THE FUTURE OF MOBILITY 2
CONTENTS
Introduction 3
Executive Summary 4
What This Means for Fleets 10 and the Leasing Industry
Major Themes
Environmental Regulation 11 Cost Pressure 18 The Developing Markets 22 Technology and Connectivity 29 Rapid Manufacturing and New Materials 38
Wildcard Scenarios 43
Conclusions 47 3
INTRODUCTION
LeasePlan commissioned this report on the directions that personal mobility is likely to take from now up to 2023. The report consulted a wide range of sources in order to identif y the key trends most likely to shape this future.
The report is the first piece of primary research that supports the activities of the LeasePlan Fleet Strategy Board. EXECUTIVE SUMMARY – FIVE KEY TRENDS 4
FIVE KEY TRENDS
Five major trends seem likely to dominate the developments in the mobility landscape over the coming decade. While each individual trend may not represent a significant shift, their overall effect could revolutionise attitudes to motor vehicles.
This executive summary presents a brief overview of the five key trends and their implications, these are explored in greater depth in the main body of the report. EXECUTIVE SUMMARY – FIVE KEY TRENDS 5
1. ENVIRONMENTAL REGULATION
When the EU signed the Kyoto It is clear that electric vehicles treaty in 1997, this signaled their are set to form a larger proportion intent to reduce long-term of the vehicle stock, but questions environmental harm from carbon about where the energy to charge emissions. Although the US them will come from, and when they and China were not signatories, will become truly competitive with manufacturers face collective combustion cars, still linger on. pressure to produce cleaner, more energy-efficient vehicles. It is the belief of the EU transport commission, that, for mid to long There are obvious synergies with distance travel, the first and last technological developments around ten miles of most journeys will new propulsion options, new energy become a feeder solution for sources, and new ways of using mass-transit systems. existing infrastructure. EXECUTIVE SUMMARY – FIVE KEY TRENDS 6
2. COST PRESSURES
The need to recoup increased Technology will alleviate some environmental costs, at the national of the pain with better real-time level, combined with peak oil “polluter journey planning. The road network pays” pricing, means that both the will need to be organised centrally base price of fuel and fuel taxation, so that it can be more efficiently will rise. utilised. And, as the speed of the internet and available bandwidth There will be indirect costs from increases, the advantages of video increased congestion, as more road chat may begin to outweigh the space is allocated to High Occupancy disadvantages of physical movement, Vehicles (HOVs) and Electronic taking some of the pressure off Vehicles (EVs) and cycle routes. And the road network, as homeworking fewer new roads are likely to be built, becomes more widely accepted as planning wisdom sees that they and more practical too. only encourage more driving until congestion reverts to the mean. EXECUTIVE SUMMARY – FIVE KEY TRENDS 7
3. EMERGING MARKETS
Vehicle manufacturers, keen to large and 4x4, we’ve seen new, service the most lucrative markets luxury 4x4s produced by Bentley, that offer most potential growth, will Rolls Royce, Jaguar and Lamborghini. continue their shift in focus towards the BRIC countries – Brazil, Russia, And, as many Asian cities expand India and China. beyond populations of 10 million, we’ll see the needs of these We’ve already seen manufacturers ‘Megacity’ dwellers shaping such as Mercedes and BMW make the output of car manufacturers. special versions of their vehicles for these markets and the tastes of the China is an exciting market for BRIC countries, particularly China automotive brands because it has and Russia, will gradually begin to no embedded brand perceptions. influence the cars produced for the It’s a blank canvas where European market. For example, manufacturers can try out new in response to Chinese and Russian technologies and brand positions. perception that premium means EXECUTIVE SUMMARY – FIVE KEY TRENDS 8
4. TECHNOLOGY, CONNECTIVITY AND THE CAR
The ways in which consumers, The driving process will be made and their devices, connect to their safer and more efficient, by further vehicles will open up some intriguing automation: techniques such possibilities. Cars will become as motorway “platooning” will “appified” as their specialist hardware see vehicles travel together, in is co-opted into software running on convoy, by communication with the user’s own phone or tablet. The infrastructure and each other. car’s systems will become a conduit controlled by these personal devices. A logical progression of this is the This begs the question; if the unique self-driving cars Google, Nissan, differentiators of “your car” are Audi and others are working to defined by your personal device, bring to market. But you may how much sense does it make to not own one – with Google’s X, own a car, rather than have access as a service model, you may whenever you need it? Consequently, lease access to a cloud of cars we could see a shift away from that comes to you on demand. personal ownership. EXECUTIVE SUMMARY – FIVE KEY TRENDS 9
5. THE IMPACT ON MANUFACTURING
New manufacturing techniques As personal devices become more like 3D printing will allow faster integrated into the sphere occupied turnaround of design concepts, by the car, “personalisation” will increased choice of personalisation, begin to apply, as much to behaviour and more niche models to be spun as aesthetics. Manufacturers and off the same basic platform. The other mobility providers will begin lower break-even costs through to offer lifestyle mobility packages, scale means more diversity, allowing drivers to swap out for personalisation, and product a different car with specialist risks being taken. capabilities, greater utility, or more driving pleasure. New materials will emerge in the quest for lighter and more efficient vehicles – we spotlight the BMW i3’s carbon fibre reinforced plastic construction to demonstrate what this means for ownership and repair costs. EXECUTIVE SUMMARY 10
WHAT THIS MEANS FOR FLEETS AND THE LEASING INDUSTRY
Arriving at the optimal composition Existing perceptions of manufacturer As the potential for vehicle of a fleet will become more complex, brands will be challenged as vehicles personalisation increases, fleet and choices will need to be made originating from emerging markets operators will need to deal with in the context of extra support will begin to play more of a part increasing operational complexity requirements like specialised on fleet lists, particularly where and driver expectations. Creative recovery solutions, better route low cost is paramount. packaging of services that simplify planning and charging services. the experience will be essential. The increasing convergence of The cost structure of running a fleet vehicles, technology and the data will have many new components generated by their usage will provide and their relative weight will change much greater visibility of and control significantly. Fleet professionals and over fleets. This combined with the suppliers that support them will new models of usage gives the need to simplify the operational and opportunity for genuine service administrative challenges and add enhancement by fleet providers. value to and enrich the experience of drivers. MAJOR THEMES – ENVIRONMENTAL REGULATION 11
ENVIRONMENTAL REGULATION
Whenever the future of mobility is discussed, the environment must be a prime consideration. Between now and 2050, major climate change mitigation initiatives will start to bite. At the same time, a “second billion” people in emerging nations will demand western standards of living and freedom. MAJOR THEMES – ENVIRONMENTAL REGULATION 12
REGULATORY RESPONSE IN THE NEXT DECADE
Given the US and China’s reluctance However, this is not to say that the In the shorter term, the EU sees Costs across fuel options will be to sign up to Kyoto, the EU is the EU Transport Plan is anything but transport emissions being cut by normalised by the implementation only significant governmental body highly ambitious: conventional cars a variety of means. By 2020, 10% of of “polluter pays” taxation policies. to have produced an on-the-ground would be banned from cities. The all mobility fuel consumption should Which means that consumers will transport plan to the timescales focus of personal transport would come from renewable sources. bear the environmental cost of their involved. The key observation to be around the first and last 10km Initially, the majority of this will come travel directly, through taxes, or note from the report is this principle: of any journey, with cars acting as from biofuels, but in the longer term indirectly through increased costs feeders to and from high-speed rail population growth across the EU will of goods or services. “Curbing mobility is not an option.” lines. Oil dependency would be put pressure on crop growing space, reduced by 60% and relatively few with both biofuel and food production The EU does not envisage solving time-dependent goods would move competing for the same land. the climate crisis by any means by road, with the rest shifted instead which would prevent the free flow to rail and sea channels. Limitations on car use will prevent of goods and people across the some of the more inefficient uses continent. Mobility currently makes of fuel. For example, the London a direct contribution of 5% of the Congestion Charge could be continent’s GDP, and immeasurable replicated across European cities indirect contribution. to discourage uneconomical short, stop-start journeys. MAJOR THEMES – ENVIRONMENTAL REGULATION 13
CASE STUDY LONDON
As one of the EU’s most populous Crossrail 2, running from Wimbledon The Congestion Charge is considered [1] https://consultations.tfl.gov.uk/crossrail/2/ urban centres, London is at the to Alexandra Palace, could open to be a success, which could lead supporting_documents/Summary%20of%20Option %20Development.pdf forefront of developing integrated by 2030 [1]. to larger zones and more granular mobility networks in the context charging using Automatic Number [2] http://crossrail.co.uk of the environmental and human With public transport just keeping Plate Recognition and/or geolocation. challenges of the 21st century. pace with population growth, traffic [3] EU Transpor t 2050 repor t These are some of the highlights congestion isn’t going away. The Goods vehicles will be subject to of its current plan: London’s EU predicts the productivity cost additional charges and restrictions, [4] http://www.london.gov.uk/media/mayor-press- population is growing faster than of congestion will increase 50% as exemplified by the Low Emissions releases/2013/03/crossrail-for-the-bike-in-mayor-s- 913m-cycling-plan previously predicted, hitting 8.2 in real terms by 2050 [3]. Zone, the proposed Safer Lorries million in 2011, some 15 years Charging Zone [5], and existing [5] https://www.gov.uk/government/news/dft-and- ahead of predictions. It may New technologies and political time restrictions on operations. mayor-announce-plans-to-tackle-hgv-safety-and- support-londons-cycling-revolution reach 10 million by 2031 [1]. measures will be required to mitigate
the environmental costs of inefficient Year Crossrail opens in 2018, adding fuel use in congested areas. capacity for 72,000 passenger 2030 journeys per hour across Central As cycling increases in popularity, London [2]. The extra capacity due to its environmental and health 2020 added by Crossrail and all benefits, more road space will be current tube upgrade projects reserved for cycle lanes. Through- will be outstripped by population travel, by motor vehicles will also 2010 growth in around 2031 [1]. be discouraged, reducing the average speed of cars across the capital. 6m 7m 8m 9m 10m Population
Past Prediction
Todays Prediction MAJOR THEMES – ENVIRONMENTAL REGULATION 14
HYDROGEN & ELECTRIC CARS
The combustion engine will still In the medium term, a shift to have the lead market share until biofuels is likely. But, as biofuels at least the mid-2030s. Downsizing, share space requirements with food turbocharging and hybridisation supplies, and climate change is likely will keep it relevant through many to place pressure on food supplies, rounds of stricter CO2 targets. In fact, it is likely that the long-term future it may be the case that the tipping lies in electric propulsion. point away from petrol and diesel will come as a result of social rather than technical or legislative factors: as oil becomes more difficult to extract, we could see increased local opposition to operations, such as the protests we are currently seeing against fracking. Sufficient protest could lead to a change in the social acceptability of any fossil fuel use, in the same way that the acceptability of fur was challenged in the ’80s. MAJOR THEMES – ENVIRONMENTAL REGULATION 15
ENERGY DENSITY
The key factor to consider when The best batteries, currently available BMW ran several rounds of real-world The question is whether that determining which fuel is likely for automotive use, approach data gathering on BEVs as part of happens quickly enough to beat replace fossil fuels, for cars of the 2.6 MJ/Litre, and take much longer the Megacity project which led to FCEVs to the same punch. BMW future, is that of energy density. to recharge. Whereas hydrogen, the creation of the i3. They discovered predicts that by 2020, BEVs and This is the amount of available when compressed for use in a that, for urban dwellers, a range Electric Range Extender Vehicles energy from a source for a kilogram passenger vehicle, has an energy of 100 miles with an overnight will make up 5-15% of its sales. of weight or a litre of volume of that density of 5.6 MJ/Litre. charge would be sufficient for However, manufacturers like source. When discussing automotive 95% of all journeys. Ford, that sell cars in much larger applications, volume is generally What this means is that, all things volumes are likely to struggle to more applicable, as this has a being equal, a Hydrogen Fuel Cell A combination of improved energy sell 15% of their vehicles as BEVs. greater effect on the form of Electric Vehicle (FCEV) requires a density and fast-charge facilities, This is because many of their the vehicle, than weight. fuel tank that occupies nearly 5 such as Tesla’s Supercharger customer base would not consider times the volume of a petrol-fuelled network [1], would cause that number paying the price premium inherent Fossil fuels are convenient because vehicle with the same range. to converge on 100%. At that point, in BEVs and FCEVs. they marry a very high energy density A Battery Electric Vehicle (BEV) the combination of price, energy (typically 26 MJ/Litre of petrol) with a requires batteries that occupy density and recharge time would [1] http://www.teslamotors.com/supercharger fast recharging ability (a couple 10 times the volume of the be such that BEVs become a practical of minutes at the pump). petrol vehicle’s tank. choice, alongside petrol or diesel.
The race to power vehicles of the future revolves around one factor: increasing energy density. And, while petrol and hydrogen have fixed energy densities, batteries do not. MAJOR THEMES – ENVIRONMENTAL REGULATION 16
ENERGY SOURCES
While the majority opinion appears This means, whether for batteries [1] http://www.london.gov.uk/media/mayor-press- to be that hydrogen is the fuel of the or hydrogen, the source of power, releases/2013/03/crossrail-for-the-bike-in-mayor-s- 913m-cycling-plan future [1], it is important to understand for both BEVs and FCEVs – in the that hydrogen differs from fossil UK at least – is mostly generated [2] http://www.nsf.gov/news/news_summ.jsp?cntn_ fuels in one key aspect: hydrogen is by burning fossil fuels. With neither id=110648 not a fuel source, but a reservoir for renewable nor nuclear power gaining conventionally-generated electricity. any serious traction in the UK, this While the energy extracted from fossil is likely to continue, certainly until fuels is “free” in the sense that oil around the 2030 period. Thus, the takes less energy to extract than true environmental benefits of BEVs it releases when burnt, present and FCEVs will not be realised until production methods mean hydrogen the grid is significantly greener, or must be “cracked” from water in an alternative method of cracking a process that takes more energy hydrogen – which does not require than can be recouped from the grid energy as an input – can be resulting hydrogen. So hydrogen developed [2]. In the meantime, can be considered more like a offsetting and carbon credits are liquid battery than a fossil fuel. likely to gain increased importance in the consumer market as the reality of climate change becomes apparent. MAJOR THEMES – ENVIRONMENTAL REGULATION 17
WHAT THIS MEANS FOR WHAT THIS MEANS FOR THE PRIVATE PURCHASER A FLEET
In the short and medium term, buying Peugeot has also indicated it will Private purchasers and leasees will • Fleet disposition management a BEV will remain an urban, niche expand its similar scheme when its make the choice between BEV, FCEV, to ensure even battery wear on decision, often limited to those who own BEVs come to market. Broadly Petrol or Diesel according to their all vehicles have a guaranteed parking space, speaking, schemes of this type own circumstances, but fleet managers with charging facilities at their office. could do a great deal to increase will have to make the choice on an • Fleet disposition management to Currently, most owners of EVs already BEV adoption in urban markets. aggregate level. In addition to the ensure that an exhausted vehicle own a petrol vehicle, although they traditional factors of cost, reliability can be swapped for a charged prefer to use the EV where possible. and so on, there will also be a one, should the driver need it With space limitations on parking in marketing dimension to the choice urban areas, this is a factor that is of EVs. However the range limitations • Route planning to maximise likely to limit growth. To get around of EVs could cause difficulty for those range (especially for multi-drop this, BMW supports its i3 BEV with industries, such as delivery and home delivery services) the BMW Access scheme, in which service, that rely on keeping their purchasers can redeem points for fleets on the road all day. • Specialised recovery solutions access to conventional BMWs when for exhausted vehicles needed for longer journeys, or just To combat this, organisations that when they feel like a change. make an early shift towards BEVs • Driver training in particular, will look for support services that allow them to manage • Charging services; installation, the new needs of these fleets. management, and cost optimisation For example: MAJOR THEMES – COST PRESSURE 18
COST PRESSURE
Between the rising cost of fuel and increased taxation, the cost of personal mobility will continue “The less successful the world is in decarbonising, to rise for the majority of drivers. However, the the greater will be the oil price increase.” perceived value of a car, at purchase, should — EU Transport 2050 report increase, as technological progress, appification and smart manufacturing produces vehicles that do more, more personally, for the same cost. MAJOR THEMES – COST PRESSURE 19
FUEL COSTS TAXATION
This report will not attempt to As part of their “polluter pays” become a larger proportion of the predict the timescale on which policies, governments across the total vehicle stock, it is likely these Peak Oil will occur (although, EU have toyed with the concept of benefits will be eroded. Taxation for the record, BMW works on satellite-tracked per-mile taxation. levels will more accurately reflect the expectation that it will Should it be implemented, this these vehicles’ true cost to the occur in 2025), but it is clear could change the face of environment by including the that extraction costs, political motoring dramatically. environmental impact during volatility and environmental their manufacture. responsibility taxes will continue Several charging structures are to push fuel prices upwards. being considered: journeys could, In terms of the CO2 equivalent for example, be taxed at a falling rate, currently used for calculating tax, where the first few miles are charged this would be a reduction of roughly very highly, and beyond that only 50%. For the Congestion Charge it is at a few pence per mile. This would likely that, over the course of several encourage drivers not to make short, years, the existing discount for EVs more polluting journeys. Alternatively, would decline to zero. different roads could be charged at different rates, discouraging drivers VED rates for combustion engined from urban centres and other vehicles should be expected to highly-congested places. continue rising according to the CO2 g/km rating. Alternate fuel vehicles currently receive effective tax subsidies on VED (Vehicle Exercise Duty) and the Congestion Charge, but as they MAJOR THEMES – COST PRESSURE 20
PURCHASE PRICE RUNNING COSTS
At present, BEVs are about £10,000 In order to close the price gap In contrast to the purchase price, more expensive than an equivalent between EVs and combustion the running costs of vehicles can combustion vehicle, although vehicles, governments may choose be expected to increase. Not least a government grant of £5,000 is to increase the existing “gas guzzler” in terms of the time: routes will available at purchase which lessens tax on the purchase price of large- need to be planned more carefully the sting somewhat. Technological engined cars. to maximise range, and minimise advances are expected to reduce the tax and congestion. And new price of batteries. The government However, the ability to simplify and classes of tax will inevitably grant may well be reduced in tandem. standardise internal data networks, lead to increased administration. (FCEVs remain so expensive relative the falling cost of sustainable to combustion cars that the few “on materials and the trend away from For example, it took several years sale” are actually leased direct from bespoke interfaces to appification, for the Congestion Charge to gain the manufacturer as part of an should mean that the list price of an an automatic payment mode. extended testing programme). average car will, in real terms, stay Companies such as ZipCar that can about the same (even as the offer a service designed to alleviate capabilities of the vehicles improve). the pain of this administration would have an opportunity to create a lasting relationship with the customer. MAJOR THEMES – COST PRESSURE 21
WHAT DOES THIS MEAN FOR LEASING?
Increased cost and inconvenience Fewer journeys will not mean less Vehicle Excise Duty and other is a natural driver away from car time spent in the car. Increased automotive taxation will become ownership in any form. Those who congestion will mean that increasingly complex and interlinked can do without private mobility, opportunities will arise for time with other aspects of the general especially those who live in cities, management and working solutions tax code. Providing a service that will avoid outright ownership, or that take otherwise dead time simplifies this at source presents a sole-driver lease, as much as in the car into account. Equally, an opportunity to position a car possible. Those who have a specific drivers will seek ways to make lease as a tax management benefit. need for ownership, whether in cities the most of that time through or outside, will save money by driving entertainment or managing fewer miles and seeking cheaper fuel other aspects of their lives. options. To remain competitive, leasing companies will need to demonstrate that costs can be saved relative to outright purchase, and add value by removing more of the common frustrations that accompany motoring. MAJOR THEMES – THE DEVELOPING MARKETS 22
THE DEVELOPING MARKETS
In many ways it is the newest markets that offer car companies the greatest scope for innovation. Since these markets have few preconceptions about what the cars they buy should or should not feature. Even as these markets develop through their early stages, patterns or tastes (which can be quite short-lived) emerge, and the motor manufacturers do their best to cater to them. MAJOR THEMES – THE DEVELOPING MARKETS 23
BRIC
Brazil, Russia, India and China (BRIC) India holds massive potential for are the four major fastest developing market growth but the failure of the nations. Of these four, the most Tata Nano demonstrates that the interesting case is China, with its market still has yet to pass the rapidly growing middle class and threshold of middle-class growth challenges of extreme urbanisation. that would make it relevant in the The effects of the Chinese market timescale covered by this report. will increasingly feed back into Brazil remains dominated by locally- older established markets in assembled vehicles from US and significant ways. European mass-market brands like Chevrolet, Fiat and VW, and as a result tends to be reactive to these parent markets at present. Russia, by its proximity to Europe, does have some interesting brand and manufacturing implications for Europe as a whole and these are explored further on. MAJOR THEMES – THE DEVELOPING MARKETS 24
ALL EYES ON CHINA
However, any analysis of the driven by Chinese market tastes For premium manufacturers the automotive market in BRIC must in the then-rapidly growing luxury emphasis is shifting to large 4x4s, begin with the China factor. China is car sector. Chinese buyers of luxury with BMW preparing an X7 and now the world’s largest car market cars demand presence and scale Rolls-Royce 4x4, and in Volkswagen by volume, having surpassed the US in their vehicles, and the Bangle Group the platform of the new Q8 in 2009 and Europe in 2012. Though era responded to this with 7 will also underpin the production growth is beginning to slow, the and 5 series models which were far versions of the Bentley EXP 9 F and market is still predicted to expand taller and visually imposing than the Lamborghini Urus, and a Q7 coupé- 8-10% year on year [1]. While this shift outgoing models. It is notable that SUV cross. Jaguar is showing its notably occurs during a period of while BMW, Mercedes and Audi sell C-X17 crossover concept at Frankfurt. recession and financial stagnation in ever more standard (and lightly This again is a response to the the West, China has resoundingly stretched) executive models in Chinese premium market’s fixation emerged as the key growth market Asia, back home in Europe all three on size as a marker of privilege for car manufacturers. Both GM and manufacturers have introduced (along with a Russian preference Toyota are chasing global sales of “4 door coupé” models which hark for ruggedness and the general 10m vehicles for the first time ever back to the original remit that the American preference for SUVs). China in 2013, with VW close behind [2]. 5 series, E-Class and A6 used to will not drive a premium downsizing occupy–but now with a lifestyle trend, but it’s highly likely that small China’s tastes as a country will proposition that enables them premium cars like the BMW 1 Series directly affect the kind of products to be sold at a useful premium. and Mercedes A-Class will sell well car manufacturers offer in the rest as a result of the brand association of the world; in fact, they already to super-premium 4x4s. have. BMW’s controversial restyling programme in the early 2000s, led by Chris Bangle, was directly MAJOR THEMES – THE DEVELOPING MARKETS 25
BRAND ACQUISITIONS EXPANDING MIDDLE CLASSES
Moreover, European brands are Volvo, for example, was a strong- The centre of gravity in the Chinese beginning to be directly controlled selling brand and key technical centre market has now shifted to the middle by Chinese influence with MG Rover, for Ford when it was sold to China’s classes rather than the super-rich, Saab and Volvo now all owned by Geely. Volvo is showing two new and we will begin to see the same Chinese interests (along with Jaguar concepts at the 2013 Frankfurt motor kinds of product trends affecting Land Rover now owned by India’s show designed to herald a new mass market vehicles. For example, Tata). We can expect more direction that will sell in the West PSA Peugeot-Citreon’s new brand underperforming manufacturers to and the East. Other brands that strategy sees Peugeot moving shift to China as the West’s economy continue to sell well in Western upmarket to challenge VW in the continues its uncertain recovery. markets will soon be affordable European market. Meanwhile While MG Rover and Saab were for consumers in the expanding Citroën, which is a larger player bankrupt at the time of purchase, Chinese economy. Meanwhile MG in China, will split its range between the economic growth of China means and Saab are tentatively returning semi-premium DS vehicles and that more successful brands are now to retail operations in Europe. low-cost C vehicles, the latter being potential acquisitions. specifically designed according to the tastes of China and other emerging markets. MAJOR THEMES – THE DEVELOPING MARKETS 26
MARKET EXPECTATIONS
Buyers in China are not subject to A further way in which market the quality proposition of VW is the same embedded expectations expectations differ throughout BRIC stretched compared to a brand like as those in Western markets. Users is that although the markets have Hyundai, which comes to market are far more likely to have owned very strong recognition of certain with only its current, modern and a smartphone as their first middle- brands (especially super-premium capable product roster. This offers class technological investment prior brands), in the middle market there the opportunity for challenger to a car purchase, so there is an is less distinction between what we brands to make a prestige leap automatic assumption that the car in the west consider to be established by coming to market with the will take advantage of the phone’s and challenger brands. While in right product and proposition. capabilities. Equally, China presents Europe we may remember when, a much clearer opportunity for for example, Korean manufacturers alternate propulsion methods to had to be positioned as a low-cost take hold. Not only are there fewer option in order to gain a foothold, preconceived notions about range, these brands have arrived in BRIC cost and prestige, but new charging with competitive mid-market or hydrogen distribution networks propositions from day one. can be built more easily as part of Additionally, companies like VW and the rapid urbanisation of the country. Citroën target low-cost markets with designs that have been superseded in the West (at least 3 generations of VW Passat remain on sale under different names) which means that MAJOR THEMES – THE DEVELOPING MARKETS 27
EXPANSION INTO SOLUTIONS FOR EUROPEAN MARKET MEGACITIES
Towards the end of the period Broader demographic trends will This will include smarter traffic we cover here, “native” Chinese have a powerful effect on China’s management to prevent congestion, manufacturers may begin to make motoring needs. China is experiencing APIs that allow for smarter journey inroads into Western markets a rapid migration of population from planning, and new solutions in the (though this has of course been the countryside to urban areas, area of communal transport, whether predicted before). One can look meaning that it is becoming the that be traditional public transport or at the turnaround in Hyundai/Kia first country having to deal with something more closely resembling to realise exactly how quickly the notion of designing megacities a car-sharing club on a citywide a product transformation of the (defined as urban areas with scale. Some of the possibilities for type required can be effected once populations in excess of 10 million) this latter option will be explored the strategic will and funding are essentially from the ground up. The in other areas of this report. However put in place [3]. It is likely that this EU currently has only two megacities cities will also be likely to take their influx from the Chinese manufacturers in the form of Greater London and cue from Songdo in South Korea [4], will initially come in the form Paris, and with population growth where the city is structured so that of a foothold in low-cost small trends in the EU it is unlikely that every citizen has the option to walk commercial vehicles and extend many more will join them before to work. Such radical restructuring into passenger cars in the 2050. The solutions China finds for of the city proposition could not following decade. its megacities will influence urban occur in Europe, but on smaller landscapes throughout the world. scales such as neighbourhood replanning, the principles may well be influential. MAJOR THEMES – THE DEVELOPING MARKETS 28
WHAT DOES THIS MEAN FOR LEASING?
China and Russia (and later Brazil In Europe, cars that meet the [1] http://www.carnewschina.com/2013/01/10/ and India) could present a disruptive market’s embedded expectations china-buys-more-cars-than-europe-for-the-first- time/ opportunity for leasing companies of desirability will increasingly be who are able to understand the shifted to higher-grossing premium [2] http://www.autonews.com/apps/pbcs.dll/ market and present a compelling placement, matching consumer article?AID=/20130730/OEM01/130739984/ toyota-production-to-top-10-million-vehicles-this- alternative to outright ownership. mood as the economy begins year-report-says#axzz2dRaKv8sP, CAR Magazine to pick up again. This may offer September 2013 Chinese manufacturers looking opportunities to add premium to get a foothold in the European services to leasing agreements, [3] Ben Oliver, Car Magazine September 2013 market will be eager to move or use premium positioning vehicles to organisations that of existing benefits as a zero- [4] http://www.bbc.co.uk/news/technology-23757738 can give them volume and profile. cost value add. Initially it will be easier to place these vehicles in extremely TCO Chinese auto manufacturers seeking (Total Cost of Ownership) sensitive greater understanding of new markets sectors such as commercial fleets, may be keen purchasers of but this may mean finding anonymous, aggregated driver a way to reassure those clients data of the type a telematics-enabled that untested total lifetime costs leasing company would have to offer. will not exceed expectations. MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 29
TECHNOLOGY AND CONNECTIVITY
Since 2007, a quiet revolution has been underway. The bulk of our most personal interactions “There are no airplanes, only computers that fly. There are no cars, only computers we sit with technology have shifted away from fixed in. There are no hearing aids, only computers environments such as a PC at a desk to the personal we put in our ears.” sphere, first with smartphones providing a pervasive — Cory Doctorow bubble of connectivity, and latterly with tablets taking over many of the functions that a laptop would previously serve.
Steve Jobs described this world as a place where PCs became analogous to trucks, performing specialised tasks for professional users, and tablets took over the “car” role of day-to-day interactions with the internet. With this in mind, the key themes of the coming decade are those of pervasive connectivity, software and services that support our lives, and the expansion of the new “superpowers” these devices give us into whatever environments surround us. MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 30
APPIFICATION
An accompanying trend is that of the It is this aspect of “good enough” “appification” of what had previously for a far cheaper price that drives been distinct products [1]. For appification. In fact as an app can example, the standalone TomTom be supported by commercial models GPS unit is rapidly being made other than outright purchase, the obosolete by cheaper smartphone choice for a user may be expensive apps which provide the same hardware or a completely free app. capabilities. While the dedicated hardware may be able to acquire a satellite signal faster and hold onto it better, the performance of mobile hardware is good enough for most users. MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 31
EXAMPLES IN ACTION
GPS is the first and most obvious soon offer a mode in which the car’s There are start-ups already working example of this occurring in the touchscreen simply offers access to a on this vision. Like the CarK now automotive sphere, but as our lives paired phone, and the phone’s apps platform that aims to provide the are increasingly expected to connect and services drive the required ability to write apps on a third-party to the cloud, more and more features functionality [2]. Once that happens platform that plugs into the OBDII that currently live on the car platform for entertainment and GPS, it is quite port and interfaces with the vehicle’s will migrate to the user’s own devices. easy to see a path where all of the CANBus internal network [4]. car’s user-accessible functions are Manufacturer-backed schemes will Volvo for instance, has recently appified in the same way, although naturally be more elegantly integrated. embedded a Spotify app into its the need for cross-manufacturer APIs in-car platform. But Spotify is one would push this further into the of many options for consumers future. Ford’s Open XC endeavour who want to stream music, and demonstrates some early progress may already have a relationship with in this area [3]. Rdio, iTunes Match, Google Music, Amazon or any of a hundred other providers. They have direct access to these services via their smartphone, without needing a second mobile data subscription. So the pressure from consumers will be for the car’s ICE (In Car Entertainment) to become a dumb pipe for those services. iOS and Android, and Microsoft’s Devices division (Nokia as-was) will both MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 32
NEW INTERACTIONS
Interacting with a device while However, one very clear inference become more sophisticated this driving a moving vehicle is a from the current generation of channel will be a more important particularly challenging proposition. mobile devices such as the iPhone 5s aspect of prompting an emotional Drivers have limited capacity for and Moto X is that voice will play an bond to the car. extra attention, and touchscreens ever-larger part in the way drivers as they currently exist lack the interact with their cars. Apple’s “Siri important haptic qualities of physical Eyes-free” mode is targeted for controls: touchscreens must be manufacturer support in 2014 and looked at to be interacted with. offers a specific mode of Siri in which A variety of solutions exist: BMW it responds to the driver only in voice has the iDrive controller which is and without visual feedback. For now, despite teething problems, now, the limited functions that Siri successful; Audi has introduced a can operate in a car mean that touchpad on which gestures can be manufacturers will cede those drawn; Jaguar and others offer voice interactions to Apple. However control of some functions. Future at some point manufacturers will vehicles are likely to continue to realise that these voice interactions use a mix of options as brands and responses will have a significant see the cabin experience as a key effect on the driver’s perception differentiator. Although there will be of the car’s personality. Mini’s some common metaphors, there will 50th anniversary specials had some not be any industry-wide standard limited development in this within the timeframe of this report. direction [4.1], but as voice recognition and server-backed response systems MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 33
THE INTERNET OF THINGS
Although the user’s interaction As the Internet of Things begins surface will increasingly be their to connect physical objects to own device, and the car may the cloud, cars will become a first- “piggyback” the connection when class player in this new world. an app is in play, the car will retain a cellular data connection of its own. This will allow the user (and the manufacturer, service agent and possibly government) to remotely interact with the car - starting the heating system on a cold day to clear ice from the windscreen, identifying itself in a crowded car park and guiding the user back to it, reporting its service status to the dealership to trigger customer contact, for example. MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 34
THE VALUE OF DATA
Naturally with this access to the There are three classes of vehicle- vehicle’s systems flowing in one centric communication: direction, a torrent of useful data will flow in the other, through the 1. V2V is inter-vehicle communication 3. Finally V2X is the principle of upgrades. For third parties this will phone’s data connection and out into – cars will be able to relay weather, the vehicle communicating with mean new business possibilities will the cloud. Cisco estimates that the congestion and road surface anything, using either a dedicated emerge in managing and analysing savings and revenue from this flow conditions, match speed so they local radio frequency or connecting this data, in building services which of data could add up to $1,400 per can be “platooned” together via the internet. This could be consume and react to it, and in year [5]. This flow of data is not and driven automatically on something as simple as automatic using it to understand the situation unique to the car. As the cost of motorways, and alert each mileage transmission for a on the ground when developing connectivity hardware and services other to avoid accidents. company driver, up to emergent new products. decreases, we will see many more uses such as new location-based sources of data being aggregated in 2. V2I is vehicle-to-infrastructure social applications. However, the cloud. On a small scale, we can communication, in which cars for all three of these classes the see the trend for personal can communicate with the fabric assumption should be that some quantification with devices like of roads and smart cities to route endpoint within the system will the Nike+ Fuel Band allowing people around roadworks, co-ordinate connect to the internet, and huge to track their daily activity, plot it journeys to make the best use volumes of data relating to traffic, against time and compare of congested facilities, rather than individual cars, will be to others. For a vehicle, this means communicate hazards to the driver available for analysis. For the the ability to interact with connected and, possibly, tax by the mile. authorities this will mean more objects around it – in the real world granular control over traffic in real and in the cloud. time and better assumptions when planning infrastructure MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 35
MORE ACCURATE POSITION THE CAR IN THE CLOUD AND SPEED DATA
GPS will be joined by fully-operational Increasingly, ownership of a car will Volvo and the EU’s SARTRE project networks of Russian GLONASS and mean ownership of a virtual object envisages “platoons” of vehicles on EU GALILEO satellites, offering and its attendant services and motorways, all driven automatically potential location resolution down applications, but it may not by a professional driver in a lead to an accuracy of 10cm (or better necessarily mean ownership of a vehicle. The cars in the platoon are with a subscription). At this level physical object. For urban dwellers, able to drive with reduced space of granularity, geolocation becomes services like ZipCar currently offer between them, improving useful for more than just navigation timeshare ownership of a car, but aerodynamic efficiency and reclaiming purposes – cars will be able to tell cannot solve some of the pains of space. Beyond this semi-autonomy, when they are being parked across motoring such as urban parking, entirely self-driving cars are being two parking spaces, or driven too congestion or the need to actually developed by Google, Audi, Nissan, fast into a tight corner. drive the car. However, motor Stanford University and others. manufacturers and tech companies are looking at possible solutions. GM and Toyota have both exhibited single-person mobility pods which are self-driving on their own segregated road network. GM said of its En-V model, “it might not be something you own.” Larger, more traditional vehicles will exhibit similar swarming behaviours. MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 36
THE CAR AS A CLOUD OBJECTS OF DESIRE
Google recently claimed its self- enough surplus vehicles at any time As millenials come of age, we People who choose not to driving cars may only be 3-5 years to ensure that a service operated by can see the above trends begin own a car will still have access to from market [6]. It is unlikely that a electric vehicles could always have to come to fruition. In the US, teens personal mobility through “cloud company like Google, with its native enough out-of-service charging time increasingly see a smartphone as ownership” where a car is available understanding of mass resource without compromising the service. their object of desire, rather than on demand. Through interaction with management and network effects a car [7]. Where cars once symbolised devices and personal data stored in and its advertising-driven revenue freedom and independence and acted a cloud, these cars will demonstrate model, would release a product like as a social hub, those functions are a level of personalisation which this into the market with a traditional now served and amplified through is somewhere between that purchase model. It is not the internet. As these teens grow of a taxi and one’s own car. unimaginable that users will into adults with differing needs, it is subscribe to a “cloud of cars” likely to be a race as to whether the However, this does not mean that model where a car is guaranteed need for independent mobility shifts private car ownership is going away to arrive within minutes when further into life, or new digital – certainly not outside urban areas. called, and be ready-tailored to solutions arise to obviate it further. Instead, manufacturers will leverage the user’s preferences when it does The need to physically move people new technologies to make the arrive. The user can then drive or be from A to B will never go away, but ownership experience more driven to their destination, at which the expectation that the most personal and customer-centric point the car disappears to serve efficient way to serve that need than ever before. the next user, removing any need is to own one car per person may. for parking. This kind of network management could also provide MAJOR THEMES – TECHNOLOGY AND CONNECTIVITY 37
WHAT DOES THIS MEAN FOR LEASING?
As vehicles and technology converge, An opportunity exists at the nexus [1] The Appification Of Ever ything Will Transform The [5] ‘Big data’ from a car is wor th $1,400 a year, it becomes equally likely that of vehicle data and owner data to: World’s 360 Million Web Sites – Forbes Cisco exec says disruption will come from technical http://www.forbes.com/sites/ http://www.autonews.com/apps/pbcs.dll/ organisations as from automotive • Gain extra value from aggregation anthonykosner/2012/12/16/forecast-2013-the- article?AID=/20130805/OEM06/130809928 appification-of-everything-will-turn-the-web-into- organisations. Equally it becomes and use of generated data an-app-o-verse/2/ clear that non-technical companies [6] Google sees self-driving cars in 3-5 years; wishing to stay relevant will • Offer drivers differentiators [2] Nokia unveils its connected car platform: Washington, insurers not so sure – Autoblog increasingly need to engage and value-adds through Here Auto — Tech News and Analysis http://www.autoblog.com/2013/02/08/google-sees- in technical development to the technological platform http://gigaom.com/2013/08/30/nokia-unveils-its- self-driving-cars-in-3-5-years-washington-insurers/ meet user expectations. connected-car-platform-here-auto/ • Offer fleet managers more visibility [7] http://bits.blogs.nytimes.com/2011/11/20/a- New attitudes towards non-traditional and control over their vehicles [3] How tech nerds will write the next generation teenage-question-a-car-or-a-smartphone/?_r=0 ownership of and access to vehicles of car apps | TechHive will open up a third option beyond [4] http://translogic.aolautos.com/2013/08/12/ purchase and leasing. Leasing in-detail-carknow-car-hacking/ organisations that choose not to http://www.techhive.com/article/2046512/ participate directly in this model how-tech-nerds-will-write-the-next-generation-of- car-apps.html may still have a part to play in fleet supply, management [4.1] http://www.greencarreports.com/ and maintenance. news/1044317_the-50th-anniversary-talking- mini-cooper-in-dealerships-now MAJOR THEMES – RAPID MANUFACTURING 38 AND NEW MATERIALS RAPID MANUFACTURING AND NEW MATERIALS
As the need for greater efficiency bites, cars will increasingly be built from weight-saving materials other than steel and glass. BMW’s recently launched i3 makes extensive use of Carbon Fibre Reinforced Plastic for both bodywork and structural applications. BMW claims that its designed-in reparability means CFRP will be no more expensive to repair than a steel component [1], but there will be a natural ramp-up time for dealerships to acquire the experience and equipment required, and it is unclear what possibilities there will be for out-of-network repairs. The i3 is a premium small hatchback, but the technology will filter down rapidly. Ford is already exploring ways of reducing CFRP production costs [2]. MAJOR THEMES – RAPID MANUFACTURING 39 AND NEW MATERIALS
MODEL PROLIFERATION RAPID PRODUCTION START-UP BY OUT-OF-SECTOR COMPETITORS
The modular platforms which GM even envisaged that the life Hand in hand with this new style underlie these CFRP bodies will allow module could be changed at a of engineering, Gordon Murray much greater variation in the kinds dealership from a sensible saloon has begun to licence his iStream of vehicles that are built on top. Fiat during the working week to a sleek manufacturing process which takes and VW have managed to massively sports car at the weekend. This lower this modular, platform-based decrease the break-even volume development cost to extend a range construction as the seed for a faster, of a particular model by spinning means that we will see an explosion cheaper and more flexible method many models off the same platform of niche vehicles designed to more of vehicle manufacturing [3.1]. Murray and component set. However new accurately target every conceivable envisages that the majority of propulsion and manufacturing models consumer sector. licensee companies will not already will increase this efficiency further. be in the automotive manufacturing In common with many emerging sector – for instance, Sony or Nike electric vehicle architectures, GM’s may take the opportunity to compete 2003 Hy-Wire concept sits upon a in the automotive market, adding “skateboard” platform containing their own differentiators along the the batteries, propulsion, suspension way – as Swatch attempted to do and so on, and have a “passenger with the original conception of Smart. module” on top which the passengers occupy. A single skateboard platform can underpin many types of vehicle with the development cost of only the individual passenger modules. MAJOR THEMES – RAPID MANUFACTURING 40 AND NEW MATERIALS
LESSENING USE SPOTLIGHT: BMW i3 OF PLASTICS
Increasing oil costs and carbon BMW’s i3, known in development • Carbon Fibre Reinforced Plastic accounting may mean that the use as the Megacity Vehicle, is the most platform offers lighter weight of plastics is lessened. Bamboo, as comprehensive re-architecting of the and greater rigidity than steel a lightweight material and good way car currently available. Unlike Nissan’s If a damaged section of CFRP of removing carbon from the Leaf, which is built on an existing needs to be replaced, it can be environment, is frequently suggested combustion car platform, or even the cut out at marked safe points as an alternative material for interior Tesla model S which uses a bespoke and a replacement module can surfaces, including fabrics [4]. but conventional platform, it has be patched in As more of the vehicle interface been designed from the ground up moves to reconfigurable forms to maximise the new opportunities • BMW expects 5 to 15% of its sales such as touchscreens, simpler of an electric architecture. to be EVs and EREVs by 2020 dash architectures will enable further weight savings. • Life/Drive architecture: Like GM’s • Buyers get credit with BMW Access Hy-Wire concept, the i3 is split scheme, allowing them to swap between a skateboard floor “Drive” their i3 for a combustion-engine module containing the batteries, BMW for longer journeys – or just suspension, crash structures and for fun propulsion modules, and the upper “Life” module with passenger • Satnav can plot energy-efficient volume and external body panels routes and recalculate expected range based on terrain • BMW ConnectedDrive app helps drivers find public charging points to alleviate range anxiety MAJOR THEMES – RAPID MANUFACTURING 41 AND NEW MATERIALS
BUILT AROUND RAPID MODEL TURNOVER THE CUSTOMER
The upshot of these innovations is As the cost of model proliferation that those who choose to own a car falls, car manufacturers may in 2023 will own cars that are more re-energise markets by following intensely personalised than ever the smartphone model of making before. Personalisation will take the significant upgrades to their core form not just of colour and graphics, lines each year, hoping to push but body styles, bespoke panels, image-conscious consumers down and even in the way the car drives to a 2- or even 1-year renewal cycle. and reacts to commands. This would naturally be accompanied by new lease-like forms of financing, and require some solution in the form of fleet disposal to ensure that general resale values remain high. Solutions developed in the era of GM’s planned obsolesence may be relevant again. MAJOR THEMES – RAPID MANUFACTURING 42 AND NEW MATERIALS
WHAT DOES THIS MEAN FOR LEASING?
Consumers will expect the same Out-of-sector brands that enter [1] New BMW i3 – can its carbon-fibre panels [4] http://www.usatoday.com/story/money/ level of personalised design, the automotive market via new be repaired? cars/2013/06/27/wood-fisker-bmw-ram-lexus-gs- es/2413611/ behaviour and services from their manufacturing methods will seek http://paultan.org/2013/08/06/new-bmw-i3-can-its- leasing companies that they will distribution models that disrupt carbon-fibre-panels-be-repaired/ expect from the purchase experience. the existing market. This presents Leasing companies’ Quote and Order both a potential challenge and an [2] Ford working on mass-market carbon fiber (Q&O) process will need to support opportunity for leasing companies. components to save weight, improve ef ficiency – Autoblog an explosion of model bases and optional extras. However, as the As leased vehicles are tailored more http://www.autoblog.com/2012/10/12/ford-working- on-mass-market-carbon-fiber-components-to-save- experience of owning a car outright and more towards the taste of an weig/ increasingly comes with the individual customer, sell-on values expectation of a package of services may be impacted as one person’s [3] Ford Develops Advanced Technolog y to attached, leasing companies will dream car may be another’s ugly Revolutionize Prototyping, Per ... – Press Release have an opportunity to outcompete mess. Options for mitigating this http://corporate.ford.com/news-center/press- manufacturers on the service offering. include not giving customers releases-detail/pr-ford-develops-advanced- complete freedom at the Q&O stage, technology-38244 Customers will need reassurance including a reversion charge along [3.1] http://www.gordonmurraydesign.com/ that adopting vehicles built from the same lines as the current fair istream.php new materials will not impact wear and tear charges, or developing repair or maintenance costs. bespoke personalisation solutions that can be reversed at low cost, along the lines of vinyl wraps. 43
WILDCARD SCENARIOS WILDCARD SCENARIOS 44
RAPID ENVIRONMENTAL CHANGE UK ENERGY CRUNCH
A serious environmental disaster In 2015, several coal-fired electricity (eg. a “Super-Katrina” destroying generating facilities in the UK will fall an Eastern Seaboard US city) may below emissions standards and be result in a hard shift towards severe decommissioned. The UK’s generating environmental restrictions, with surplus will fall from 15% today to consequential knock-on effects 4%, with a consequent rise in costs for first world manufacturing. and uncertainty of supply. With no clear path to replacement for this lost capacity, this could be a long- term situation which colours public opinion of Electronic Vehicles and Plug-In Hybrid Electric Vehicles for a generation. WILDCARD SCENARIOS 45
HARD SHIFT TO ASIA LIMITATION OF MINERAL SUPPLY
If the Chinese economy continues Certain battery and electronic to grow during a depression in the components in modern vehicles West, then naturally there will be (and personal devices) rely on the a hard economic and product supply of rare-earth minerals from development shift towards the East. countries which are prone to This would cause a hastening of instability. A destabilising event some of the effects we discuss in such as a war or natural disaster the BRIC major theme. could disrupt supply long-term, or encourage a new wave of economic empire building to secure supply of these minerals. Equally, public opinion may be coloured by the adoption of campaigning platforms against the exploitation of these resources, for example by Greenpeace. WILDCARD SCENARIOS 46
ENERGY DENSITY ALTERNATE ECONOMIC BREAKTHROUGH RECOVERY SCENARIOS
At present, the best (and most At present, a steady recovery from expensive) battery technologies 2008’s financial collapse, lasting up allow an energy density of around to a decade is predicted. However, 1/10 that of petrol, at a much greater if recovery is faster than expected it cost than a comparable petrol may presage a return to 2000s-style vehicle. However, there are several conspicuous consumption, or on the promising new battery technologies other hand a further depression claimed to be “close to market.” would cause severe problems, in These promise energy densities particular for European manufacturers up to 1/4 that of petrol, often with who continue to find their domestic greatly decreased recharging time market shrinking. and lower production cost. Should one of these technologies disrupt the market, it could result in increased pure EV up take against existing predictions. CONCLUSIONS 47
WHO WILL THE DISRUPTORS BE?
For the leasing market, incumbents will be increasingly pressured by holistic solutions from “In future, there won’t be just one automobile, but a variety of different forms of mobility.” the manufacturers themselves. The BMW i3, sold — Audi with BMW Access, BMW ConnectedDrive and a subscription to a public charging service, is one “Mu by Peugeot is the ultimate mobility solution. example of the kind of integrated solution that Buy online credit and rent a vehicle, scooter, bike or accessory when you want.” manufacturers will offer. BMW is ahead of the — Peugeot curve but by no means unique. CONCLUSIONS 48
WHO WILL THE DISRUPTORS BE?
However, for the automotive market Car-share ownership is a clear One serious disrupting influence in general, there is a clear desire challenger to the traditional leasing will be governmental regulation. from Silicon Valley to be the disruptor. model. The increased ability to make To meet the EU’s 2050 transport Google’s self-driving car project a vehicle react to an individual targets, infrastructure development clearly indicates a will to challenge driver’s preferences will mean the needs to be reshaped in the next few the notion of car ownership, and sole ownership experience of leasing years. At some point governments if they were to acquire one of the will be less of a differentiator from will be forced to choose between emerging EV manufacturers such the car sharing providers. As many missing those targets and pushing as Tesla, their 3-5 year go-to-market of these providers emerged as digital harder to get people out of time would not look unrealistic. native entities, they have a greater combustion cars and into EVs and embedded understanding of the public transport. This will probably The modularity of non-combustion online world and network effects. not come until the 2030s but one or vehicles and the emergence of new An intimate and implicit understanding more of the wildcard scenarios could manufacturing systems will present of these effects will be vital for any have an accelerative effect. an opportunity for any player to organisation wanting to play in an become an automotive manufacturer increasingly connected marketplace. on scales commensurate with the power of any existing brand they own. Hence a major disruptor could be Sony, Nike, or even Apple. These disruptors will bring with them new distribution channels and ownership models. 49
AND FINALLY...
We are clearly closing in on the To make the most efficient use end of the internal combustion era, of the entire transport network, but reports of the death of the petrol it will be truly integrated with the car have clearly been exaggerated. internet, allowing smart cross-modal Within the timescales covered by this journey planning, real-time route report, the combustion engine will comparisons, and post-facto analysis continue to command no less than to refine and improve in future. 85% of the new-purchase market, and a commensurately larger As the 2020s arrive, cars will begin portion of total vehicle stock. to operate independent of their owners, coming when called and However, drivers will pay handsomely finding their own parking spaces. to own and drive those vehicles, and The notion of ownership will mean will spend longer sitting in traffic in access to services and networks them. As a result, cars will act as a that enhance the experience of “fourth space” distinct from home, owning the car, up to and including work and public spaces, where allowing the car to be swapped owners are entertained, express for other purposes such as moving themselves and get things done. house or enjoying a weekend away The information, materials and opinions contained in in a convertible. this repor t are for general information purposes only. They are not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to par ticular circumstances. LeasePlan UK Limited does not accept any responsibility for any loss which may arise from reliance on information or materials in this repor t.