How Europe plans to breeze into the mobility of the future
Data-based services and shared mobility facilities will account for a quarter of the industry’s turnover by 2030. As a result, software will make up 30% of the vehicle’s value, while electronic components will make up 25%. If the European auto industry wishes to remain successful, it needs to rethink its long-term strategy. A five-point plan has been drawn up to secure an advantage over competitors from China and the US.
Despite the ongoing discussion about customers losing faith in the industry and the rise of China: “Europe’s automotive industry is a success story and a world leader,” says Andreas Tschiesner, who leads McKinsey’s automotive consultancy work in Europe. Europeans make 70% of all their journeys by car, while the number of accidents has fallen by 40% since 2005. The automotive industry accounts for 7% of Europe’s GDP, directly and indirectly employs more than 13 billion people, and contributes around 6% of the EU15’s total tax revenue (EUR 410 billion). “But this top position is at risk – and with it, Europe’s prosperity. The rise of China, as well as the emergence of new business models, such as carsharing and self-driving taxis, means that companies need entirely different skills, other than ‘just’ producing excellent vehicles,” says Tschiesner.
Autonomous vehicles: EUR 1 billion added value per day
“Up to now, the success of the European automotive industry has been built on three pillars: customer focus, an emphasis on sustainability, and the finely balanced value chain,” explains Andreas Cornet, who heads up McKinsey’s German automotive and industrial consultancy services. “We need to carry these strengths over into the industry’s future – as radically improved customer focus, as truly sustainable mobility, and as a European ecosystem for mobility.” For instance, Europe should aim to make “Vision Zero” – no more fatalities resulting from traffic accidents on Europe’s streets – a reality by 2050. Autonomous driving could give up to 90% of the population – including disabled people, seniors, and teenagers – easy access to customized mobility for the first time.
Self-driving cars could, due to the extra time people would have to use in their vehicles, generate added value of EUR 1 billion per day. Cornet says: “The industry should also work towards achieving zero emissions by 2050 – not just reducing emissions from the vehicle itself, but also throughout the process chain of energy supply.” According to the study “Race 2050 – A Vision for the European Automotive Industry” by McKinsey, the key to achieving these ambitious goals lies in Europe’s unique strength: its diversity. With its domestic market of 500 million people, its trading and economic power, the world’s leading medium-sized companies, and its innovative flair, Europe could become an incubator for the mobility of the future. “The diversity of our forms of mobility and propulsion technology in particular is a real locational advantage,” explains Cornet. From cities with a low per capita income like Bucharest or Athens, to prosperous cities like Munich and metropolises like London and Paris, as well as important rural areas – all of these require different mobility solutions, from e-scooters and minibuses to self-driving taxis and hydrogen-powered cars. “Europe can export everything that works on the continent to the rest of the world,” says Cornet.
Five initiatives to secure future success
1. European “mobility valley” and changes to employment
Europe is home to 13 of the world’s 17 top universities for e-mobility research, four of the top 17 for autonomous driving, and eight of the top 19 for data-based services. At the same time, the automotive industry is investing more than EUR 50 billion in research and development every year. These efforts should be combined with a “mobility fund”, financed by private and public capital, to develop a “mobility valley”, using the US West Coast as a model – a strong network of world-class research, companies, start-ups, and capital investors. There should also be a project like this in place for the shift in employment: out of 3.4 million jobs in the automotive industry, more than a third – around 1.3 million – will be affected by the transition.
A total of 200,000 jobs – that’s 10% of jobs in European car production – will be cut because of automation and the transition to less work-intensive electric mobility. At the same time, there is a range of new jobs opening up in the industry and its related sectors, in software-based fields such as automated driving, data-based services, and mobility services. Tschiesner says: “These changes will happen gradually and can be carefully planned. This gives Europe the chance to work constructively with social partners to shape the transition.”forward.
2. Decarbonizing passenger and freight transport
In order to make traffic carbon neutral by 2050 at the latest, Europe’s industry will need to take into account the entire chain of energy use and supply. This also includes building the necessary infrastructure and securing the required raw materials. To achieve the goal of reducing CO2 emissions from cars and commercial vehicles by around a third by 2030, the annual sales volume of electrified cars, for example, will need to grow from the current figure of around 300,000 to 6.2 million.
“To ensure customers start switching to e-cars, around 3.6 million public charging stations will need to be set up by 2030 – today there’s barely more than 100,000,” warns Cornet. And to secure the required supply of green energy, up to 45,000 GWh will need to be generated every year from renewable energy sources – that equates to the output of 4,200 wind turbines in the North Sea.
3. New forms of cooperation
No company can take on a transition of these proportions alone. Establishing new forms of cooperation between car manufacturers will be essential. “Up to now, for instance, almost every car manufacturer has been working on its own development project for autonomous driving – which makes it difficult to achieve the necessary economies of scale,” says Cornet. For example, a collective data and software pool could be set up, in accordance with competition law, which all stakeholders could use as a basis for developing new products and services. This could become a tangible reality in a European test city for autonomous driving.
4. Regulatory forum for future mobility facilities
Future regulations – for emissions, vehicle safety, recycling, legal issues related to autonomous and networked driving, data protection – will not only affect the automotive industry, but also telecommunications companies, insurance providers, and energy suppliers. A common platform and a single point of contact in the EU Commission – an EU Commissioner for Mobility, for example – could initiate the necessary dialog.
5. Support for cities and districts
Europe’s cities have well-established structures, and each of them have specific requirements for future mobility services. Despite each city’s uniqueness, there could be a common set of standards developed and tested for mobility solutions, which would enable a rapid roll-out for similar city types and districts across Europe. Cities should work together with the industry to drive this standardization process
This article was first published in German by next-mobility.news.