Future sustainability and digitalisation reshape automotive testing : Using competence and market based business models to address opportunities in building internal capabilities or in spinning off businesses

University essay from Högskolan i Halmstad/Akademin för ekonomi, teknik och naturvetenskap

Author: Henrik Svensson; [2016]

Keywords: ;

Abstract: There are several major trends that will affect the future of the car industry. One trend is the demand for newer models in shorter times. A second trend is the increase in automotive technology. A third trend is the effect of legislation on fossil fuel-based drivelines and the introduction of new technology in the driveline. Hence the cars developed by the Volvo Cars R&D division have to be tested in order to meet all requirements. Volvo Cars’ internal department, Analysis and Verification Environment, currently conducts these tests. In testing cars in the future, the challenge is to become more efficient in terms of operational capabilities as well as to review current competencies. Hence, future technology and legal challenges drive significant competence and investment needs in the automotive testing industry. A major shift in competences is needed in order to meet future requirements on sustainability and digitalisation. Sharing investment costs and facilities can have business potential. There is an opportunity to spin off VC’s Analysis and Verification Environment, which would permit sharing the future competence and investment burden with other stakeholders. However, from Volvo Cars’ perspective, achieving cost effectiveness and making test facilities available must be secured, but not at the risk of jeopardising future car programmes. Therefore a profitable business case for spinning off Analysis and Verification Environment is needed. This means Analysis and Verification Environment, as a spinoff company, must be capable of success on the open market. This report addresses the following questions: Can VC’s Analysis and Verification Environment division be spun off? If so, how can it be organised so that it can succeed in the open market? This report concludes there is a potential benefit to spinning off Analysis and Verification Environment. However, the success of the spin off requires execution of an Action Plan based on a competence/market business model that includes, for example, a strong value proposition.

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