Thoughts on the Future of Mobility (Dec 2016)

Thoughts on the Future of Mobility

December 2016

Cornel Chiriac

Opening note

The presentation includes thoughts on how the world is changing, what does the future hold for how people will move around and fulfil their needs for transportation and mobility.

The presentation is built upon research by leading consultancies, aggregated and augmented with my thoughts on the topic. It is high-level and is meant to be presented in-person rather than read as a stand-alone, exhaustive paper. It is meant as a starting point - see the list of sources for in-depth reading.

Cornel ChiriacTwitter @cornelchiriacLinked http://uk.linkedin.com/in/cornelchiriac

Cornel Chiriac & Company 3

Mobility is changing

Trends


Trends impacting local mobility

Digital technology

Product innovation

Macro Consumer behaviour

Macro trends


By 2030, 60% of the world population will live in urban areas

The world’s megacities are set for major growthPopulation growth of the world’s top 15 megacities (millions, 2011 – 2025)

Sources: Shannon Bouton et al., How to make a city great, McKinsey & Company, September 2013, mckinsey.comUN population division, World Economic Forum, Statista

… and urban traffic is likely to deteriorate

Macro trends


By 2030, more than 2bn people are likely to enter the middle class

Global middle class is forecast to surge …Population, billions

Sources: EY; McKinsey “Urban Mobility at a Tipping Point, 2015”; The World BankJoyce Dargay, Dermot Gately, and Martin Sommer, “Vehicle ownership and income growth, worldwide: 1960–2030,” Energy Journal, Volume 28, Number 4, 2007, pp. 143–70.

… and with it the global car park is forecast to doubleGlobal car park, billions

0

1

2

3

4

5

6

7

8

9

2015 2030

Poor

Middle class

Rich

0

0.5

1

1.5

2

2.5

3

2015 2030

Digital technology trends


Technology is eating the world

Sources: Statista; Forbes; Ultra VR

37% of global population will use smartphones by 2020

30bn devices will be connected by 2020

Virtual reality and video commstrends are up

Product innovation trends


Car manufacturers and tech giants are rethinking the vehicle

Sources: Deloitte University Press “Future of Mobility 2016”

Powertrain technologies are maturing in response to the green movement

Stronger and lighter materials reduce vehicle weight

V2I and V2V technologies are part of new vehicles

Autonomous vehicles have arrived

Consumer behaviour trends


Consumers think, and behave, differently

Sources: Sivak, M., ‘Has motorization in the US peaked?’, University of Michigan Transportation Research Institute, June 2013; Global Workplace Analytics; McKinsey Global Institute

Generation Y is less inclined to own cars

Consumers wish to repurpose driving time to other activities

“Work from home” is on the rise

Consumers use delivery more often

Trends summary


The future of mobility is ‘green’ and ‘shared’

Digital technology__

Penetration of mobiletechnology and IoTenable new mobility

business models

Product innovation__

EVs, lighter materials,connected vehicles, and

AVs are here

Macro__

Congestion and greenhousegas emissions are on

the rise causingregulators to respond

Consumer behaviour__

Consumer preferences shiftto pay-per-use mobility

and multitaskingwhile mobile

Implications for OEMs


Cars are the main mode of personal mobility in the UK

Source: Department of Transport, Transport Statistics UK 2014

78%



New tech enabled mobility models are emerging

Source: McKinsey Global Institute

A multimodal mobility scenario could save consumers 30 - 60% per annum



New business models could expand revenues by 30%

Source: McKinsey Global Institute, “Automotive revolution - perspective towards 2030”, Jan 2016

Global vehicle sales will continue to growVehicle sales, millions

87105

41

2310

0

20

40

60

80

100

120

140

2015 Urbanisationand macro-economic

growth

Fewerprivate

vehicles

2030

New shared vehicles

Private vehicles

115

The automotive revenue pool will grow by c.$1.5 trillion by 2030Revenues, USD billions

27504000

720

1200

30

1500

0

1000

2000

3000

4000

5000

6000

7000

8000

2015 2030

Recurring revenues- Shared mobility penetrates dense and suburban

cities with new car sharing and e-hailing business models

- >USD 100 billion from data connectivity services, incl. apps, navigation, entertainment, remote services, and software upgrades

Aftermarket- Growth with increased vehicle sales- Higher annual maintenance spend for shared

vehicles- 20-30% lower maintenance spend on electric

powertrains- Up to 90% lower average crash repair per

autonomous vehicle

One-time vehicle sales- ~2% annual global increase in vehicle unit sales

driven by macroeconomic growth in emerging economies

- Price premiums paid for electric powertrains and autonomous driving technology features

3500

6700



Four future states of mobility will coexist

31

42Driver controlled

vehicles

Autonomousvehicles

Personally ownedvehicles

Shared vehicles

Sources: Deloitte University Press “Future of Mobility 2016”

Personal autonomy

_53% cost reduction

Incremental change

_$0.97 cost per mile

Autonomous car sharing

_68% cost reduction

A world of car sharing

_35% cost reduction

Assist

Mobilityproviders



The new mobility competitive environment is complex

Specialty OEMs (e.g. Tesla) and new entrants from the East (e.g. BYD)

Traditional vehicle manufactures

Established OEMs

EmergingOEMs

E-hailing and Car sharing mobility providers (e.g. Uber, Zipcar)

Technologygiants

Providers of mobility services, advanced safety, location-based services, in-vehicle content, and remote analytics

Extended services to infrastructure (Smart roads and cities) Source: McKinsey Global Institute, “Automotive revolution - perspective towards 2030”, Jan 2016



OEMs should partner with tech giants and expand into shared mobility

IN-VEHICLE EXPERIENCE

Be better than other OEMs

END-TO-END SEAMLESS MOBILITY

Satisfy customer’s emerging mobility needs better than Uber and alike

MOBILITY NETWORK & DIGITAL INFRASTRUCTURE

Integrate in the connected world and participate in the new mobility ecosystem to facilitate better consumer experience

Sources: Deloitte University Press “Future of Mobility 2016”; IBM Mobility Survey 2015

Home turf

21 3Expansion

Partnership



In vehicle experience: Personal vehicles

Sources: IDEO

KEY FEATURES

- Connectivity- Electrification- Autonomous driving- Other ‘Smart car’ features

Implications for premium OEMs


‘Social status’ could drive OEM-led premium end-to-end experience

Social status

Quality of digital experience

Quality of vehicle

Cost

Sources: Board of Governors of the Federal Reserve System, 2015

Summary

- Mobility is changing as a result of urbanisation, green movement, digitalisation, product innovation, and consumer behaviour- Future consumer is likely to employ multiple modes of transport based on their needs and cost- The automotive revenue pool will add $1.5 trillion (30%) in revenues due to the growth in the shared services- There is a strong movement towards autonomous vehicles and shared economy but they require advancements in public and

private sectors to be adopted en masse (e.g. regulations, smart city technology)- The competitive environment in the mobility space is becoming increasingly more complex and includes mobility providers and

technology giants in addition to traditional and emerging vehicle manufacturers- The mobility leaders of tomorrow will innovate within their core competency, collaborate with technology giants, and embrace new

business models


Mobility is changing and opportunities for all are big

Appendix

Sources

Mobility- Fortune on JLR http://fortune.com/2016/09/21/jaguar-land-rover-inmotion/- Deloitte future of mobility: https://www2.deloitte.com/us/en/pages/about-deloitte/topics/future-of-

mobility.html- Forbes http://www.forbes.com/sites/danielnewman/2016/09/27/autonomous-cars-the-future-of-

mobility/#178610f6514a- Atlantic accident reduction http://www.theatlantic.com/technology/archive/2015/09/self-driving-cars-

could-save-300000-lives-per-decade-in-america/407956/- Wired https://www.wired.com/brandlab/2015/12/the-future-of-mobility/- Ideo http://automobility.ideo.com- TechCrunch https://techcrunch.com/2015/08/08/understanding-the-future-of-mobility/- Yahoo / Wolf predictions fro 2016 http://uk.businessinsider.com/michael-wolf-predicts-what-will-

happen-in-the-tech-industry-in-2016-2015-10/#-1- Average driving time in USA

- 2015 https://www.aaafoundation.org/sites/default/files/2015AmericanDrivingSurveyFS.pdf- 2005 ABC poll https://www.reference.com/world-view/much-time-people-spend-driving-

f93af41f3f2605ea- Average American time spent http://distractify.com/old-school/2015/01/07/astounding-

facts-about-how-we-actually-spend-our-time-1197818577- Average American time spent http://blog.tempo.io/2013/7-time-consuming-things-an-

average-joe-spends-in-a-lifetime/

- CVC on mobility http://www.cvent.com/events/gcv-automotive-2016/event-summary-1e70ceac75564e95b06bc6f9bb36f365.aspx?ReflD=ove

- Tesla AR2016 http://ir.tesla.com/secfiling.cfm?filingID=1564590-16-13195&CIK=1318605- Ford AR2015 http://corporate.ford.com/annual-reports/2015/index.html- McKinsey ‘Urban Mobility at a Tipping Point 2015’ http://www.mckinsey.com/business-

functions/sustainability-and-resource-productivity/our-insights/urban-mobility-at-a-tipping-point

- McKinsey ‘Future of Auto Industry’ 2014 http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/a-road-map-to-the-future-for-the-auto-industry

- Deloitte ‘Future of Mobility’ https://dupress.deloitte.com/dup-us-en/focus/future-of-mobility/transportation-technology.html?id=gx:2el:3dc:dup1374:eng:cons:fom:dcpromo

- Transport stats in the UK https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/489894/tsgb-2015.pdf

- Statista, growth of megacities https://www.statista.com/chart/1826/population-growth-in-the-worlds-megacities/

- China middle class, McKinsey http://www.mckinsey.com/industries/retail/our-insights/mapping-chinas-middle-class

- Global middle class growth, EY http://www.ey.com/gl/en/issues/driving-growth/middle-class-growth-in-emerging-markets---entering-the-global-middle-class

- IoT estimates http://www.forbes.com/sites/louiscolumbus/2015/12/27/roundup-of-internet-of-things-forecasts-and-market-estimates-2015/#4224f05448a0

- Statista, Smartphone penetration https://www.statista.com/statistics/203734/global-smartphone-penetration-per-capita-since-2005/

- Cheapest generation http://www.theatlantic.com/magazine/archive/2012/09/the-cheapest-generation/309060/

- Work from home http://globalworkplaceanalytics.com/telecommuting-statistics- IBM Mobility survey http://www-935.ibm.com/services/multimedia/GBE03640USEN.pdf- CB Insights https://www.cbinsights.com/blog/game-changers-mobility-and-transportation/




In vehicle experience: Autonomous delivery

Sources: IDEO

KEY FEATURES

- Connectivity- Electrification- Autonomous driving- Delivery robotisation



In vehicle experience: Work-on-Wheels vehicles

Sources: IDEO

KEY FEATURES

- Connectivity- Electrification- Autonomous driving- Office technology capability

EV tech annual global financing history


Mobility game-changers


Sources: CB Insights










Rise of shared economy in business travel


Uber accounts for 43% of business ground transportation

Tech Investor @LondonVentureFactory and @Chicago_AngelsIndependent consultant to startups and corporates

LinkedIn http://uk.linkedin.com/in/cornelchiriacTwitter @cornelchiriac

Cornel Chiriac