Digital Auto Report

Time to get real: opportunities in a transforming market

Executive summary

The eighth annual Digital Auto Report is a global study with a focus on the U.S., Europe, and China. It consists of a quantitative market outlook based on detailed research and interviews with key industry executives at OEMs and suppliers, leading academics and industry analysts. The findings reveal that despite important innovation in connected services, the auto industry’s share of value is still low.

The total number of cars in use in Europe is forecasted to peak at 273 million in 2025 and to decline thereafter. The number will continue to increase in China and at a slower pace in the US.
During the same time period, the cost of vehicle content is going up electric powertrains and automated features could increase the Bill of Material (BoM) by between 20 and 40 percent by 2030.
Alternative ownership models and new revenue opportunities for OEMs are required to ensure customer affordability and economic returns for the industry: mobility spending is expected to be worth $1.2 trillion in Europe, the US and China by 2030 , growing by more than 20 percent a year.
There will be a significant shift in value pools as OEMs and suppliers search for new business models. We estimate that profit share from traditional car sales, parts and aftersales will shrink from 70 to ~55 percent of total automotive market, while non traditional player profit shares could raise from 5 to ~25 percent by 2030.
As a result, intense efforts are needed by suppliers and OEMs to drive down technology costs in the coming decade a reduction of 65 to 75 percent of costs for advanced driver assistance systems (ADAS), for example

Connected, automated, shared, electric: what’s driving the pace of digital change?

Technical readiness, consumer demand, regulation and superior economics will dictate transformation speed.

Connected

Sales of 5G enabled vehicles are expected to reach 16 million in the EU, US and China by 2030. However, we believe connected services mainly make a positive contribution to user experience – we see little potential for OEMs to make money directly from connectivity

Automated

We still expect people movers with level 4 autonomy to be operating in restricted areas at less than 50km/h by 2021, however we expect a delay until 2029 in highly autonomous Level 4/5 vehicles making it on to the road. This is due to the high development costs of ADAS

Electric

By 2030, 46 percent of new car registrations in China will be for electric vehicles. In Europe the figure will be 40 percent and in the US 35 percent. Internal combustion engines (ICE) still have the advantage when it comes to range, with only premium-priced fuel-cell electric vehicles able to compete

Shared

Our research shows more than 50 percent of consumers would be willing to pay up to $250 for a monthly subscription of unlimited rides within town, while 47 percent of European consumers would consider giving up their own car in favor of widely available and adequately priced autonomous robotaxi services

These changes have fundamental implications for OEMs and their suppliers. OEMs need strategies to reduce their R&D costs through partnerships, and to focus on developing new ideas while outsourcing non-core back-office, R&D and technology solutions.

We also believe five new sustainable roles for suppliers will emerge: smart infrastructure enablers, automated shuttle-vehicle manufacturers, platform providers, mobility intelligence providers, and vehicle feature and demand providers.

Finally, new flexible and hybrid organizations need to be created, and due to the scarcity of people with the right skills, the auto industry must upskill its existing workforce to perform digital and data-management roles.