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Future of the Mobility and Automotive Industry

Justinas Liuima, Senior Consultant Fransua Razvadauskas, Consultant 2© Euromonitor International 2

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The data included in this document is accurate according to Passport, Euromonitor International’s market research database, at time of publication: April 2021

Shared mobility

Electric and alternative fuel mobility

Connected cars

Autonomous vehicles

Online sales

Shared mobility is a transportation system where people share a vehicle either simultaneously as a group or over time as personal rental.

. Between 2020-2040, . Global car traffic volume . In 2020, transport urban populations will has surged by 69% over accounted for 22% of grow by 33% while the 2000-2020 carbon emissions arising rural population will from the burning and . More non-car based decline by 2.7% flaring of fossil fuels alternatives to reduce car . Improve mobility choice traffic . Need cleaner alternatives for the growing number to getting around in cities of urbanites 8 Q: Which of the following do you use when commuting?

Global Respondents’ Typical Mode of Over a quarter of Commute, 2021 commuters use shared Personal car Public transportation

mobility Mobility sharing

Walk

Take a taxi

. In 2021, over a quarter of global Motorcycle/moped

respondents reported using shared Bicycle mobility services to commute Private shuttle

. Only personal car use and public Electric bicycle

transportation are more popular than Electric scooter mobility sharing 0% 10% 20% 30% 40% 50% 60% Share of respondents

Note: mobility sharing is this graph is composed of ride- hailing, car sharing and ride-sharing © Euromonitor International Source: Euromonitor’s 2021 Mobility Survey 9

Ride-hailing accounts for 87% of the shared mobility market

. Ride hailing is the most popular shared mobility mode. In 2020 it accounted for 87% or USD143 billion in gross bookings . The ride-hailing industry is dominated by major players such as Uber, Lyft, Didi Chuxing and Grab

Note: values in USD billions © Euromonitor International Source: Euromonitor from trade sources and national statistics 10 Global Growth Index of Shared Mobility Modes, 2020- 2040 …but Shared Micro- 1,400 mobility to see faster 1,200 growth 1,000

800

600 . Electric scooter sharing’s gross bookings will rise 13-fold over 2020-2040 while 400 bike sharing will grow 5-fold Index 2020=100 (constant 2020 prices) (constant Index 2020=100 . Car sharing to show the slowest growth 200 with gross bookings rising 3-fold over 2020-2040 0 2020 2030 2040

Bike Sharing Car Sharing Ride Hailing Ride Sharing Scooter Sharing

© Euromonitor International Source: Euromonitor from Trade Sources and National Statistics 11 Top 5 Largest Shared Mobility Markets, 2040 250 4 out of 5 largest shared 200 150 mobility markets will be 100 USDbillion developing in 2040 50 0 China USA Indonesia India Thailand Source: Trade Sources and National Statistics

. Top and Bottom 5 Markets for Shared Mobility Gross In 2040, 4 of the 5 largest shared Bookings Growth, 2020-2040 mobility markets will be developing 600% . Some of the best performing markets 400% will be Turkey, Vietnam and India will

experience the fastest growth in shared growth% 200% mobility gross bookings 0%

© Euromonitor International Source: Euromonitor from Trade Sources and National Statistics 12 Passenger Cars Per ‘000 in Select Cities, 2020 1,000 800 600 Case study: Milan and 400 200 Vianova population Per ‘000 0

. The city of Milan and the data and tech Source: Euromonitor International from European Automobile Manufacturers’ Association firm Vianova are teaming up to improve (ACEA)/International Road Federation (IRF)/Eurostat/national statistics shared mobility services by better PM2.5 Annual Mean Conc. in Select Cities, 2017 integrating it into the wider transport 30 25 system 20 . Vianova will be partnering with the likes 15 10 of Cityscoot, VOI, Lime and Share Now to 5 Per population Per ‘000 broaden the city’s micro-mobility offering 0

Source: Euromonitor from US Environmental Protection © Euromonitor International Agency/European Environmental Agency/national statistics 2 Electric and alternative fuel mobility What is electric and alternative fuel mobility?

Electric and alternative fuel mobility refers cars running fully or partially on alternative fuels such as electricity and hydrogen. Sustainability Affordability Restrictions

. CO2 emissions from . Between 2010-2020, . In 2020, 98% of all new transport grew by 33% lithium-ion pack prices fell passenger car over 2000-2020 from USD1,100/KWh to registrations were either USD137/KWh diesel or petrol . Electric cars can reduce CO2 emissions in cities, . More competition in the . More restrictions placed especially if the electricity market is helping to on diesel and petrol cars is derived from renewable reduce electric car prices in cities is incentivising sources. people to make the transition 16 Car Registrations, 2010-2040 120,000

Nearly 9 in 10 new car 100,000

registrations to be 80,000 electric by 2040 60,000 ‘000 . In 2020, just 1.3% of all new vehicle registrations were electric across 45 40,000 major markets

. By 2040, 90% of all new vehicle 20,000 registrations will be electric

0 2010 2020 2030 2040

Electric Car Registrations Non-Electric Car Registrations

90%

90% of all new electric 80%

care registrations will be 70% BEVs in 2040 60% 50% Share . Battery electric vehicles (BEVs) will be 40% the fastest growing category among 30% electric vehicles 20% . While only making up less than 20% of all electric car registration in 2015, by 10% 2040, BEVs will account for 90% of all 0% electric car registrations 2015 2020 2025 2030 2035 2040 Battery Electric Car (BEV) Hybrid Electric Car (HEV) Plug-in Hybrid Electric Car (PHEV)

1,000,000

Only 3 in 10 stations 800,000 provide fast charging 600,000 Number . In 2020, only 30% of electric charging

stations were fast (charging speed of 400,000 more than 22kW)

. Charging station availability will 200,000 influence the future electric car adoption by consumers and businesses 0 2014 2020

Fast Slow

Case study: BYD

400,000 . BYD is aiming to delve into the low to mid market and take advantage of state

subsidies for vehicles under 300,000 Number yuan 200,000 . In 2021 BYD introduced ‘Blade Batteries’, a new breakthrough that makes traditional Lithium ion phosphate batteries safer and able to handle higher

energy densities 0 2011 2020

Source: Euromonitor from Trade Sources and National Statistics 3 Connected cars 21 What are connected cars?

Connected vehicles embodies a field of technology that allows vehicles to communicate with each other and the wider environment via the internet.

. Between 2000-2020 the . In 2020, 76% of the . Government mandates number of internet users world’s households and regulations are grew to 1024% to 4.1 possessed a smartphone pushing the car industry billion to incorporate more . Consumers are becoming safety features . Internet access underpins more tech-savvy and are the rollout of connected demanding more . E-call and Electronic cars connectivity solutions in Stability Control are the car examples of government mandates for greater safety 23

Low-mid market Partnerships

Increasing penetration of connected car More partnerships between tech and solutions in the low to mid market segment automakers to take advantage of synergies

ADAS Insurance policies

A greater push for more safety will make Telematics data can be used to provide advanced driving assistance even more more data on driving habits which can then important be used for personalised insurance policies

Google Assistant by Google Siri by Apple Alexa by Amazon.com Case study: Ford and Bixby by Samsung Electronics Cortana by Microsoft Google Alice by Yandex AliGenie by Alibaba Duer by Baidu . In 2021, Ford and Google formed a 6- Blackberry Assistant by BlackBerry XIaowei by Tencent year alliance, starting in 2023 which will 0 20 40 60 see all Ford and Lincoln vehicle being % of respondents equipped with Android Google apps and Q: Which of the following virtual assistant platforms to do you use? Select all that apply. services built in Source: Euromonitor International Digital Consumer Survey . The two firms will create a collaborative Ford Sales by Vehicle Type, 2011-2020 group, Team Upshift which will be 6.0 developing projects based on new retail 4.0 experiences Million 2.0

0.0 2011 2020

Passenger Car Sales Non-passenger car sales Source: Euromonitor from Trade Sources and National Statistics 25 Q: Please select all statements that best fit your beliefs related to digital security. N=20,203

Attitudes and Perceptions to Cyber Security, 2020

I believe all companies are vulnerable to 52% feel companies are hacks and cyberattacks I would like to exercise more control over my vulnerable to cyber digital security I believe most companies handle sensitive attacks personal data responsibly I find it overwhelming to manage the security of my digital life . Companies will need to improve virus I believe businesses, not governments, are security if people are to have greater best equipped to protect me digitally confidence in connected car I would rather trust one company with my technologies digital security needs

. 52% of global respondents as according I would prefer to spread my digital security needs across more than one company to Euromonitor’s mobility survey feel companies are vulnerable to None of the above cyberattacks 0 20 40 60 % © Euromonitor International Source: Euromonitor from the Mobility Survey 2021 26 Q: Please select all statements that best fit your beliefs related to digital data and personal information N=20,203 Attitudes and Perceptions to Data Privacy, 2020

I believe companies should not be able to sell my personal data to a third-party 55% are concerned I believe companies I interact with should manage my data responsibly I am concerned with the amount of personal about data being sold to information companies know about me I feel that companies should be more third-parties transparent in terms of how data is sold I would like to exercise control over how companies leverage personal data . Data privacy is important to users who I believe companies I interact with should may feel sensitive data may be passed manage my dependent’s data responsibly I believe companies should collect data on to third parties anonymously I feel that companies should provide more . Around 55% of global respondents feel value in exchange for my data that personal data should not be sold to I feel in control of my personal information third parties None of the above

0 20 40 60 % © Euromonitor International Source: Euromonitor from the Mobility Survey 2021 27

Automotive Industry's Costs in Selected Categories, 2015-2020

Electrical Equipment for Engines and Vehicles +3.2% Connected cars to Research and Development +13.8%

Electronic Components, Valves and Tubes transform automotive -0.2%

Computer and Related Services industry’s supply chain +16.3% Television and Radio Receivers, Sound and . Stricter safety standards drive Video Recording Devices -11.5% expenditure on electronic components Telecommunications +1.0% Total Costs: +2.2% over 2015- . Connected cars will transform supply Computers and Office Machinery +12.9% 2020 chains Mobile Phones, Radio Transmitters and +18.3% . Telecommunication and cloud Cameras computing services providers will 0 10,000 20,000 30,000 40,000 50,000 60,000 USD million benefit 2020 2015

5G internet will be crucial for connected cars

Best Positioned Sectors to Adopt Internet of Things Solutions Industry’s Financial Investments Energy, Utilities and Recycling sophistication stance in innovations Finance and Insurance

Transport and Communications Higher Manufacturing higher profitability production provides Business Services value-added. more resources Measures Retail and Wholesale for current innovations. Construction and Real Estate Extensive expenditu business-to- re on Personal and Recreational Services business ties. Higher computer Government, Health and Education concentratio and ICT n in industry services. Hotels and Restaurants creates Higher more Primary Materials engagement incentives to in exports. innovate. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 Index, max score = 1.0

Countries with 5G internet

Legend Title 5G networks launched 5G technology deployed Investment in 5G technology

Source: Global Mobile Suppliers Association

Case study: Verizon and Amazon

. In November 2020 LG, together with startups Renovo and Savari, started testing connected vehicles in multiple US cities Source: Verizon . The technology was based on Verizon’s 5G network, which was used to transfer data from cars to servers . Amazon’s AWS service was applied to help store and analyse the data flows

Source: Amazon AWS

4 Autonomous vehicles What are autonomous vehicles?

Autonomous vehicles are vehicles capable of sensing environment and operating without human intervention. 33

Global Semi-autonomous Passenger Car Sales, 2015-2020

2020

60% of new cars had 2019

semi-autonomous 2018 driving equipment 2017

. Majority of cars have Level 2 2016 autonomous equipment 2015 . Emerging markets drive demand for Level 1 equipment 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 Level 1 Level 2 Level 3 . Penetration of more advanced Level 3 Source: Marklines.com technologies remains limited Level 1: The system assists with either acceleration/deceleration or steering operations. Level 2: The system assists with both acceleration/deceleration and steering operations. Level 3: Under specific circumstances and when parking, the system automatically controls acceleration/deceleration and steering operations.

Consumer Attitudes Towards Autonomous Vehicles in Top 10 Consumers are open to New Car Markets, 2020 India autonomous vehicles, Brazil South Korea

but safety concerns Canada need to be addressed Japan UK

France . 31% of consumers globally want to drive Germany autonomous vehicle USA

. Younger generation is more willing to China

drive autonomous vehicles 0% 10% 20% 30% 40% 50% % of total respondents . Consumers in emerging markets are more willing to drive autonomous I am looking forward to riding in an autonomous/self-driving car vehicles I am concerned about the safety of riding in an autonomous/self-driving car Source: Euromonitor International Mobility 2020 Survey

Top 5 B2B Costs of the Global Retail Industry, 2020 Automotive Industry's Spending on R&D in Selected Countries, 2019-2020

Business Services Global

Construction and Real Estate Japan

France Transport and Storage USA

Finance and Insurance Germany

Information and Communication China

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 0 100,000 200,000 300,000 400,000 USD million USD million 2020 2019

Case study: Ford

. In 2020 Ford announced it will postpone its autonomous vehicle programme until 2022 . The outbreak of COVID-19 pandemic prompted the company to rethink its investments and potential use of

autonomous vehicles Source: Ford Motor Co . This is predicted to delay the testing and production of fully autonomous vehicles by 2-3 years

Global Cost Structure, 2020

Post and Courier Services

Logistics Autonomous

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% vehicles could % of total costs Labour Costs Fuel Taxes Other reduce

Top Buyers of Logistics and Post and Courier Services, 2020 transportation

Construction and Real Estate costs per km Retail and Wholesale by up to 40% Government and Membership Organizations Food, Beverages and Tobacco Business Services

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 USD million

Online sales cover online car sales (new and used) through online platforms.

What future measures do you expect your business to introduce or adapt to prevent similar risks in the future: E- commerce/omni-channel distribution?

Automotive companies Apparel and personal accessories

plan investments in e- Beauty and personal care commerce Consumer electronics and appliances

Food and beverages . 42% of automotive companies plan to increase investments into e-commerce Automotive

. This helps to diversify sales risks and Household essentials improve consumer experience Technology

Packaging

0% 10% 20% 30% 40% 50% 60% % of total respondents Source: Euromonitor International Voice of the Industry COVID-19 October 2020 Survey © Euromonitor International ONLINE SALES 41 52% of consumers purchased a new car online

New Car Purchase by Online Channel in Selected Countries, Used Car Purchase by Online Channel in Selected Countries, 2021 2021

India China

China South Korea

South Korea India

UK Global

USA Mexico

Global Germany

Mexico France

France USA

Germany UK

Japan Japan

0% 10% 20% 30% 40% 50% 60% 70% 80% 0% 10% 20% 30% 40% 50% 60% 70%

On computer On smartphone On computer On smartphone Source: Euromonitor International Mobility 2021 Survey © Euromonitor International 42

Case study: Volvo

. In 2021 Volvo announced it plans to produce electric vehicles only by 2030 and sell them through online platform . The company will offer fixed prices for all consumers, adding more transparency to the process . Physical dealerships will also be involved in the process and help with logistics, delivery and service of cars Source: Volvocars.com car configurator

Turnover of Car Dealership Industry in Selected Car Dealership Industry's Concentration in Selected Countries, 2020 Countries, 2020

USA

Japan Germany

France France

Germany Japan

UK USA

Spain UK

Australia 0% 20% 40% 60% 80% 100% % of total turnover 0 100,000 200,000 300,000 400,000 500,000 USD million Top 5 Companies Other

Consumer experience

Operating Geographic costs outreach

Key takeaways

Connected cars will transform transportation ecosystem by improving safety and reducing transportation costs COVID-19 pandemic is forecast to delay the mass production of autonomous vehicles until 2025 Developing markets will drive the growth of the global shared mobility market thanks to rising incomes and improving internet access Battery electric vehicles (BEVs) is expected to be the fastest growing electric vehicles category through to 2040 compared to PHEVs and HEVs Automotive companies are forecast to invest into online sales

Justinas Liuima, Senior Consultant Fransua Razvadauskas, Consultant

[email protected] [email protected]

@JLiuima @FRazvadauskas https://www.linkedin.com/in/justinas-Liuima/ https://www.linkedin.com/in/fransua-vytautas-razvadauskas/