The automotive industry is undergoing the most profound change in its history. Decarbonization, electrification, digital connectivity and a shift to sustainable fuels to power transit are changing the meaning of mobility. After a century of gas-powered vehicles, the entire industry is primed for reinvention, as it seeks to reflect the new era.
Cars are becoming electrified, connected and autonomous, and electric vehicles (EVs) integrated into new transit infrastructure. Today’s transport opportunities lie in creating efficient, sustainable, connected mobility solutions that enable people to seamlessly select from a portfolio of options, whether EVs, bicycles, e-bikes, ride-hailing, autonomous vehicles or more sustainable modes of public transport.
The world needs new mobility solutions
About 68% of the world’s population will live in urban centers by 2050, up from 55% in 2018, according to the United Nations. Increasing demand from rapidly growing urban populations, increasing pressure on global resources—along with pandemic-driven disruption of typical commuting patterns—are creating new opportunities in the mobility sector. At the same time, 197 countries have signed the Paris Agreement committing them to reducing global warming, and many have vowed to slash carbon emissions to net zero by 2050. To achieve the world’s sustainability goals over the coming decade, new mobility solutions will have to be in put in place.
Firstly, a dramatic acceleration in replacing combustion engines with electric-powered drivetrains is needed. Today, around 10 million EVs are on the road, with 40% in China and 30% in Europe. A number of countries have made enormous strides toward electrification, with Norway achieving 81 electric cars per 1,000 inhabitants, compared to 5.2 per 1,000 in the U.S.; over 70% of new car registrations in Norway are electric, compared to 10% in the U.K.
This shows the scale of opportunity for the mobility industry. The market for EVs will be a $46 trillion opportunity by 2050, according to the BloombergNEF (BNEF) Electric Vehicle Outlook 2021 report, and opportunities cover everything from battery manufacturing to designing and building EVs, to embedding charging infrastructure into urban networks.
However, genuine questions remain about whether the targets for sustainable, zero-emission mobility can be met. Some 58% of global passenger vehicle sales need to be zero-emission by 2030, according to BNEF, up from 7% in 2021, to hit the 2050 target. That means the global auto market will have to transition to electric vehicles as fast as the world leader, Norway, has done over the past 10 years.
Secondly, another part of the shift to zero emissions will be achieved through the expansion of two-, three- and even four-wheeled pedal-assisted e-bikes. According to BNEF’s EVO report, motorized bikes and trikes are well on their way to achieving net zero before 2050. Sales of electric two-wheeled vehicles rose 11% in 2020, as they increasingly become the personal urban transport mode of choice—especially in many Asian cities, from Beijing to Bangkok—and electric cargo bikes capable of carrying 250 kg are already used in many urban locations for short-distance deliveries. E-scooters, human-powered bicycles and other car alternatives are changing the way the urban landscape is traversed, while driving down carbon emissions.
How smarter cars make valuable connections
Thirdly, connectivity is also vital to meet the demand for greener transport in densely populated cities. Ensuring that traffic can move smoothly through urban areas while optimizing energy use will require the smart application of Big Data. Mobile mapping apps already gather data from road users’ smartphones to plot the quickest routes, and data emitted from connected cars is now being used to make traffic-light changes more efficient, redirect traffic away from hotspots and reduce the time spent looking for parking spaces.
Operational data from vehicles could become an important source of revenue for carmakers. McKinsey has calculated that a connected car processes up to 25 gigabytes of data every hour—the data equivalent of about 6,000 music tracks. Several startups are concentrating on what are expected to be high-margin mobility services fueled by vehicle data; just as social media and internet giants have monetized online data, there are huge opportunities to monetize vehicle data.
Lastly, the advent of autonomous vehicles, touted by supporters to become widespread after 2030, is a game changer. It is envisaged that self-driving vehicles will be hailed by a mobile app only when needed, reducing the number of cars on the road, pollution and congestion. Ride hailing of vehicles, autonomous or with a driver, is expected to transform the nature of car ownership, as the public transitions to a portfolio of more sustainable transport options that reimagines mobility as a service (MaaS). In May, German lawmakers agreed to allow some driverless vehicles on public roads—a first step toward enabling autonomous driving in Europe’s largest economy.
Looking toward the future
Around the world, mobility is being geared towards the goal of climate neutrality. EVs, e-bikes, ride-hailing, and autonomous vehicles are the key solutions that will define how to solve the transport challenges of an increasingly urban world that urgently needs to create a greener, more liveable environment. The auto industry must make the shift from motors to mobility to grasp the opportunities the new solutions offer.
