The auto industry has stayed strong throughout the years despite economic setbacks, and according to a recent report by McKinsey & Company, the industry is now “ripe for disruption.” The organization identified four key interconnected trends that will shape the industry in the next 15 years, possibly rendering it much different by 2030. In fact, the report’s authors assert that there’s no way of telling what the industry landscape will look like by that year, but have sketched out several compelling possibilities based on trends in mobility and vehicle technology.
The way the world gets around is changing rapidly. The McKinsey report points out that the rise of shared mobility (as in the case of car sharing and e-hailing) as well as urban environments that discourage car use, the need for flexible transportation options, the decline of private car ownership and the use of multiple modes of transportation to reach one destination have created significant shifts in the automobile industry—and that’s not a bad thing.
They predict that that diversification of the automotive revenue pool, driven by on-demand and data-driven mobility, will create an additional $1.5 trillion in revenue potential, due to the inclusion of apps, remote services and software upgrades in the revenue pool. Additionally, vehicle units sales will continue to grow despite shared mobility, albeit at a slower rate, which will drop from 3.6 percent to 2 percent per year. This will be due to the development of a new market for vehicles designed specifically for sharing.
As “advanced driver-assistance systems” (ADAS) continue to be developed by tech giants like Google, the possibility of fully autonomous vehicles by 2030 becomes more feasible. McKinsey predicts that up to 15 percent of all cars sold in 2030 could be fully autonomous. This will lead to serious lifestyle changes surrounding how drivers and passengers use their cars, and will allow them to both get more work done and consume more media and entertainment while driving (although we at EmpireCLS maintain it won’t change the preference for chauffeured luxury travel service). This trend, in turn, can lead to greater technological integration in vehicle design. The hurdles for driverless car systems? The breadth of regulatory oversight and consumer’s acceptance of taking their hands off the wheel.
As we’ve already touched upon in previous blogs, the sale of electric cars like the Tesla Model S have exceeded expectations in the past few years. Electric cars are becoming increasingly more viable and competitive in the auto market due to stricter emissions regulations, lower battery costs, a widening infrastructure of vehicle chargers and greater consumer acceptance. The McKinsey report authors predict that anywhere from 10 to 50 percent of vehicles sold in 2030 will be electric, depending on where they are sole. Adoption rates will vary at the local level, dependent on the push-pull of consumer demand and governmental regulation and highest in dense urban areas where regulation is strongest.
The aforementioned factors will result in heightened connectivity among vehicles themselves and with different technologies. Automated driving will allow passengers to consume media and services from their vehicles, and sharing technology will dictate the need for built-in applications. Electrical and shared cars will likely come with software, technological advances and upgrades much like smartphones and computers, meaning that tech companies will play an increasingly important role in the vehicle industry. In order for this dynamic to work, vehicle makers will have to learn how to cooperate and collaborate with tech competitors.
Of course, there’s no way to tell how many of these predictions will come true (and we still hold fast to our conviction that we won’t see driverless wedding limo service anytime soon), but we can say for certain that the future of the auto industry is full of rich possibilities. Keep up with industry news by following the EmpireCLS blog for the latest updates.
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