The Automotive Landscape Set for a 180-Degree Overhaul: Says Zinnov
Investor funding in the automotive sector 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. 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. The hottest areas of investment are Transport Tech and Electric & Autonomous OEMs.
Santa Clara, CA, November 29, 2016 --(PR.com)-- 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 automotive industry 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, the 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.
Commenting on the study, Pari Natarajan, CEO, Zinnov, said, “The Face of the automotive industry has changed drastically with two major developments. New age Electric OEMs such as NextEV, Faraday Future are emerging and competing with traditional OEMs like GM, Ford and BMW. Secondly, software providers in areas like Autonomous cars and Infotainment such as Mobileye, Elektrobit are now an integral part of the Tier-1/OEM industry structure itself.”
“Interestingly, the sector is also receiving considerable attention from Non-Automotive investors. A total of 104 Corporate Investors from verticals like Telecom, Internet companies, Tech Mafia & Semiconductor companies are making significant bets in the Automotive Ecosystem,” he added.
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.
Speaking about the findings of the study, Ayan Mukerji, President & Board Member, Zinnov, said, “Global Automotive Innovation is shifting its center of gravity towards the Bay Area. Amazingly, overall investment in startups in the Bay Area is equal to rest of the world. The Bay Area has emerged as a global hotspot with $16.1B in funding as compared with $18.7B in RoW. With 220 Startups, Silicon Valley has more than 3X the number of startups as Europe & China both together.”
“Bay Area has always been the Driver in Automotive Tech Innovation with OnStar, Livio; Tesla, Uber; Google Self-Driving Tech leading the way in areas like Infotainment, Electric, On Demand Cabs and Autonomous Tech. We also noted that the Collaboration Intensity in the Bay Area is the highest due to its robust ecosystem of Open Innovation Labs, VC Arms and Accelerator Partnerships,” he added.
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. 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.
Investor funding in the automotive industry 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, the 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.
Commenting on the study, Pari Natarajan, CEO, Zinnov, said, “The Face of the automotive industry has changed drastically with two major developments. New age Electric OEMs such as NextEV, Faraday Future are emerging and competing with traditional OEMs like GM, Ford and BMW. Secondly, software providers in areas like Autonomous cars and Infotainment such as Mobileye, Elektrobit are now an integral part of the Tier-1/OEM industry structure itself.”
“Interestingly, the sector is also receiving considerable attention from Non-Automotive investors. A total of 104 Corporate Investors from verticals like Telecom, Internet companies, Tech Mafia & Semiconductor companies are making significant bets in the Automotive Ecosystem,” he added.
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.
Speaking about the findings of the study, Ayan Mukerji, President & Board Member, Zinnov, said, “Global Automotive Innovation is shifting its center of gravity towards the Bay Area. Amazingly, overall investment in startups in the Bay Area is equal to rest of the world. The Bay Area has emerged as a global hotspot with $16.1B in funding as compared with $18.7B in RoW. With 220 Startups, Silicon Valley has more than 3X the number of startups as Europe & China both together.”
“Bay Area has always been the Driver in Automotive Tech Innovation with OnStar, Livio; Tesla, Uber; Google Self-Driving Tech leading the way in areas like Infotainment, Electric, On Demand Cabs and Autonomous Tech. We also noted that the Collaboration Intensity in the Bay Area is the highest due to its robust ecosystem of Open Innovation Labs, VC Arms and Accelerator Partnerships,” he added.
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. 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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Zinnov LLC
Jaya Shukla
+91 81970 52525
zinnov.com
Jaya Shukla
+91 81970 52525
zinnov.com
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