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The mobility ecosystem is transforming into a fragmented future with different adoption patterns and use cases by region
The ninth annual Digital Auto Report is a global consumer survey with a focus on the U.S., EU and China. It consists of a quantitative market outlook until 2035 based on detailed research and interviews with key industry executives at OEMs and suppliers, leading academics and industry analysts.
The report is divided in three volumes:
(1) Anticipating post-pandemic market dynamics
(2) Rethinking business models and investments
COVID-19 is impacting the mobility behavior of Germans beyond the crisis and stresses the importance of individual mobility (volume 1)
- A third of the respondents in Germany (31%) intend to use their own cars more frequently for commuting in the future
- While before the corona crisis, 24% planned to buy a new car in 2020/21, this share has only fallen by three percentage points
- While petrol-driven cars are still the most popular choice, BEVs and PHEVs are the second choice
- Demand for ride sharing is rather slowed down by COVID-19 and the preference for individual mobility, but smart mobility as a whole remains highly relevant
- More than 70% of Germans say they travel less via car sharing and ride hailing than before the pandemic - for almost a third of consumers (28%), a key incentive to use sharing offers despite COVID-19 is regular cleaning and disinfection of the vehicles by the provider
Capturing CASE value opportunities requires refocused investment strategy aligned with player’s core capabilities (volume 2)
- The expected market potential of CASE use cases vary among +60 industry experts in Europe, the US and China:
- Connected: Behind first peak with most value expected in B2B applications
- Electric: While BEV use cases approaching plateau stage, fuel cell not yet at peak
- Automated: Higher value expectations in Level-4 goods transport than in private passenger transport
- Smart mobility: Micro-mobility with high value expectation – on par with ride hailing; view on air taxis not yet converging
- A large number of well funded startups is trying to capture this market potential putting traditional automotive players under pressure in connected, electric and automated driving
- For OEMs and suppliers, specific vehicle-centric business models are most promising despite strong competition
- Looking at smart mobility, the line between traditional car sales / leasing and alternative ownership with rental / subscription / sharing / hailing / on-demand continues to blur. Cost per kilometer ranges between $0,7 (subscription) and $2 (ride hailing) vs. $0,6 (own car)
- The market for alternative ownership models is expected to grow from $276bn to $1.084bn in Europe, USA and China by 2035 – led by Europe with $549bn vs. China $362bn given higher consumer prices in mobility and value captured per km in EU
- The pandemic has widened the investment gap between OEMs and VCs and technology players. CASE investments of Top 10 OEMs went from 47 to 16 transactions in Q1/2 ’20 vs. previous year, while VC invest grew from 36 to 66 transactions and Top 10 Tech players remained flat
Building a software-enabled automotive company (volume 3)
- Software has become the differentiating factor for modern vehicles with almost doubling development costs – growing on average from €181m to €331m per model series over the next 10 years
- Autonomous driving functions will be the main cost driver with 45% of total software development cost by 2030
- A growing spectrum of software components and functions prevents innovation leadership and pushes OEMs as well as suppliers to carefully select areas of own value creation
- Partnerships with competitors, suppliers and technology players on an equal footing can help to master complexity, the need for talent and to reduce expenditure by 35-60% per project
- Transformation of mindset from strategy to decision making is needed across the company to adapt to the new paradigm and to build successful software-enabled products
The ongoing COVID-19 pandemic is increasingly impacting all four CASE dimensions
Connected
COVID-19 digitizes society and increases acceptance and demand for digital – and connected – services.
Automated
COVID-19 modifies competition: Big Tech benefits, asset-heavy OEMs struggle to keep up required R&D invest.
Smart Mobility
COVID-19 reverses preference for mobility modes – own vehicle regains preference against shared.
Electric
COVID-19 cools down economies, makes governments subsidize EVs and increase EV market demand.
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