Transformers: How the automotive industry is riding the wave of change
The automotive industry is facing a bumpy ride with the onslaught of new technologies and business models, similar to the wave of change that shook up the music, telecommunications and video industries in recent decades. The disruptive trends include the emergence of electric vehicles (EVs), autonomous vehicles (AVs) and ride-sharing apps, as well a generational step-change in consumer preferences and a surge in sustainability sentiment in key markets.
As if these transformative trends were not enough, carmakers are already facing slower growth in the major markets around the globe. In Europe and the US, decelerating demand can be blamed on a millennial shift to mobility as a service rather than shelling out on a car. In Europe, the automotive market is forecast to decline by 2% in 2020, according to the industry body ACEA. China, the world’s largest car market, saw sales declines in both 2018 and 2019. Largely because of this, global industry growth for light vehicles is slowing and expected to drop from the average 3.6% of recent years to around 2% by 2030.
Traditional automakers have been under continuous pressure to reduce costs, lower emissions and become more efficient for decades. These demands have been driving carmakers to downsize, consolidate and form new types of alliances, such as that between Ford and Volkswagen to build utility vehicles. And, the deal struck by Fiat Chrysler Automobiles to pool its fleet with Tesla to comply with stricter emissions rules in Europe is even more pioneering.
The new disruptive forces of change are hastening the urgency for carmakers to reinvent their industry. A move to mobility as a service and a host of nimble new competitors entering the mobility space, like Uber, Tesla and Google, is significantly increasing the complexity of the new automotive market reality.
These tectonic market movements are forcing carmakers to make massive bets on new forms of mobility, including investing billions in EVs. But the industry shake-up will go further than just replacing internal combustion engines with electric technology. A fundamental revolution is underway that will see private vehicles increasingly replaced by a range of new, on-demand mobility solutions, especially in urban areas with stricter congestion and emissions policies, and a younger generation of consumers.
But the industry need not despair. These new mobility services could grow global automotive revenue by up to $1.5 trillion, which is a market increase of one-third, by 2030. In the same timeframe, fully autonomous vehicles could account for up to 15% of passenger vehicles sold worldwide.
The key will be to ride the wave of creative destruction and stay ahead of the disruptive curve. Forward-looking OEMs are already investing in and partnering with pioneering start-ups and cutting-edge technology providers. It is this competitive drive and continuous investment in innovation that will ensure a bright, transformed, future for the automotive industry.
Find out how we are partnering with OEMs in the new mobility space through our innovative Technyl® offering for e-mobility.