The Automotive Industry’s Road Ahead
Remember those long commutes stuck in traffic, dreaming of a better way? The automotive industry is at a similar crossroads right now, facing a revolution driven by consumer expectations, technology, and economic shifts.
This industry is experiencing a period of intense change. Environmental considerations, updated consumer preferences, technological breakthroughs, geopolitical factors, and the global economy are all driving this transformation.
A Resilient Market
The automotive sector has always shown a knack for bouncing back, even after tough economic times. This resilience is set to continue, with the market predicted to keep growing and innovating through 2035. The industry’s performance has historically mirrored Real GDP growth, especially in light vehicle sales, highlighting its close link to economic health.
With cars staying on the road longer than ever, replacement cycles are expected to pick up in developed countries.
Milestones of 100 million vehicle sales by 2028 and a global vehicle parc of 2 billion by 2030 are just the start.
The Rise of EVs
While the growth rate of electric vehicles (EVs) might see a temporary slowdown, they’re expected to overtake internal combustion engine (ICE) vehicles by 2036. This will be a major turning point for the automotive industry. Key drivers include advances in battery tech such as new solid-state batteries, which will lower battery prices further, extend battery life cycles, and environmental awareness.
This is where Chinese manufacturers like BYD, Geely, Chery, Changan, and SAIC are poised to play a lead role because they have strong EV portfolios.
Emerging Markets on the Move
The Indian automotive market is booming, boosting the global market significantly. Although not expected to surpass China in sales, India’s rapid growth is driving substantial manufacturing development. Emerging markets such as India and Indonesia are expected to be key contributors between 2025 and 2030.
Mexico, the Philippines, and Turkey will become significant growth drivers from 2030 to 2035. After 2035, Nigeria is predicted to lead the growth trend. A growing middle class and the Gen Z population will further fuel this growth.
Streamlining EV Platforms
The next seven years will see significant consolidation of EV platforms, with OEMs aiming to cut the number of platforms by over 60%. This approach, focusing on cost savings and flexibility, will allow companies like Volkswagen to have over 20 models per platform by 2030, while smaller companies may have 5-9 vehicles per platform. These flexible platforms, optimized for EV production, can handle hatchbacks, sedans, SUVs, Light Commercial Vehicles (LCVs), and pickups.
Revolutionizing Manufacturing
The automotive industry’s future lies in modularity and micro-factories, offering production flexibility and customization. This shift emphasizes the need for agility, sustainability, and rapid technological advancement. Modular factories that can produce a wide array of cars with more customization and using techniques like Gigacasting are on the horizon.
The Power of Connected Technology
Connected technology is set to revolutionize the automotive market. The total market for these technologies is projected to increase dramatically, driven by enhanced features and services. Smart tech, integrated through the Internet of Things (IoT), will promote an efficient, automated lifestyle, integrating cars with urban infrastructure for increased user convenience and safety. Future vehicles will feature over 300 connected features.
The Future is Autonomous
While Level 5 (L5) autonomous driving is still a ways off, advancements in Advanced Driver-Assistance Systems (ADAS) will quickly move vehicles from Level 2 to Level 2.5, and then to Levels 3 and 4. Commercial vehicles (CVs) are expected to move from Level 2 to Level 4 faster than passenger vehicles by 2030. The market for autonomous vehicles is expected to create a $10 trillion opportunity by 2035.
Other Key Trends:
- Multi-Cycle Service Providers: OEMs will now offer multi-cycle vehicle sales and integrated services that can be combined with energy, connectivity, and Vehicle-as-a-Service models.
- Chinese OEMs Lead: Chinese OEMs will be at the forefront of innovation, particularly in EV production and vehicle connectivity and autonomous tech.
- Global Sales & Collaboration: Increased partnerships will be essential for building market presence.
- Long-Lasting Batteries: Next-generation batteries will be able to outlast the cars they power.
- Efficiency and Cost Reduction in EVs: Focus will be on improving EV efficiency and lowering costs through advances like increased charging rates, higher voltage architectures, efficiency semiconductors, high-frequency motors, and integrated e-Powertrains.
- Hyper-Connected Tech Stacks: Future cars will have integrated tech stacks to build advanced automotive tech.
- SUVs Are Still Popular: The SUV segment is set to continue growing.
Conclusion
The future of the automotive industry holds the promise of not just solving daily issues but fundamentally changing how we approach mobility. The industry’s ability to overcome challenges, along with its adoption of electric and autonomous technologies, sets the stage for a future with countless possibilities.
