The global mobility product trend is rapidly changing. Cars are becoming more advanced than before, in ways we never thought possible such as autonomous cars and connected cars. More and more urban folks now don't own cars, but share or hail cars. Seamless mobility is envisaged for the urban areas over the next few decades.
Current driver of rapid growth in the automotive industry is positive macroeconomic development including rise of global consumer middle class. In future, growth of the industry is expected to rely on emerging economies, particularly India and China, where there is a large population and rapid growing economy.
Data generated from automobiles signals huge opportunity
Cars are becoming more connected as it is able to transmit data generated through the internet. As more self-driving features appear inside connected cars, the architecture required to make it all possible will become increasingly complex.
This directly correlates to the number of sensors needed for an autonomous system to operate. With the increasing number of sensors and camera modules installed in cars, the amount of data generated by a car is set to explode. Today, even with lower level of autonomy, connected cars generate about 25Gb of data per hour.
Companies need to use and monetise data to improve business models, and identify growth and improvement opportunities such as loyalty management, risk management and customer acquisition. The car generated data market is estimated to become a USD 450 - 750 Bn market by 2030.
The automotive revenue pool will grow and diversify with new services such as apps, navigation, entertainment, remote services, and software upgrades. Software-based, direct interaction with every user – supported by the brand experience will lead to higher revenues over the lifecycle of the customer relationship. Business model will therefore become more focused on the user.
There is no single strategy to succeed in car data monetisation, as targeted and company-specific approaches are required. There is a need to develop a plausible and pragmatic blueprint, acknowledging its starting point and current capabilities as well as future ambitions and prospects.
An example of data used from cars to improve business model is in the insurance industry. If a driver consents, data can be streamed from the car to insurers to determine how much premium to charge. Insurers can determine the risks for accidents by knowing if the driver is driving according to speed limit, logging in a lot of miles or wears a seatbelt - all of which could be interpreted to determine the risks for accidents.
Due to transmitted data, companies need to consider privacy at every stage of the software development life cycle from designing, coding, testing and installing. As data will be shared with third parties for analysis, as well as data coming into the car from the cloud, companies also need to consider security of the overall infrastructure network.
Increasing focus on electrified cars and autonomous cars
Electrified cars and autonomous cars are expected to be widely adopted. In 2018, global sales of new electric vehicles passed a million units. European car makers are driving the trend in electrified cars (i.e. emission free cars). However, in terms of number of electric vehicles sold, China remains firmly in the lead.
Battery costs potentially will decrease to USD 150 to 200 per kWh over the next decade. Electrified cars will achieve cost competitiveness with conventional vehicles, creating the most significant catalyst for market penetration.
An interesting point to note is that Japanese car makers currently do not have a fully electrified vehicle in their model line-up and are working on it. Japanese car makers (Toyota, Honda and Nissan) are however setting new aggressive targets for electrified cars. Toyota has announced that it intends to have a fully electrified line up by 2025. It is forming new partnership with other carmakers and battery producers.
The wide-scale adoption of autonomous cars will lead to unprecedented economic, social and environmental change. Google and Tesla are especially forging forward in autonomous cars (self-driving cars). However, legislation is still very fragmented across countries globally. Technological and regulatory issues are still being worked out.
Autonomous cars are expected to reduce accidents. High-tech maps, camera, and sensor technology allow autonomous cars to monitor their surroundings better than a human may be able to at times. It can also help disabled people get around. Services such as driver-less grocery delivery will be possible.
In the short run, there will be price premiums paid for electric power trains and autonomous driving technology features, but over the long run, it is expected that pricing will reduce to reach very competitive levels.
Changing mobility behaviour will change car design requirement
Companies need to consider more lasting cars, as cars will be used more intensely and replaced more frequently. The sharing economy is growing, and shared mobility is one of the fastest growing segment in the sharing economy.
The increasing penetration of autonomous cars is expected to have a very positive impact on shared mobility such as 'Robotaxi'.
For example, Tesla is combining the concept of autonomous cars and shared mobility, and has announced that it will not be too distant in the future where Tesla owners could put their autonomous cars to work (and earn money) when not using the cars - no humans needed. Tesla will take 25% to 30% of the payment for each ride ordered, similar to the cuts taken by other ride-hailing apps.
However, there are still discussions on who should be liable if the vehicle gets into an accident when in autonomous mode. This new concept is intriguing and will impact the shared mobility industry.
More young people in the city will have no car of their own and will use shared mobility concepts in combination with public transport. Therefore, there will be less car ownership. Car sales is still expected to grow but at a slower rate. Companies need to take these trends into consideration when designing cars. Cars will be used more intensely and replaced more frequently.
The automotive industry is transforming. There is an increasing emphasis on data, electrified cars and autonomous cars. The sharing economy will also have a huge impact on the automotive industry. There will be lesser ownership of cars among the young generation. Sales of cars will be growing but at a slower rate. Therefore, automotive OEMs will need to adapt to changing trends.
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CNN, Toyota sets aggressive new targets for electric cars, https://edition.cnn.com/2019/06/07/business/toyota-electric-cars/index.html, published 7 June 2019
Mashable, Elon Musk says Tesla Robotaxis are coming - and soon, https://mashable.com/article/tesla-elon-musk-robotaxi-self-driving-cars-autonomy-day/, published 23 April 2019
World Economic Forum, Digital Transformation of Industries: Automotive Industry, http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti-automotivewhitepaper-final-january-2016.v1.pdf, published January 2016