Future of Mobility:
Trends and implications
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OFV Oslo | December 2017
2McKinsey & Company
Shifting mobility market and trends
Electrifying the future
Future of urban commercial mobility
Outlook for Europe
Agenda
3McKinsey & Company
For more than 2 years, the industry has been talking about disruptive trends
that have the potential to radically change the mobility industry
SOURCE: McKinsey Center for Future Mobility
4 disruptive technology-driven trends …
Electrification Connectivity
and IoT
Autonomous
driving
Diverse mobility
… radically changing
the mobility industry
▪ Shifting markets and
revenue pools
▪ Diffusion of advanced
technology
▪ Changes in mobility
behavior and new
business models
▪ Increasing investments
▪ New competition and
cooperation
4McKinsey & Company
Over the past 2 years, significant additional momentum has been built up
along all four disruptive trends, and continues to do soExamples
SOURCE: McKinsey Center for Future Mobility
From today… … to tomorrow
51% of models announced until
2021 will have xEV powertrains
3.5% of vehicles sold
have xEV powertrains
80% of the top 20 OEMs are
planning to have AV L4+ by 2025
1-2% of vehicles sold are
equipped with basic partial
automation (L2) technologies
16% of customers already reported
they would use shared mobility in
the future
<1% of passenger miles
travelled currently carried out
using shared mobility
Percentage of consumers ready to
change car brand for better
connectivity doubled in last 2 years
12% of cars equipped with
embedded connectivity, generating
revenues of less than $1.5 billion
Sustainable mobility
Autonomous driving
Shared mobility
Connectivity
5McKinsey & Company
Current and future annual global vehicle sales, millions
Driven by urbanization and macroeconomics, global vehicle
sales will continue to grow, although at a slower pace
4123
105
87
10
115
Fewer private
vehicles
Macro-
economic
growth
2015
Private
vehicles
2030
New
shared
vehicles
HIGH-
DISRUPTION
SCENARIO
SOURCE: McKinsey Center for Future Mobility
SHIFTING MARKETS AND REVENUE POOLS
6McKinsey & Company
20302016
With disruptive scenarios becoming more likely, the share of revenues from
disruptive business models could increase to 20-25% by 2030
Automotive revenues based on
consumer spend in 2016 and 2030
SOURCE: McKinsey Center for Future Mobility
"Disruption to personal mobility" scenario, USD bnShared mobility
One-time vehicle sales
(incl. xEV and AV)
Aftermarket
2,600
1,270
35
~ 6,600
1,325
Data-enabled services
(connectivity)1
250
840
3,800
~ 3,500
Disruptive
business
models
Traditional
business
models
1 revenues only, not comprising cost saving potentials
7McKinsey & Company
A more granular perspective on geographical areas and city archetypes
becomes ever more important due to differing growth rates
1 Vehicle sales revenue adjusted from consumer spend to reflect OEM addressable revenues; including removal of VAT, import tariffs, shipping costs, and dealer margin
2 Global CAGR of 4.6% across all geographies and city archetypes
3 Based on disruptive scenario, i.e. 80-90% ridesharing app adoption, 10x growth in rideshare vehicle miles traveled by 2030, 100% connectivity saturation by 2021, ~50% of vehicles sold
electrified by 2030
Traditional1 and new automotive revenues 2030 forecast2
7.8%
SOURCE: McKinsey Center for Future Mobility
Percent
6.8%25
Rest of World
China
18
Europe
22
11Rest of Asia
NAFTA25
22
Small towns
30
19Developing
suburban
cities
10
Developed
suburban cities
19
Developed
dense cities
Developing
dense cities4.0%
China
Except China
3.5%
Except dense cities
Dense cities
Revenue by geography2015 - 2030
CAGR2Revenue by city archetypes32015 - 2030
CAGR2
8McKinsey & Company
1 1076 Companies. Using selected keywords and sample startups, we were able to identify a set of similar companies according to text similarity algorithms (similarity to companies business
description) used by the Competitive Landscape Analytics (CLA) team. Companies used were pulled from Capital IQ and were filtered by year founded greater than 1990
2 Until September 2017
SOURCE: Start-up Investment Analytics (SILA); CapitalIQ; Pitchbook; McKinsey
SILA analysis identified strong acceleration of investment activities
with few big industry shaping moves and many small investments
0.8
110.9+
36.5
8.2
8.7
0.4
3.3
15.4
42.5
12.9
0.6
24.1
68.5
Total disclosed investment amount since 2010
USD bn
Average invest p.a., USD bn
2014-172Technology clusters1 2010-13
6x increase in average funding
from 2010-13 to 2014-17
Total 4.3 25.3
Vehicle leasing and
fleet management0.0 0.2
Backend and cyber
security0.4 0.9
Sensors/semi-
conductors1.8 1.5
Gesture/voice
recognition0.1 0.1
Electrification/energy
storage0.4 1.7
Telematics 0.4 0.4
Parking and mobility
optimization0.0 0.1
User interface
technologies0.6 3.5
Autonomous
solutions0.1 6.4
Sharing solutions 0.3 9.6
6
5
4
3
8
2
9
10
1
7
>USD 1bn<USD 1bn
Single transaction
Smart MobilityElectrification
Connectivity
5
1
2
7
8
3
4
9
10
6
Autonomous
171,248# Transactions
9McKinsey & Company
Shifting mobility market and trends
Electrifying the future
Future of urban commercial mobility
Outlook for Europe
Agenda
10McKinsey & Company
Short term, four key drivers will drive EV market dynamics
SOURCE: McKinsey Sustainable Mobility Initiative
E-MOBILITY TRENDS
▪ Vehicle sales projected to grow by ~2%
p.a. until 2030
▪ Oil prices could rise meaningfully within
next 10 years
1 | Macroeconomics
▪ CO2 targets, real driving
emissions changes, and
‘Dieselgate’ generates
headwinds for future
investments in diesel tech
▪ Local regulations on city
level as a driving force for
EV roll-out
Regulation
and incentives
▪ Battery prices could fall
between $100-190/kWh
for battery packs by 2020,
and continue to fall
▪ Charging infrastructure
rollout could accelerate in
key markets (US, EU,
China)
3 | Technology
▪ Up to ~50% of car buyers consider an
EV based on survey insights
▪ Top EV purchase barriers - price and
model variety - likely to dissipate
4 | Customer demand
E-mobility
industry
dynamics
2 |
11McKinsey & Company
Macroeconomic trends will help facilitate E-mobility…
SOURCE: McKinsey Global Growth Model, Federal Reserve Bank of St. Louis ; UN Population Division; IHS, McKinsey Sustainable Mobility Initiative
MACROECONOMICS
1 8 recession periods since 1947; occurrence every 8.5 years, last recession in 2009
2 Companies exiting the market, lower investment, potentially more OECD cooperation
Rising oil prices and declining battery
prices could put EVs at cost parity in
some scenarios by 2020-25
Trend through 2030
Oil prices could recover2 with
rising prices in the next 10 years
Implication on EVsMacroeconomics
EVs may be favored over conventional
vehicles in cities due to zero emissions
targets
Global urban population could
increase by ~1.1 bn between
2016-30
Urbanization
Robust and lean powertrain/EV
portfolio required to adapt quickly to
changing mobility trends and sustain
economic downturns
Global economies expected to
grow by 1.6-3.2% p.a. until 2030,
with 2 recessions1 (in the US)
expected through 2030
GDP growth
Oil price
1
Growth driven by urban and shared
mobility that favors EVs over
conventional cars
Despite shared mobility trends
global vehicle sales expected to
grow by 2% p.a. through 2030
Vehicle sales
12McKinsey & Company
CO2 regulation is a key factor for EV penetration
1 To ensure comparability, CO2 figures are cycle-adjusted and normed (to NEDC)
SIMPLIFIED
“World of today“
“Mix of powertrains“
“EV world“
Incre
ase in
reg
ula
tio
n o
f C
O2 g
/km
1
2015 2020 2025 2030
Corridor for potential CO2 regulation
CO2 g/km
130
121
144
95
~50
172166
96
107
68-78
180
150
100
50
Year
Regulation
corridor
~70
~80
Estimate
Communicated
Required powertrain portfolios
Until 100g CO2/km, a portfolio of
ICE, mild-hybrids, and less than 10%
electrification can meet targets
Below 100g CO2/km, a “portfolio
game” with equal importance of
ICE, PHEVs, and EVs can meet
regulations
Below 50g CO2/km, a portfolio mainly
consisting of EVs and PHEVs is
required
2
SOURCE: McKinsey Sustainable Mobility Team
DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK
13McKinsey & Company
540
599
500
100
300
1,000
900
800
0
400
600
200
700
201615
269
2010 11 14
-77%
12 13
140
642
2022E
800
1,000
227
SOURCE: IHS, Bloomberg, New Energy Finance, IEA report on GlobalEVOutlook2017, McKinsey Sustainable Mobility Team
Battery price declines transform into increased range for EVs
Weighted average battery pack price
and indicative ranges, $ per kWh
1.2
180
120
140
160
100
80
1.4
0.2
0
0.6
0.4
0.8
1.0
BEVs in the car parkMillion units
Weighted average range of BEVs in the car park, Miles
2118 1914 1715 2022E20162011 12 13
Projected1Actural <100 miles 100-200 miles ≥200 miles
1 US Department of Energy target in 2022
Biggest improvements in battery cost will be driven by technology jumps and scale effects
3
DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK
14McKinsey & CompanySOURCE: McKinsey Sustainable Mobility Initiative – 2016 Electrified Vehicle Consumer Surveys
Percentage of responses, US and Germany, 2016
Between almost 30 and 45% of vehicle buyers in the US and Germany
respectively consider an EV purchase today
4
ICE
models100 100 96 73
96 50 44 3
Germany
96 50 29 4
US
EV
models
(BEV +
PHEV)
Percentage of consumers that identify themselves at each purchase funnel stage
ConsiderationFamiliarityAwareness Purchase
DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK
15McKinsey & Company
In 2019/20, the number of available BEV models will increase
dramatically – this could become a tipping point in EV adoption
Source: IHS Markit Automotive; Press; McKinsey
1 Excluding Light Commercial vehicles (LCVs)
Announced new BEV models
A
B
C
D
E
Segment
Start of Production in…
2019 2020 2021 2022 2023 20242018
2020: new CO2 limits
12
5
15
1
4
1
2
4
1
3
1
2
3
1
3
4
4
6
3
2
4
3
2
3
1
2
2
3
Produced
in 2017
E-MOBILITY MARKET OUTLOOK
16McKinsey & Company
…it may come faster and be more far-reaching than anticipated
SOURCE: Tony Seba
TECHNOLOGICAL PARADIGM CHANGES OFTEN OCCUR VERY RAPIDLY
No horsesLots of horses, one lonely car
5th Avenue, NYC
Exponential technological progress combined with disruptive social dynamics
(“tipping points“ in consumer behavior) make forecasting speed and magnitude
of change very difficult
1900 1913
E-MOBILITY ECOSYSTEM AND VALUE CHAIN UNBOUND
17McKinsey & Company
Shifting mobility market and trends
Electrifying the future
Future of urban commercial mobility
Outlook for Europe
Agenda
18McKinsey & Company
Commercial vehicles contribute more than their
fair share of emissions vs private vehicles%
London
7092
8~30
China (nationwide)1
85
30
15
Car parc2 NOx 3
~70
SOURCE: London Atmospheric Emissions Inventory, France Ministry of Environment, KVA, China Ministry of Environmental Protection
1 NOx emissions in urban areas in China are expected to have slightly lower than 70% contribution, mainly due to access restriction
2 London 2015, China 2014 3 London 2013, China 2014 4 EURO6 standard
Commercial vehicle
Passenger vehicle + others
CVs also contribute a much higher impact on overall congestion due to:
• Longer idling time
• Slower acceleration
• Slower average speeds
• Frequent stops and starts
• Frequent blocking of lanes and traffic
Due to two primary characteristics
Commercial vehicles on
average travel 1.5 to 2
times more miles than
passenger vehicles
Higher
utilization
Commercial vehicles
consume more fuel than
passenger vehicles
▪ CV : 0.1~0.5 liter per km
▪ PV : ~0.1 liter per km
Higher fuel
consumption
19McKinsey & Company
Increased freight volume and instant and same-day deliveries are likely to
lower utilisation of vehicles even further
SOURCE: McKinsey “Future of Last Mile” customer survey conducted in US, China, Germany (N=4,700)
Instant and same day deliveries are soaring
▪ Increasing freight volumes and expectations on service levels from
consumers are exacerbating the issue
▪ Instant and Same-day deliveries fragment delivery networks,
creating a system with lower utilization of vehicles, many of which
are already operating on less than truckload (LTL) capacity
% Share of B2C delivery
market, number of parcels
20252016
<1
+43% p.a.
~25
Same-Day
Instant
2015
+40%
2045
Freight volumes are growing
Freight volume in U.S. urban areas
20McKinsey & Company
▪ Autonomous LCVs
▪ Bike delivery
▪ Night delivery
▪ Combining passenger
and parcel delivery
▪ Route optimization
▪ Load-pooling/
Crowdsourcing
▪ Electric vehicles
▪ Drones
▪ Droids
▪ Urban consolidation
center (UCC)
▪ Warehouse
logistics
▪ Order grouping
(e.g., Amazon)
▪ Return
management
▪ On–demand
printing (reducing
inventory)
▪ Dynamic hand
delivery
▪ Trunk delivery
▪ Click & collect
▪ Individual parcel boxes
▪ Parcel lockers
Evaluated 100s of solutions addressing different parts of the delivery
value chain - we identified 6 in particular that provide the most value
SuppliersWarehousing &
Sorting facilities
Transporting
vehicles
Delivery
destinations
Fixed locations
Dynamic locations
Autonomous ground vehicles
(AGVs) with lockers
2High impact
solutions
21McKinsey & Company
1 Large emissions reduction. Cost can be further reduced in areas with governmental regulation
2 Also possible for B2C in conjunction with other technologies
Each of those 6 solutions is aided by one or more of the mobility trends2Solution How mobility trends improve its outlook
Urban
consolidation
centers (UCCs)
▪ Better connectivity benefits route optimization and improves transparency to
customers
▪ Regulation of urban vehicles can improve attractiveness of UCCs
Electric vehicles
▪ Electrification of vehicles has benefited from falling battery costs
▪ Investments in EV charging infrastructure enables higher adoption rates
▪ More distributed renewable generation makes EV charging easier
Load-pooling
▪ Shared mobility companies like Uber and Lyft pioneered the concept that has
been adopted for freight load-pooling
▪ Connectivity allows for fast and simple delivery transactions via mobile devices
Night delivery
▪ Electrification of vehicles help manage noise pollution
▪ Better connectivity and navigation apps allow drivers to efficienctly execute their
routes at night
Autonomous
ground vehicles
(AGVs) with
lockers
▪ AVGs depend on advances in autonomous driving technology to become viable
▪ Electrification helps manage air pollution concerns given increase mileage
▪ Connectivity lets customers track their parcels and meet delivery windows
▪ E-commerce creates more demand for B2C deliveries, improving utilization
Parcel lockers▪ Public investments in locker infrastructure can accelerate adoption
▪ Connectivity makes accessing and picking up a parcel from a locker seamless
▪ E-commerce creates more demand for B2C deliveries, improving utilization
22McKinsey & Company
Integrated solutions create additional impactShare of total commercial
delivery in reference cityxx%
1 Emissions per parcel (or parcel volume equivalent for B2B)
Integrated solutions
Delivery cost, % # of vehicles, %Emission , %
Developing,
dense Parcel
lockers
Load-
pooling
Autonomous
ground vehicles Electric
vehicles
Night
deliveries
Urban
consolidation
centers
+ + + + +
-35%
-70%
-35%
3
23McKinsey & Company
Shifting mobility market and trends
Electrifying the future
Future of urban commercial mobility
Outlook for Europe
Agenda
24McKinsey & Company
We think mobility disruption in cities can happen along 3 major trajectories
SOURCE: McKinsey
Seamless
Mobility
Rapid change, system coordination
and deployment of mobility solutions
results in a radically different
mobility system
Private
Autonomy
Technology change accelerates
but social change is slow, resulting
in high uptake of EV/AV but within
current ownership models intact
Clean
and Shared
Despite technology readiness, AV
adoption remains very low while
EV and shared mobility
accelerate
Potential path for major
European cities
25McKinsey & Company
In dense developed cities: “seamless mobility”, based on multimodal
transport and true mobility as a service
SOURCE: McKinsey
26McKinsey & Company
Nearly half of the current global 20 EV capitals are located in Europe
Figure 1: Cumulative electric vehicle sales and 2016 sales share in electric vehicle capital cities
SOURCE: ICCT
64
224
68 767
3633
710
15
5
25
10
20
100
70
110
80
30
0
90
60
40
50
10
40
20
0
35
30
Electric vehicle sales through 2016 (000s)
Hangzhou
Qin
gdao
Beiji
ng
118
Schenzhen
Tia
njin
Shanghai
Am
ste
rdam
Berg
en
Paris
San J
ose
Tokyo
Los A
ngele
s
Utr
echt
Sto
ckholm
1
London
San F
rancis
co
6
New
York
1
Rotterd
am
-
Hague
Electric vehicle share of 2016 new sales
Oslo
7Taiy
uan
Share of 2016 sales, %Plug-in hybrid vehicles Battery electric vehicles
China Europe Japan US
The EV landscape in Europe demonstrates the power of
regulatory environments to spur vehicle electrification
27McKinsey & Company
However, out of the top 25 cities with the highest forward looking EV
intensity only 6 are in Europe, and China looks to dominate
SOURCE: IEA Global EV Outlook, National and City Statistics, The International Council on Clean Transportation, City Scope Database, Siemens Green City Index, California New
Car Dealers Association - California Auto Outlook, SMMT - EV & AFV Registrations, The Middle Ground – Electric Vehicles Singapore
Adoption index, #
Index, scale 1-100
NOTE: Modeled only for data available so far (as per previous page)
Country
47.7
50.7
47.9
49.8
49.8
50.2
48.8
50.5
49.7
46.6
47.7
49.3
53.4
51.9
54.4
52.0
50.9
52.6
52.9
51.9
52.7
54.7
59.9
64.1
50.9
Hong Kong SAR, China
Beijing
London
Denver
Copenhagen
Los Angeles
San Francisco
Shenzhen
Shanghai
Wuhan
Seattle
Paris
Hangzhou
Portland (OR)
Tianjin
Oslo
Guangzhou
Seoul
San Jose (USA)
New York
Chengdu
Tel Aviv-Jaffa
Boston
Washington, D.C.
San Diego
City’s ability to
act
City’s motiv-
ation to actCity
Demographics
& car pool
4th3rd
2nd1stQuartile:
EXAMPLE: EV ADOPTION (MID-SIZE CAR)
Insights
▪ China and USA together
make up over 2/3 of the
top-25 list
▪ USA leading with 10,
followed by China with 9
and Europe with 4 cities
▪ Tel Aviv and Seoul only
cities not falling into these
3 regional buckets
▪ Oslo and Hong Kong
clearly leading the index
▪ Oslo with >10% difference
to the number 3 city
▪ Cities in developing
countries generally fall
short in the category
demographics and carpool
but often show a strong
motivation to act due to
heavy pollution – vice
versa in developed
countries
28McKinsey & Company
Cities are taking ambitious steps to reduce the reliance on
individual cars (1/2)
SOURCE: Press search; expert interviews; team analysis
Helsinki
Paris
Norway
Focus/description
▪ Launched a program with the aim at making personal cars irrelevant by 2025 by having
a comprehensive, point to point, "mobility on demand" system focused on a high user
convenience (purchase mobility in real time, from their smartphones, and minimizing
waiting times)
▪ Helsinki expects a flood of new residents over the next few decades, but the more people
come, the fewer cars will be allowed on city streets. In a new plan, the city lays out a
design that will transform car-dependent suburbs into dense, walkable
communities linked to the city center by fast-moving public transit
▪ The mayor of Paris has called for diesel cars to be banned from the French capital
by 2020 as part of plans to reduce pollution. Additionally, the Mayor wants more
pedestrian-only areas and a doubling of cycle lanes. Only 40% of Parisians own cars
today, down from 60% in 2021
▪ Last year, when smog levels spiked in Paris, the city briefly banned cars with even-
numbered plates. Now, in the city center, people who don't live in local neighborhoods
won't be able to drive in on weekends, and that rule could soon roll out to the whole week.
Recently implemented drastic measures against cars: 3x higher price for street
parking, free parking from 8 pm instead of 7 pm, ban of free parking on Saturday,
increased price of car impound by 35%
▪ Expected to become the first country where one in every 100 cars is purely electric.
This results from the Norwegian Parliament's incentives to get people off fossil fuel
(e.g. no tax for plug-in vehicles)
▪ The smoggy city of Milan is testing a new way to keep cars out of the city center: If
commuters leave their vehicles at home, they'll get free public transit vouchers. An
Internet-connected box on the dashboard keeps track of a car's location, so no one can
cheat and drive to work
Milan
29McKinsey & Company
Cities are taking ambitious steps to reduce the reliance on
individual cars (2/2)
SOURCE: Press search; expert interviews; team analysis
Focus/description
▪ Developing a prototype for an integrated Personal Mobility smartphone platform:
the SMILE program (Smart Mobility Information and ticketing system leading the way for
Effective e-mobility services). The app integrates diverse mobility offerings into one option
taking into account the customer's needs
Vienna
▪ Forty years ago, traffic was as bad in Copenhagen as any other large city. Now,
over half of the city's population bikes to work every day. Car-free zones have
slowly spread since then, resulting in one of the lowest rates of car ownership in Europe.
Transport authorities created a network of bicycle lanes throughout the city, and bicycle
super highways to reduce traveling time and safety. In addition the city implemented a
new bike sharing system to foster the use of bicycles from door to door
Copen-
hagen
▪ Madrid has already banned most traffic from certain city streets, and has expanded
the car-free zone to more than a square mile, in which non-neighborhood residents will
be fined $100. In the next five years, 24 of the city's busiest streets will be redesigned
for walking, not driving. Currently, the most polluting cars in the city have to pay
have to pay more to park
Madrid
▪ Though Hamburg isn't planning to ban cars from its city center, the city is making it
easier and easier not to drive, with plans for a new "green network" connecting parks
across the city. The city is also covering up sections of the infamously crowded A7
autobahn with green spaces
Hamburg
▪ Together with national and local incentives, taxis and delivery trucks can get up to
€10,000 in incentives for xEV purchases; Schiphol has installed fast chargers for taxis
▪ Though the registration tax incentive in the Netherlands has ended, Amsterdam has
strong non-monetary incentives in the form of parking. xEV owners get access to
electrified parking spaces, whereas new ICE owners can wait up to 10 years to get an on-
street parking space
Amsterdam