Shift to electric at full speed by 2030, but still hurdles on the road

• _{Total vehicle parc expected to shrink in Europe (-0.5% p.a.), while it further increases in US (+1.1%) and China (+3.9%) until 2035}
• _{Total connected vehicle parc will pass 50% mark in Europe by 2025}
• _{Shared-active (e.g. rental, subscription) expected to grow strongest in EU}
• _{EU and China leading e-mobility transformation with expected new car share of 17% and 19% by 2025}

Brussels, 5 November 2020 – The acceleration of consumer mobility preferences have rapidly shifted as a result of the COVID-19 pandemic, according to a new report from PwC’s Strategy& 2020 Global Digital Automotive report: Navigating through a post-pandemic world. With adjusted technology expectations and changing post-pandemic customer preferences, the 'CASE' dimension (connected car services, automated driving, smart mobility and electrification) is becoming increasingly important for the automotive industry's business models.

Connected and electric driving on the rise

The total vehicle parc expected to shrink in Europe (-0.5% p.a.) while growing in the US (+1.1% p.a.) and China (+3.9% p.a.) until 2035.

The report found that the total connected vehicle parc will pass the 50% mark in Europe by 2025; in the US as early as 2023 and in China latest by 2029. In terms of new vehicles, the proportion of new vehicles with basic connectivity is expected to reach 95% by the end of the year in Europe and the USA. Several regulatory requirements are driving basic connectivity in the EU and the US (both >85% penetration of new cars in 2020), while China is still at 44%.

In electric mobility, the EU and China are leading the transformation, with battery electric vehicles (BEVs) expected to account for 17% and 19% of new vehicle sales by 2025. The US will have a lower penetration of 5% by 2025 due to lower government support. Tightening CO2 emission targets in the EU and new national guidelines in China accelerate BEV penetration in these regions significantly faster than in the US. This difference in regional evolution of the vehicle parc is primarily due to three factors: mobility growth (highest in China), consumer preferences for shared mobility (lowest in US) and the average life of a vehicle until it is deposed (highest in Europe).

Patrick Boone, Partner at PwC Belgium said: “While the number of vehicles worldwide is still growing, the shift towards greener mobility is in full swing, particularly marked by the shift from conventional to electric powertrains. With the new federal coalition agreement, the outlines for our future mobility have been defined for making our vehicle park greener.  Although greening the vehicle park is one of the pillars of the Vivaldi parties' efforts to achieve the climate objectives, additional steps will be needed to achieve a real shift. Just think of sufficient road and charging infrastructure and the accessibility (and affordability) of alternative mobility solutions. If we want to relieve the pressure on the roads - and with it the climate - further flexibilisation of the labour market will also be needed, certainly in the light of more location-independent working as a result of the COVID-19 pandemic. Finally, investment in innovation is also necessary, as well as in those sectors where the COVID-19 crisis has exposed the areas where we may be too dependent on imports at the moment”.

No big bang for automated driving and shared mobility

The road to autonomous driving is taking longer than originally expected, with gradual improvements in hardware, software and infrastructure. In Europe, a 14% share of new vehicles equipped with Level 4/ Level 5 technology for automated driving is not on the horizon until 2035.

Due to COVID-19, consumers are seeking convenient and safe mobility options, which makes private modes regain importance. Still, shifts in individual mobility patterns are equally boosting shared mobility modes. According to the findings, the shared-active category (where the driver drives the vehicle him/herself e.g. shared car rental, shared car subscription) is expected to grow the strongest in EU (10% of total person kilometers by 2025), while shared-passive (where the driver becomes the passenger e.g. ride-hailing) is expected to grow significantly more in China (10% vs. 1-3% in US and EU).

“Before deploying autonomous passenger vehicles at scale, market players will need to push the next years for specific automated driving applications in domains such as transport, fleets and logistics or industrial areas to recover investments. Consumers’ mobility preferences are rapidly changing based on comfortability and technology. They prefer to use their own vehicle over shared mobility and public transportation as a result of COVID-19. Overall, seamless mobility solutions are still key for consumers. Though mobility preferences are changing, shared mobility providers can take steps to win back consumers, such as regular cleaning and disinfection. It’s paramount that the mobility industry quickly adapts to the new needs and expectations of consumers”, concludes Patrick Boone.

You will find the complete report here.