All eyes on shared mobility

November 9, 2017

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By Ray Telang and Brandon Mason

How technology is dramatically transforming the auto industry

The technological transformation underway in the global auto industry will bring about unprecedented and relatively rapid change to nearly every aspect of the market. The future belongs to “shared mobility,” with connected and self-driving vehicles populating the roadways and leading to new uses for motor vehicles. Industry forecasts and their expected impact on the ecosystem are highlighted in the Digital Auto Report 2017 by Strategy&, PwC’s strategic consulting team.

Reshaped by the roboconomy

Among the predictions highlighted in the report, overall consumer spending on the emerging “roboconomy” is expected to reach approximately EUR 2.2 trillion annually, which will be powered by myriad mobility offerings and digital services. Driven by increased regulation and falling technology costs, nearly 60% of all new vehicles sold in the US, Europe and China are expected to offer some type of alternative propulsion (hybrid, electric, fuel cell) by 2025. More than 85% of all new cars across these regions are already connected, with the number growing to 470 million by 2025. The first “robot cars” (series-ready, self-driving vehicles) are anticipated to become a reality in 2023, and by 2030 analysts also forecast around 80 million of such cars in circulation in these regions.

These are bold predictions that underscore the global auto paradigm shift. In turn, business models across the auto supply chain are being upended. As various technology companies expand their influence on the sector, manufacturers will need to adapt to changes in consumer demand and preferences. Businesses and consumers will look to use cars in new ways, and expectations regarding their purpose and functionality will evolve exponentially.

The revolutionary phases

Each overlapping phase of the mobility journey will bring forth disruption with thousands of companies needing to adjust their mindsets and embrace new strategies aimed at navigating the changing environment. The first phase is currently marked by the introduction of digital products and services with autonomous, electric and connected cars – all in various launch phases. There’s no doubt that we are now seeing the large-scale emergence of mobility and digital services within the automobile.

The next phase pertains to elevating the digital customer experience through digital commerce and “always-on” service. We’ll see advanced data analytics and predictive services aimed at capturing customer insights and personalizing the experience. The quest to make cars smarter and more intuitive will take center stage.

Finally, in the third phase of this mobility revolution, we’ll see a rise in digital enterprise activity. This will include wholescale IT transformation marked by horizontal and vertical integration between suppliers and partners. This stage will also support advances in cybersecurity and payments as technology companies build out the mobility infrastructure.

The reimagined ecosystem

Along with the many pitfalls of not evolving fast enough, the roboconomy also creates business opportunities for OEMs, particularly within major categories of household spend. They include augmenting the car through services, delivering cross-modal mobility services and deploying fifth-screen ecosystem services. Cross-modal mobility services/MaaS represents the single biggest opportunity for OEMs.

Connected cars and electric cars are already a growing part of today’s auto ecosystem, with continual advancements being integrated into new models. Meanwhile, self-driving vehicles are only a few years away from becoming a reality. With a view to their future role in the roboconomy, auto manufacturers will need to decide whether they want to be infrastructure operators with their own end-customer service; adopt a role as an intermediary between the mobility providers and end customers; or retreat to today’s core competences of vehicle development and of their integration capacity as a parts supplier network.

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