Hyundai Motor Co. startled the auto industry in 2020 when it unveiled its newest concept vehicle to the public: an electric-powered, rotary-driven flying taxi with a proposed 60-mile range and the ability to recharge in less than 10 minutes.
The South Korean automaker's vision also will need networks of urban flight hubs on the ground, served by fleets of electric people movers to shuttle passengers to their final destinations.
The unanswered question to Hyundai's unasked question: Who among the world's traditional auto suppliers will rise to the challenge of converting the vision into a reality?
Clearly, the auto industry is changing, and as a result, so are the parts companies that make all of its pieces. But they are not all changing in the same strategic way.
Automaker investment in electric drivetrains, connected vehicles and self-driving technology is pushing the world's largest suppliers to reshape themselves for a future that might only barely resemble their past.
Evolving industry trends — particularly the long-term waning of internal combustion engines — are prompting parts makers to examine their legacy product portfolios, reconsider past revenue assumptions and tilt their R&D spending toward new priorities.
Three global leaders illustrate those changing outlooks and that there are differences of opinion about which way to pivot and what strategy to pursue.
German megasupplier Bosch — the world's largest parts and technology company, with $46.56 billion in sales to automakers in 2019 — is confident that a primary key to continued growth will be vehicle software. Bosch is launching a business unit that groups its expansive software talent from product areas around the world under one umbrella.
At the same time, Japan's largest supplier, Denso Corp., is placing its bets on reinventing its strategic core. Traditionally a maker of air conditioners, instrument clusters and gasoline and diesel engine parts, Denso has begun reorganizing itself to pursue new fields, including electrification, automated driving and even urban air mobility.
Hyundai Mobis, South Korea's largest parts maker and a bedrock supplier of Hyundai Motor, is bolstering its position in electrification as well as connected vehicles and autonomous driving.
But no one is etching into stone plans for the future. Regardless of their individual strategies, parts makers are exploring myriad opportunities to stay relevant amid shifting industry demands.
Here's a glimpse into the changes underway at these three suppliers.
The supplier of powertrain solutions, electronics and vehicle technology is positioning itself to be the industry's go-to for software-intensive electronics systems with its new Cross-Domain Computing Solutions unit, which was scheduled to launch Friday, Jan. 1.
The organization draws engineers from Bosch's multimedia, powertrain solutions, chassis systems control and automotive electronics divisions. It will make the company's work on automotive software more efficient, Bosch North America President Mike Mansuetti told Automotive News.
For Mansuetti, the disruptive moment also is an opportunity to build a better Bosch.
"There was a lot of overlap in the group, so I'm looking forward to being able to streamline — especially some of the inefficiencies we have with different components being in different business units," he said.
"Now, we can take all these people, combine them, talk with that group of people with the customer and really drive those solutions forward and understand — whether it be the new architecture in the vehicle or help even develop the customers in that new architecture — what can we do for them?" Mansuetti said.
Bosch also is betting much of its future on electrification as customers continue to invest more in electric vehicles.
"This need for speed, this need to be first to market, the need to be there with the right product, that's something I think that's really accelerated. Maybe some of this sharing economy took a back seat in the pandemic," he said.
Some of Bosch's focus remains on autonomous vehicles. In August, the company launched an automated valet-parking project in Detroit to showcase its work on self-driving vehicle infrastructure. As the technology progresses, the industry timeline surrounding AVs will continue to get more realistic, Mansuetti said.
"Autonomy is still there, and autonomy is still interesting, but I think everybody's come to realize what a difficult problem it is," he said. "We'll still continue to work on it, but it may not be with the timeline that everybody once expected."
Bosch's strategic shift also anticipates new forms of collaboration, the executive said.
"Truly, no one organization or division or person can really handle these things alone," Mansuetti said. "The pandemic reconfirmed the necessity for this really high level of cooperation and collaboration and even partnerships in new ways."
Denso is no laggard in repositioning itself for the future when it comes to electrification and automated driving.
The Japanese supplier of thermal, powertrain control, electronic and electric systems initiated its Long-term Policy 2030 and Long-term Plan 2025 business strategies in 2017.
Denso, which posted $41.81 billion in sales to automakers in 2019, has been preparing for the change over the past three years by creating cross-functional business activities, advancing its R&D and evolving its various units. The company has spoken, somewhat mysteriously, of shifting deeper into a supplier of services rather than just parts.
In December, Denso announced that it intended to further reorganize itself with an internal directive it calls Reborn 21, which will "expand mobility, manufacturing and society-focused business domains." It also vowed to recommit to its green and safety pillars with a thorough plan of action coming as soon as the end of March.
To accelerate development of key technologies, it will establish divisions that report directly to the president.
That includes "reorganizing production and procurement-related functions and strengthening manufacturing capabilities and competitiveness of production goods," as well as reorganizing sales functions and strengthening its solutions business.
Denso declined to discuss specifics about how the plans will help the company go where it wants to go. But in addition to changing its executive structure, the company intends to create new business departments, including one each for smart-city planning and software innovation, as well as establish a production engineering R&D center and industrial solutions unit.
"The industry is shifting from products to services and from hardware to software," Denso said in a statement. "It is critical for companies to become more flexible and resilient in order to consistently provide new value to customers and consumers."
For Hyundai Mobis, investing is the name of the game.
Like other suppliers, Mobis is pivoting to more tech-heavy components. The diverse Korean supplier of auto electronics, infotainment, advanced driver-assistance systems and EV systems plans to expand its R&D investment by about 10 percent in 2021 overall, but by about 50 percent in advanced technologies.
Soo-kyung Jung, executive vice president and head of corporate planning, said, "2021 will be the year of change and innovation in many ways."
In October 2019, Mobis invested $50 million in lidar company Velodyne, of San Jose, Calif., representing a technology that will be critical to autonomous driving. Mobis also invested to build EV parts at two new plants in Korea — one each in Ulsan and Pyeongtaek — as well as at another EV parts plant in Chungju, Korea. It also is considering adding sites in the U.S. and India.
This past October, Mobis invested in augmented reality head-up display company Envisics, of the United Kingdom.
Pursuing each of these tech investments gives Hyundai Mobis a well-rounded blueprint for the industry's evolution, said Jung.
"I believe our strength and competitiveness comes from convergence," he told Automotive News.
The company, which reached $26.16 billion in sales to automakers in 2019, has plans to focus especially on software, much like its German competitor Bosch.
In pursuit of new revenue streams, it also is considering EV parts diversification, such as the recycling and reuse of EV batteries, and it will continue to strengthen its R&D investments focused on advanced technologies.
"Hyundai Mobis is in the middle of a transition to a software-enabled company and set the goal as our top priority in response to the future mobility changes," Jung said. "Eventually becoming a 'service provider' is the ultimate goal."