BriefCASE: From ADAS to autonomy - The strategic moves shaping automakers’ future

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