Auto Outlook 2042 – the Rise of Fully Autonomous Vehicles
Today, we are introducing our 2040 Automotive Model, available here, detailing our projections for electric vehicles, autonomous vehicles, and fleet services through 2040.
The global automotive industry is quickly approaching a transformation that should fully take shape by 2040. While 20 years doesn’t seem very far away, keep in mind that technology is advancing at an accelerating pace — the next 20 years of innovation will see changes equivalent to what we’ve seen over the last 50 years. We expect to see three major automotive themes emerge: 1) the transition to electric, 2) fully autonomous vehicles, and 3) a higher percentage of people relying on ride sharing services as their primary source of transportation. We believe these three themes will create enormous market opportunities. While some of the traditional auto players will capitalize on these emerging themes, the competitive landscape will change dramatically as more technology companies enter the space to bring these revolutionary technologies to market.
According to Bloomberg New Energy Finance, 84.0M new passenger cars and light commercial vehicles were sold globally in 2016, up ~5% y/y. Of all vehicles sold, 81.5M were internal-combustion engine (ICE) vehicles, 2.0M were hybrid, and 440K were electric. While electric vehicles only accounted for <1% of new vehicles shipped in 2016, this segment of the market has seen tremendous growth over the past 4 years, and we believe we are nearing an infection point for demand of electric vehicles. By 2033, we believe electric vehicles will surpass 50% of total market share. By 2040, we believe 86% (87.9M) of new cars sold will be electric vehicles; from 2020 – 2040 the electric category will experience an ~18% unit CAGR, while ICE vehicles will decline ~13% over that same time period.
Over the next 20 years, electric vehicles will become more affordable, but due to the advanced sensors, onboarding computing processors, and other components that will enable fully autonomous driving capabilities, we expect electric car ASPs to increase modestly. That said, in order for ICE and hybrid vehicles to compete, these categories will see prices steadily decline. In 2040, we believe the global passenger and light vehicle automobile market will represent a $3.8T annual market opportunity, up from $2.9T in 2016. The bulk of the growth will be driven by electric vehicle demand, which we anticipate to increase from $20B in 2016 to $3.4T in 2040, representing a ~18% CAGR.
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