DIGITAL AUTO REPORT 2020 - NAVIGATING THROUGH A POST-PANDEMIC WORLD - PWC
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Volume 1 Anticipating post-pandemic market dynamics • Market outlook – penetration of technologies and mobility types • Technology – shifting gears in connected, electric, automated Digital Auto Report • Customers – changing mobility preferences: shared no more? • Regulation – slowdown or acceleration of key policies? 2020 – Volume 1 Volume 2 Rethinking business models and investments ✓ Ninth annual Digital Auto Report, • New business opportunities – hype or reality? developed by Strategy& and PwC • Economic value – market growth and unit economics ✓ Global consumer survey with a focus • Investment strategy – OEMs vs. VCs vs. Tech players on the US, EU and Asia • OEM survival guide for a post-crisis market reality (n = 3,000) ✓ Quantitative market outlook until 2035 Volume 3 based on regional structural analysis Building a software-enabled ✓ Interviews and survey with >60 industry automotive company executives at OEMs and suppliers, leading academics • Capabilities of a software-enabled company and industry analysts • Deep dive on automated software development and testing Strategy& | PwC • Capability build-up strategy – a platform approach 2
The mobility ecosystem is transforming into a fragmented future w/different adoption patterns and use cases by region Executive summary – Volume 1 • With adjusted technology expectations and changing post-pandemic customer preferences, CASE evolves. Consumers do not expect fully automated cars before early 2030s. Shared mobility growth is slowing down, relevance of seamless mobility remains high • Total vehicle parc expected to shrink in Europe (-0.5% p.a.) while growing in the US (+1.1% p.a.) and China (+3.9% p.a.) until 2035, driven by 1) mobility growth (highest in China), 2) customer preferences for sharing (lowest in US) and 3) vehicle disposal rate • Regulatory requirements are driving basic connectivity in EU and US (>85% penetration of new cars in 2020), while China is still at 44%. Total connected vehicle parc will pass 50% mark in Europe by 2025; in US as early as 2023 and in China latest by 2029 • EU and China are leading the e-mobility transformation with expected new car BEV share of 17% and 19% by 2025. US significantly lower with 5% by 2025 given fewer government incentives and attractive ICE alternative in terms of TCO • Automated driving will emerge in a broad spectrum of use cases with specific requirements that are difficult to scale. While e.g. L4 pilot projects with people movers are running today, L4 share of new vehicles is expected to reach 17% by 2035 in EU (vs. 16% in China) • Shifts in individual mobility patterns require a new segmentation in terms of private vs. shared and active vs. passive driving – each with multiple use cases at different automation levels. Shared-active (e.g. rental, subscription) expected to grow strongest in EU (10% of total person kilometers by 2025), while shared-passive (e.g. ride-hailing) is expected to grow significantly more in China (10% vs. 1-3% in US and EU) • The increasing proliferation of use cases and business models requires many players to re-evaluate their CASE strategies with a fact-based view on available technology, value pool sizes and unit economics as well as investment requirements and right to win (→ covered in our next report volume No 2) Strategy& | PwC Note: Please refer to respective section for detailed assumptions and sources behind stated propositions 3
With adjusted technology expectations and changing post-pandemic customer Connected Electric preferences, CASE evolves” S for Shared becomes Smart (Mobility)* Automated Smart Mobility *Smart Mobility describes a transportation ecosystem where stakeholders use data and connectivity to move people and goods sustainably and efficiently. Shared mobility remains as a sub-segment and an important value pool in this ecosystem focusing on people transport with passenger vehicles. Strategy& | PwC Source: Strategy& 4
Triggered by the effects of the COVID-19 pandemic, many players will have to reevaluate their CASE strategies Consumer Technology Connected Automated COVID-19 postpones COVID-19 shatters old COVID-19 digitizes COVID-19 modifies consumer spend during industries and will lead society and increases competition: Big Tech lock-downs. Demand to market shakeout. acceptance and benefits, asset-heavy recovery expected with Digital and remote demand for digital – and OEMs struggle to keep preference for EV tech is on the rise connected – services up required R&D invest Regulation Economics Smart mobility Electric COVID-19 imposes COVID-19 cuts topline, COVID-19 reverses COVID-19 cools down new norms for work accelerating saving needs preference for mobility economies, leads environments, of OEMs and suppliers modes – own vehicles governments to subsidize consumer interactions as liquidity becomes regain preference EVs and increases EV and international trade critical to survive against shared market demand Strategy& | PwC Source: Strategy& 5
The acceleration of technology penetration will occur at varying times and speeds globally, as local mobility transforms Key considerations to anticipate tipping point of exponential technology adoption Technology Consumer Regulation Economics Expected tipping points • Connected service • “Digitally savvy” share of • Scope and timing of • Indirect value capture by content and UX population enforced connectivity OEM requirements • Vehicle system/EE • “Freemium” segment • Effective end consumer architecture services • Scope of data privacy pricing earlier 2030 later Connected • Network infrastructure restrictions • Battery and powertrain • Premium/early adopter • Emission target levels • Superior total cost of performance segment size ownership (TCO) of BEV • BEV/PHEV incentives vs. ICE in relevant number • EV manufacturability • “Rational green” segment and production capacity size • Diesel/ICE of segments bans/restrictions in cities • Additional • Charging infrastructure earlier 2030 later Electric revenues/savings from V2G/V2X charging • ADAS capability by use • Premium/early adopter • Scope and timing of • Superior TCO vs. non-AV case segment size enforced ADAS safety in first commercial cases features • Data processing • Technology openness • Additional value capture • Geographic range and from riders • Driver UI quantity of AV test drive/ earlier 2030 later Automated • Network and traffic vehicle approvals infrastructure • Smartphone penetration • Intermodal openness • Private car restrictions/ • Superior TCO vs. own taxes vehicle • Access and fleet • People/traffic density availability “Frequent user” segment • Passenger transport • Dynamic pricing for opt. size regulation use and availability earlier 2030 later Smart Mobility ADAS = Advanced Driver Assistance Systems; EE = Electric/electronics, V2G = Vehicle to grid, TCO = Total cost of ownership Note: A tipping point is defined as the start of exponential growth within a segment of the mobility transformation Strategy& | PwC Source: Expert interviews, PwC AutoFacts®, Strategy& 6
Total car parc growth strongest in China with high penetration of connected and electric; automation relevant after 2025 Total vehicle parc and technology penetration (in million, %) Assumptions New LV sales 332 350 302 308 294 281 281 289 310 302 (million) 250 34 • Total vehicle parc driven by 197 31 − Growing economic mobility 14 17 17 17 13 16 17 18 demand after COVID-19 Total LV parc 22 28 (million) − Build-up of new mobility fleets with high annual mileage − Disposal of outdated vehicles 86% 100% 100% 100% 87% 100% 100% 100% 91% 100% 100% Connected 44% • Basic connectivity with high penetration due to regulation in (eCall, % new LV sales) US/EU; share with over-the-air (OTA) capability significantly lower • BEV with strong growth in EU/ 67% 55% 33% China due to government Electric 17% 34% 14% 19% subsidies and earlier “total cost of 4% 2% 5% 8% 4% (BEV, % new LV sales) ownership” parity (vs. ICE) than in the US • Delay of automated vehicle 16% penetration at L4/L5 due to Automated 7% 15% technical challenges and 0% 0% 0% 0% 1% 2% 0% 0% 3% investment cuts; L3 with first (L4/L5, % new LV sales) 2020 2025 2030 2035 2020 2025 2030 2035 2020 2025 2030 2035 useful applications before 2025 Strategy& | PwC Source: PwC AutoFacts®, Strategy& LV = Light Vehicles = Cars + Light Commercial Vehicles < 6t GVW BEV = Battery Electric Vehicle ICE = Internal Combustion Engine 7
Connectivity will rapidly penetrate total car parc; OEMs need to leverage platforms for scale, while maintaining distinct UX Total vehicle parc and connected car share (in million, %) 350 332 302 308 310 302 294 281 281 289 26% 250 50% 32% 72% 197 35% 56% 78% 72% 16% 96% 97% 93% 2020 2025 2030 2035 2020 2025 2030 2035 2020 2025 2030 2035 Connected Vehicles Non-Connected Vehicles Source: PwC AutoFacts®, Strategy& Total vehicle parc expected to shrink in Europe (-0.5% p.a.) while growing in the US (+1.1% p.a.) and China (+3.9% p.a.) until 2035 – connectivity penetration >50% after 2025 in Europe and US. Strategy& | PwC 8
The shift from conventional to electric powertrains is under- way; China and Europe head-to-head in market penetration New vehicle sales by powertrain (in million, %) 17 17 18 34 17 17 1% 1% 4% 16 31 5% 17% 5% 8% 14% 14 7% 8% 28 13 10% 34% 4% 3% 9% 33% 2% 5% 19% 22 55% 67% 4% 1% 6% 10% 7% 88% 83% 75% 93% 74% 93% 9% 55% 95% 74% 60% 11% 32% 17% 2020 2025 2030 2035 2020 2025 2030 2035 2020 2025 2030 2035 FCEV BEV PHEV ICE (incl. HEV) Source: PwC AutoFacts®, Strategy& Tightening CO2 emission targets in the EU and new national guidelines in China accelerate BEV penetration in these regions significantly faster than in the US. Strategy& | PwC 9
Automated driving will not arrive with a big bang: Various useful functions and features will pave the way for L4 New vehicle sales by SAE level (in million, %) 17 18 34 17 17 17 1% 2% 1% 4% 7% 16 1% 31 14% 10% 13% 3% 15% 5% 28 14 13% 8% 13 1% 14% 18% 22 96% 94% 88% 84% 99% 89% 100% 78% 100% 68% 66% 100% 2020 2025 2030 2035 2020 2025 2030 2035 2020 2025 2030 2035 L0-2 L3 L4 L5 SAE = Society of Automotive Engineers Source: PwC AutoFacts®, Strategy& Before deploying L4 passenger vehicles at scale, players will push the next years for specific automated driving applications in transport / fleets and logistics / industrial areas to recover investments. Strategy& | PwC 10
Transformation of mobility refocused towards shared active and passive modes due to COVID-19 and slower automation Market penetration by mobility mode (in ‘000 trillion person-kilometer, %) 4.7 5.1 5.3 5.4 5.3 6.1 6.4 6.7 8.5 10.4 12.2 13.8 6% 2% 2% 2% 2% 2% 2% 10% 16% 1% 1% 1% 1% 9% 2% 10% 2% 11% 2% 12% 3% 21% 5% 7% 92% 97% 97% 97% 97% 87% 89% 88% 87% 86% 79% 72% 2020 2025 2030 2035 2020 2025 2030 2035 2020 2025 2030 2035 Shared active Shared passive Private active / passive [e.g. car sharing, rental] [e.g. ride hailing, (robo-) taxi] [e.g. own vehicle] Source: PwC AutoFacts®, Strategy& Global market remains difficult to address with one mobility service given high proliferation of different active & passive driving use cases – new players invest in multi-mode transport platforms. Strategy& | PwC 11
This report series lays out in three volumes 1) CASE drivers, 2) economic opportunities, and 3) capability implications Volume 1 Volume 2 Volume 3 Consumer Technology Regulation Economics Capabilities Connected Automated Opportunity Build-up sizing and and Smart Mobility investments partnering Electric Strategy& | PwC 12
Volume 1 Strategy& | PwC Anticipating post-pandemic market dynamics 13
Digital Auto Report 2020 – Volume 1 Consumer Technology Regulation Connected Consumers are seeking convenient and safe Electric mobility – private transport modes regain Automated importance” Smart Mobility Strategy& | PwC Source: Strategy& 14
Consumer – Overview Survey among 3,000 consumers in Germany, the US and China shows latest shifts in consumer mobility preferences Key results 3 >20 >3,000 • Respondents confirm relevance of connected regions questions Respondents1) services – security & navigation most important • However, willingness to pay overall lower than most OEMs hoped for n = 1,0001) n = 1,000 n = 1,000 • Consumers expect AD vehicles in the early 2030’s; first in transportation, later in private cars Gender 49 51 49 51 51 49 (%) • Two thirds of respondents would use automated vehicles; of those 75% would pay a premium for an automated driving of 5 – 20% Age 17 15 15 19 34 22 17 16 18 27 21 21 27 17 14 per ride (%) • While new car purchase options lead across 18-29 30-39 40-49 50-59 60+ regions pre- and post-pandemic, interest in car Gross subscription is growing strongly in China monthly household 26 40 29 10 15 70 29 47 23 • Regular cleaning / disinfection has become income2) most important feature for shared mobility (%) offerings to ensure usage during COVID-19 4,000 USD Strategy& | PwC 1) Questions on COVID19 effects of mobility behaviour in DE partially n=2,000 2) converted from EUR/CNY (Mid of August 2020) Remaining % up to 100% “not specified” 15
Consumer – Connected Respondents highlight the importance of connected services - – safety and navigation rated as most important features Connected services – By importance for consumers1) Question: “Which connected Safety 80% 90% 93% service categories are particularly important to you?” Navigation 75% 83% 92% Vehicle 58% 71% 84% management Vehicle features 58% 68% 83% as a service Infotainment/ In Germany in particular, 47% 63% 79% Enterntainment safety and navigation rank Mirror smartphone as most important services. 42% 67% 74% in car Winning consumers in other Lifestyle and comfort 39% 59% 71% categories requires strong USP and compelling story. 1) Share of respondents, who want to have connected services in their vehicles Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=3,000 (1,000 DE, 1,000 US, 1,000 CN) 16
Consumer – Connected Customers want in-vehicle connected services; however, willingness to pay might be lower than OEMs hope Connected services – Willingness to pay1) Willingness to pay vs. reference prices of other digital & media services Question: “Would you like to have Connected Car services integrated Fully-fledged connected Spotify Mobile voice & Premium iPhone in your vehicle and are you willing to service offering subscription2 data contract sports stream3) leasing4) pay a surcharge for this? If yes, how much…” $ 19.5 at 31% $ 11.9 $ 34.6 $ 14.2 $ 39.5 willingness $ 17.6 China with highest share of at 40% $ 10.0 $ 43.6 $ 19.9 $ 35.3 consumers (58%) who are willingness willing to pay an extra for connected services . $ 4.3 at 58% n/a $ 9.8 $ 10.3 $ 33.4 Capturing this value requires willingness providers to compete partially against other digital services. 1) Local currency conversion to USD as of mid of August 2020 2) “Individual” plan 3) DAZN basic package for GER and USA, basic Tencent package in China 4) iPhone 11 64GB, 24 months leasing Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=3,000 (1,000 DE, 1,000 US, 1,000 CN); International Telecommunication Union 2019 17
Consumer – Electric Gasoline still most preferred type of powertrain in Germany and the US; hybrid gains popularity and is most popular in China Preferred type of powertrain by age (%) Question: “Suppose you wanted to buy a car: Leaving aside financial aspects, legal requirements and Gasoline Diesel Gasoline Diesel Gasoline Diesel Age segment lack of infrastructure […] – which 60 years 47 67 Σ 67 39 PHEV BEV PHEV BEV PHEV BEV While 68% of Chinese consumers below 40 years prefer 24 22 Σ 46 23 14 Σ 37 46 22 Σ 68 electric powertrains over gasoline, only 46% in Germany PHEV 32 16 Σ 48 24 8 Σ 32 39 18 Σ 57 and 37% in the US share this & BEV preference. 33 12 Σ 45 25 7 Σ 32 45 17 Σ 62 Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=2,000 DE, n=1,000 US, n=1,000 CN Percentages may not total 100% due to rounding 18
Consumer – Automated Two thirds of respondents would use automated vehicles; of those, 75% would pay a premium for an automated driving service Automated driving – Consumer attitude, impact factors and willingness to pay Attitude towards AV (%) 47% 44% 37% 41% 26% 29% 26% 23% 23% Top 3 Persuasive would 36 factors for using AV use AV 38 (% of respondents) Curious Accident Road Curious Accident Use time Relax Accident Use time about and traffic about and for other while and for other 59 driving speeding safety driving speeding activities driving speeding activities AV reduction AV reduction reduction would use Willingness to Pay AV only at “Would you be willing to pay a Premium Premium Premium 28 26 low speed/ premium for an AV (e.g. car parking sharing, ride hailing)? If yes, 10 2 € 10 2 $ 20 1¥ how much more would you Base price Base price Base price pay for a 5 km trip with a base price of 10 €/10$/20¥?” would 32 not use 36 36 Lack of Lack of Lack of AV Desire Loss of trust in AD Desire Loss of trust in AD Desire Loss of trust in AD Top 3 Deterrent to drive control technology to drive control technology to drive control technology 9 factors for using AV 7% 4% 3% (% of respondents) DE US CN 15% 14% 22% 19% 32% 34% Source: PwC Strategy& consumer research 2020; n=3,000 (1,000 DE, 1,000 US, 1,000 CN) Strategy& | PwC * Average willingness-to-pay a premium for a 5km ride with an automated vehicle instead of having a chauffeur or self-drive 19
Consumer – Smart mobility Mobility modes shift due to effects of COVID-19 – use of own vehicle preferred over shared mobility and public transport Mobility pattern after COVID-19 restrictions (%)1) Question: “Assuming COVID-19 restrictions are lifted again, how would you use the following mobility Own bike 33 32 35 35 25 40 35 27 37 modes compared to pre-COVID-19 times?” By foot 32 38 30 44 26 30 43 31 26 Own car 31 45 24 67 24 9 60 24 15 Public 10 25 64 22 21 56 23 27 50 transport Shared Own car is the clear winner in the micro- 7 15 79 22 22 57 34 27 39 US and China. In Germany, the mobility intended increase of car usage Car- 5 18 77 22 22 56 25 24 51 is on par with bike and foot. sharing Taxi, At the same time, Germans move 4 20 76 25 22 53 30 27 43 Uber, … away strongly from shared modes. More Same Less 1) On the example of transportation to/from work Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=1,259 DE, n=593 US, n=779 CN; Percentage may not total 100% due to rounding 20
Consumer – Smart mobility Shared mobility providers win consumers back with clear disinfection concepts rather than with lower prices Attitude towards shared mobility after COVID-19 lockdown (%) Question: “Which requirements should providers fulfill to ensure that you would continue using shared 42 58 17 83 2 98 mobility offerings after COVID-19 lockdown? 1| Regular cleaning and disinfection by the provider (28%) 1| Regular cleaning and disinfection by the provider (50%) 1| Regular cleaning and disinfection by the provider (49%) 2| Lower/cheaper prices (25%) 2| Lower/cheaper prices (40%) 2| Provision of disinfectants to/in every vehicle (49%) 3| Reliable availability (24%) 3| Provision of disinfectants to/in every vehicle (39%) 3| Lower/cheaper prices (42%) In Germany, quality / premium … … … vehicles seen as least important 8| Offer of gloves and masks in 8| Reserved parking spots 8| Extensive geographical factor to return to shared modes – the vehicle (15%) (26%) coverage (33%) after cleaning, price and availability are most important. 9| Higher quality/premium vehicles (11%) 9| Extensive geographical coverage (17%) 9| Reserved (32%) parking spots No usage of shared mobility offerings at all Open towards usage of shared mobility offerings Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=2,000 DE, n=1,000 US, n=1,000 CN 21
Consumer – Smart Mobility Purchasing a new vehicle remains preferred option across regions; China shows strongest increase in subscription intent Likelihood to buy/lease/subscribe to a car before/after COVID-19 (%)1) Question: “Taking the position of pre-COVID-19, how likely was it that your household would buy, lease or subscribe to a new vehicle in Purchase of 24% 46% 68% 2020/2021? How likely is it now?“ a new car 21% 44% 75% Purchase/lease 18% 40% 48% of a used car 19% 39% 52% Lease of a 11% 29% 50% China, and partly the US, are new car 10% 27% 54% open towards subscription models. Subscription 9% 24% 62% In Germany, further market of a new car 8% 25% 65% education needed to win subscription customers. Likely / very likely before COVID-19 Likely / very likely after COVID-19 1) Before= 1 year ago, after = within next 1-2 years Strategy& | PwC Source: PwC Strategy& consumer research 2020; n=2,000 DE, n=1,000 US, n=1,000 CN Difference to 100%: no/low likelihood to buy/lease/subscribe a car 22
Digital Auto Report 2020 – Volume 1 Consumer Technology Regulation Connected Technology progresses fast – yet complexity of Electric autonomous driving has been underestimated” Automated Smart Mobility Strategy& | PwC 23
Technology – Connected In connected services, OEMs are currently rethinking their “build vs. buy strategy” on key technology components Connected services components Enabler Hardware Software Integration Content/Service Sales and CRM Plan – Build – Ship – Update – Sunset Key value Vehicle architecture and User interface and Vehicle-based services Offering bundling and blocks Cloud infrastructure ECUs Automotive security controls and apps pricing I/O devices (e.g., sensors, Vehicle OS, over-the-air- 3rd party content and User ID and Mobile/local network System integration displays) update and cloud platform services personalization 3rd party hardware (e.g. Cloud/hybrid services incl. Regulation Data Analytics Data interfaces and APIs Customer support VR glasses) vehicles health services Current • Cloud infrastructure costs • Centralized E/E • OTA update functionality • UI design (e.g. graphical • 3rd party content and app • Subscription vs. life-time limitations • MNO costs architecture with zonal • Data processing and vs. voice only), store integration offer model • Regional regulations ECUs (see chapter 3) intelligent data fusion • Online-first vs. offline-first • Transmission, collection, • Customer identification • Sensor fusion and virtual • Security of data • Open vs. closed APIs and analysis of vehicle • VIN to UID sensors connections health data (e.g. based • Data privacy on sensor data) Current • Leverage eSIMs for • Evaluate sweet spot • Define software-value-add • Focus on differentiating • Leverage smartphone • Bring user sign-up and develop- customers and more between complexity strategy (see Chapter 3) adaptive user interface integration for non- log-in journey to perfection frequent MNO tenders reduction and profitability • Use virtualization to • Provide and monetize connected markets • Connect to existing ments • Enable expendable vehicle securely separate domains SDKs and interfaces for ecosystems (e.g. phone) architectures 3rd parties Crucial value blocks (own know-how necessary) CRM: Customer relation management ECU: Electronic control unit HW: Hardware I/O: Input/Output MNO: Mobile network operator Strategy& | PwC SW: Software VR: Virtual reality V2X: Vehicle-to-x communication Source: Strategy& 24
Technology – Electric Technology progress in e-mobility must be evaluated in the context of tech trends across various alternative powertrains Alternative powertrain developments – + ICE PHEV BEV H2 O2 FCEV Internal combustion engine Electric drivetrain (electric motor, inverter, transmission) Fuel cell system Efficiency improvement Cost reductions Electrification Stack Recuperation and boost as standard Silicon carbide power semi- Bar windings and increased notch Increased integration of conductor switches (inverter) filling degree in electric motor Increase of power density features with 12V (budget) or 48V inverter and motor Optimization of catalyst Increased electrification of auxiliaries compositions (reduction of Pt) (water/oil pumps, cam phaser, etc.) High voltage system and architecture and nano-scale microstructure P2 topology avoiding drag torque Architecture Auxiliaries Optimization of bipolar plate coatings Reduction of friction losses Integration of power-units Top models up to 800 V, Increasing commoditization (OBC, DCDC, DC charger) standard in volume 400 V of electrified auxiliaries Coatings and microstructural modifications on cylinder Balance of plants Optimization of crankshaft bearings Stack internal humidification Ball bearings for turbocharger HV battery system System design Cell innovation and simplified water mgmt. Structural integration of System design Increased cell capacity through larger cells Combustion/emission optimization Tank housing into vehicle body incl. recyclability Cathode cost reduction by minimization of cobalt Increasing injection pressures content and cobalt-free cells Optimization of fiber winding Variability in valve trains layout and process Increased anode energy density via silicon Particle filters for most powertrains Mixed materials to reduce Intrinsic safe cells by application of solid state including DI gasolines costs electrolytes (polymers, inorganics, blends) Variable compression ratio through Compressed H2 as standard Dry (solvent-free) processing of electrode coatings for passenger vehicles variable connection rod Strategy& | PwC Source: Strategy& 25
Technology – Electric BEVs will become economic for several segments – but extended ranges (600 km+) will not be viable with BEVs Electric powertrain operating cost break-even timeline (vs. ICE) Vehicle Viable Break- segment Range powertrains Evolution of TCO leader even – + 2020 2025 2030 Low 150 km H2 O2 2019 – + A/B Mid 300 km H2 O2 2027 Budget 70 kW Long 600 km 2040 There is no fixed point in – + time when battery Mid 300 km H2 O2 – + 2024 electric vehicles offer an – + C/D Long 600 km H2 O2 H2 O2 2035 operating cost advantage Volume – + 100 kW Extra-long 800 km H2 O2 2038 over internal – + combustion engines – it Mid 300 km H2 O2 2018 – + depends on factors such E/F Long 600 km 2024 as the vehicle segment H2 O2 Premium – + – + – + Extra-long 800 km 2028 250 kW H2 O2 H2 O2 H2 O2 and range" Main assumptions: electricity and fuel prices as for Germany 2020; H2 price 5€/kg; PHEV driving modes 40% EV mode/60% ICE mode; FCEV driving modes 40% EV mode/60% FC mode Strategy& | PwC One-time buying incentives not considered Source: Strategy& 26
Technology – Automated Hardware, software and infrastructure of automated driving are improving, but overall progress slower than expected Automated driving technology developments Current status and limitations Emergency vehicle • Radar and camera sensors are recognition developed with a good cost position • Cheap LiDAR systems do not yet have the necessary performance Blind Surround • New ADAS computers based on low spot view Hardware power tech are under development Lane assist e.g. sensors • Different driver assistant systems Rear collision warning mandatory beginning 2022 in EU Emergency Collision Park Driver Park Cross Topo- braking avoidance Environment traffic graphy • Test and validation not yet mature mapping assist monitoring assist Environment Pedestrian alert detection • Motion prediction still not Mapping detection completely solved Software Traffic sign • Very large amounts of test data recognition e.g. smart complicate traditional analytics data usage Rear Surround view view • So far, there are only a few test tracks that are fully developed for automated driving • Expansion of 4G by 2022 for motorways in DE as basis for 5G Infrastructure e.g. 5G • For the time being only pseudo 5G Ultrasound Short-/medium-range radar Camera based on 4G (non stand-alone) LIDAR Long-range radar Microphone Strategy& | PwC Source: Strategy& 27
Technology – Automated While L3 enables various attractive use cases, user experience and system complexity breakthrough is happening at L4 Automated driving SAE levels and AD function mapping Environment Fallback for Vehicle monitoring and dynamic System SAE level Narrative definition control user interface driving task capability Exemplary AD functionalities • Universal pilot (full autonomy) HIGH …under all environmental and Full All driving • Interactive pilot driving (control via touch/gesture UI) 5 automation road conditions that can be managed by a human driver modes • Robo-taxi and automated people-mover (all conditions) System The system performs System • Urban/rural/highway pilot with multi-lane change …even if a human driver does Most High all aspects of • Robo-taxi and automated people-mover 4 automation dynamic driving (driving-mode not respond appropriately to a request to intervene driving modes • Urban last-mile delivery • Automated valet parking Alternative or specific)… System conventional • Urban/rural/highway assistant (e.g. hands-off traffic …expecting the human driver user interface Conditional jam, intersection movement, single lane change) 3 automation to respond appropriately to an intervention request • Parking chauffeur • Assisted fleet operations (on-site, off-highway) …executes both steering and AUTOMATION • Adaptive cruise control Partial acceleration/deceleration 2 automation The human driver (driving-mode specific)… Some driving • Remote/key parking assistant • Lane change assistant modes performs remaining Human Human aspects of dynamic driving, while the • Adaptive cruise control …executes either steering or Driver system… • Driver assisted parking assistant 1 assistance acceleration/deceleration (driving-mode specific) Human and System Conventional • • Lane keeping assistant (system steers) Blind spot monitoring rear/side (system steers) user interface The human driver performs all aspects of dynamic No • Pre-/forward- collision braking LOW 0 automation driving, potentially “enhanced” by warning or intervention systems Human n/a • Front/rear cross-traffic alert with braking Strategy& | PwC Source: “SAE International Standard J3016”, SAE; Strategy& 28
Technology – Automated Commercially viable automated driving applications at L3 and beyond will start becoming available for specific use cases first Automated driving timeline of commercial road availability Current developments People mover (Sub-)Urban 30 Restricted 50 Restricted • ADAS1) technologies require Areas Areas Pre-defined route(s) 7-12 seats higher development cost Last mile logistics and efforts than anticipated Pre-defined route(s) Urban 20 Restricted 40 Restricted Areas • ADAS sensors still far Areas e.g., parcel station above target cost, due to Robo-taxi (Sub-)Urban 60 Restricted Areas small production volumes No defined routes 60 Restricted Areas and sensor fusion/ 2-6 seats Rural recognition challenges Urban 50 50 Restricted Areas • Regulation still uncertain with the UN/ECE technical Owned vehicle Rural 100 100 framework and national Restricted Areas No defined routes 2-5 seats Highway 130 60 130 130 Restricted Areas rules not yet fully in place • While first L3 vehicles expected for 2021/22, first L4 2021 2023 2025 2027 2029 2031 2033 2035 road applications beyond Commercial availability (beyond pilot projects)2) pilot projects expected for Level 2+ Level 4 xx Max. speed Construction Closed compounds Urban: Traffic situations with many traffic interactions and low speeds ~2025 area capable Sub-Urban: Traffic situations with moderate traffic interactions and moderate speeds Level 3 Level 5 Automated Area restriction Vehicle follows user Rural: Traffic situations with few traffic interactions and higher speeds lane changes 1) ADAS = Advanced Driver Assistance Systems Strategy& | PwC 2) Indicating start of availability. Tipping points of significant adoption expected significantly later in certain fields Source: Strategy& 29
Technology – Smart mobility Individual mobility splits into four modes of private vs. shared and active vs. passive driving, each with increasing automation Private / shared mobility modes with selected automated driving use cases PRIVATE 1) Personally-owned vehicle SHARED 2) Collective vehicle or ride AUTONOMATION LEVEL L5 Universal pilot L5 Automated Robotaxi Automated people mover L4 Urban/rural/highway pilot L4 valet parking PASSIVE3) I am a passenger Urban/rural/highway Parking assistant Urban/rural/highway L3 L3 assistant (for private driver) (for private driver) assistant (for public driver) L0-2 Private/family driver L0-2 Taxi, ride hailing/pooling AUTONOMATION LEVEL L5 L5 Interactive pilot driving Interactive pilot driving (vehicle control via touch/gesture UI “for fun”) (vehicle control via touch/gesture UI “for fun”) L4 L4 ACTIVE4) I am the driver Urban/rural/highway Urban/rural/highway Assisted fleet operations L3 Parking/pick-up assistant L3 assistant assistant (on operator site) L0-2 Self drive L0-2 Car sharing, rental, subscription Differentiating AD use case Traditional base use case 1) Includes self-owned, family-owned, credit-financed, long-term leased, personal company car 2) Includes rental, subscription (up to 1 year), ride-hailing, ride-sharing, car sharing, pool car, car club 3) “Passenger” determines mobility purpose and target, passenger selects means of transport and expected time of arrival, mobility system determines detailed routing and actual time/place of arrival 4) “Driver” determines mobility purpose and target, driver determines means of transport and plans arrival time, driver determines detailed routing and actual time and place of arrival through User Interface (UI) Strategy& | PwC Source: PwC AutoFacts®, Strategy& 30
Technology – Smart mobility Seamless smart mobility services require a modular, open API-based technology architecture and platform approach Smart mobility technology platform building blocks Partners & Data Sources Platform Capabilities Current developments User devices User interface Customer acquisition and experience and retention Mobility service (rider, driver, partner) (direct, indirect) In contrast to individual mobility, providing providers smart mobility requires a modular Customer operations technology and system architecture, Value-added service providers capable of integrating various partners API, Integration, Storage Identity and access Rating and loyalty Exception handling across the ecosystem with focus on Advanced analytics Retailers and media • Flexibility to integrate multiple Booking and ticketing Billing and payment modalities and mobility service providers Public transport (with different brands) operators Product and quotation management (B2C or B2B or B2A) • Cross-platform customer acquisition Product configuration Real-time ride sourcing (Dynamic) consumer and seamless sign-up/-in Events & weather and calculation & negotiation pricing conditions • Region-specific/ local mobility product Traffic mgmt. Fleet disposition (own or partner fleets) configuration and partner management, systems Demand & supply Ride request & Fleet location incl. ride request/ offering brokerage prediction matching and routing • Real-time environment / asset Infrastructure condition-based routing Operations • Predictive maintenance scheduling … Vehicle condition Asset lifecycle Maintenance and monitoring management repair management • Predictive asset lifecycle management Strategy& | PwC Source: Strategy& 31
Digital Auto Report 2020 – Volume 1 Consumer Technology Regulation Connected Regulation is aiming to accelerate the mobility Electric transformation – but following very different Automated approaches across regions” Smart Mobility Strategy& | PwC Source: Strategy& 32
Regulation Dynamic regulatory discussions shape CASE trends – impacting EV penetration and speed of AV testing rollout in particular Latest regulatory initiatives and discussions USA GLOBAL AUTOMATED: AUTOMATED Announcement to unify AV policies CONNECTED Internationally harmonized and binding UN Connected: norms on cybersecurity and software requirements for OEMs across 38 federal departments enforcing a consistent (06/2020, UNECE’s World Forum for Harmonization of Vehicle regulatory approach (01/2020) Regulation, WP.29) AUTOMATED NHTSA with plan to introduce Automated: AUTOMATED First binding global regulation on level 3 upgrades to NCAP, involving new safety technologies vehicle automation with focus on advancing safety (UNECE’s and test procedures (10/2019) World Forum for Harmonization of Vehicle Regulations)2) Automated: AUTOMATED Updated standards for on-road testing of ELECTRIC Limited national support (i.e. plans to level 3, 4 and 5 prototype ADS promoting a standardized terminate EV subsidies) groundwork for AV tech (09/2019)3) Heterogeneous regulatory dynamics; focus on Recently introduced regulations at UN level with positive commercial dimension, less on sustainability impact on CASE adoption, further steps still required EU China Connected: CONNECTED New guidelines on the ELECTRIC New EU CO2 emission Automated AUTOMATED Release of the “Strategies Electric: ELECTRIC New national guidelines on processing of personal data (EDPB, 02/2020) targets, applying as of 01/20201) for Innovation and Development of Intelligent safety requirements and standards for EVs AUTOMATED: AUTOMATED Addition of new advanced Vehicles” with focus on creating an ecosystem (coming into force by January 1st 2021) Shared: SHARED New governmental regulations for AVs in China (02/2020) test scenarios to rate AEB technology promoting shared mobility (e.g. free parking) (2020 EU NCAP update) AUTOMATED Autonomous: Plans for new changes Autonomous: AUTOMATED Updated guidelines to EU states with a siloed / bottom-up to the NCAP test program with new safety Top-down approach based on long-term enforce advanced safety features (01/2020) approach towards CASE regulation additions (following the Euro model) strategy with positive impact on CASE Positive expert sentiment Neutral expert sentiment Negative expert sentiment Note: (1) the regulation targets a 15% reduction for passenger cars from 2025 on and 37.5% reduction from 2030 on. (2) e.g. establishes strict requirements for Automated Lane Keeping Systems. (3) incorporates "lessons-learned based on accumulated field experience in testing prototype ADS-operated vehicles on public roads“. (4) general regulatory sentiment derived from various expert opinions across politics and industry, e.g. automotive associations. AEB = Automated Emergency Braking; AV = Automated vehicle; NCAP = New Car Assessment Program; NHTSA = National Highway Traffic Safety Administration; UNECE = United Nations Economic Commission for Europe Strategy& | PwC Source: Strategy& 33
Network contacts Jörg Krings Andreas Gissler Jonas Seyfferth Hartmut Güthner Jörn Neuhausen Claus Gruber joerg.krings@ andreas.gissler@ jonas.seyfferth@ hartmut.guethner@ joern.neuhausen@ claus.gruber@ strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com strategyand.de.pwc.com Automotive Europe Digital Transformation Connected & Smart Mobility Automated Driving Alternative Powertrains Software Development Contributors Dietmar Ahlemann Martin Gerhardus Sarah Nolte Felix Andre Jonas Heydasch Kevin Rothe Christoph Stürmer Akshay Singh Steven Jiang Sebastian Böswald Andrew Higashi Tanjeff Schadt christoph.stuermer@ akshay.singh@ steven.jiang@ pwc.com pwc.com strategyand.cn.pwc.com Thilo Bühnen Timo Kronen Nicola Schudnagies AutoFacts® Automotive US Automotive China Christoph Faller Joram Lauterbach Felix Starke © 2020 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Mentions of Strategy& refer to the global team of practical strategists that is integrated within the PwC network of firms. For more about Strategy&, see www.strategyand.pwc.com. No reproduction is permitted in whole or part without written permission of PwC. Disclaimer: This content is for general purposes only, and should not be used as a substitute for consultation with professional advisors.
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