Innovation in the Automotive Industry

The automotive industry has an excellent track record in innovation. Investing 4 per cent (€20billion) of its annual turnover in research and development (R&D), it is the largest private investor in R&D in the EU, covering approximately one fifth of Europe’s total private R&D expenditure (source: EU statistics). The results of this investment are clear to see. Landmark innovations in car production in the 20th century began with the introduction of the assembly-line, which then evolved into modular platforms - just-in-time and the use of robots - all of which were seen as revolutions in their time. During the 20^th centuary,  numerous innovations in vehicle design lead to a dramatic improvement in functionality, safety and reliability whilst reducing costs at the same time. In the 21^st century, innovation will also increasingly be driven by the need to respond to environmental and social changes.

The European Commission (EC) has become a key driver of innovation in the automotive industry. The introduction of legal frameworks such as the European Emissions Standards which first came in to force in 1993 to control vehicle exhaust emissions is one example of this. By 2014 the industry will be adopting the 6th generation of these standards (EURO6), which is set to continue the trend of being progressively more stringent than its predocessor. Since their introduction, these important standards have successfully led to dramatic reduction in the majority of vehicle exhaust emissions,  however increasing concerns about climate change and global warming have placed a new spotlight on CO2 emissions, which were not previously covered.

Road transport is responsible for about 20% of all CO₂ emissions, with passenger cars contributing about 12 per cent of this figure (EU Commission). Despite the transport industry’s capacity to innovate the automotive industry’s relative contribution towards CO₂ emissions it is still increasing due to increasing numbers of cars on the roads, more journeys being carried out and increasing life-spans of vehicles.Transport is the only major sector in the EU where CO₂ emissions are still rising and so governments and the EC have again stepped in with stringent targets and a new legal framework for CO₂ emissions, which was introduced in 2007. This  has further ramped up the pressure on the automotive industry to innovate in order to stay in business.

The necessity to innovate in order to meet such demanding legal frameworks within the EU has been a key factor in fostering a close co-operation between car companies, their suppliers and the EU, with large sums of public money committed to joint, pre-competitive strategic research.

We are rightly concerned to see such public funding have the necessary impact and not be wasted. This comes down to planning, and what is particularly impressive to me is the creation of a coherent and dynamic strategic framework for planning transport research and innovation in the EU. Creating this has involved the difficult task of managing the many stakeholders from across the different European cultures and continent and I think the result is a shining example of successful stakeholder management. This has no doubt been helped by the internet revolution, and is certainly something that European citizens can be proud of. Organisational ‘instruments’ to achieve this level of strategy include various EU industry organisations such as EUCAR, ERTICO, EARPA, CLEPA and various others - all of which have complementary objectives focussed on achieving the level of strategy needed not just to focus the public funding but much greater amounts of private funding as well.

We will soon be coming to the end of the latest EU Framework programme for research and innovation, Framework 7. This programme has part funded close to €4billion of collaborative R&D projects in transport since 2007. My own company has been an active participant in this programme and have benefited greatly from this and are already exporting the capabilities we have developed into global markets.

Society is benefiting too from such funding. There are numerous examples of technologies that are already in the market that will help to save lives on our roads during these winter months, such as stability control and ABS. However there are also other technologies in the pipleline that are set to further improve safety standards. SAFESPOT is one such example – a new technology that enables cars to share information on road conditions, alerting other drivers if they are approaching hazards such as black ice. Thankfully in the current climate of austerity, governments have resisted the temptation to cut back on European R&D funding and the next EU framework programme for research and innovation (Horizon 2020) kicks off in 2014 - something we are already preparing for.

Looking back at how far the automotive industry has come to date, I believe pan European legal frameworks that force innovation and the collaborations fostered by funded R&D programmes are forces for good. They are also something to be proud of.  To date they have played an important part in the European car industry becoming a world leader in the development of ‘safer’, ‘greener’ and ‘smarter’ technologies, not only to meet current obligations but to equip ourselves with the capabilities to face the major environmental and social challenges that lie ahead. In so doing this will provide further opportunities for economic development by exporting such capabilities to global markets. No doubt there are improvements that can be made and EU funding does often come in for criticism, but it is also important to recognise the many achievements and the sheer importance of continuing to invest public money in securing the future of the EU automotive and wider transport sector through innovation.