AI's the smart way for auto industry
Artificial intelligence is about more than fancy new gadgets - the main factor is return on investment
The automotive industry has seen dramatic changes in the last decade. Today's cars are smarter, safer and more fuel-efficient compared to 10 years ago, and technology has been the driving force behind many of these advancements.
But there is one innovation that is set to have an even greater impact on automotive design and manufacturing as well as how these businesses are run in the digital era: artificial intelligence (AI).
AI is set to have a dramatic impact on almost every industry, with innovations such as Google's self-driving cars already hogging the headlines.
Last year, General Motors, one of the world's largest car manufacturers, spent more than US$1 billion (S$1.35 billion) on Cruise Automation, a start-up company to help it enter the driverless cars market. Tech heavyweights Baidu and Google spent US$20 billion to US$30 billion on AI last year, with 90 per cent of it going to research and development, and deployment. The rest went to AI acquisitions.
In South-east Asia, Singapore leads the driverless car front.
Just last month, Grab and aMassachusetts Institute of Technology spin-off announced they would use Singapore as a test-bed for the world's first self-driving taxi for a ride-hail network. Public trials are already in the works with plans to roll it out to other cities.
Investment in AI is not, however, just about fancy new gadgets and innovations for drivers.
The main factor here is return on investment (ROI). Based on Tata Consultancy Services (TCS) research, automotive executives found that investment in AI helped to reduce production cost by 10 per cent. Automotive manufacturers also reported a 12 per cent average revenue increase in the areas connected to AI initiatives.
Simply put, the view from the boardroom is: If automotive companies invest in AI, it delivers ROI, spurs new product innovation and leads to better safety and reduced environmental impact.
TCS recently conducted a major study into AI across 13 sectors. In the automotive industry, 90 per cent of business leaders said they were already using this technology.
The sector has always been quick to adopt new innovations and operating models; after all, it was Henry Ford who invented the assembly line that revolutionised how cars were produced.
It also pioneered the use of robots in automotive plants long before other manufacturers incorporated their use.
AI and the Internet of Things, however, present the next big leap forward. Self-driving cars are a prime example. AI has helped the automotive industry bring this idea to fruition.
But more than just driving, AI technologies are so powerful that they can be deployed to learn human behaviour, sensing how other drivers would react to adverse weather conditions and helping motorists make important decisions, such as when to overtake during wet weather.
What is interesting is how this technology is driving production and safety. French carmaker Renault uses factory robots designed to work with people.
At a French plant, robots put screws into car engines and check that parts are fitted correctly. These robots are also equipped with camera and other technologies that let them know where plant workers are, so they avoid harm.
This is a major opportunity for car manufacturers in South-east Asia who have ramped up production in response to rising spending power and low car ownership.
In Vietnam and the Philippines, two of the fastest growing car hubs in the region, production outputs are expected to surge up to 200 per cent and 300 per cent, respectively.
Effectively managing the security and data risk of AI systems is of paramount importance, for instance, with automotive companies in TCS' study stating this was the No. 1 success factor to derive real value from the technology.
Other issues such as the willingness of workers to learn new skills and adapt to ways of working alongside AI tools were also reported as potential buffers.
The ability of AI to improve design and the operations of a business is palpable. The study shows that AI is leading the charge on many fronts and the benefits will soon be seen on the roads as well as across a wide array of business areas.
With AI set to continue having a dramatic impact on the automotive industry, it is vital that business and policy leaders think carefully about where the impact will be most acutely felt and how they can make AI's influence a genuinely positive development for the sector.
The writer is Tata Consultancy Services' president of Asia-Pacific. This article was published in The Business Times on Tuesday.