increasing (e.g., infrastructure maturity) (e.g., higher test coverage)
demand for real-time data
connectivity, and in-vehicle Data based EV design: Centered on AI led personalization of
software content actual road conditions, driving experience: Increasing ask to
patterns and supplemented by differentiate using hyper
Improved value delivery of comprehensive data collection personalization of user experience
software development : Increasing
cost competition from several Integration with other Partnerships with Tech firms: For
other Asian countries sustainability measures: developing necessary H/W and S/W
Coordination with other industries tech, to enable AI integration
(e.g., utilities – renewable grid) to
ensure success of sustainability
initiatives

Source: BCG Analysis 8

SEIZING THE ER&D ADVANTAGE
ADVANTAGE |Frontiers
| Frontiersfor for
20302030: Auto Sector Deep Dive
 1a
MEGA TRENDS - WHAT IS SHAPING AUTO ER&D?
DIGITAL VEHICLES

SUSTAINABILITY

AI

10
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep Dive
 OEMs are expected to develop Digital Vehicles while ensuring holistic
autonomy and real time connectivity at low development costs
Digital Vehicles

Optimization
Holistic Software
of software
Autonomous vehicles Defined Vehicles
development cost
1. ADAS safety features: There is an 1. Smart-phone on wheels: OEMs are 1. Rising cost competition: ASEAN
increasing consumer demand for focused on providing a seamless smart countries (e.g., Vietnam) with maturing
features such as Collision Warning, car driving experience based on software development capabilities are
Lane Departure Warning, Blind Spot customer needs leading to increased competition with
Detection, Pedestrian Detection Indian firms
2. Seamless and real time data transfer:
2. Reliable Autonomous Vehicles: CAN based data transfer, LIN, 2. Agile & Modular Software Design
OEMs are focusing on using latest chips, Automotive Ethernet etc. are being provides competitive advantage to
real-life road conditions in simulations, used to connect vehicle to the cloud companies with the ability to reuse
new-age tech such as reinforcement code libraries
learning to ensure high uptime, and 3. Reimagined software architecture:
reliability of AVs There is a vast potential to build
modular software elements to enable
seamless integration of new features in
vehicle architecture

11 Source: BCG Analysis

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Rise in demand for connected mobility, electrification & autonomous
vehicles driving engineering demand…

Despite recent temporary

Autonomous vehicles will start Share of connected vehicles
slowdown, BEV and HEVs will
to emerge in next ten years will continue to increase
become dominant
Share of new car sales Share of new car sales Share of car parc w/internet access
100% 100% 100% 100% 100 % 100 % 100 % 100 % 100% 100% 100% 100%

32%
50%
68%
3% 83%

5%
68%
59% 24 % 50%
5% 39% 32%
15 % 17%
17% 9%
6% 2% 2% 2% 6 % 2 %5 % 7%
2021 2025 2030 2035
2021 2025 2030 2035 2021 2025 2030 2035
Gasoline Plug-in
& diesel hybrid (PHEV) None L2 L3 Not connected Connected

Hybrid & mild Battery Electric L0/1 L2+ L4/5

hybrid (HEV) vehicle (BEV)

Recent slowdown being viewed as temporary and Increased penetration of ADAS/ AVs driven by Increasing connected vehicles leading to
not structural with EV expected to driven 40%+ regulatory push, premiumization and tech increasing software play in-vehicle (e.g., digital
new sales on back of new technology changes maturity; L2, L2+ tech expected to drive short cockpits, OTA updates, smartphone led
(e.g., solid state battery breakthrough) term growth services etc.)

Source: IHS, Statista, BCG market model, BCG analysis 12

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 … will lead to rising Electronics and OEM software spending

40% of the cost of a car is now attributed to semiconductor- Software spending expected to increase at 11% CAGR from
based systems, and this is expected to go up to 50% by 2030 2023 to 2024, driven by key trends such as movement
Auto OEM software spends are expected to reach
Automotive electronics cost as a % of overall cost is rising1 USD41bn by CY25E2

60% 45.0
50%
21%
45% 40% 21%
35% 30.0 21% 9%
21% 8%
7%
30% 21% 7% 26% 26%
22% 6% 26%
26%
15% 15.0 26%
15% 10%
45% 45% 43%
5% 47% 46%

0% 0.0
1970 1980 1990 2000 2010 2017 2030E 2021 2022 2023 2024 2025

Testing Maintenance Integration Development

13 1. Secondary Research
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Increasing digital content is expected to positively impact OEMs by
improving diagnostics and updates (1/2)
KEY PLAYERS IMPACTED

Minimum
Time Distributor/ Independent
Theme Use case connectivity Supplier OEM Dealer
horizon retailer installer
required

Basic remote diagnostics: Remote

diagnostics before appointment to Connected Available now
optimize visit1

OTA2 software updates: Remote updates to

Software-defined Available now
reduce in-person appointments
Diagnostics
and updates
OTA repairs: Over-the-air software patches to
Software-defined Likely in 10 years
reduce in-person hardware repairs

Self-diagnosing vehicles: On-vehicle diagnostics

Software-defined Likely in 5 years
to replace service-center tools

Quality assurance in vehicle sales:

Software-defined Available now
On-demand remote vehicle inspections

New services Software integration: Services to

and business ensure aftermarket part and Software-defined Available now
models accessory compatibility

Software features: Aftermarket software add-

Software-defined Likely in 5 years
ons (e.g., performance suspension settings)

Direct impact (+) Upstream/downstream impact (+) Upstream/downstream impact (-) Direct impact (-)

Source: Industry reports; leadership belief audits; BCG analysis. 1. Basic remote diagnostics impact only OEMs. 2. OTA = over the air. 14
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Additionally, all players would be able to benefit from operations
optimization and data monetization related use cases (2/2)
KEY PLAYERS IMPACTED

Minimum
Time Distributor/ Independent
Theme Use case connectivity Supplier OEM Dealer
horizon retailer installer
required

Operations optimization: Increase

supply-chain and labor efficiency using Software-defined Likely in 5 years
Operations vehicle data
optimization
Supplier optimization: Use vehicle performance
Software-defined Likely in 5 years
data in product development

Supplier marketing: Promote personalized

Software-defined Likely in 5 years
upgrades based on driving behavior
Data
monetization
Emergency services: Coordinate response and
Connected Available now
repair after incidents

Smartphone app appointments: One-

click service scheduling based on vehicle Not connected Available now
diagnostics

Embedded appointment scheduling:

Software-defined Likely in 10 years
Vehicle schedules service automatically
Maintenance
scheduling Preventive maintenance:
Vehicle schedules service by maintenance Connected Available now
schedule

Predictive maintenance: AI proactively

Software-defined Likely in 10 years
schedules service to avoid breakdowns

Direct impact (+) Upstream/downstream impact (+) Upstream/downstream impact (-) Direct impact (-)

15 Source: Industry reports; leadership belief audits; BCG analysis.

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Case Studies
Digital Vehicles

16
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Jaguar Land Rover offered over the air software updates with Dual Memory
Architecture impacting leading to over $300 mn in annual savings

About the company Innovation brief

Introducing dual memory architecture for Electronic Control Units (ECU) to deliver new
Company: Jaguar Land Rover capabilities and fix existing issues over the air (SOTA) to the vehicle
Megatrend: Digital

Description
Need of ER&D Impact
of solution
Time, cost and effort for both the customer and • Introduced dual memory architecture for • 7M+ customers saving $300M+ annually for
JLR to update software seamless software updates to vehicle where it JLR for a single ECU; future software updates
can be updated while in park mode as well as to their vehicle without having
• Software update using Diagnostics requires drive mode; this brings down recalls of the to visit their Retailer
physical presence of the vehicle at dealer’s vehicles due to software issues
place • By implementing dual memory, software is • Around 65 ECU’s gets updated remotely
downloaded and updated in the background in which is cost effective and saves lot of
• Vehicle should be kept in Ignition ON state engine running time and emissions
smaller deltas while the original software is
which adds additional carbon footprint running from the active memory; this reduces
failures due to software updates because the
• Each ECU needs to be updated separately active memory always have the last working
and each takes ~1 hour for a successful software
update

• If update is unsuccessful it takes more time

Source: Nasscom case study

17
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Tata Motors’ BSL offered end-to-end automation GRN across all its plants,
removing inefficiencies and resulting in 70% productivity savings

About the company Innovation brief

Introducing end to end Automated /self service process first time in the Indian auto industry
Company: TML BSL through multi-lingual self-service kiosks, and AI / ML integration
Megatrend: Digital

Description
Need of ER&D Impact
of solution
TML had 100% manual GRN creation across all • Set up vendor self-service kiosks at CRDO End to end Automated /self service process first
plants, causing inefficiencies in the inbound leveraging horizontal learning from airport self – time in the Indian Industry
process leading to delayed vendor payments and check-in kiosks
dissatisfaction • Deployed cognitive and AI/ML tech to ensure • Solution impacted 7M+ invoices annually
quick and accurate data entry with minimal • Productivity savings of 70%
• Manual intensive process manual effort • Carbon footprint reduction
• High error rates • Respect for driver’s time
• GRIR reconciliation issues • Kiosks with multi-lingual capability provided • On time payment to vendors
• Multilingual CRDO operators needed support for local languages improving user • Customer delight
• Long vehicle wait time (4-5h) impacting accessibility
95 % 70% 87%
production increase 100% GRN Reduction Reduction
• Delayed payment to vendor in accuracy in in

Touchless Accuracy Truck wait time GRN creation

Processing time
Before After

Source: Nasscom case study

18
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Expleo offers customer centric personalized settings in the new car
subscriptions through continuous monitoring of past consumer behaviour

About the company Innovation brief

The solution intelligently changes the personalization of the new car subscription by
Company: Expleo continuously monitoring the past subscription of the vehicles by the same customer
Megatrend: Digital

Description
Need of ER&D Impact
of solution
• Millennials want to use the services for • The solution provides the car for the use with all Personalization is the benefit of this solution. It
transporting from Point A to Point B the settings like climate, seating position, gives a feeling to the customer that they are
(uberization) than owning a car due to either steering wheel position, infotainment choices as using their own car, if the car model is same. If
liking to drive different models or aligning per the choice of the customer. the car model is different, then based on data
with self driving cars. • The choice of the customer was learnt using analytics best preferred personalization is
data sharing from the Car to IoT platform and provided.
• The challenge with uberization is customer Analytics. Once the choice of the customer is • Stores multiple user
preferences securely
dissatisfaction over continuously changing the learnt, applying the same preferences in the car • Applies analytics &
settings on each new car subscribed. using the IT Gateway and sending the data to understands user
behavior
the respective ECUs to readjust the settings to • Makes data compatible for all
give personalization intelligently to customer. car models

• An infotainment
application: Gathers
user settings data • User settings applied back when user
from ECU and sends subscribe the car again.
it on IoT platform. • User requests for the service either
• Applicable to all users through Mobile App, Web App or from
the rental agency network

Source: Nasscom case study

19
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Quest Global designed a digital Cockpit reference platform, reducing their
time to market by 30%

About the company Innovation brief

A digital Cockpit reference platform, that reduces time to market for Automotive OEMs
Company: Quest Global
Megatrend: Digital

Description
Need of ER&D Impact
of solution
• As infotainment systems get transformed into • Android-based infotainment system with high- • Reduces Time to market by 30%; Responsive
integrated digital cockpits, they become a key resolution integrated display, connectivity, voice framework for catering to different variants,
differentiator for new cars, despite this not recognition and media features. and different markets, with a single code
being a core competency of OEMs. • Voice first zero depth UX; In-car Feature base, bringing down maintenance costs by up
framework; Compliant with Google UI to 40%
guidelines; modular, clean, MVVM architecture;
easy portability to different SoC; Hardware
partitioning as a cost-effective alternative to
virtualization

Source: Nasscom case study

20
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 1b
MEGA TRENDS - WHAT IS SHAPING AUTO ER&D?
DIGITAL VEHICLES

SUSTAINABILITY

AI

22
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Climate and Sustainability solutions to be customer centric, data backed, and
compatible, with complementary sustainability measures taken by other sectors

Digital
ClimateVehicles
and Sustainability

Customer centric Integration with other

Data based EV design
sustainable mobility sustainability measures

1. Understanding of customer use 1. Key data points: Use of road 1. Customer focused applications: To
cases: Type of customer application conditions, details of charging infra enable customers to find and utilize
(point-to-point, regular route, and driving patterns to design EV charging infrastructure; important to
highway, off-road etc.) define the components (battery life, battery enhance infra utilization
sustainable technology choices of management systems, motor power
customers (e.g., EVs not preferred for requirements etc.) 2. Interfacing charging infrastructure
long distance application in the with Renewable dominant grid:
absence of battery swapping) 2. Continuous data collection: From Seamless integration between
sustainable mobility applications to charging infra, national grid,
2. Accounting for regional differences: refine design parameters (E.g., battery renewable micro-grids and energy
Regional differences of infrastructure, management system optimization storage systems to ensure high uptime
capability etc. driving differing choices based on vehicle logs; ECU
of sustainable mobility optimization based on emission data)

23 Source: BCG Analysis

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Robust emission targets to drive adoption of sustainability initiatives in the
auto sector for EVs/HEVs and supporting infrastructure

Europe USA China Japan India

CO2 emission
reduction
target
-69% -50% -65% -48% 45%
2005-2030

Net zero Before

target year 2050 2050 2060 2050 2070
economy

Source: Climate Action Tracker, EEA 24

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Critical to set up comprehensive supporting infra and interfaces across grid,
charging infra and vehicles to ensure success of sustainability initiatives

Key integration points

Charge point and vehicle data needs to Example issues, not exhaustive
Charge point interfaces with energy
supply physically and commercially interface with P&D systems Software patches

Energy supply Charging infrastructure Fleet software

Energy and Grid Charge point Mobility Service Planning and

mgmt. software software provider software dispatch system

• Manage load on How to facilitate access &

Telematics
connection process payments with
various public chargers? and state
• Provide grid services of charge
• Optimize charging to Storage &
maximize off peak use generation
Vehicle

Data on Vehicle state of

How to secure asset
charge, Charge point power for non-depot charging, Real estate
Grid connection
requirements e.g., truck stops?
Electricity supply How to set up grid Charger EV ECU
connection that fits
charger needs?
How to secure charger supply? Charger physically
How to future-proof in case charging connects to vehicle
speed upgrade is needed in the future?

25 Source: BCG analysis

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Case Studies
Sustainability

26
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 SAP devised E-mobility, a cloud-based charging infrastructure solution,
offering seamless management & monitoring of charging infrastructure

About the company Innovation brief

SAP® E-Mobility is a cloud-based solution for operating a networked electric vehicle
Company: SAP charging infrastructure at scale. It enables companies in multiple industries to build, run,
Sector: Sustainability and manage charging infrastructure networks to drive the Sustainable transition to convenient
electric mobility.

Description
Need of ER&D Impact
of solution
• Need for an enterprise grade EV charging • End-to-end management of charging scenarios • Greater support for business
point management software with decarbonization objectives
• Business scenarios for remote charge point
integration capabilities that follows open
operations, e-fleet management, 360-degree • Seamless management & monitoring of
charge point protocols along with intelligence driver view etc.
capabilities was the necessity for many charging infrastructure
customers in various industries such as • Smart charging: Intelligent dynamic load
management • Reduced total cost of ownership
automotive, utilities, real estate, and energy
• Ecosystem development with charge point • Reduced costs through seamless integration
certification program into your existing business systems and
corporate finance processes
• Bidirectional communication with vendor
independent charging infrastructure based on • Strong partner ecosystem for expert services
Open Charge Point Protocols

Source: Nasscom case study

27
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Forvia developed an electrically heated catalyst for tailpipe emissions
reduction, leading to 95% conversion of pollutants in petrol engines, 75%
NOx emissions reductions

About the company Innovation brief

To meet the proposed stringent Euro-7 emission norms, an innovation product was developed to
Company: Forvia help reduce the tailpipe emissions from IC engine powered vehicles.
Sector: Sustainability

Description
Need of ER&D Impact
of solution
• Need to comply with the upcoming Euro 7 • Towards the objective to meet Euo-7 emission • Faurecia's electrically heated catalyst can
regulations to reduce pollutants from IC norms, Faurecia worked on developing the convert pollutants by 95 percent in petrol
engines. The catalytic convertor plays a key Electrically Heated Catalyst (EHC) as an engines, and for diesel engines, it can reduce
role in reducing the harmful emissions at an aftertreatment technology to answer Euro 7 NOx emissions by 75 percent. At the same
emissions requirement.
optimum temperature range of 400-800ºF. time the enhanced performance of the
But at cold start, this is ineffective and 80% • This allows efficient emissions conversion in all emission control system helps in reducing the
of emissions come from cold start conditions driving conditions right from cold start of the Platinum Group Metals (PGM) reduction by
in the first 20 secs. This meant that an engine. Faurecia’s solution offers the fastest 20% leading to cost benefits. Ultra fast
catalyst light-off in less than 10 secs, with lower
innovation was needed to activate the heating” with1-2 kW less power needs than
electric power supply than competition. This
catalyst in the Catalytic convertor from low compact EHC is integrated directly in our hot competition.
temperature phases. ends and enhances the aftertreatment
performance by heating the gases and the
ceramic catalyst bricks

Source: Nasscom case study

28
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 JLR developed a solar-powered active cabin ventilation system, resulting in
cabin temperature reduction of upto 10°C and other energy efficient results

About the company Innovation brief

Introduction of solar powered Active Cabin Ventilation (ACV) to reduce solar induced cabin
Company: JLR cooling demand, improve cabin comfort, and to get carbon credit benefit of $57-79 per vehicle in
Sector: Sustainability the USA

Description
Need of ER&D Impact
of solution
• Automobile cabin temperature under solar • The cabin temperature of a vehicle under a solar • Low-energy, low-cost solution can bring
load can reach 65-70°C due to greenhouse load is 15-20°C excess to the ambient down the cabin temperature up to 10°C and
effect, which increases the cabin cooling temperature due to greenhouse effect. The air can reduce air stratification (difference of
demand, A/C pull down energy and cabin blower in HVAC system of an automobile can be temperature at breath level and foot level)
used to bring relatively colder air from outside
discomfort. A low-cost and low-energy into the cabin. The mixing of colder air brings by 9°C
solution can be utilized to bring down the down the average cabin temperature as well as • The feature can reduce cabin pull down
cabin temperature to ambient temperature. reduces the air stratification. The solution is energy by ~210W
implemented innovatively by harnessing a • The introduction of solar-powered Active
portion of solar energy to run 12V HVAC blower,
Cabin Ventilation feature in automobiles can
resulting in zero range-loss of an EV with added
cabin comfort. All modern HVAC systems consist give carbon credit benefit of $57-79 per
of HVAC blower, therefore the solution doesn’t vehicle in the USA.
require any addition of new components. • The customer can start their journeys feeling
Furthermore, the HVAC blower consumes very comfortable on hot days, without extra
less energy as compared to A/C system, making energy expenditure and without loss of
it a low-energy solution. range.

Source: Nasscom case study

29
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 KPIT developed India’s first indigenously developed fuel cell electric bus,
offering 25% more efficient solutions & ready to use tech accelerators

About the company Innovation brief

With climate change looming, green, clean energy is the way forward. KPIT has developed India’s
Company: KPIT first indigenously developed fuel cell electric bus for public transport. Fuel cell technology has
Sector: Sustainability been developed with CSIR-NCL and CECRI.

Description
Need of ER&D Impact
of solution
• Fuel Cells are perfect for commercial vehicles • The FCEV employs HFC for generating electrical • KPIT’s FCEV Solution is 25% more efficient
because they emit only water vapor, meeting energy, propelling the vehicle through chemical compared to existing solutions at the same
OEMs' GHG targets. Compared to battery reactions between hydrogen and oxygen. Our price points.
electric vehicles, they offer greater payload in-house development covers all essential
components, including the electric powertrain, • Ready to use technology accelerators viz:
capacity, reduced weight, and longer ranges fuel cell stack, balance of plant, and hydrogen
of over 500 miles, making them more Fuel Cell Test Bench, Battery Testing Lab,
storage tank. We have also designed and
economical. Fast fueling means no time is Electric Motor Testing, Lab, HV Testing Labs,
manufactured the Fuel Cell Stack, Electric
wasted charging, and a single H2 refueling Powertrain, Motors, controllers, transmission, BMS platform and CDD, Battery Configurator
station can serve many vehicles. battery, and Battery Management System. As a and Thermal management
tech company, we aim to collaborate with
major manufacturing organizations via
technology licensing to achieve large-scale
manufacturing and widespread adoption of this
transformative technology.

Source: Nasscom case study

30
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Continental took a series of actions, with a focus on renewable energy,
carbon capture, and energy-efficient practices and reduced energy
consumption by 20%, & transitioning to 100% renewable energy

About the company Innovation brief

Innovations in carbon reduction are propelling climate action, with a focus on renewable energy,
Company: Continental carbon capture, and energy-efficient practices. By proactively reducing carbon emissions, we play
Sector: Sustainability a vital role in mitigating climate change and fostering a more sustainable future for our planet.

Description
Need of ER&D Impact
of solution
• The accumulation of carbon emissions in the • Currently, 98% of Continental’s Bengaluru • The plant has efficiently reduced energy
atmosphere leads to global warming, plant’s energy needs are met by renewable consumption by 20% while transitioning to
resulting in climate change. This sources, with grid electricity accounting for only 100% renewable energy sources. Through
phenomenon manifests in various ways, such 2% of total consumption. initiatives such as tree planting and
• To enhance energy efficiency, energy-efficient
as the height of sea levels, disruption of LEDs, occupancy sensors, solar skylights, and monitoring dam activities, 60 tons of CO2
natural habitats, and occurrence of extreme turbo air ventilators are installed. Planting of emissions have been eliminated. Employee
weather events. These adverse effects pose a 100,000 trees, reduced DG operation, and mobility has become emission-free.
significant threat to the planet, human and utilization of IE4-based motors and VFDs to Furthermore, the use of electric and CNG
animal life, and our future. minimize power consumption are being done. container vehicles has the potential to
• The company’s eco-friendly refrigerants have a reduce transit times by 50%.
GWP of less than 2500 and ODS equal to 0.
• Optimization of streetlights with real-time
clocks, light switch sensors, and auto-
brightness sensors. Employee transportation
provided using e-vehicles and CNG vehicles
while optimizing logistics transportation by
increasing container capacity to decrease the
number of trips.

Source: Nasscom case study

31
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 1c
MEGA TRENDS - WHAT IS SHAPING AUTO ER&D?
DIGITAL VEHICLES

SUSTAINABILITY

AI

32
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Critical for Auto ER&D players to ensure AI enablement by integrating it into
the vehicle development process and partnering with tech companies
Digital
AI Enablement
Vehicles

Integrating AI into Vehicle Development Partnering with tech companies

1. Reducing development time through AI and GenAI: GenAI 1. Technology (hardware and software) development
enable software development, GenAI based vehicle design partnerships: Partner with technology companies (e.g.,
and testing, quality control, personalized driving experience, Amazon, Google, Microsoft etc.) to develop and deploy AI
predictive maintenance etc. enabled software into vehicles

2. Ensuring Safety through AI: Driver assist through 2. Integration of vehicle stacks with fleet management
simulations, higher test case coverage systems: Seamless interlinkage of vehicle and service
provider stacks to ensure seamless integration of AI
3. Utilizing existing data and digital vehicle architecture for algorithms used in fleet management to vehicle controls
creating edge-based AI solutions: Use of past vehicle logs, (e.g., creation of specific software patches that can
testing data etc. to create simple AI models that can be integrate with VCUs of fleet vehicles to optimize vehicle
deployed at the VCU level performance based on vehicle use)

33 Source: BCG Analysis

SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Potential to optimize Automotive software development via Gen AI –
multiple applications and tools available across SDLC
Code y/CD
Plann plo
ion i Inte Key considerations

De
at Desi Customer
ng g
itiz

gra
l
Prior

n
Bui
Changes in

te/CI
development lifecycle
a te g y

will reduce upfront

st

rif y
S tr

productivity,
Te

Ve
for longer-term gains
Feedback
Developer input is
required to
Strategy & planning loop Development loop Deployment & monitoring loop
contextualize lifecycle
Automate
Conduct Automate Automate to organization; there is
Design

Enhance drafts of
Strategy

Integrate semantic performance security, no one-size-fits-all

Verify
ideation for wireframes
customer and code search and vulnerability &
products and and mock-ups
market data compatibility compliance
features Tools may be updated if
testing testing
Automate code to support new
Code

Automate code
generation and Automate build development lifecycle

Integrate/CI
Facilitate documentation
standardization
Planning

Automatically optimization
generate user
internal
and build
Automate (e.g., adopting security
knowledge documentation
stories and PRD
search Automate Failure testing tools)
Build

Automate code analyses

config updates
refactoring
and integration
Prioritization

Automate
Deploy/CD

Log/system
Fetch historical Integrate deployment
Automate test Automate analysis, perf.
performance customer and (IaaC, infra.
Test

data & case digital twin review and

of task delivery market data analysis,
generation model testing optimization
optimization)

Note: PRD: Product requirement documents; IaaC: Infrastructure as a Code

Source: External Tech leader survey (N=50), BCG experience 34
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Increased test coverage through test case generation with tests based on
business requirements via Gen AI

Test case generation - illustration of the use case

Generative AI training models

Generative
AI leveraged
• Generate code via context-aware conversation in coding interface • Generate tests from intended business purpose of function
to
for more reliable tests and less developer bias
automatically
generate test
Evaluation of the GenAI use case Tool Example Tool/Company example
cases from a
Efficiency1 Instant test cases GitHub Copilot Amazon CodeWhisperer description
Innovation/ Better developer of a code’s
experience (no test focus)
Experience functionality
Risk reduction Less bias for tests

Risk of excluding • Individual lines and functions • For staff and clients
Low concerns2 edge-cases in real-time • Code based on developers’
• Context from comments comments and prior code
Roll-out cost and Scalable tools for and code
effort to scale business of all sizes

1. Cost/speed 2. Privacy, security, ethical

35 Source: BCG Analysis; GitHub; Amazon
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 25% increase in model accuracy of test data for autonomous operations,
95% lower training cost by leveraging Gen AI

Test data for autonomous operations- illustration of the use case

Hardware-in-the-loop vehicle in testing “cinema” Generative AI training models

Generative AI
to create
• Fast generative of large datasets for virtual training environment • Create synthetic data that covers different weather conditions and
• Test data can include images, videos, lidar scans and other traffic situation
training /
• Able to upskill performance of algorithms
sensors data
testing
Evaluation of the GenAI use case Tool Example Tool/Company example datasets for
autonomous
Efficiency1 Fast data generation GitHub Copilot Amazon CodeWhisperer
operations
Innovation/
Experience
Higher vision
performance scenarious
Risk reduction Reduced real-world bias

No personal/confidential • Realistic test data • Road scenario simulation

Low concerns2 date input required • Scenario simulation of • Test environment for
complex situations (e.g., autonomous vehicles
Roll-out cost and Available tools, likely in accidents, pedestrian
effort to scale subscription model crossings)

1. Cost/speed 2. Privacy, security, ethical

Source: BCG Analysis; GitHub; Amazon 36
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Case Studies
AI

37
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Tech Mahindra offered AI based solution for automated defect detection,
leading to 80% productivity enhancement and 95% detection accuracy

About the company Innovation brief

AI based solution to ensure automated defect detection on the XUV 700 painted surface, BIW
Company: Tech Mahindra (body in White) coming out from the paint shop
Category: AI

Description
Need of ER&D Impact
of solution
• Average 30 identified defects per vehicle • Deflectometry concepts combined with a • Fully automated: 100% automated
(XUV 700), including major and minor defects custom-built rig installed on the Assembly Line inspection – Eliminate the need of inspectors
used for vehicle inspection. Vehicle BIW to be and associated cost of quality (missed defects
• ~30% defects go unnoticed due to the inspected is passed through the rig which etc.).
limited time available for the inspectors consists of 16 cameras, lights and edge
computing. • Productivity enhancement: 80%
• Needs an investment on inspectors (at least
• AI algorithm identifies the deformation on the
2 per shift) • Detection accuracy: 95%
fringes projected on to the vehicle surface and
classifies them based on the defect category. • Seamless integration with MES & ERP
Data is sent to the cloud via 5G for storage and
integrated with the MES system. systems

Source: Nasscom case study

38
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Maruti Suzuki’s Nexaverse is an AI powered customer support platform
which helped customers to get quicker TAT for newer services & better unit
economics for the company

About the company Innovation brief

AI powered customer support is improving customer experience by enabling Intelligent customer
Company: Maruti Suzuki conversation using AI, ML & NLP. The Solution is co created along with the startup Rezo.ai.
Category: AI

Description
Need of ER&D Impact
of solution
• High Human Agent Workload • Actionable Insight on the unstructured voice • Personalized Recommendation
data is enabling to identify opportunities of
• Difficulty in Mass reach-outs improving Customer Experience (CX). It is • Prevention of funnel leakage
measuring quality of call centre & providing
• Low Contact Center Performance insights to improve Customer Experience (CX) to • Upselling and Cross- selling
reduce cost. With migration of users to channel
of their choice, cost per avg. customer reach is • Boost in Agent Performance
optimized.
• 24 x 7 availability with scalability to handle
large volumes​

• Quick TAT to add newer services​

• Reduce time from interest to lead

qualification​

• Better unit economics

Source: Nasscom case study

39
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 2
CHALLENGES AND WAY FORWARD

40
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 The challenges facing the rapidly evolving Auto ER&D segment can be
addressed through flexible platforms and talent upskilling

Concerns highlighted by ER&D leaders Key skills required by ER&D

in the sector players in the sector
Regional disparities in customer choices and Creating Flexible Product Platforms - Build
regulations – Need for flexible development cycles and customizable platforms which can be used
regional innovations (e.g., software patches depending across regions
on regional emission regulations)
360 degree view of vehicle development -
Rapid pace of innovation – Companies and employees Innovation, entrepreneurship and
unable to keep up with the pace of development (e.g., G Interdisciplinarity
roles of data scientists and data engineers rapidly
evolving with advancements in AI) Ability to develop and sell services – To meet
the increasing demand for peripheral services
Talent gap – Emerging areas like AI augmentation,
Cybersecurity etc. face talent shortage
Ability to work with an ecosystem of
Inability to adapt – Current automotive development automotive partners (including startups and
and sales cycles much shorter compared to traditional universities) on topics like electrification,
cycles; Challenges in adapting processes to new connected cars, cybersecurity etc.
timelines
Multiple choices permitted per respondent. % shows the percentage of experts within a class that determined the choice as a future challenge
Source: CapitalIQ, BCG ER&D Survey 2023 n=281; Press Search; BCG Analysis

41
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Way Forward | The Auto sector needs to reimagine its talent & product
strategy, operating model to adapt to the fast-changing ER&D environment
Auto OEMs, Tier 1s & Service Providers
The Fast Changing Auto ER&D with the right gearing across talent,
landscape opening up a host of new product & ops best placed to leverage
opportunities opportunities

Working at the intersection of emerging

1 megatrends 1 Talent Strategy
• Climate & Sustainability focused digital and • Upskill the existing workforce - Conduct Gen AI
connected solutions (E.g., Grid integrated EVs to trainings, encourage interdisciplinary learning
optimize use of electricity for charging) through internal transfers etc.
• AI powered electrification/ hybridization etc. (E.g., • Create flexible pay structures - To attract best talent
AI-enable battery management/ engine control) from other industries

Creating an integrated software and hardware 2 Product Strategy

2 ecosystem to interface with developments in • Focus on agile and flexible product development
allied industries
• Reposition products to showcase value added services
• Integration of EVs into an increasingly renewable
grid (E.g., Charging infrastructure integration Reimaging the Operating Model
3
software) • Restructuring the development process - Integrate
• Connection of fleet vehicles with IoT enabled software and hardware development, blend
industrial processes (E.g., Manufacturing to dispatch sustainability into development processes etc.
integration – vehicles for dispatch made available • Restructure the organization – Create cross
just in time) functional teams to work on interdisciplinary
• Integration of AI focused software protocols problems, integrated hardware and software sales
vehicle development teams etc.
42
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
 Way Forward | For India

For Auto OEMs

Leverage Indian talent and expertise to become champions of global competencies – OEMs and Service
providers can leverage the skill and scale of India’s talent; focus on competency clusters to service global
demand of legacy tech like ICE, and nurture pools of talent of emerging tech like EV and Hybrid tech through
upskilling & academic partnerships

Own larger part of the automotive value chain - Reduce imports and make vehicles affordable, specifically
for EVs (E.g., Develop indigenous battery modules and electric drive motors)

Make India the hotbed for research and innovation - Setup labs and COEs for niche technologies and
develop shared infrastructure to strengthen the overall automotive ecosystem incl OEMs, Tier 1s, service
providers, startups and government

Co-creation with ecosystem players and integration at Vehicle Level – OEMs and Service providers should
focus on developing a comprehensive partnership ecosystem incl., system Integrators as well as smaller, new
age and niche software providers

Use AI to shorten new vehicle design cycles - Both OEMs and service providers can leverage Gen AI (e.g.,
creating automated test use cases in development and deployment) to create personalized, sustainable and
safe automotive platforms

Develop cost optimal safety standards and technologies for emerging markets – For primarily Electric
vehicles, especially in the 2-wheeler segment, ADAS, emergency braking, blind-spot detection etc

44
SEIZING THE ER&D ADVANTAGE | Frontiers for 2030: Auto Sector Deep -Dive
ACKNOWLEDGEMENTS
We would like to extend our gratitude to Kishor Patil (CEO & MD of KPIT), Latha Chembrakalam (Vice President &
Head of Technical Center India – Continental Automotive), Debashis Neogi (Managing Director – Renault Nissan
Technology & Business Center India) and Snehil Gambhir (Partner & Director, BCG) for participating in the Nasscom
BCG Automotive Sectoral Roundtable discussion. Their expertise, views and rich experiences have been invaluable.

A special thanks to Siva Polimetla (Head – ER&D), Achyuta Ghosh (Head - Insights), Vandhna Babu (Principal
Analyst - Insights) from Nasscom for conceptualizing this roundtable and to Amit Kumar (Managing Director &
Partner), Mayank Sharma (Project Leader), Aarkesh Venkataramanan (Consultant), and N Nopur (Marketing
Team Lead) for their support in the preparation and execution of this endeavor.
Disclaimer
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errors, omissions or inadequacies in the information contained herein, or for interpretations thereof. The material or information is not intended to
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