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How Digitalization Is Changing Automotive Manufacturing

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    Since the invention of the automobile, the automotive industry has become one of the most rapidly evolving and competitive industries worldwide. In 1908, the mass production of Ford’s Model T forever changed travel and transportation, making cars accessible and affordable for America’s middle class. Today, Ford is competing with dozens of other automakers, like Tesla and GM, to dominate the electric vehicle (EV) sub-sector. 

    But behind one fast-paced evolution is another — that of manufacturing technology. Over the past few decades, digital manufacturing technologies have accelerated automotive production and improved the quality of parts. Innovations like the Internet of Things (IoT), artificial intelligence (AI), machine learning (ML), and big data analytics have enabled manufacturers to produce increasingly “smart” cars, including autonomous vehicles.

    In this article, we’ll explore how digitalization is shaping automotive manufacturing, the benefits and challenges of automotive digital transformation, and digitalization’s future impact on this $104.1 billion industry (U.S.).

    Key drivers of digitalization in the automotive industry

    Every part of the automotive supply chain is undergoing a significant digital transformation, driven by various factors that are reshaping the way vehicles are designed, manufactured, and used.

    The major stages of the automotive manufacturing supply chain.

    Stages of the automotive manufacturing supply chain.

    Some key drivers of digital transformation in the automotive industry include:

    • Consumer demand for connected and autonomous vehicles. By 2050, an estimated 80 percent of vehicles on the road globally will be fully electric. Of this percentage, nearly all of these vehicles will be self-driving and connected — able to sense and communicate with systems around them. While not yet the standard, the demand for connectivity increases every year

    • Changing regulatory requirements. Stringent environmental regulations and the push for sustainable practices drive the adoption of digital technologies in the automotive industry. This includes the development of more fuel-efficient vehicles, emissions monitoring, and the integration of green technologies.

    • Rapid advancements in smart technologies. Cutting-edge digital innovations like sensors, AI, machine learning, IoT, and 5G are now integrated not only into vehicles but automotive manufacturing processes to improve quality, safety, efficiency, and comfort.

    • Increased market competition. Today, the automotive market is saturated with different automakers, vehicle models, and customization options. Moreover, these automakers can choose from a plethora of parts suppliers to build their vehicles. In these market conditions, quality, innovation, and cost-effectiveness are critical for staying competitive.

    • Advanced manufacturing capabilities. The use of digital technologies in manufacturing processes, such as robotics, automation, and predictive analytics, is transforming the production of vehicles. These technologies help auto manufacturers produce high-quality products at lightning speed.

    As technology evolves, so do consumer expectations. Automotive manufacturers are under constant pressure to produce high-quality, innovative products — making digitalization a dynamic and ongoing journey.

    Examples of digitalization in vehicle production

    Digital technologies have reshaped the way vehicles are manufactured, from the construction of individual parts to the final stages of vehicle assembly. Here are some of the most common instances of digitalization in vehicle production.

    • ML in product design. In the product design phase, automakers use ML to automatically create multiple design ideas within specified parameters. ML also aids in design testing by creating virtual scenarios where the design’s performance can be analyzed and evaluated.

    • Robots in the production process. Automotive manufacturers rely on advanced robotic technologies to produce parts with near-perfect accuracy and on a mass scale. Applications include assembly, welding, cutting, drilling, and more.

    • Smart manufacturing software. Manufacturing software like connected workforce platforms helps automakers optimize production processes and solve problems faster. Today, software is integrated into almost every part of the production process.

    • Real-time data integration. Using a combination of IoT sensors, connected devices, and AI-powered data analytics, auto manufacturers can gather data and insights from multiple sources across their plants. This helps them manage production, maintenance, inventory, and purchasing processes.

    • Predictive maintenance. Predictive maintenance is an approach that incorporates real-time analytics into traditional maintenance processes. High-volume producers like automakers rely on predictive maintenance methods to spot and address mechanical issues before they result in costly downtime.

    Digitalization has fundamentally changed automotive manufacturing and, in turn, the quality and performance of motor vehicles. As digital technology advances, production methods and techniques will become more sophisticated, resulting in more innovative and personalized vehicles.

    See how connected worker technology helps auto companies smash their production goals in our FREE eBook: Connected Worker Solutions for Auto Parts.

    Roadblocks in automakers’ digital transformation journeys

    No digital transformation journey unfolds on a linear path. This is especially true for large industrial companies or makers of complex, highly regulated products like consumer vehicles.

    The six major elements of digital transformation in automotive manufacturing.

    Components of automotive digital transformation. Source: McKinsey & Company.

    Here are some of the most common challenges auto manufacturers face when digitizing their production processes.

    Costs of digitalization

    Digital transformation requires a significant upfront investment of money, time, and resources. For large enterprises, the price tag often climbs into the millions. Moreover, corporate leaders and investors need to embrace the benefits of digitalization before any new technologies can be made — a related challenge that stalls digital transformation progress.

    Despite the cost of digitizing factories, automotive manufacturers increasingly rely on smart manufacturing technologies to meet consumer demand for high-tech vehicles, adhere to safety and emissions regulations, and maintain healthy profit margins. Careful planning, flexibility, and engagement from leadership are imperative for a successful digital transformation.


    Cybersecurity is another major challenge for automotive manufacturers undergoing digitalization. Now that cars feature varying degrees of connectivity and advanced digital systems, they are more vulnerable to hackers, data breaches, and unauthorized access.

    As cyber threats become more sophisticated, automakers need to take sufficient cybersecurity measures with the digital systems they use in their vehicles. Ensuring the security of software, communication networks, and data is essential for protecting against cyber-attacks, which could compromise vehicle safety, user privacy, and overall system integrity. 

    The need for skilled workers

    One of the biggest challenges facing automakers in their digitalization journeys is the manufacturing labor shortage. In the U.S. alone, an estimated 2.1 million manufacturing jobs will go unfilled by 2030 due to a lack of skilled workers. The absence of skilled workers can be tied to the retirement of older, more knowledgeable workers coupled with the concerning hiring and retention rates associated with younger workers.

    To combat this problem, automotive manufacturers need to invest in their shop floor environments. This includes developing comprehensive training and upskilling programs, offering paths for career advancement, and incorporating digital technologies that make workers’ roles less frustrating and more productive.


    Digital transformation isn’t a single project; it’s a continuous process that evolves and scales with your business. Furthermore, it’s a process that affects every area of an organization, from business strategy to customer perception of your brand. The amount of complexity digitalization creates often intimidates manufacturing leaders who simply want to produce more at a lower cost.

    In the automotive industry, however, the cost of delaying digital transformation is becoming greater than the transformation process itself. Keeping pace with the competition requires automakers to stay ahead of the digital transformation curve. 

    For a smooth digital transformation journey, every phase of the process should be meticulously managed with particular attention to change management and company culture.

    Future outlook of digitalization in the automotive industry

    Within the next decade, the automotive manufacturing sector can expect to see major changes driven by digitalization and the demand for electric vehicles. Already ahead of other manufacturing sectors when it comes to embracing digital technology, automakers are becoming increasingly reliant on intelligent software — both in their products and in their manufacturing processes. 

    In automotive production, we’ll likely see factories incorporating advanced robotics, AI-driven automation, data analytics, and IoT technologies for more agile and efficient production processes. Additionally, additive manufacturing and digital twins will likely play a bigger role in designing, prototyping, and optimizing new vehicle parts and models. 

    Start digitalizing your operations with L2L

    The future of automotive manufacturing is already here. It’s time to digitize your manufacturing operations — beginning with your shop floor. L2L’s connected workforce platform is designed by manufacturers for manufacturers, offering the advanced capabilities auto manufacturers need to help employees do their best work. 

    With our flexible and user-friendly platform, you can:

    • Visualize everything that goes on in your plant

    • Streamline employee collaboration

    • See who’s “winning” or “losing” on the shop floor

    • Spot and solve problems quickly

    • Dramatically improve operational availability

    Discover the full range of L2L’s benefits for automotive manufacturers — and check out what customers like Autoliv and ADAC Automotive accomplished with our platform.

    Ready to see L2L in action?

    Explore our virtual product tour today!