Learn more about market trends Millennials driving smart mobility

Millennials driving smart mobility

April 2019

When it comes to climate change, the younger generations are making their voices heard. Since cars currently account for a large part of carbon emissions, it is of keen interest to these generations to see cars move to electric power. At the same time, the pace of automobile electrification is increasing. In a world where the majority of cars sit idle 95% of the time and, if they are used, it is mostly by one occupant, cars are likely to become increasingly autonomous and car sharing more popular. To cater to tech-savvy generations like the millennials, cars are becoming connected and fun. Over the next decade, we are therefore likely to move from an auto-centric world to a mobility-centric world in which original equipment manufacturers (OEM) become autonomous mobility providers.

Pace of electric car adoption accelerating

In 2019, numerous electric vehicles are expected to be launched, offering improved driving range and new features. OEMs target an average electrification of 25% by 2025. Battery costs are rapidly falling, enabling manufacturers to make vehicle prices more attractive for consumers. The entire supply chain for batteries geared to electric vehicles is set to benefit from these developments, hence a rapid expansion of capacity should not be a concern. Neither should falling commodity prices, as expected demand far outpaces projected supply.

From clean vehicles to smart mobility

Despite incidents involving autonomous vehicles in test runs last year, we expect “robotaxis” to be launched in a limited  number of geographies in 2019 and such launches are likely to accelerate in the coming years. The road to autonomous vehicles is going to be in stages, moving from partial automation to full automation. Increasing safety standards are going to require technology hardware such as Lidar and HD map-based systems to be included in vehicles. Moreover, technological disruptors are going to create software utilizing significant advances in artificial intelligence. Credit Suisse expects 20% of cars to include “level 3”-and-above autonomous functions, i.e. conditional, high or full automation, by 2030. Yet premium OEMs are set to launch cars with level-3 features as early as 2020.

Ride-hailing or ride-sharing companies are expected to be early adopters of autonomous driving, as owning and managing a fleet of autonomous vehicles appears to be an attractive business model. Such fleets will require financial services for asset ownership, cleaning and charging, maintenance and repair, as well as an app provider. Monetizing time spent in autonomous vehicles by selling ads or services represents another significant opportunity. In this context, we expect current ride-on demand platforms, hardware/software integrators and potentially social media businesses to partner up.

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