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Driving change: shaping the future of the automotive business
It is no secret that the technological and commercial landscape of the global automotive industry is likely to change beyond all recognition over the next two decades as three key technologies converge. Autonomous driving, ride-hailing and electromobility, as well as other future powertrain technologies, have the potential to create the biggest paradigm shift in the 132-year history of the car industry.
The real game-changer for the industry and for the way in which the general public will consume products and services is autonomous driving technology. This has enormous potential to offer flexible mobility services that will allow consumers to engage in business, commercial and leisure activities while on the move, all of which will have the potential to be monetised. However, it is the way ride-hailing interfaces through mobile phone app technology that will allow consumers to access mobility in an entirely new way. It is also to likely speed the shift from the ownership of cars as products that are owned and very much seen as a cornerstone of day-to-day life in advanced consumer societies, to a service or even a commodity. IHS Markit's research on the future of transportation predicts that app-based mobility services - which effectively did not exist a decade ago - will become a USD1-trillion market by 2040.
One of the key architects of IHS Markit's "Reinventing the Wheel" multi-client study is Tom De Vleesschauwer, who leads the Transport and Mobility Practice within the Automotive Group at IHS Markit in London. He is at the forefront of our organisation's efforts to understand how personal mobility will evolve and effect change in the automotive industry over the next few decades. Commenting on this diffuse and complex environment De Vleesschauwer says, "Everyone is trying different things and probably until 2020, and probably beyond that now with the other new ideas that are out there, we are just in an experimental phase. We have to figure out what works, why does it work, why does it work in specific locations, while also trying to find other locations where the externalities are very similar, so you are able to scale up the idea into two or three other cities and so on."
Whatever happens in the future, it appears that ride-hailing will be the opening act, and a major catalyst as the precursor to technological and social changes to personal transport and mobility. One key impact is that more people will travel by car than previously expected. This will increase access to mobility, especially in emerging economies. Another impact will be more intense use of vehicles. A car driven by a mobility services company averages 50,000 miles per year, five times more than a car purchased for personal use. So overall utilisation of the automotive fleet will be higher.
App-based mobility services have grown because consumers value what they provide - they did not come about due to government policy. For EVs, however, government subsidies, incentives, and regulation have been the key stimulant. If a shift to EVs takes place on a wider scale, the implications will be large for both the oil and electric power industries. But light vehicles today account for only about one-third of total oil demand, and the timing and pace of change are far from clear. It is clear the environment is hugely complex and dynamic, and it is also subject to rapid change as a result of societal, macroeconomic and geo-political flux. An example of this is the Trump administration's decision to pull out of the Paris climate accord in 2017, just two years after then-president Barack Obama was a key architect of and a willing signatory to the agreement. The landscape is changeable so gaining the clearest possible picture will be a huge competitive advantage for any potential stakeholder in the future of mobility, whether they are an OEM, supplier or technology company. IHS Markit will continue to refine Reinventing The Wheel, which will spearhead other exciting studies, products and projects that will be launched over the next few years aimed at forecasting the future mobility landscape.
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