Time to change the Business Model!

The Automotive Industry is in a transition phase, no doubt. The question is just when the different technologies, products and services will reach the “tipping point” for introduction. Most advanced at this stage seems to be the “electrification” of the automotive powertrain. Autonomous Driving and Connectivity breakthrough will depend on computing power, 5G communication network availability and simply engineers available to develop and validate the systems! Car ownership / sharing will depend very much on creating a holistic mobility offering, combining car usage with trains, buses, trams, bikes and scooters.
Traditional Automotive companies do invest time, money and resources in all above mentioned areas. The problem is, that they position these technology developments as satellites around their core product “car”!

Everything the Automotive OEM´s do is around the value proposition “developing, building and selling cars”!

Patrick van der Pijl is an entrepreneur, business designer and business model strategist. He has used Alex Osterwalde´s Business Model Canvas and compared the business model of a traditional Automotive OEM BMW with the business model of an Automotive “Challenger” Tesla.

BMW versus Tesla: who is going to win?

I very much encourage you to read the article, first of all it explains the use of the Business Model Canvas very well. Secondly it makes the value proposition of both companies visible:

  • BMW´s business model is all about their specific “car” product offering, their brand image, performance oriented target customers
  • Tesla´s business model is about “driver experience and service”, it´s about safety, acceleration experience, easy charging and driver service 24/7

I strongly believe that the traditional automotive “product” centered business model will gradually be replaced by a “mobility service” business model. The future (Generation Z) customers are no longer interested in the product “car”, they want a smart, efficient, cheap “mobility service” to bring them from A to B with all possible connectivity offerings and communication channels. Of course there will still be lots of opportunities to differentiate in the product “car” and brand images will still be important. But it is essential to put the customer and their mobility wish in the center! As mentioned in one of my previous articles / blogs, this also means that the Automotive Industry will have to sit together with other mobilty service providers and develop joined up offerings, the time that cars compete with trains, airplanes, buses or bicycles is over….

 

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