Autonomous mobility is coming. Not even the coronavirus can stop it. Roland Berger
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Autonomous mobility is coming. Not even the coronavirus can stop it. t o m otive Au ption Disru ar Rad #8 Roland Berger Automotive Disruption Radar #8 – 2020 1
The coronavirus crisis hit the automotive industry hard but also accelerated the shift towards autonomous mobility, the latest edition of the Automotive Disruption Radar has found. All indicators in the twice-yearly report and survey suggest disruption is still coming to the sector, despite the pandemic-induced downturn and changes in mobility habits. The eighth edition of the ADR, which tracks 26 indicators in 18 global markets, found that Covid-19 stimulated technology players while hitting traditional OEMs hard. Overall, country scores were the highest on record, with smaller countries closing the gap on bigger markets. The Netherlands ranked number one, as it did in ADR7, followed by Singapore, leaving former frontrunner China in joint third with South Korea. The survey results also highlighted a growing interest in electric vehicles and soaring EV sales. For example, 50% of all potential car buyers say they are now considering a battery EV – compared with 35% in ADR1 (Jan 2017). Interest in private vehicle ownership also rose, and R&D activity hit a record high. In this booklet, we take a closer look at these figures and analyze four real-life developments that underscore the shift to autonomous mobility: Cover photo Michael Hitoshi/Getty Images Commercialization of autonomous mobility services; growing competition in the EV market; OEMs fall behind as new players enter software market; and the rise and rise of Tesla. Roland Berger Automotive Disruption Radar #8 – 2020 3
Under the hood: Key report findings The first ADR since the outbreak of the coronavirus pandemic shows that the transformation of the global automotive industry to autonomous mobility continues unabated despite the crisis. This was the case across all five ADR dimensions (customer interest, regulation, technology, infra- structure and industry activity) and their 26 indicators. These measure Growing up: Evolution of ADR country scores since the first edition in 2017 Overall score as percentage of maximum score 64% 62% 60% 58% 56% Singapore China South Korea 54% 52% Netherlands 50% Sweden Netherlands 48% Global USA, India Japan, France 46% South Korea China, Singapore Germany 44% Germany, India UK Global France, USA 42% Italy UK Belgium 40% Japan 38% 36% ADR 1 ADR 3 (Jan 17) (Jan 18) Source: Roland Berger 4 Roland Berger Automotive Disruption Radar #8 – 2020
factors from mobility behavior and vehicle sales to CO2 regulations, 5G mobile network coverage and research and development. Countries are awarded scores according to their performance in each of the 26 indicators. Overall scores among the 18 surveyed nations were the highest since the ADR began in 2017, and the top four countries all achieved totals higher than any previous top-ranked country. The average score also jumped, from around 50% of the maximum achievable score in ADR7 (January 2020) to 55%. Only one country – Canada – performed worse than in ADR7. Netherlands 1 Singapore 2 3 China South Korea 3 China Sweden 5 Singapore Sweden Global UK 6 Netherlands South Korea 7 France Germany 7 Spain 9 UK India Germany UAE 10 Global Spain 11 Italy USA 11 France 13 India Japan 13 USA Russia 15 Russia 16 Belgium Saudi Arabia 16 UAE Japan Italy Canada 18 Belgium XX Country ranking Score evolution vs. last edition ADR 6 ADR 8 (Jan 18) (Sept 20) Roland Berger Automotive Disruption Radar #8 – 2020 5
Small but mighty The performance of smaller markets was particularly impressive – the Netherlands recorded the highest score ever, while China was the only automotive “superpower” to make the top 5. Results from the survey component of the report (which account for a third of the total score) were a key driver here, with customers in countries that have little or no automotive industry much more enthusiastic about new mobility concepts. Down with cars: Most countries show an increased level of interest in mobility concepts since the outbreak of the Covid-19 pandemic “How many people do you know who don’t or did not want to buy a car because they exclusively use other mobility concepts?” Most enthusiastic countries about the use of mobility concepts 75% Singapore 85% 75% India 80% 75% UAE 80% 70% China 75% 65% Saudi Arabia 75% Less enthusiastic countries about the use of mobility concepts 50% Italy 50% 40% UK 50% 35% France 40% 30% USA 40% 35% Japan 30% ADR7 (Jan 2020) ADR8 (Sept 2020) Source: Roland Berger Automotive Disruption Radar online survey 6 Roland Berger Automotive Disruption Radar #8 – 2020
EVs charge ahead Several specific developments caught the eye. Most notable was a big jump in interest in EVs, with 50% of potential car buyers now considering an EV, against 40% in ADR7 in early 2020. Some of the biggest individual jumps came in China (80% vs. 60%), the Netherlands (45% vs. 30%) and Germany (40% vs. 25%). People living in city centers are most keen on EVs, with 60% of potential car buyers living in cities considering one. The rise in interest may be attributable to the massive Covid-related government stimulus packages currently being rolled out, many of which include generous EV subsidies. Leading the charge: South Korea and China have rapidly expanded their electric vehicle charging networks in 2020 Number of charging locations per 100 km of roadway 15.2 16% 15% 14% 13% 12% 10.6 11% 10% 9% 8% 7% 6.1 6% 5% 3.9 4% 3.0 2.5 2.3 3% 2.2 1.8 1.5 2% 1.2 1.0 0.9 0.6 0.5 1% 0.0 0.0 0.0 0% USA Germany Italy UK South Korea Netherlands China Sweden Belgium UAE Japan France Singapore Spain Canada India Russia Saudi Arabia ADR1 (Jan 2017) ADR8 (Sept 2020) Source: EV Volumes, desk research, Roland Berger Roland Berger Automotive Disruption Radar #8 – 2020 7
This shift in buying intention has translated into an increase in EV sales, particularly in northern hemisphere markets. In Sweden, for example, almost a quarter of all vehicles sold are now fully electric or plug-in hybrid models. And compared to the first half of 2018, the number of EVs sold as a percentage of the total number of vehicles sold leapt in France (7.8% vs. 1.8%), Germany (7.2% vs. 1.8%) and the UK (6.9% vs. 2.0%). Subsidies no doubt again played a part. An electric market: More people are now interested in buying an EV than they were at the start of 2020 Percentage of potential car buyers “Are you considering buying a battery electric vehicle as your next car?” 60% China 80% 70% India 80% 75% Saudi Arabia 75% 55% South Korea 70% 60% UAE 70% 55% Spain 65% 40% Italy 55% 35% Singapore 50% 30% Netherlands 45% ADR7 (Jan 2020) ADR8 (Sept 2020) Source: Roland Berger Automotive Disruption Radar online survey 8 Roland Berger Automotive Disruption Radar #8 – 2020
Tesla remains the dominant EV seller, with its models featuring heavily in lists of the top 5 manufacturers by EV sales in each country. Its Model 3 saloon is particularly prevalent, with sales in the US and China alone in the first half of 2020 reaching almost 90,000. Sales by traditional OEMs are also picking up, with Renault’s Zoe performing well in European markets, for example. Chinese producers, such as BYD and GAC, are largely confined to the top 5 of the Chinese market. ADR7 ADR8 average 40% average 50% (Jan 2020) (Sept 2020) 35% Sweden 45% 35% Canada 40% 30% France 40% 25% Germany 40% 25% Russia 40% 25% UK 40% 25% Belgium 35% 25% USA 35% 20% Japan 20% Roland Berger Automotive Disruption Radar #8 – 2020 9
Robotaxis good, private cars better As in previous editions, ADR8 measured mobility preferences, where Covid-19 also made its presence felt. Unsurprisingly, the desire to travel by private car has increased since the pandemic, with the importance of having access to a private vehicle rising from 69% to 76% overall. The increase was greatest among young people and city center dwellers. Private preferred: Access to a private car has grown in importance since the Covid-19 pandemic Global average and selected demographic groups “Before the Covid crisis started, how important was it for you to have access to a private vehicle?” 10% 34% 32% 30% 30% 26% 25% 36% 22% 69% 12% 11% 18-29 years old City center 32% “Today, how important is it for you to have access to a private vehicle?” 45% 7% 41% 16% 31% 29% 20% 76% 18% 48% 8% 8% 29% 18-29 years old City center Not important Slightly important Important Very important Source: Roland Berger online survey September 2020: 17,202 participants – Participants by country: Belgium 1,009; Canada 1,002; China 1,005; France 1,008; Germany 1,008; India 1,013; Italy 1,022; Japan 1,014; Netherlands 1,008; Russia 1,005; Saudi Arabia 527; Singapore 1,010; South Korea 1,010; Spain 1,013; Sweden 1,011; UAE 503; UK 1,015; USA 1,019 10 Roland Berger Automotive Disruption Radar #8 – 2020
Despite this, autonomous mobility services don’t seem to have suffered at the hands of Covid-19 – willingness to use autonomous robocabs rose to 56% overall from 52% in ADR6 (July 2019). Results were particularly high in Asia and the Middle East. So, respondents seem to want autonomous cars, but they are not giving up private vehicles. Rise of the robocabs: Enthusiasm for robotaxi services has risen in the past year, particularly in North America Global average and by continent “Would you use a mobility service based on a fully autonomous robocab?1” 52% 56% ADR 6 ADR 8 (Jul 2019) (Sept 2020) 34% 40% 54% 73% 30% 34% 50% 57% 70% 66% 66% 60% 50% 46% 43% 27% Asia Middle Europe North Asia Middle Europe North East America East America Yes No Yes No 1 Autonomous driving taxis without a driver in the vehicle Source: Roland Berger Automotive Disruption Radar online surveys Roland Berger Automotive Disruption Radar #8 – 2020 11
Research & Development keeps on developing Covid-19 also failed to dent autonomous mobility R&D activities. The number of full-time equivalent employees working in R&D jobs in the sector and listed on LinkedIn increased by 8% to 147,000 between the first and third quarter of 2020. Additionally, the number of registered patents related to autonomous vehicles/functions as a percentage of all registered driving technology patents reached an all-time high of 5.4%. It has risen in all eight ADR editions. Patent pattern: The number of autonomous driving-related registered patents has grown every year since the ADR began Autonomous driving-related patents as a share of all driving technology patents 136,623 125,107 5.4% 101,569 89,123 80,565 4.2% 78,209 3.3% 2.3% 1.6% 1.3% 2015 2016 2017 2018 2019 2020 (Jan-Sept) Total patents in scope Share of patents with keywords Source: Patentinspiration, Roland Berger 12 Roland Berger Automotive Disruption Radar #8 – 2020
How the industry is changing: Four real-life examples While the ADR indicators and survey results suggest that Covid-19 has failed to halt the charge of autonomous mobility, it is real-life developments that prove it in practice, as demonstrated in our four examples. Commercialization of autonomous mobility services OEMs fall behind as new players enter software market Growing competition in the EV market The rise and rise of Tesla Roland Berger Automotive Disruption Radar #8 – 2020 13
Commercialization of autonomous mobility services After much trailing and hype, robotaxis are finally here. The Alphabet- owned autonomous driving technology firm Waymo, oft-mentioned in previous ADR editions, has launched a fully driverless service in the US, albeit almost 18 months later than promised. In October 2020, Waymo told Ars Technika, a technology magazine, that its vehicles are initially operating For and against: Reasons for adopting or not adopting autonomous mobility have changed considerably in the past three years Percentage of survey respondents Reasons for Yes (multiple answers possible) If the technology for auto- 55% nomous vehicles is proven to 35% be safe and well established If same or lower cost than 45% taxi/chauffeur services/cabs 31% If same or lower cost than 45% public transportation 22% 20% If I use the service exclusively 8% Reasons for No (multiple answers possible) No, because I want 20% to drive myself 34% No, because I don’t trust 40% the technology for 20% automonous vehicles No, because I want 25% a human driver 13% No, because I am afraid 35% to have lack of control 11% (e.g. to stop or leave the car) ADR3 (Jan 2018) ADR8 (Sept 2020) Source: Roland Berger Automotive Disruption Radar online survey 14 Roland Berger Automotive Disruption Radar #8 – 2020
in a 50-square mile area covering four suburbs in Phoenix, Arizona, alongside a fleet of self-driving cars that have a safety driver. A spokesman said that before the pandemic, the company was providing “1,000 to 2,000 weekly rides in total, five to ten percent of which were fully driverless.” The firm added that it expects to return to that volume by the end of 2020, and grow from there. It will now be interesting to see if Waymo can establish and sustain a viable business model. If it can, the firm will not only be a leader in autonomous driving technology, but also the commercial leader in the sector. OEMs fall behind as new players enter software market Big-name technology players are not only diving into the EV market – they are increasingly entering the OEM software market as well. In the biggest recent development, the US chip manufacturer Nvidia announced a partnership with Daimler, the manufacturer of Mercedes-Benz cars, to produce a software architecture for autonomous driving. A key feature of the new platform will be its ability to update battery and driving software via the internet. For example, data for new features or regulations, such as autonomous parking or updated self-driving rules, can be downloaded via mobile networks as they become available and for the entire vehicle lifecycle. Previously, Mercedes updates were largely limited to infotainment apps. The architecture is based on Nvidia’s AI-based Drive platform. As with similar products, it offers a range of autonomous driving software, including a central computer to control sensors and AI functions, and reference architecture. Like Foxconn’s platform, it is also open source. Drive should be available across Daimler’s range of brands from 2024. Daimler has said it aims to develop the most advanced architecture in the automotive industry. However, its new partnership shows that OEMs are having difficulties building in-house software competencies. This is allowing new players into the space, players that can better differentiate and therefore be more profitable than mere hardware manufacturers. OEMs will have to take measures to address this risk and defend margins. Roland Berger Automotive Disruption Radar #8 – 2020 15
Growing competition in the EV market The EV market has seen a flurry of activity recently with the entrance of several new players. Most notable is that of Foxconn, the Taiwanese firm best known for making Apple iPhones. In October 2020, it unveiled its MIH Open Platform, an architecture consisting of EV hardware and software. But it has one major difference to typical closed EV systems, such as those used by Tesla. Foxconn will grant open-source access to third party developers and car companies to develop the platform, with the hope of making it the “Android of EVs”. Powering up: Electric vehicle sales have ballooned in most ADR countries since 2018, with Sweden way out in front EV/PHEV/FCEV sales as percentage of total vehicle sales Sold units ['000] 33 21 69 96 23.9% 10.9% 7.8% 7.2% 3.2% 1.8% 1.8% 5.1% Sweden Netherlands France Germany ADR4 (2018 HY1) ADR8 (2020 HY1) Source: EV volumes, IHS, Roland Berger 16 Roland Berger Automotive Disruption Radar #8 – 2020
Foxconn hopes this strategy will quickly lead to new functionalities, such as range improvements. It will layer and separate software and hardware so they can be developed independently and costs kept down. The firm will build EVs for others rather than produce its own EVs, with platforms developed for several models from minis to powerful AWDs. Foxconn is also partnering with several firms, including CATL and SES, to develop solid-state batteries by 2024. As Foxconn already produces autonomous driving technology, the MIH Open Platform development marks the entrance of a major new industry player. It remains to be seen how established OEMs will react, especially in Asian markets. 2018 2020 HY1 1.9% HY1 3.3% average average 52 14 386 21 27 11 16 112 0.3 1 15.5 1.7% 1.5% 3.3% 2.9% 2.8% 2.5% 1.6% >1.0% 6.9% 5.7% 4.1% 1.4% 0.1% 2.0% 2.1% 2.9% 2.1% 1.5% 0.7% 0.4% 0.4% >1.0% UK Belgium China Canada Spain Italy USA UAE South Singapore Japan, Korea India, Russia, Saudi Arabia Roland Berger Automotive Disruption Radar #8 – 2020 17
18 Roland Berger Automotive Disruption Radar #8 – 2020
The rise and rise of Tesla Investors love Tesla, and it seems that currently companies with a comparable business model can profit simply by being a “kind of Tesla”. The valuations of EV makers NIO, XPeng and Li Auto, for example, exploded this fall on the back of strong delivery news. Other OEMs are now trying to piggyback on the US firm’s success by copying its solutions. There are several reasons for this. Tesla is primarily a technology company. It therefore views its business as much more than selling cars, and as such operates in other areas such as CO2 emissions trading, data services, recycling, energy and even mining. Top of the range: Tesla dominates sales of electric vehicles in the 18 ADR countries, but traditional OEMs and Chinese brands are catching up Top 10 EV models sold sold in the 18 ADR countries from January to June 2020 (in thousand units) 129 #1 #3 In China, In Germany South Korea, UK and France and Netherlands 4 models in Top 5 in USA 32 21 18 18 16 14 14 14 14 Zoe EV Leaf EV Aion S EV e-Golf EV GTE PHEV Kona EV E100/E200 EV PHEV VW Tesla Model 3 Renault BYD Qin Pro EV600 Nissan GAC Trumpchi VW Passat Hyundai GM-SAIC Baojun E50/ BMW 530Le Photo kokouu/Getty Images Source: EV Volumes, IHS, Roland Berger Roland Berger Automotive Disruption Radar #8 – 2020 19
But its cars are its stars, and by building its own EV platform and software it can offer unique services and features. In addition, vertical integration of key differentiating technology, especially around batteries and its e-powertrain, gives Tesla a competitive advantage in energy efficiency. The company’s unique manufacturing approach that focuses heavily on innovation also gives it an edge. For example, it uses die-cast vehicle Digital growth: The number of cars bought through online sales channels increased across the board during 2020 Percentage of sales completed online 15% China 25% 20% Germany 25% 15% India 25% 25% South Korea 20% 10% Spain 20% 15% France 15% 15% Italy 15% 15% Netherlands 15% 15% Saudi Arabia 15% ADR7 (Jan 2020) ADR8 (Sept 2020) Source: Roland Berger Automotive Disruption Radar online survey 20 Roland Berger Automotive Disruption Radar #8 – 2020
body parts rather than spray-painting individual components to save time and money. Lastly, its lean online-based sales network has been a boon during the pandemic, when dealerships were forced to close or wind down operations. This has made its lack of physical dealers a competitive advantage. As a result, more and more OEMs are likely to jump on the Tesla bandwagon. ADR7 ADR8 average 10% average 15% (Jan 2020) (Sept 2020) 15% Singapore 15% 10% Sweden 15% 10% UAE 15% 10% UK 15% 10% USA 15% 10% Belgium 10% 5% Canada 10% 10% Russia 10% 5% Japan 5% Roland Berger Automotive Disruption Radar #8 – 2020 21
22 Roland Berger Automotive Disruption Radar #8 – 2020
It’s clear from the ADR indicators and survey that the future of the automotive industry is (still) autonomous mobility. This is worrying for traditionalists, who know that none of the current major OEMs are technology leaders. It’s even worse for pessimists, who can see that even premium OEMs, with their huge R&D budgets, are struggling to organically meet the required future competency levels. The likes of Foxconn moving into OEMs’ core business of vehicle manufacturing is a further blow for the automotive establishment. But on the positive side, these are companies well known for their manufacturing excellence and cost effectiveness. So it will be interesting to see how the major automotive firms defend themselves from this disruptor attack and ensure they are still producing competitive vehicles in the future. To help companies adjust to the new normal in the automotive industry, including post-Covid strategies, disruptor threats and maintaining a competitive advantage, Roland Berger has developed its Automotive Triple Transformation framework. It aims to help senior automotive executives bring order to the complexity and equip their businesses for the challenges of the coming decade. Photo tampatra/Getty Images Roland Berger Automotive Disruption Radar #8 – 2020 23
What is the Automotive Disruption Radar? The Automotive Disruption Radar is a biannual analysis of market trends related to disruption in the global automotive industry. Its latest findings are based on field research and a survey of 17,000+ car users across 18 markets (Belgium, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Russia, Saudi Arabia, Singapore, South Korea, Spain, Sweden, 360-degree coverage: The Automotive Disruption Radar is based on the permanent screening of 26 indicators along five dimensions Indicator definitions Amount of shared vehicles Shared vehicles in car parc [%] EV portfolio EV models currently on offer [% of total models] R&D intensity – Autonomous driving No. of FTEs listed on LinkedIn ['000 employees] Automotive products (Level 4+) Level 4 city vehicles [% of total car parc] 5 Test roads – Autonomous vehicles Industry Test tracks in operation [#; km] activity Vehicle-2-vehicle communication Models with V2V functions [% of total models on the market] Multimodal mobility 4 Usage of multimodal mobility Infrastructure EV/PHEV charging infrastructure Number of charging stations per km of road Mobile network – 5G coverage Steps taken towards 5G installation 3 Venture capital investment – Artificial intelligence Technology Total in USD bn Venture capital investment – Mobility Total in USD bn Battery cost – EVs Expected development of battery cost [USD/kWh] Patent activities Automotive patents filed related to autonomous technology [% of total] Source: Roland Berger 24 Roland Berger Automotive Disruption Radar #8 – 2020
UAE, UK, USA). information is also drawn from external sources such as leading mobility experts and major industry reports. Each nation is scored along 26 indicators, grouped into five dimensions The ADR aims to answer key questions such as: which factors are driving change in automotive ecosystems; how do these factors evolve over time; and what can decision makers do to best manage disruption? Ultimately, the ADR is a go-to decision-making tool for senior executives in the mobility sector. Mobility concept preferences % of people who know at least one person who does not use their own car for mobility Autonomous vehicle preferences % of people who would use a fully autonomous robocab if it cost less than owning a vehicle Mobility planning % of people who use an app at least once a week to plan a trip Digitalized culture preferences % of people interested in buying a vehicle directly on the internet EV preferences 1 % of people who are considering buying an EV as their next vehicle Mobility behavior Customer % of overall distance traveled by car interest EV/PHEV sales % of total vehicle sales Customer curiosity People's web search behavior 2 Type approval process Regulation Current level of regulation Restrictions for ICEs Restrictions on ICE vehicles in cities with more than 500,000 inhabitants CO2 legislation CO2 emissions target in g/km Automotive association activities Positive actions/press releases [% of total number of actions/releases] Autonomous vehicle – Computing power Current level of computing power Roland Berger Automotive Disruption Radar #8 – 2020 25
Your contatcs Dr. Wolfgang Bernhart Senior Partner Löffelstraße 46 70597 Stuttgart Wolfgang.Bernhart@rolandberger.com +49 711 3275-7421 Stefan Riederle Principal Sederanger 1 80538 München Stefan.Riederle@rolandberger.com +49 89 9230-8169 Do you want to know more? Computer on Wheels series → The car will become a computer on wheels → C omputers on wheels: Turning OEMs into software-enabled companies Photos Roland Berger GmbH → Automotive Triple Transformation framework 26 Roland Berger Automotive Disruption Radar #8 – 2020
Roland Berger, founded in 1967, is the only leading global consultancy of German heritage and European origin. With 2,400 employees working from 35 countries, we have successful operations in all major international markets. Our 52 offices are located in the key global business hubs. The consultancy is an independent partnership owned exclusively by 250 Partners. Automotive Disruption MADE by RB We believe that the combination of 4 dimensions (Mobility, Autonomous driving, Digitalization and Electrification) is likely to trigger a major disruption in the automotive industry over the next 15 years. Since 2016, we have been bringing together our experts from all around the world to try to make this new future and its implications more concrete, and to best support the key decision makers of the automotive industry. Roland Berger Automotive Disruption Radar #8 – 2020 27
Publisher Roland Berger GmbH Sederanger 1 80538 Munich Germany +49 89 9230-0 RB_SAL_20_025_FLY This publication has been prepared for general guidance only. The reader should not act according to any information provided in this publication without receiving specific professional advice. Roland Berger GmbH shall not be liable for any damages resulting from any use of the information contained in the publication. © 2020 ROLAND BERGER GMBH. ALL RIGHTS RESERVED.
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