5 top trends from CES that will drive the automotive industry in 2024

Every year, CES provides automotive and consumer electronics companies with a global platform on which to showcase their new inventions and innovations. This year, AI may have grabbed the headlines but there was much more to see. The lines between automotive and consumer electronics melted away and we saw a greater focus on sustainability, heavy industry, and the importance of partnership plays. Based on my meetings with clients, partners, and industry experts, these are the key themes that I think will drive the automotive industry this year and beyond.

1. GEN AI … in the car and across the value chain

For some brands, Generative AI use cases were the main draw – we saw both VW and Mercedes-Benz show off ChatGPT-powered in-car voice assistants. BMW revealed its Dee concept at CES 2023 and this year confirmed that it continues to work on its own Large Language Model (LLM) with Amazon and Alexa. Other brands will surely follow.

Whatever the technology behind the tool, the trend is clear – these AI-powered assistants take voice control up a level and bring us closer to the possibility of in-car companionship. This opens up some intriguing opportunities, such as how can you make your assistant stand out from the crowd? Will it be through the LLM and data set used for training, the ‘character’ through which the technology speaks, the depth of integration with other car controls, or something else (e.g. emotion detection and subsequent adaptation of behavior)? How deeply will we allow voice control to integrate with vehicle functions? And just how much data will we allow our in-car companions to gather about us?

There is huge potential to personalize in-car experiences, add value in new ways, and build loyalty. But we must remember that the whole topic is still relatively fresh and not without it’s risks – OEMs must monitor implementations and usage carefully, and go the extra mile to ensure AI in the car can be trusted and does not compromise safety.

GenAI will also have a big part to play elsewhere on the automotive value chain. Many valid use cases for this technology are emerging, from the acceleration of R&D activities, to training ADAS systems and generating test cases, creating code that enables software to be shipped much more quickly and much more. The possibilities are almost limitless and – given the public interest in this technology – automotive brands will be keen to show they are at the forefront of innovation.

2. Evolution of the in-car experience continues

The C in CES stands for consumer and it was the end consumer, or customer experience, that was the main focus for most of the big automotive brands in Las Vegas. Of course, AI-powered in-car assistants were one of the main stories, but there was much more to see and experience. Sony and Honda revealed their first Afeela car, with most of its appeal built around the potential for slick gaming and entertainment experiences. I had the opportunity to explore the vehicle and can attest that the high-quality interior really felt like a cross between a futuristic vehicle and a sophisticated home entertainment environment.

The Afeela experience (as well as the innovations from Mercedes Benz with its ultra-sophisticated MBUX and MB.OS interfaces) points towards an overall trend in the industry – the in-car digital experience is emerging as a key point of differentiation, one that is arguably as or more important than some of the physical aspects we have traditionally valued, such as exterior styling and performance. This trend will intensify as EV adoption continues (and people get used to the idea of re-charge breaks) and as the driving experience becomes more assisted and automated (a topic I’ve explored in a previous blog).

Gaming is at the forefront of this trend and it’s interesting to see the variety of approaches being taken by some brands – Sony and Honda are betting on the established reputation and subscription base of the PlayStation brand; Audi and Porsche owners have had first access to the immersive Holoride experience; BMW has partnered with AirConsole and is building gaming options into its iDrive OS, and there are more examples. Given the value of the gaming market and its popularity among the key car-buying demographic, we can expect to see more innovation in this area in the coming months. And watch out for an increased focus on audio experiences – with EVs being quieter than their combustion counterparts, there’s an audio void to fill, which is yet another area in which brands will compete. I found listening to the Panasonic Automotive ELS Studio 3D system in the Fisker Ocean to be a mind-blowing experience and the Mercedes Benz’s MBUX SoundDrive also looks like a novel approach to delivering a customized and differentiated audio experience.

And if gaming and music aren’t your thing, there’s much more to consider – audio books, e-publications, and digital streaming of media and entertainment – with new options being added by carmakers and their partners almost daily. What we’re still waiting to see is just how much of a market there will be for these services (we have explored the lack of uptake of connect services). Will high-quality digital services be table stakes or difference makers for car-buying customers? And will there be enough ‘willingness to pay’ to create a viable source of ongoing revenue for OEMs?

And it’s important to remember that this isn’t just a competition between automotive brands. Every OEM is looking at what level of integration with CarPlay and Android Auto can be considered ‘comfortable’. Some car brands are allowing deeper integration, while others are pulling up the drawbridges. It’s a fascinating topic and one that we’ll hear much more about in 2024 and beyond.

3. More than one route to sustainability

The faster-than-expected uptake of electric vehicles (EVs) in 2022 and 2023 convinced many that electric mobility was the only way to achieve sustainable mobility. More recently, we’ve seen a slow down in demand in some markets and the scaling back of production plans and investments by some manufacturers, which suggests that not everybody is ready to make the switch to electric just yet.

Clearly, there are still obstacles to overcome. In some markets (e.g. North America), longer journeys and a lack of infrastructure make many customers wary. In others, a lack of affordable options (e.g. because of a lack or removal of subsidies) is slowing down uptake, which suggests we need more affordable options at the ‘volume’ end of the market. We know that battery technology is a hotly contested topic. What I’m keen to see is whether the focus will remain on bringing down the cost of large, longer-range batteries, or if there’ll be a shift to smaller-but-faster-charging batteries, which could serve the majority of urban commuter needs. Whichever direction an OEM chooses, the key is that electric mobility needs to become more affordable and accessible.

It’s also important to recognize that every market and automotive brand’s customer base is different. Manufacturers must seek to understand the needs of their customers (and the customers they want to attract) and act accordingly. Move too fast, and you might alienate existing customers. Too slow, and you risk being left behind. 

What I saw at CES showed that the automotive industry is definitely looking beyond just battery electric vehicles (BEV) when it comes to sustainability. There was a surprising number of announcements and exhibits involving hydrogen, as well as some innovative uses of different materials and recycling to make car production and performance more resource-efficient.

Hydrogen is a controversial topic for many. For road cars, there seems to be little momentum or appetite to develop new models after extremely low uptake in major markets. However, the continued investment in other segments – such as commercial vehicles and heavy machinery – indicates that there may still be a future for hydrogen. At CES we saw examples of zero-emission vehicles from the Kenworth-Toyota partnership and a futuristic-looking hydrogen-powered excavator from Hyundai (as well as an announcement of some major investments in hydrogen-powered commercial vehicles). All of this suggests that there is still plenty of exploration and experimentation to be conducted with different energy sources as different industries seek to reduce their environmental impact in the most efficient way possible, but the answer might vary according to segment, use case, and market.

The bottom line is that there is more than one route to sustainability and, perhaps most importantly, the journey must be an inclusive one – one that considers the planet, customers, workers, and the existing ecosystem – if it is to be truly successful.

4. Consumer tech entering the automotive space

It used to be that CES was all about consumer electronics (CES stands for Consumer Electronics Show). The focus on automotive at the event is a relatively recent development and, up until this year, the industry had stood apart. Not so this year, with the lines between automotive and consumer electronics essentially disappearing.

Companies like Sony, LG, and Samsung (directly and through its wholly owned subsidiary Harman) – brands we typically associate with consumer electronics – are increasingly present, either through their own solutions or in partnership with major manufacturers. As the in-car experience becomes more important, these brands can add significant value with their competencies in providing high-quality screens, cameras, user interfaces and experiences, and much more. The evolution goes far beyond the devices and the technology that the driver can enjoy inside the cabin – many companies, such as Panasonic and LG (though its LG Innotek division) are bringing chips, battery technology, sensors, LED lighting and displays (inside the car and as external vehicle communication interfaces), and other technologies to provide new and competitive options to support a variety of areas in the modern software-defined vehicle architecture. The fit makes sense – OEMs can benefit from class-leading technology without having to invest in building new capabilities while customers can enjoy top-quality and familiar experiences across their digital lives.

As the automotive industry embraces electric mobility and software, and the commonality between software-defined electric vehicles and consumer devices grows, we will see more new entrants into the automotive industry – either as partners or vehicle manufacturers. We know that Foxconn (the manufacturer of the Apple iPhone) is already partnering to enter, while Xiaomi and Huawei have revealed their first vehicles. Look out for more announcements from consumer electronics companies, more partnerships between these industries, and maybe even news on a long-awaited Apple car.

5. Navigating the expanding ecosystem will be key to success

There is one thread that runs through all of the trends above, and that is the importance of being able to operate successfully with the right partners within an expanding ecosystem. The pace of change and the number and variety of development areas is simply too much for automotive companies to go it alone.

The major hyperscalers (AWS, Microsoft Azure, and Google Cloud) have established themselves as key enablers in the transition to software-defined vehicles and they’ll be supporting many of the digital in-car infotainment options mentioned above. And, of course, we see the growing role of chip producers like Qualcomm, NVIDIA, Arm, and others. Their speed of development will play an important role in advancing progress on key topics such as infotainment and autonomous mobility.

But the changes taking place in the industry go beyond technology. To succeed in the new world, you need to know how and when to engage with the broader ecosystem and look beyond your own industry. How can you work with energy and utility companies to support a transition away from fossil fuels? What can you learn from retail leaders about enhancing the digital customer journey? How can you find and build relationships with start-ups and niche players that provide real differentiation and business value? And how and where can investments and lessons learned be shared across industry segments (e.g. commercial vehicles, heavy industry, or motorsport like we’re doing with the Peugeot Sport 9X8 hypercar) to save time and money while maximizing mutual benefit?

For all the allure of the shiny new tech, it is partnerships that will empower you to accelerate progress, and scale in a way that is efficient, profitable, and aligned with the bigger-picture goal of delivering safe, stress-free, satisfying, and sustainable mobility experiences and transport solutions.

Interested in these trends and how you can harness them for the benefit of your company? Get in touch with us.