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Summary of "A Disruptive New Era of the Automotive Age"

Core Content

This report, titled Cars 2025, outlines the future of the automotive industry over the next decade, emphasizing the need for automakers to adapt to rapid technological changes. It identifies four key themes—Green, Safe, Convenient, and Affordable—that will drive the evolution of vehicles, alongside seven major megatrends expected to transform the industry.

Main Themes

1. Green

• The transportation sector accounts for 22% of global CO2 emissions.
• CO2 reduction targets are tightening globally, with major developed nations aiming to cut emissions by 30-40% by 2025.
• Electrified vehicles (EVs, PHEVs, HVs) are expected to represent 25% of global car sales by 2025, up from 5% in 2015.
• Internal Combustion Engines (ICEs) will still dominate 75% of global sales in 2025, but improvements in thermal efficiency (targeting 45-50% by 2025) will be critical for fuel efficiency.
• Fuel Cell Vehicles (FCVs) are seen as a potential "ultimate eco-car" but face challenges in hydrogen infrastructure and cost. The Japanese government aims for ¥2.2 million (US$18,000) FCV prices by 2025.

2. Safe

• Road accidents claim 500,000 lives and injure 7 million people annually.
• Autonomous driving is expected to enhance safety, especially with an aging global population (projected to be 10% over 65 by 2025).
• Preventive safety technologies (like automated braking and lane assist) will become standard before 2020.
• Level 4 automation (full self-driving) is anticipated by 2020, but regulatory and liability hurdles remain significant.

3. Convenient

• Urbanization will increase to 6 billion people by 2050, with 41 mega cities expected by 2030.
• Car utilization is currently only 3% in Japan, with 95% of time spent unused.
• Autonomous vehicles and car-sharing services are expected to reduce the need for personal car ownership and improve traffic efficiency.
• Google aims for Level 4 automation by 2017, and other companies are targeting 2020-2025 launches.

4. Affordable

• Global auto sales are expected to grow to 120 million units by 2025, with developing markets driving most of this growth.
• China and India are set to become major markets, with 35 million and 7.4 million vehicles respectively by 2025.
• High ownership costs and government restrictions (e.g., license plate fees in China) are influencing consumer behavior and market dynamics.
• Younger populations in emerging markets may favor shared mobility over car ownership due to cost and convenience.

Key Megatrends

1. Endless powertrain advancement

   • Electrified vehicles will account for 25% of global sales by 2025.
   • Fuel economy regulations are becoming more stringent, especially in the US and Europe.
   • California ZEV regulations will shift focus to PHEVs, EVs, and FCVs starting in 2018.

2. Autos on a severe diet

   • Weight reduction (50 kg per vehicle) is expected to cut CO2 emissions by 1g/km.
   • Aluminum and high-tensile steel will be key materials for reducing weight.
   • Carbon Fiber Reinforced Polymer (CFRP) may be used in the future, though it's currently expensive.

3. Autonomous driving on horizon

   • Level 4 automation is anticipated by 2020, but regulatory and liability issues remain.
   • Preventive safety tech will become standard before 2020.

4. Power shift to mega suppliers

   • Compliance with CO2 regulations will cost US$2,500 per vehicle.
   • Mega suppliers will play a growing role in the industry due to their advanced technology and cost-efficiency.

5. New entrants afoot

   • Tech companies like Google and Apple are entering the automotive space.
   • Entry barriers are being lowered by innovations in autonomous driving and EVs.

6. Connected cars and shared mobility

   • Connected cars will transform insurance and rental fleets by providing data for better risk assessment.
   • Car sharing could increase vehicle utilization and reduce the number of cars needed.

7. Shift to emerging markets

   • China and India are expected to see significant growth in vehicle ownership.
   • Affordable fuel economy technologies will be crucial for success in these markets.

Key Players and Outlook

• Toyota, Honda, Nissan, Hyundai, and Volkswagen are leading in FCV development.
• Denso, Delphi, Continental, and Bosch are key component makers in the powertrain and engine management sectors.
• Hydrogen infrastructure and cost reductions are essential for the widespread adoption of FCVs.
• Market penetration of FCVs depends on cost efficiency and availability of hydrogen stations.

Conclusion

The automotive industry is entering a disruptive era driven by technological innovation, environmental pressures, and changing consumer behavior. The convergence of green technologies, safety advancements, convenience through automation and shared mobility, and affordability in emerging markets will redefine the future of mobility. Mega suppliers, new entrants, and connected vehicle systems are poised to reshape the industry landscape, making the next decade a pivotal time for transformation and competition.