The automotive industry is experiencing a period of massive change towards the “Automotive Endgame” driven by major disruptive trends, which we summarize as “5 RACES”:
- Real customer focus: Automotive and mobility leaders will put the customer and her needs at the center of their business and provide customer-centric propositions and processes on the same level as leading technology players do today. This is nothing short of a fundamental cultural change for the traditionally engineering- and product-oriented automotive industry.
- Autonomous driving will form the foundation for completely new mobility solutions in urban mobility with self-driving robo-cabs over the next few years. In addition, autonomous driving will become available as an option in Premium and Luxury vehicles.
- Connectivity/Digitalization: All cars will be connected to the internet and essentially become digitally enabled devices on wheels. Increasing connectivity and digitalization will lead to new service offerings, but also impact the multi-channel customer journey.
- Electric powertrains will grow steeply to meet emission standards; once price parity is reached, customer-driven momentum will push this trend further.
- Shared mobility services will result in new solutions for urban mobility.
All traditional manufacturers and suppliers will need to develop their own answers and strategies to cope with the 5 RACES and to be well set up for the “Automotive Endgame”. Each of the RACES will require massive investments and the development of often new capabilities, including software. Given the magnitude of the challenge, we believe that no player will be able to implement proprietary solutions for all 5 RACES without strong partnerships.
The speed and trajectory for each of these trends will depend on many factors. Adoption of electric vehicles, for instance, depends heavily on regulations at the national and even city level, further cost reductions for batteries and cells, the availability of competitive products including range and charging time, the availability of charging infrastructure in cities and highways, and more. We have built and are continually refining our proprietary data models for the 5 RACES, which are scenario-based and forecast the tipping points in the adoption S-Curves under specific premises.
The 5 RACES will have a massive impact on profit pools over the next decade and beyond. In some key urban areas mobility will likely be revolutionized by shared electric self-driving robo-cabs. As major trends such as autonomous driving and new mobility services allow for platform economics, the early movers—at least, those who make the right moves—may have an opportunity to build highly profitable and prohibitive business models. In contrast, companies who take a wait-and-see approach may either miss the chance to participate in certain profit pools or be forced to make huge investments to catch up.
Leading OEMs and suppliers will:
- Pick their battles and drive for leadership position in selected RACES. This will often require substantial investments in M&A and certain capabilities that are often outside of traditional automotive strongholds. It will be critical for these companies to provide a differentiated omni-channel customer interface, bringing brand values to life and establishing a unique