Automotive and mobility

Leaders have a more mature view of the EV transition

• The estimated timing of transition to EV powertrain as mainstream has narrowed compared to previous years. This indicates a more mature—and realistic—view of how quickly EV penetration will occur.
• China is expected to have the highest market penetration of EVs in 2030 rising to an estimated 36%.
• Cost parity is still far off as the industry is less optimistic, compared to previous years, that EVs can reach cost parity with conventional cars before 2030.

The charging market is up for grabs, but Tesla continues to have a strong position

• No clear leader has been established within the in the charging market ecosystem.
• Potential future leaders within the charging value chain are estimated to be charging networks, electric utilities, and existing fuel stations.
• Pressure to build an effective charging network will only grow, due to range anxiety and car owners becoming increasingly demanding about charge times in secure locations.

Automotive industry margins are under pressure

• Around the world, manufacturers are less confident that the industry will achieve more profitable growth over the next five years due to concerns over the global economy and rising costs.
• Entry of Chinese players with access to low-cost manufacturing, advanced technology, and ability to set up factory plants are rapidly challenging traditional established OEMs.
• Big bets amongst passenger vehicle companies on electric propulsion that is not yet realizing its full potential generates concern on postponement of near-term payoffs.

Arrival of Autonomous vehicles is expected post 2030

• However, there are significant differences within expectations across various regions, with China being most positive and India being the most hesitant.
• Autonomous technology has arrived, but a critical question is when it will be adopted widely and become a mainstream component of future transportation.
• One manifestation of new technology is autonomous ride hailing and delivery, spurring a growing expectation of a faster introduction of autonomous vehicles in major cities.

Connecting to the customer is a key differentiator

• While performance remains the most important selling point for customers, the need for a seamless and hassle-free customer experience has moved up to second place.
• The emphasis on a smooth customer experience extends from buying the car to having seamless operating software within the vehicle, the latter proves to be a challenge for the manufacturers.
• OEMs are showing less confidence than in previous years in their ability to generate revenue through subscription services.

"Just in case" is overtaking "just in time"

• As businesses recover from disruptions in the supply chain in the past few years the new normal in supply chain management is becoming “just in case”, rather than “just in time”.
• Companies are developing a wide range of strategies to build resilience against supply chain disruptions.
• Chinese OEMs are less worried about continuity of supply, likely because the country has been providing much of the supply of key commodities, particularly raw materials for EV batteries and EV components.

Labor shortages remain a concern

• The level of concern for labor shortages is higher among tech companies in the auto industry than in other categories, as demand for specialized skills remains strong. In addition, the increased importance of integration of technology solutions alongside hardware is accelerating the labor shortage problem.
• Some OEMs have set up R&D and design shops in Silicon Valley, whilst also recruiting technology leaders, showing the need to increase tech competence in the industry.
• Demand for specialized tech skills lead the automotive sector toward needing to adhere to the “Silicon Valley mindset and way of working” to increase attractiveness as employers, reducing working hours and improving employee benefits.

Technology challenges grow more complex whilst opening opportunities for agile players

• Automakers indicate that they feel less prepared than in 2022 for advanced technologies, such as artificial intelligence (AI), digital twins and advanced robotics.
• The rapid advances in AI, particularly generative AI, which is expected to bring automation to white-collar jobs, has negatively impacted confidence.
• When it comes to powertrain technology, more companies are hedging their bets this year.