The automotive industry and experts are in unanimous agreement that these four key trends will reinforce and accelerate each other’s impacts. Meanwhile, the automotive industry has matured sufficiently to make disruptive changes achievable. Although it is widely recognized that disruptive transformations affecting the entire industry have already shown initial signs, there is no consensus on how these trends will impact the automotive industry over the next 10 to 15 years. In response, we put forward eight viewpoints on the “2030 Automotive Revolution”, aiming to predict the changes the automotive industry will undergo and the impacts of these changes on traditional automakers and suppliers, potential new market entrants, regulators, consumers, the market as well as the industrial value chain.
This research is intended to make the upcoming changes more intuitive. Therefore, the predictions made in this research should be interpreted as the most plausible speculations based on our understanding and centered on the four major trends. Admittedly, these speculations are not definitive in nature. Nevertheless, discussions on the potential future are expected to help industry participants better prepare for uncertainties more thoroughly.
Shifting Markets and Revenue Streams
Some commentators argue that the automotive industry is in decline; however, our position is that its development is actually accelerating. This is driven by the emergence of new revenue streams, including shared mobility, data connectivity (sharing) services, and global macroeconomic growth fueled by the continuous expansion of emerging economies.
1.Driven by shared mobility, connected services, and performance upgrades, the automotive industry’s revenue will increase by 30% due to new business models—equivalent to an additional $1.5 trillion.
The automotive industry’s revenue will grow significantly and diversify toward on-demand mobility services, data-driven services, and other areas. This will result in an extra $1.5 trillion in automotive sales revenue by 2030, representing a 30% increase. Over the same period, revenue from traditional vehicle sales, aftermarket products, and services will reach $5.2 trillion—50% higher than the $3.5 trillion recorded in 2015.
Smart connectivity and automation technologies will increasingly transform vehicles into platforms, enabling drivers and passengers to access novel media formats and services during trips or use their newly available time for other personal activities. The rapid pace of innovation—particularly in software-based systems—will require vehicles to have upgradeable capabilities. As short-term shared mobility becomes more widespread, consumers will stay informed about technological advancements, which will further boost demand for upgradeable features in private vehicles.
2.Despite the growing shift toward shared mobility, vehicle sales will continue to increase, albeit at a modest annual rate of 2%.
Total global vehicle sales will keep rising, but by 2030, the growth rate will drop from 3.6% (recorded over the past five years) to 2%. This is mainly driven by macroeconomic factors and the expansion of mobility services such as car sharing and ride-hailing.
Detailed analysis shows that regions with high population density and long-standing high vehicle ownership are fertile ground for these emerging mobility services—many cities and suburbs in Europe and North America fall into this category. New mobility services may lead to a decline in private vehicle sales, but this decrease is likely to be offset by higher sales of shared vehicles. The reason lies in the fact that shared vehicles have higher usage rates and greater wear and tear, requiring more frequent replacements.
Another factor boosting global vehicle sales growth is the strong momentum of macroeconomic development, including the expansion of the global middle-class consumer base. As growth slows in mature markets, global vehicle sales growth will continue to rely on emerging economies—China in particular. Meanwhile, different product portfolios will result in varying revenue growth outcomes.
Shifts in Mobility Behavior
When considering the growth potential of industry transformation, consumer preferences and behaviors serve as an excellent starting point. We believe that technology-driven disruptive trends have the potential to fundamentally reshape the relationship between consumers and automobiles.
1.Consumers’ mobility behavior is changing. By 2030, one out of every ten vehicles sold will be a shared vehicle, and mobility solutions tailored to user needs will also gain a larger market share.
Major shifts in personal mobility have been driven by evolving consumer preferences, tightening regulatory measures, and technological breakthroughs. People are increasingly using a mix of transportation modes to complete their trips, and goods and services are delivered to them rather than being fetched by themselves. As a result, a range of diverse, on-demand mobility solutions will complement traditional vehicle sales models—particularly in densely populated cities where private car use is discouraged.
Today’s consumers view cars as all-purpose tools, used both for commuting and family trips. In the future, they may expect to flexibly choose the optimal mobility option for a specific purpose, with selections made via smartphones. We have already observed signs that the importance of private car ownership is declining: in the United States, the percentage of young people (aged 16–24) holding driver’s licenses dropped from 76% in 2000 to 71% in 2013. Over the past five years, the usage of car-sharing services in North America and Germany has grown by more than 30% annually.
Consumers’ new habit of choosing customized solutions for different purposes will give rise to specialized vehicles designed for specific uses. For instance, there are already millions of vehicles dedicated to ride-hailing services—these vehicles feature high usage rates, robust performance, the ability to accumulate extra mileage, and enhanced passenger comfort—and this is only the beginning.
As a result of consumers’ shift toward diverse mobility solutions, one out of every ten vehicles sold in 2030 will be a shared vehicle, which will reduce private car sales. This means that 30% of the mileage of newly sold vehicles will come from shared mobility. Following this trend, by 2050, one out of every three vehicles sold could be a shared vehicle.
2.City type will replace country or region as the market segmentation dimension that determines mobility behavior—and thus the speed and scope of the automotive revolution.
To identify future business opportunities, we need to examine the mobility market from a more granular perspective than in the past. Specifically, these markets need to be categorized by city type, primarily based on population density, economic development level, and degree of urban prosperity. Across all these segmented markets, significant differences will emerge in consumer preferences, policies and regulations, and the availability and cost of new business models. For example, in major cities like London, car ownership has become a burden for many people, mainly due to congestion charges, limited parking spaces, and traffic jams. In contrast, in rural areas such as Iowa (U.S.), private cars remain the preferred mode of transportation so far.
Therefore, city type will replace the traditional regional perspective for segmenting the mobility market and become a key indicator for analyzing mobility behavior. By 2030, the automotive market in New York State will likely be more similar to that in Shanghai than to that in Kansas.
Diffusion of High-Tech Innovations
Autonomous driving technology and electrified powertrains are attracting widespread interest and hold long-term development potential; however, the extent of their diffusion over the next 15 years will depend on overcoming a series of barriers.
1.Once technical and regulatory issues are resolved, 15% of new vehicles sold in 2030 could be fully autonomous.
Commercially available fully autonomous vehicles are unlikely to hit the market before 2020. In the meantime, Advanced Driver-Assistance Systems (ADAS) will play a crucial role in preparing regulators, consumers, and businesses for the gradual shift toward vehicles that replace human drivers.
The launch of ADAS has revealed that the main challenges hindering faster market penetration stem from pricing, consumer perception, and safety/security concerns. In terms of technical readiness, technology companies and startups are also likely to play a significant role in the R&D of autonomous vehicles. Regulation and consumer acceptance may pose additional barriers to autonomous vehicles. However, once these issues are addressed, autonomous vehicles will deliver substantial value to consumers—such as the ability to work during commutes, or conveniently use social media or watch movies while traveling.
The adoption of fully autonomous vehicles will gradually increase, accounting for 15% of global passenger vehicle sales by 2030.
2.Electric vehicles (EVs) are becoming more viable and competitive; however, the pace of consumer adoption will vary significantly across regions.
Stricter emissions regulations, lower battery costs, more widespread charging infrastructure, and greater consumer acceptance will create new and strong momentum for the market penetration of electric vehicles (including hybrid, plug-in hybrid, battery electric, and fuel cell vehicles) in the coming years. The speed of consumer adoption will depend on the interaction between “pull” factors (driven in part by the total cost of ownership of personal vehicles) and regulatory “push” factors—and this interaction will vary significantly across regions and localities.
By 2030, electric vehicles could account for 10% to 50% of new vehicle sales. Adoption rates will be highest in dense, developed urban areas, where strict emissions regulations and consumer incentives (tax breaks, special parking and driving privileges, preferential electricity rates, etc.) are in place. In small towns and rural areas, low levels of charging infrastructure and heavy reliance on long-distance driving will result in lower sales penetration.
These regional disparities will diminish as battery technology and costs continue to improve, and electric vehicles are expected to gain an increasing share of the traditional vehicle market. As battery costs are likely to drop to $150–$200 per kilowatt-hour (kWh) over the next decade, electric vehicles will achieve cost competitiveness with conventional vehicles—a key catalyst for market penetration. It is also worth noting that a large portion of electric vehicles will be hybrid models, meaning internal combustion engines will still have a role to play even after 2030.
New Forms of Competition and Collaboration
While the growth of revenue streams is accelerating, traditional industry boundaries are shifting, and the rules of the game are being rewritten.
1.In an increasingly complex and diversified industry landscape, existing players will be forced to compete in multiple areas simultaneously while collaborating with competitors.
While other industries—such as telecommunications or the mobile phone industry—have been disrupted, the automotive industry has so far seen only modest changes and consolidation. For example, over the past 15 years, only two new companies have entered the list of the top 15 original equipment manufacturers (OEMs) in the automotive sector, whereas ten new companies have emerged in the mobile phone industry.
The transformation of the mobility industry toward a service-oriented landscape, coupled with the entry of new companies, will inevitably force traditional automakers to compete across multiple domains. Mobility service providers (e.g., Uber), tech giants (e.g., Apple, Google), and specialized vehicle manufacturers (e.g., Tesla) have added complexity to the competitive landscape. Traditional automotive enterprises, already under pressure to reduce costs, improve fuel efficiency, cut emissions, and enhance capital efficiency, will face even greater urgency to transform their market positioning amid the evolving automotive and mobility industry. This could lead to mergers among existing players or the emergence of new forms of partnerships.
In another development disrupting the industry, software capabilities are increasingly becoming the most critical differentiator—spanning areas including ADAS/active safety features, smart connectivity, and infotainment systems. Additionally, with the advancement of vehicle connectivity technologies, automakers will have no choice but to participate in new mobility ecosystems shaped by technological and consumer trends.
Another game-changing shift is that competition in software is becoming a primary driver of differentiation in the industry. The code in modern vehicles may contain as many instructions as the control systems used in space navigation. Software will be leveraged to deliver a wide range of features and services, including mobility services, advanced safety functions, location-based services, in-vehicle content, and remote analytics. Extensive collaboration on technology and services will help build a larger user base, reduce costs, and thereby deliver greater value to customers. Such collaboration will also stabilize connected ecosystems. Automakers must adopt a strategic perspective: they need to determine which parts of the connected ecosystem they must control to capture value and prevent vehicles themselves from becoming commoditized content platforms. However, as vehicles become increasingly connected to the world around them, automakers have no alternative but to join this new mobility ecosystem driven by technology and consumer trends.
2.New market entrants will first focus on profitable market segments and activities along the value chain before expanding into additional areas.
Market diversification will create opportunities for new enterprises, which will initially concentrate on specific links in the value chain and target only particular, profitable market segments before expanding further. While Tesla, Google, and Apple have shown significant interest today, we believe they represent just the tip of the iceberg. More new players are likely to enter the market—particularly cash-rich high-tech companies and startups. These new entrants from outside the industry also hold greater influence over consumers and regulators (e.g., generating interest in entirely new mobility models, lobbying for favorable regulations for new technologies). Similarly, some Chinese automakers that have recently achieved impressive sales growth may leverage the current industry reshuffle to play a significant role on the global stage.
The Future
Existing automotive enterprises cannot predict the industry’s future with certainty. However, they can take strategic actions at this stage to shape the industry’s development. To succeed in the inevitable industry reshuffle, existing players need to implement strategic initiatives in four key areas:
① Address Uncertainty：
To achieve success by 2030, automotive enterprises must transform to align with new market trends, explore alternatives and supplements to traditional business models, and investigate new mobility business models—along with their financial viability and market acceptance among consumers. This requires strong planning capabilities and flexibility to identify and scale up promising new business models.
② Leverage Partnerships：
The automotive industry is shifting from peer-to-peer competition toward new forms of competitive interaction, collaborative partnerships, and open, scalable ecosystems. To succeed, automakers, suppliers, and service providers need to form alliances or participate in ecosystems—for example, exploring cooperation around infrastructure for autonomous and electric vehicles.
③ Drive Transformational Change：
As innovation and product value become increasingly defined by software, automakers need to adapt their capabilities and processes to address new challenges such as software-driven consumer value definitions, cybersecurity, data privacy, and continuous product upgrades.
④ Reshape Value Propositions：
Automakers must further differentiate their products and services and shift their value propositions away from traditional vehicle sales and maintenance toward integrated mobility services. This will position them to capture a larger share of the industry’s growing global revenue and total profits—benefiting from the revenue and profit growth brought by new business models (including online sales and mobility services)—while fostering new business opportunities between core automotive operations and new mobility business models.
Conclusion
Challenges and opportunities coexist in the future of the automotive industry. To become a leader of change and benefit from the disruption brought by new entrants, our four priority strategies underscore the importance for existing enterprises to make strategic decisions now. Far from entering a period of decline, the automotive industry, in fact, is believed to have not yet reached its most brilliant era.
Source: China New Energy Network (http://www.china-nengyuan.com)
language
