2025: Berger report forecasts 40 percent hybrid, 10 percent EV penetration
Car sharing, computers and less auto sales key trends in 2025
In just the next 15 years, everything about the auto industry could change, and it might not be very good for the auto industry, particularly the US and European industries. This morning Neil Winton provides a fascinating summary of the “Automotive industry 2025″ study that Roland Berger, the Munich, Germany-based strategy consultancy is about the release.
And while batteries play an important role, other trends could have even greater impact in the auto industry.
Mostly, the report is focused on Europe, but many of the trends recognized could also have a big impact on the US as well. One of the biggest trends is related to one I’ve been following for some time. Gen Y is changing the perception of cars. For Gen Y it’s becoming much more about utility and much less about status. But it isn’t just utility, it’s cost-effective utility that matters.
Because of this utility, car sharing – even one hour car sharing – could be the most important trend in the auto market by 2025. Why own, insure, and park a car if renting one is much cheaper and just as effective as a utility for transportation? With leasing already poised to become the dominant form of car ownership in the future, why not just least the exact amount of time or mileage needed? Why pay for what you don’t need?
In Europe, the report suggests, this trend could decrease auto sales by 1 million vehicles per year as early as 2025, while creating new opportunities for the telco and energy industries to compete with automakers in this space.
OK. This is a hybrid-focused blog, so how do batteries fit in? The Berger Report estimates hybrid cars will achieve 40 percent penetration by 2025, while electric cars will hit 10 percent penetration. Yet, when it comes to the greatest gains in fuel economy, the battery might not be key.
Because of the advancement of computers, networked communications and software in the auto industry, the cars of the future might be very different than those of today. For example, they could be much smaller and much lighter, but because of new software and communication technologies, even safer than today’s vehicles.
Couple the above trend with Gen Y’s focus on cost-effective utility and entirely new business models become ever more possible, perhaps even unavoidable. Business models that don’t support the normal profit margin games played in today’s auto industry could be the key to success in 2025 and beyond.
If that’s not bad enough, Chinese and Indian auto sales are going to become the real engine of the world’s auto industry. “Within two replacement cycles of say eight to 10 years cars will be designed for China and India because these markets will be so much bigger,” notes the report.
And if the auto industry is going to be designed for these emerging markets, why not just build most cars in these emerging markets? Since Chinese banks are sitting on $3-1/2 trillion to invest, the Berger report suggests much of this money will be invested into the Chinese auto industry. That means world auto industry consolidation.
Of course, predicting the future is never easy, but many of these ideas in the Berger Report are based on trends already coming into fruition. Automotive industry game changers could come in a host of different directions, even multiple directions at the same time.
What seems clear to me, however, is that the US auto industry – vehicles made for the US and/or in the US – are not very inline with many of these trends. In fact, the US auto industry wants to build as many cars as possible with the highest pricing points possible. Unfortunately, this is exactly what the future appears not to want.