Predictions 2025: Smart manufacturing and mobility

Forrester’s report on The Future Of Manufacturing highlighted major trends driving modernization of the sector. These will continue to shape the conversation in 2025.

We continue to observe a focus on integrating digital technologies with physical products; adapting to a changing world order with local, near, and far manufacturing capacity; electrifying, decarbonizing, and manufacturing sustainably; and balancing the automation triangle to get the best from hardware, software, and people. 

Moving into 2025, we expect business and technology leaders across the manufacturing and mobility sectors to invest in specific initiatives that address one or more of these trends, while grappling with headwinds ranging from geopolitical uncertainty to the surprising difficulty of connecting factories to electrical power:

* Over 25% of big last-mile service and delivery fleets in Europe will be electric in 2025. 
While sales growth for electric passenger vehicles slowed in many markets in 2024, another mobility segment is electrifying fast: the fleets of vans used for last-mile deliveries, utility company meter readings and repairs, and local government operations. The recent Optimise Prime project in the UK gathered data from thousands of light commercial electric vehicles (EVs), delivering actionable recommendations for effective use of EV fleets. 

Big fleet operators are setting and meeting ambitious targets: One-third of DPD’s last-mile fleet in the UK is fully electric, rising to 90% in cities like London. UK energy company British Gas aims to electrify its entire van fleet in 2025. Amazon operates more than 1,000electric vans in Germany (and over 15,000 in the US), and in Frankfurt, parcels enter the city center by electric tram with final delivery on electric cargo bikes.

Fleet managers should evaluate opportunities to electrify, supporting corporate sustainability and emissions targets, while also strengthening the business casefor companies investing in better charging infrastructure.

* Less than 5% of the robots entering factories and warehouses in 2025 will walk. 
Physical automation startups are betting big on robots with legs, but this will remain a small piece of the robotics market in 2025. ANYbotics and Boston Dynamics are among those already offering four-legged robotic dogs for inspection, safety, and mapping use cases; Agility Robotics is running a trial of its bipedal robots in Amazon warehouses; and Boston Dynamics (owned by Hyundai), (in an agreement with BMW’s Spartanburg plant in South Carolina), and Tesla (a maker of cars as well as robots) have all tested their humanoid robots in automotive plants.

These robots are technically impressive, but the humanoid form is not necessarily the best to copy for significant industrial automation initiatives: A lower center of gravity, stronger arms, or wheels may all help deliver more cost-effective outcomes. Focus on the use case when evaluating physical automation of tasks in your organization, and don’t get distracted by the far-off sci-fi promise of C-3PO, the Terminator, Lt. Commander Data, and their ilk.

* Over 50% of manufacturers will have to slow electrification, as the grid fails to keep up.
By switching from coal-powered blast furnaces to electric arc furnaces, Tata Steel could slash Wales’ emissions by 15% to 20%. Other manufacturers are also keen to electrify, avoiding the expense, emissions, and geopolitical risk of fossil fuels. 

Onsite renewable energy sources help, but most electricity must come from national or regional networks that struggle to meet demand. Energy regulator, Ofgem, estimates UK demand could grow 64% by 2035, but by the end of 2024,over 800 GW of new renewable capacity could be stuck in a decade-long queue for connection to the grid. 

In northern Sweden, power-hungry manufacturers like steel producers H2GS and Hybrit or battery maker Northvolt may quickly consume all the country’s current renewable energy surplus, and more. Electrification of manufacturing makes sense, economically, environmentally, and strategically. But, as the industry races to decarbonize, don’t assume that power will be available when you need it: Engage with electricity providers now to understand when and how they can meet your needs.

* A major carmaker will make significant cuts to its digital team in 2025. 
Back in 2021, General Motors announced plans to earn $20 billion to $25 billion in “annual software and services revenue opportunities” by 2030. In August 2024, the company cut 1,000 employees from its software and services division. 

Other big automotive OEMs made similarly bullish bets on digitizing the car and its driver or passenger experience, and now they’re realizing that a track record of engineering physical products doesn’t help develop, deliver, or maintain great software: At least one will announce a major rethink in 2025. 

Volkswagen’s Cariad, Toyota’s Woven, and the others have all struggled to meet expectations. Consumers have not responded well to buggy and screen-dominated in-car experiences. Good digital experiences are hard. Engage with Forrester’s new research on the future of mobility in 2025, and focus on combining internal teams and partners to address the real mobility moments of drivers and passengers.

* Chinese manufacturers will move into their competitors’ backyards. 
Global manufacturers respond to geopolitical shifts with supply network strategies that combine onshoring, offshoring, reshoring, nearshoring, and friend-shoring. No longer just low-cost contractors to western manufacturers, Chinese firms increasingly aim to make competitive Chinese products close to their customers in Europe. 

BYD announced plans for car plants in Hungary and Turkey, Chery Auto announced a joint venture in Spain, Rich PV announced a solar panel factory in Serbia, CATL already makes batteries in Germany, and more will follow in 2025.

These and other Chinese investments meet several objectives, including manufacturing large physical products closer to the customer to reduce shipping time and cost, and circumventing sanctions, tariffs, and other charges designed to favor locally manufactured goods. New local manufacturing capacity, plus advances in AI, require European partners and competitors to revise their outdated view of Chinese manufacturing.

Summary
Integrating digital capabilities with physical products, electrifying dirty industrial processes, rebalancing global supply chains, and getting to grips with automation: These four big trends underpin investment decisions across the manufacturing and mobility sectors, and they’re readily evident in the shifts we predict for the coming year.

-- Forrester Research, USA & Australia.