From Growth to Efficiency: What ‘Leaphome’ Mode Means for OEMs
2025-04-03
Table of content
- Rethinking Automotive Costs
- 2025: Adapting to Change
- Unified Platforms Ahead
- Cutting Costs, Not Quality
- From ECUs to HPCs
- Redesigning on a Budget
- Subscription Models
- The R&D Dilemma
- Supplier Shift
- Poland: R&D Destination
- The Shift is Here
Rethinking Automotive Costs
Is the automotive industry shifting from expansion to survival mode? As economic pressures mount and competition intensifies, OEMs are rethinking their strategies. Instead of aggressive expansion, they are prioritizing cost optimization – seeking smaller, cheaper suppliers, outsourcing R&D, and standardizing vehicle platforms. The goal? Cutting costs without compromising innovation. But with measures like skipping some quality processes and reducing vehicle face-lifts, how far can this strategy go before it starts affecting long-term competitiveness?
2025: Adapting to Change
The automotive industry is evolving at an unprecedented pace, and staying ahead of the curve is essential. In our previous article, 2025 Automotive Outlook: What Will Drive the Industry Forward?, which you can read here: 2025 Automotive Outlook: What Will Drive the Industry Forward? – RSB Automotive Consulting , the RSB team delved into the key challenges shaping the sector, from the rise of EVs to the pressure on legacy OEMs. Now, in this follow-up, we explore practical solutions to those challenges, providing actionable strategies for companies to navigate the cost optimization and innovation needed for success in 2025 and beyond.
If you want to gain a deeper understanding of how these trends will affect your business and how to navigate them effectively, we invite you to keep reading. For those looking to build the right team to support these changes, feel free to get in touch with us (https://outlook.office365.com/book/BookanRSBmeeting@rsb.ac/). Let’s explore how we can drive the future of automotive forward together.
Unified Platforms Ahead
As automakers strive for greater efficiency and cost reduction, the industry is shifting towards more unified platforms and solutions. This trend, which has already begun, involves standardizing components across different models, reducing the need for separate platforms for each vehicle. By consolidating platforms, automakers minimize development complexity, streamline production processes, and improve cost efficiency.
In addition, modular architectures are gaining traction, allowing manufacturers to easily scale and adapt vehicles to different markets and customer needs. This shift towards modularity not only accelerates time-to-market but also helps reduce costs, enabling automakers to remain competitive in an industry undergoing rapid transformation. The impact of this shift will be felt across manufacturing and the supply chain, creating new opportunities for businesses to innovate and optimize.
Cutting Costs, Not Quality
In an increasingly competitive automotive industry, Value Engineering is becoming a vital tool for OEMs to achieve the perfect balance between cost, quality, and performance. By rethinking every aspect of vehicle design, manufacturers are identifying areas where they can trim excess costs without compromising the overall value of their products. It’s about smarter, more efficient design – ensuring that every part serves a clear, functional purpose.
One of the most notable changes we’re seeing is the redesign of existing models using more affordable materials. OEMs are opting for lightweight composites, recycled metals, and innovative, cost-effective materials that cut down on manufacturing expenses while also aligning with growing sustainability demands. This is not just about saving money – it’s about delivering a product that’s both environmentally conscious and economical.
OEMs are also beginning to reshape and simplify the existing jungle of product requirements – an intricate web of features and specifications that often complicates the development process. By stripping back unnecessary complexity, manufacturers can dramatically reduce R&D costs and accelerate time-to-market. With Euro 7 regulations driving up the cost of developing traditional internal combustion engines (ICE), many OEMs are turning their focus toward electric vehicles (EVs). The result? More streamlined, cost-effective models that offer the performance and value today’s consumers demand.
From ECUs to HPCs
As we approach 2025, one of the key changes on the horizon for the automotive industry is the shift from multiple traditional ECUs (electronic control units) to a smaller number of high-performance computers (HPCs). Current vehicles typically rely on 80-100 separate ECUs to manage various functions, but future vehicles will streamline this with just a few HPCs, improving efficiency and cost-effectiveness. This consolidation will not only reduce component costs but also allow for faster software updates and enhanced cybersecurity. With fewer units to secure and manage, automakers can reduce vulnerabilities and make the update process more efficient. This shift represents a significant step toward more streamlined and secure vehicle architectures, paving the way for future advancements in automotive technology.
Redesigning on a Budget
How do you think large automotive corporations will manage to give the impression of continuous innovation while significantly reducing costs? The answer lies in minimizing the scope of major vehicle face-lifts and focusing on more subtle updates that keep the product feeling fresh without the hefty price tag of a full redesign.
In the coming years, we can expect automakers to shift away from frequent, major design overhauls, which are costly and time-consuming. Instead, we’ll see more “soft” face-lifts-think LED updates, improved software, and minor tweaks to existing designs that keep vehicles looking modern and appealing. This approach allows manufacturers to maintain consumer interest without incurring the high expenses associated with full-scale redesigns. By focusing on software and modular upgrades, automakers can extend the life of a vehicle model while minimizing R&D and production costs.
Subscription Models
As the automotive industry shifts its focus toward a more connected future, there is an increasing investment in cloud-based services, data analytics, and fleet management tools. Automakers are realizing the potential of recurring subscription revenue from fleet operators rather than relying solely on traditional one-time car sales. This shift enables manufacturers to maintain continuous revenue streams and strengthen their relationships with fleet customers.
With the growing role of connected services, companies can offer enhanced data-driven insights, real-time vehicle monitoring, and more personalized experiences for drivers and fleet operators alike. In essence, these investments are paving the way for a new ecosystem where automakers become service providers, delivering ongoing value long after the initial sale.
However, I can’t help but wonder whether this shift might open the door to increased security challenges. As these systems evolve, will the industry be ready to tackle the potential risks associated with data privacy and security breaches? And could the push for more data-sharing to support autonomous driving further complicate this?
The R&D Dilemma
In an effort to meet tight timelines and reduce costs, automakers may start cutting corners in R&D quality processes, skipping certain testing and validation steps to speed up development. While this approach may help bring vehicles to market quicker, it comes with significant risks. Compromising on quality control could lead to increased recall rates, damaging both the brand’s reputation and consumer trust. The industry will face a fine line between speed and safety, as rushing the process might save money in the short term, but the long-term costs of quality failures could outweigh the savings.
Supplier Shift
As the automotive industry faces increasing cost pressures, OEMs are reevaluating their supply chain strategies. One key shift is moving away from reliance on large Tier 1 suppliers and outsourcing to smaller, more agile Tier 2 and Tier 3 manufacturers. This approach provides better pricing opportunities and more flexibility in managing production timelines. By diversifying the supplier base, OEMs can mitigate supply chain disruptions and ensure more competitive pricing.
A critical element of this strategy is the growing trend of “best-cost country sourcing”, with countries like India, Vietnam, and Mexico emerging as key players. These regions offer a combination of lower labor costs, favorable trade agreements, and established manufacturing capabilities, enabling OEMs to optimize procurement costs while maintaining quality. However, this shift requires a strategic approach to ensure smaller suppliers have the capacity and quality control systems to meet industry demands, without compromising the reliability or performance of the final product.
Poland: R&D Destination
As automotive companies strive to optimize costs, many R&D activities such as software development, testing, and validation are moving to best-cost countries. While India and China remain key destinations, Eastern and Central Europe – with Poland, Hungary, and Romania at the forefront – are increasingly becoming attractive outsourcing hubs for engineering projects.
Poland, in particular, has a lot to offer, from a highly skilled workforce to a competitive cost structure and strategic location within Europe. As a Polish company, we see this as an exciting opportunity for local talent to thrive. Could this be the moment for Eastern and Central Europe to emerge as the new hotspot for automotive R&D?
The Shift is Here
As we look ahead, the automotive industry is on the brink of a significant transformation. Competition, automation, and cost pressures will drive change, accelerating the evolution of the European automotive landscape. Chinese automakers will continue to challenge legacy OEMs, forcing a reevaluation of pricing models and production strategies.
Software and connectivity will emerge as the defining elements of vehicle value, surpassing the importance of traditional hardware. Meanwhile, cost-cutting strategies like “Leaphome” will reshape supply chains, R&D, and vehicle design, leading to streamlined processes and increased efficiency.
At RSB Automotive Consulting, we are ready to help you navigate these changes. Through our comprehensive services, we can optimize costs and enhance efficiency, ensuring that your business is prepared for the future. Whether you need assistance with supply chain optimization, technical recruitment, or R&D strategies, our specialized areas are tailored to meet the unique needs of the automotive sector. Check out the graphic below to see our areas of specialization and how we can support your business.
source: own graphic
As the industry evolves, we stand ready to help you build the future of mobility – efficient, cost-effective, and forward-thinking. Explore our services and discover how we can support your business: Home – RSB Automotive Consulting .
