The Global Automotive Revolution Just Ahead

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The Global Automotive Revolution Just Ahead

In previous issues, we’ve explored the technologies and demographic forces that are propelling the concept of the autonomous car toward reality.

Now, as other researchers have come forward with their own conclusions, we are able to assimilate their findings into our own well-developed vision of the future of the automobile.

The bottom line is that digital technologies won’t just enhance the automobile; they will transform the very definition of what a vehicle is and how it will operate.

A new report from McKinsey & Company, titled, “Automotive Revolution—Perspective Towards 2030,” provides an illuminating look at one scenario.1 As McKinsey points out, four disruptive technology-driven trends are converging and building upon each other. These four trends are:2

  1. Diverse mobility
  2. Autonomous driving
  3. Electrification
  4. Connectivity

Based on those four trends, McKinsey expects that the automotive industry’s revenues will be affected dramatically by 2030.

While most observers expect car manufacturers to suffer a catastrophic loss of demand in a world in which car-sharing will be common, another possibility is that industry revenues will actually increase as cars connected to the Internet add even more value to users’ lives.

By 2030, about 10 percent of cars will be shared vehicles, and even though there will be fewer privately owned cars in the developed world, business models based on car-sharing will ensure that car sales will keep growing, although at a much slower annual rate of 2 percent, compared to an average of 3.6 percent for the first half of this decade.

Those car sales will also be driven by demographic forces, notably the emergence of middle-class consumers in the developing world, especially India and China, which will fuel demand for vehicles.

But even at this slower growth rate, McKinsey estimates that automotive industry revenues could increase by as much as 30 percent, or $1.5 trillion, by the end of the next decade. That’s because new capabilities will generate new revenue streams.

In particular, revenues from “on-demand mobility services and data-driven services” will explode...

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