Automotive manufacturers are in a race to distinguish themselves
in the fast-evolving landscape of advanced driver assistance
systems (ADAS) and autonomous driving technologies. As competition
intensifies, automakers are adopting diverse strategies to
integrate these features, from enhancing safety and convenience
with ADAS to pushing the boundaries with fully autonomous
capabilities.
A recent example of this strategy comes from Mercedes-Benz. In
August, the luxury vehicle company became the first international
automaker certified to test Level 4 autonomous driving technology
in Shanghai; several domestic companies have such permissions
already. This highlights Mercedes’ focus on using autonomy to stand
out in one of the world’s most competitive markets. The company
faces rising competition from mainland Chinese electric vehicle
makers such as Nio and XPeng in the passenger car segment. By
advancing its Drive Pilot system, already making strides in Germany
and the US with Level 3 certification, Mercedes aims to reinforce
its technological leadership and prepare for shifts in mobility
demand. This development is emblematic of broader industry trends
as original equipment manufacturers strategically navigate the
deployment of Society of Automotive Engineers (SAE) Level 0-4
autonomous features.
Current trends in OEM strategies
The automotive sector is undergoing a major transformation as
OEMs integrate advanced automated driving features across their
portfolios. This trend is reflected in the strategies of OEMs such
as Mercedes-Benz, BMW and Tesla, who are at the forefront of
deploying automated driving capabilities at Level 2+ and Level 3.
Their approach showcases the development of advanced hardware and
highlights the critical role of robust software solutions that
allow vehicles to learn and adapt to real-world driving
conditions.
The integration of ADAS is becoming increasingly prevalent, with
approximately 60% of global vehicle sales in 2023 incorporating
over 10 ADAS applications, from multiple types of basic park assist
to active safety functions, such as automatic braking, and more
holistic automated driving systems, according to S&P Global
Mobility’s Autonomy
Forecasts. This trend highlights a strong emphasis on
vehicle safety and automation technologies across the industry.
A notable segment of the market still relies on basic driver
assistance technologies, with 29% of global vehicle sales including
only Level 0-2 ADAS applications. Rear park assist remains the most
common feature. However, 7% of vehicles are still sold without any
ADAS features, indicating a gap in the adoption of safety
technologies in certain regions, driven in large part by cost
constraints and local market priorities.
Despite these rapid advancements, many OEMs remain cautious. A
key concern is whether the driver or vehicle is liable for safe
operation in different operating modes; this concern is largely
responsible for the popular Level 2+ segment augmenting the
foundational SAE J3016 levels. This is particularly evident in the
US, where leading OEMs offer a number of “hands-off” functions but
stop short of fully absolving the driver of the need to supervise
and intervene promptly — the hallmark of Level 3 features.
Hence, these systems are classified as Level 2+ and maintain the
current driver-centric liability structure.
As OEMs continue to develop Level 3 automated driving systems,
they must ensure that policy and regulatory frameworks support such
innovation while ensuring public safety. Germany is at the
forefront, with the Mercedes-Benz Drive Pilot the first to receive
approval and be made available for sale to consumers in that
country. The system is now also available in California and Nevada
in the US. Mercedes recently announced that it will be increasing
its top allowable speed in Drive Pilot to 95 kph from 60 kph. BMW
is expected to follow suit with the second commercially available
Level 3 system in Germany.
Subscription models for automated driving
features
By offering automated driving features through subscription
plans, carmakers can provide drivers with access to hands-free
driving systems such as Ford’s BlueCruise or Tesla’s
Full-Self-Driving (Supervised) without the up-front cost of
purchasing the full package. As vehicles become increasingly
defined by software, over-the-air updates allow OEMs to
continuously enhance functionality, justifying potential price
increases over time, as long as the vehicle was originally sold
with the appropriate hardware.
Should drivers pay extra for enhanced safety, or should these
life-saving technologies be universally accessible? This question
is up for ethical debate, but automakers are providing many active
safety and ADAS features (which are increasingly mandatory, led by
Europe and the US) while offering convenience-oriented features as
options at point of sale or through their connected services
portfolios. This provides automakers with initial revenue at sale
and/or future revenue through post-sale activation or ongoing
subscription costs. Such revenue helps cover the initial optional
features and subsidizes the cost of increasingly standard active
safety features and the hardware necessary to enable them.
Authored By: Hrishikesh S, Senior Specialist, Supply
Chain & Technology, S&P Global Mobility
To learn more about OEM
strategies around ADAS, read our latest Autonomy
report
