The emergence of electric vehicles, connected & autonomous vehicles and Mobility as a Service is disrupting many sectors, but none more so than the automotive industry.
Click on each of the sections below to understand how these emerging mobility trends could impact the Automotive sector in the near, medium and long-term future.
Decline of private vehicle ownership: As autonomous vehicle (AV) and shared vehicle technology becomes more prevalent, robo-taxi models could deliver journeys to users at a fraction of the cost of today's ride-hailing services. This could shift the automotive market from a product model to a service model as consumers increasingly opt to use on-demand services rather than own a personal car.
Significant investment requirements for electric and autonomous vehicles: Manufacturers need to invest significant amounts in order to fund R&D for emerging technologies, as well as production retooling and supply chain development. We expect this to drive both partnership and restructuring activity in order to free up the necessary capital to invest for the future.
Decline in aftermarket demand due to fewer moving parts in electric vehicles: The majority of the value and complexity of an electric vehicle is in the battery. The rest of the vehicle is composed of comparatively fewer parts compared to an internal combustion engine (ICE) and also experiences less wear. The reduced wear may reduce long-term market demand for replacement parts and servicing facilities.
Rise of connectivity and autonomy enabling platooning: Platooning and autonomy will increase truck efficiency, safety and fleet utilisation by enabling fleet network optimisation effects and reducing the impact of driver time limits.
Shift from hybrids to battery electric vehicles (EVs): In the past, UK EV sales have been primarily plug-in hybrids, combining an internal combustion engine and electric vehicle powertrain. Changes in government tax incentives as well as improving range on battery electric vehicles is expected to shift the majority of vehicle sales to fully battery-powered electric vehicles.
Security of raw materials suppliers: An explosion in the pace of battery manufacturing has greatly increased demand for battery raw materials. Some materials (such as lithium) are in plentiful supply, whereas rarer elements such as cobalt may be exposed to geopolitical risk.
Second-life applications of batteries: Once electric vehicle batteries reach their end of life, there are potential applications to use these cells with reduced capacity. Second-hand batteries could greatly reduce the cost of home energy storage and could also be used in grid-level storage, refurbished or second-hand vehicles, or recycled.
Modular, upgradeable vehicles with greatly lengthened lifespans: With the reduced vehicle wear expected from EVs, future vehicles could last for much longer than vehicles do today. A modular vehicle design could have its battery, electronics and interiors replaced as needed while the powertrain and frame continues to operate.
New supply chains for AVs and EVs: Development and manufacture of EVs and AVs will be supported by supply chains quite different to those of internal combustion engine vehicles. AVs will create roles for highly technical partners/licensing models. Security of raw material supply, in particular for EV batteries, will be key.