Alex Smoker, Principal at Miramar Global, discusses the key trends affecting the automotive industry currently: electric vehicles, shared mobility, and autonomous vehicles.
Electric Vehicles and current challenges
Electric Vehicle (EV) OEMs are taking the automotive sector by storm. Organisations such as Tesla have an extremely efficient business model with very few people involved in delivering advanced technology. EV organisations who can compete on the manufacturing side have a stronger cost position compared to the technology stack used by the equivalent premium German OEMs, even those these traditional OEMs have around 5 years advantage in terms of development time. The output of EV OEMs is not perfect, but the innovation is closer to level 4. To reach level 4 and develop a successful tech stack it requires a lot of investment and successful collaborations so you can rely on an open ecosystem; this can be a challenging objective when you are 5 years behind the market leader.
According to A Beesley Lecture delivered by David Stewart, Executive Director, Markets & Mergers, CMA. Stewart stated that The Climate Change Committee believes “the UK needs 12 times more public charge points than it had in 2021 to be ready for 2030.” Stewart further explained that the committee believes that “the number of charging devices is off-track and the rate at which they are installed needs to increase by a factor of four.” According to Stewart, in order “to build infrastructure on this scale demands significant investment.”
Shared mobility and the future of privately owned vehicles
Shared mobility, in terms of when vehicles are shared among individuals over time or together among multiple passengers, appears to be a growing trend in the industry. When we visited the Mondial de l’automobile in 2022 shared and personal mobility was a hot topic. There was a lot of focus on smaller city vehicles that operate under the shared mobility schemes and less focus on privately owned vehicles. According to research conducted by McKinsey “The shared-mobility market could grow rapidly within the next several years. Depending on customer acceptance of shared mobility, regulations in each country, and the progress of technology, spending on shared-mobility services could reach $500 billion to $1 trillion in 2030.” There’s still a long way for it to become mainstream and it appears to be the most attractive form of transport for young consumers living within mega cities, but the forecasted growth signifies a big shift in the way we may buy vehicles in the future.
The reality of autonomous driving
In a closed environment and using principles of autonomous driving (AD) it will take a while to develop autonomous vehicles. If you imagine all the small windy roads in the mountains of Italy for example, it will present many challenges to the algorithms so this could take a while to develop. For any incoming players they will have to manage their cost position in a smart way because with their existing efficiency they will struggle to compete with the likes of Tesla and Google to create cutting edge software.
According to Mckinsey and their Centre for Future Mobility Analysis: “To realize the consumer and commercial benefits of autonomous driving, however, auto OEMs and suppliers may need to develop new sales and business strategies, acquire new technological capabilities, and address concerns about safety.” The article, which focused on the private-passenger-car segment of the AV market, gleamed a positive future for AD in consideration of its shortfalls: “Based on consumer interest in AD features and commercial solutions available on the market today, ADAS and AD could generate between $300 billion and $400 billion in the passenger car market by 2035.”