The Future of Mobility

Breakthroughs in self-driving cars are only the beginning: The entire way we travel from point A to point B is changing, creating a new ecosystem of personal mobility. The shift will likely affect far more than automakers—industries from insurance and health care to energy and media should reconsider how they create value in this emerging environment.

A fundamentally new business ecosystem is emerging due to the societal and technological shift toward shared and self-driving vehicles, with impacts that will extend far beyond just the automotive industry. Frictionless, automated, personalized travel on demand—that’s the dream of the future of mobility. And the extended auto ecosystem's various elements are coalescing to realize that dream sooner than expected, which means that incumbents and disruptors need to move at top speed to get on board. 

An Integrated Perspective on the Future of Mobility

Numerous trends, ranging from energy decentralization to the Internet of Things, are likely to come together to create drastic changes in mobility systems over the next 10 to 15 years.

Predicting the future is perilous. In this case, however, two factors point us in this direction. First, several key mobility trends—electrification, shared mobility, and autonomy—are poised to take off. The costs of a lithium-ion battery pack fell 65 percent from 2010 to 2015, and they are expected to drop below $100 per kilowatt-hour over the next decade. Car-sharing and ride-hailing services are already at work in hundreds of cities around the world, enabled by smartphones and backed by substantial venture capital. An array of established automotive and technology companies, as well as intriguing start-ups like nuTonomy and Zoox, are testing self-driving capabilities, with the aim of providing door-to-door travel, with no human intervention required.

Second, and just as important, trends in related areas reinforce one another. Urbanization is expected to increase average city density by 30 percent over the next 15 years, stretching existing systems as demand rises. Urban planners and residents are putting livability and sustainability higher on their agendas. Increased connectivity is opening the door to multiple shared-mobility options and could also help to smooth traffic flows.

Car of the Future v3.0 - Mobility 2030

The next Car of the Future chapter expands from a content-into-the-car theme into a new-economics-of-the-caritself theme. Fully autonomous cars, driverless on-demand ridesharing networks and eventually integrated mobile networks, connectivity, over-the-air and big data aren’t necessarily verticals that automakers are being forced to pursue. Rather, they’re being pursued because of potentially game-changing business model economics. It’s no coincidence that several prominent technology companies are entering or are reported to be considering entering the mobility space, just as it’s no coincidence that the Consumer Electronics Show (CES) has become something of an auto show.

It’s not hard to see why this is happening. Even after tremendous technological advances in recent decades, the car as we know it today falls well short of maximizing its potential in terms of efficiency (both operating cost/mile & resource sharing), safety, data collection and monetization, personalization, and updating. Not only does that make the car something of an untapped well of new revenue sources, but each inefficiency also brings with it an added cost — insurance, fuel, economic, societal, recall-related, time spent driving in situations where consumers would rather not drive (like traffic jams). And the degree of stakeholder alignment is perhaps unprecedented — autonomous electric cars promise to be safer and greener, while shared on-demand mobility promises to unclog congestion in major cities.

Rethinking Transportation 2020-2030

By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transportas-a-service” (TaaS). The TaaS disruption will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.

The disruption will be driven by economics. Using TaaS, the average American family will save more than $5,600 per year in transportation costs, equivalent to a wage raise of 10%. This will keep an additional $1 trillion per year in Americans’ pockets by 2030, potentially generating the largest infusion of consumer spending in history.

Electrification

Electric Vehicles in Europe

In the past few years, Europe has gone through the initial adoption phase of electric mobility. After a “turbulent” period of excitement and promise as well as disappointment, it is now possible to formulate a clearer view on the development of electric mobility to date and its drivers going forward.

Although global and European sales figures are still small (below 1% of new car registrations), we see that in some pockets, growth has picked up speed – driven by government support, an improved offering of electric vehicles (EVs) by the automotive industry, and a growing familiarity and willingness to buy on the side of the consumer. In Norway, one such growth pocket, the top-selling car models in September, October, and December of 2013 were battery electric vehicles (BEVs).

The gradually increasing momentum behind EV adoption – both from the side of the consumer and the automotive industry – suggests that electrified powertrains will play an important role in Europe’s mobility going forward.

Autonomous Vehicles

Monetizing the Rise of Autonomous Vehicles

With over 1.55 billion vehicles on the road, 375 billion hours spent driving, and 1.2 million global traffic deaths annually, the implications of safer, more convenient, and greener mobility are far reaching. We think ADAS (Advanced Driver Assistance Systems) and ultimately Autonomous Vehicles (AVs) have the ability to drive improvements in these areas through multiple channels:

1. Accident reduction with 90% of crashes caused by human error.
2. Reduced congestion from safer driving and features like Connected Adaptive Cruise Control.
3. Additional productivity from multitasking.
4. Adding additional vehicle users by lengthening the tails of mobility.

Self-Driving the New Auto Industry Paradigm

Autonomous cars are no longer just the realm of science fiction. They are real and will be on roads sooner than you think. Cars with basic autonomous capability are in showrooms today, semi-autonomous cars are coming in 12-18 months, and completely autonomous cars are set to be available before the end of the decade.

This is not a toy—the social and economic implications are enormous: Beyond the practical benefits, it is estimated that autonomous cars can contribute $1.3 trillion in annual savings to the US economy alone, with global savings estimated at over $5.6 trillion. There will undoubtedly be bumps in the road as well, including the issues of liability, infrastructure, and consumer acceptance. However, none of these issues appears insurmountable.

Energy

Beyond the Plug

The rise of battery-powered electric vehicles (EVs) will entail the development of a vast amount of new infrastructure, particularly charging stations. Although the deployment of this infrastructure undoubtedly represents a market opportunity, the size of it is still diffi cult to estimate. Who owns the value created by the emerging EV business strategy is also still unclear. Despite initial scale advantages, small players who have what turns out to be the right solution may displace large players who make a bad choice.

The basic elements of the emerging EV charging value chain are clear. It must transfer energy from an outlet to a vehicle. It must track information of the energy provider and the energy recipient. It must include a payment system easy for the consumer to understand and easy for the energy distributor to integrate within pre-existing billing systems — and of course, it must meet government regulations and carmaker requirements.

Disruptive Technologies: Batteries

Greatly accelerated adoption of battery technology would be disruptive for sectors accounting for just under a quarter – USD 3.4 trillion – of corporate bonds outstanding globally. An acceleration of the electrification of transport infrastructure would be resoundingly negative for the oil sector’s credit profile.

It could change the economics of “peaker” power plants currently used to meet short periods of peak loads. For electric utilities and the automotive sector it would be disruptive, potentially polarising the market into winners and losers. It may go some way to resolving the “intermittency” problems of renewables, allowing them a greater share of the overall energy mix.

The Future of Electricity

A reliable, economically competitive and environmentally sustainable electricity system is the cornerstone of a modern society. The Fourth Industrial Revolution builds on the digital revolution and combines multiple technologies that are leading to unprecedented paradigm shifts in the economy, business, society, and for individuals. It involves the transformation of entire systems. The electricity landscape is a prime example of the Fourth Industrial Revolution as it undergoes transformation, becoming more complex than ever before, with rapidly evolving technologies, emerging innovative business models and shifting regulatory landscapes.