KPMG recently published its 18th annual global automotive executive survey of 1,000 executives in more than 42 countries on the state of the industry. KPMG notes:
“This year’s results demonstrate more than ever that the car itself will certainly be an essential part of revenue but not the only major source – of all the links in the value chain, it is the auto companies that will have to develop new service-and data-driven business models together in one digital ecosystem, placing the customer at the center. At a glance, our stakeholder view on key trends below reveals that two fundamentally different mindsets and stakeholder groups are fighting for supremacy.
For the upstream players, the traditional automotive suppliers and OEMs, the product- and technology-centric business model has again caught up – powertrain technologies are higher on the agenda than connectivity and digitalization. For downstream players, on the other hand, last year’s #1 trend around connectivity and digitalization has been confirmed. This shows that executives seem to be torn between managing technological innovations around evolutionary and revolutionary powertrain technologies while jumping onto the bandwagon of grasping the next step in connectivity and digitalization – an extremely disruptive key trend.”
Battery EVs are this year’s number one key trend (it was number 9 in 2015), shown in the graphic below, followed by connectivity and digitalization and fuel-cell electric vehicles (FCEVs).
Execs are torn in between traditional combustion engines that will be technologically relevant, but socially inacceptable, especially diesel engines which are “meant to be dead.” KMPG notes:
“Ranking tenth on executives’ key trend agenda, downsizing the internal combustion engine (ICE) is by far no longer a crucial key trend compared to the highly rated electrification trends. OEMs see the importance in continuously managing the mainly evolutionary powertrain technology ICE, agreeing that revolutionary electric drivetrains still need time for implementation and cannot be easily integrated into existing platform concepts.
This leads to the question of how the market forecasts for drivetrain technologies will look like by 2023. Considering a demand oriented development, the share of alternative powertrains would increase from 4% in 2016 to only 7% in 2023 [shown in the figure below]. However, with the signalized strong influence on the market by regulation fulfilling the set CO2 goals, we believe developments are much more revolutionary and very likely to convert to a regulatory driven market with an e-mobility share of up to 30% of global automotive production by 2023. In this case it would be the first time in history that the absolute number of produced ICEs would significantly decrease.”
KPMG notes that even though battery electric mobility is ranked as the most significant key trend, the key issue with pure BEVs is “setting up a user-friendly charging infrastructure leading the majority (62%) of executives to believe that BEVs will fail.” However, 78% of executives believe FCEVs will be the “golden bullet of electric mobility” they believe these vehicles will solve the recharging and infrastructure issue BEVs face today. The refueling process can be done quickly at a traditional gas station, making recharging times of 25–45 minutes for BEVs seem unreasonable. However, this technology is far from market maturity, KPMG notes, and will bring new unsolved challenges like the cooling of hydrogen or the safe storage in a car.
KMPG notes that “both executives and consumers cling to traditional evolutionary powertrain technologies.” Over the next 5 years, 53% of executives are planning to highly invest in plug-in hybrids (PHEVs) and 52% in ICEs and full hybrids. However, looking at all powertrain solutions, there is only a 5% difference in distribution for high investment. With 36%, full hybrid electric vehicles are the consumers’ clear preference as their next car, while 21% of consumers would still buy a car with an internal combustion engine. These preferences are shown in the figure below.
KMPG notes, “Every third consumer absolutely or partly agrees with the hypothesis. This might show that the customer cannot yet let go of car ownership and will only tend towards shared economy mobility concepts (MaaS) when the cost and discomfort of a self-owned vehicle (discomfort of finding parking, traffic congestion, etc.) becomes significantly higher than the utility of car ownership.”
Other interesting tidbits from the survey include the following:
