Fast and Furious: Why making money in the roboconomy is getting harder

Richard Viereckl, Dietmar Ahlemann, Alex Koster, Steffen Hoppe, Jonas Seyfferth, Anne Pohlmann, Thilo Bühnen
September 11, 2017

OEMs, suppliers, and dealers will see their share of industry profits cut to just half, from a current 85% share, by 2030 as the digital auto revolution creates intense competition and squeezes margins. Chief executives will have to make tough choices between becoming “thin specialists” or going broad in the mobility market.

Yes, mobility is a $2.2 trillion opportunity, but it will halve today’s players’ share of profits

  • Yes, the future of mobility is a US$2.2 trillion opportunity — but ...
    • The digital auto revolution toward a shared/autonomous scenario is sparking intense competition, a margin squeeze, and high capital expenditure
    • Competition, technology, and scale will drive down the average cost-per-kilometer for using shared transport to <50% of today’s levels
    • That will reduce by 10% the amount that consumers spend on mobility by 2030
    • In the growing shared/autonomous/fleet-based segment of the market, OEMs, suppliers, and dealers in the U.S. and E.U. will see their share of industry profits cut in half from 85% in today’s owner/driver/retail model
    • Automotive markets in the U.S. and E.U. will contract as a result, forcing consolidation of OEMs and suppliers
  • All this will be propelled by unstoppable trends
    • By 2030, up to 37% of kilometers traveled will be done by shared and autonomous (and sometimes pooled) vehicles
    • Households buying premium vehicles in mature transport markets will spend ~$3,800 per annum on shared mobility
    • The full shared mobility market — shared fleets, vehicle pooling — will be worth about the same as today’s global e-commerce market
    • In 2030, shared mobility will be hypercompetitive and regional/local, involving OEMs, digital tech firms, city councils, utilities, transport authorities, logistics, and e-commerce fleets

Playing in this space requires a reconfiguration of OEMs’ strategies

  • OEMs need to fix their strategies and align with shareholders
    • Shared mobility is barely profitable today, and full autonomy will come by 2027 at the earliest
    • Large amounts of high-risk capital are required to fund growth of autonomous fleets and customer acquisition
    • OEM boards need to choose between:
      • (1) leaving the field to emerging “carriers” — fleet operators, mobility platform players — and becoming “thin specialists/design shops” and
      • (2) making a big commitment to penetrating the mobility market, finding new investors, and running a new diversification strategy
    • Whichever is chosen, OEMs will face a talent squeeze as software and Internet firms expand research and development by 15% year-on-year

01 Autonomous & electric & connected: By when?

02 Scale and impact of mobility … and growth of the roboconomy

03 Industry profits reshaped by the roboconomy

04 Imperatives for the OEM — organizing for success in services

05 Outlook: Flying cars and tunnels on the horizon

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Dietmar Ahlemann

Partner, PwC Germany

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