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Today’s automotive sector has arguably never been more dynamic as technology, including developments in artificial intelligence, pushes the industry into the most significant period of change since its inception in the early 20th Century. The Global Light Vehicle fleet is at over 1.2 billion on the road and continues to expand as ownership rises and population grows. But as urbanization trends drive the ongoing expansion of cities, and evermore people own and use cars, it is vital that personal mobility changes in order to address the growing unsustainability of the current ownership model. A number of trends are challenging the status quo. Sharing of vehicles is increasingly mainstream in many locations, while connectivity of vehicles is likely to grow and become ubiquitous on new vehicles within just a few years. But it is through the deployment of key technologies—in electrification and vehicle autonomy—that a path to sustainability, and the realization of many other benefits, is now envisioned. As the sector remains under growing cost pressure and the need to improve reliability, durability and even flexibility is increasing, embedded system design will continue to plan a vital and growing role in overall vehicle and mobility development. That role will both revolve and evolve as the transformation of the industry solidifies over the next 10-20 year. Yes, this will be a long road to an electrified, autonomous future.
"The key enabler for AVs has been the rapid technological advancement in computing capabilities, combined with already established techniques in artificial intelligence"
Mid-term Transformation—Battery Electric Vehicles (BEVs)
Attention and development in battery electric vehicles (or BEVs) has risen rapidly in the last few years thanks, in part, to the global diesel scandal at Volkswagen and the cult following that Tesla has been able to build. Between now and 2027, global light-vehicle demand is expected to grow at an average rate of 2 percent per year to nearly 120 million units. During that timeframe, BEVs are expected to grow at an astonishing 33 percent per year to 12.5 million units, with China making up more than 50 percent of that volume. The US market will grow as well but not at the same scale, increasing from 140k this year to 800k by 2027. The number of available models in the US increases from 17 to 121. Growth could be accelerated further if three main constraints are dealt with:
• Cost premium – BEVs are expected to be at or near parity with internal combustion engines in the next 5-10 years.
• Battery range and life – Range has improved as has durability but as more and more computing power is added to the vehicle for autonomous systems, range will drop below an acceptable level.
• Charging infrastructure – Until the process of charging is nearly as easy as filling up a gas tank today, BEVs will face a challenge to go mainstream.
Longer-term Transformation—Autonomous Vehicles (AVs)
The key enabler for AVs has been the rapid technological advancement in computing capabilities, combined with already established techniques in artificial intelligence. This has led to the notion of feasible deployments of increasingly autonomous vehicle features and the prospect of a transformation in personal mobility through high vehicle autonomy at Level 4 and above. Full autonomous AVs (level 4 and 5) will start to be deployed in the 2019-2022 period. These applications will, however, be primarily proofs of concept, and learning arenas, for both technology and operational models. Significant strides towards wide-scale adoption of AVs for Shared and Owned AV usage are beset with uncertainties, in terms of time and scale, and can only be addressed through the use of scenarios. The scenario assuming breakthrough progress in AVs on a global scale assumes that, by 2030, just over 8 million AVs will be sold per year. A scenario for adoption constrained by technological, commercial and regulatory barriers would see annual sales reach 2 million units by 2030. Our central case assumes over 4 million units per year by 2030. LMC does not believe that significant deployment of Level 5 AVs—that is, fully autonomous in all situations—can happen in any scenario before 2030.
AVs are inevitable, but deployment faces a daunting list of challenges:
• Deal Breakers – 5G/connectivity, weather conditions, legacy vehicles, cybersecurity, legal liability, AI decision making, society acceptance
• Road Blocks – 3D Mapping, AV “bullying”, standards, cost of mobility, shared car cleaning and recharging
• Still More Issues – Competing R&D funding and no or low return on investment, privacy, regulation, transport and city planning and integration
Sales of Owned Light Vehicles should not be significantly impacted before 2030 and the requirement to build large fleets of Shared AV simplies a period of doubling up during which total vehicle industry sales volume might be positively impacted. In the longer run, however, substitution of ownership through Shared AV usage, combined with more efficient use of vehicles in general, will become a headwind for automotive industry volume growth, and will ultimately lead to volume decline. Our current view is as much as a 10 percent decline in overall vehicle demand by 2050.