JANUARY 11, 2018
The Great Mobility Tech Race
Winning the battle for future profits
Research Highlights

Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
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Executive summary
Auto industry is facing unprecedented change; in
technology, society and regulatory trends
Automotive is being re-shaped by shifts towards
electrification, self-driving vehicles and shared mobility
This level of change is poised to have a significant effect on
the vehicle and mobility market...
...but also on the players in the industry and their
profitability
Value creation is likely to shift away from traditional OEMs
and move more towards suppliers
And, there is a new set of technology players and profit
pools that emerge driving new value in the space

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Three major trends will
converge over the next 10-
15 years, profoundly
changing the automotive
industry

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SLIDESHAREProfitPools_mediapresentationdeckFINAL.pptx
The auto industry faces never-before seen change
Technological
Autonomous
driving
Connectivity
Social
Urbanization
New way of
working
Sharing
Regulatory
City regulation
Emission standardsIntegrated view necessary
to assess implications
Electrification

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SLIDESHAREProfitPools_mediapresentationdeckFINAL.pptx
Key change drivers reinforce each other—with large implications for the industry
Share of on-demand
Revenue pools
Profit pools
Share of EVsBattery costs
Car sales volume
Margin development
TCO EV vs. ICE
EV adoption curve
AV adoption curve
Self-driving taxi TCO
(cost per km)
SD taxi adoption barrier
Industry trends
Margins of comparables
Energy prices
CO2 emissions
Gov. incentives & bans
SD taxi utilization
CAPEX requirements
AV technology costs
Share of AVs
Key drivers Outputs
Schematic

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108
104
10
13
5
66
22
1
46
5
30
41
91
Car sales volume will stall—bringing decades of growth
to an end
Source: BCG analysis
Vehicles for on-demand services New car salesTotal vehicle sales
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2020 20302010
First mass-
produced
car
Golden
20ies
Postwar
boom years
Oil
crisis
Chinese
market
opening up
Global
financial
crisis
Emergence of self-
driving, on-demand
mobility models
Today
New car sales
(Global, in M units)

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Electrification, self-driving cars, and on-demand shared
mobility offerings will change the face of the industry
Share of new car sales Share of new car sales Share of on-road passenger miles
Electrification will
become more prevalent
Self-driving cars will hit
our streets in
Shared mobility offerings
will gain acceptance
Source: BCG analysis
30%
14%
100%
1%
2035
100%
2030
100%
2025
100%
6%
2017
Electric vehicle (BEV)
Plug-in hybrid (PHEV)
Hybrid & mild hybrid (HEV)
Gasoline & diesel
11%
12%
6%
2025
100%
2%
2030
100%
2035
100%
5%1%
2017
100%
Human-driven cars
Personal self-driving cars (L4/5)
Self-driving taxis (L4/5)
18%
9%
100% 100%
2017
3% 4%
20352030
100%100%
2025
Personal car
On-demand
(from 2025 on: mainly self-driving)

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We looked at three scenarios for how the industry could
develop and focused on the most likely one
Source: BCG analysis
Conservative
Decrease 2% p.a.
Decrease 5% p.a. (2025–2035)
Hesitant
Gas down, electricity up (gas: $1.50/
gallon; electricity: 0.15 $/kWh)
Deployable for mass use in cities by
2027
Targets are relaxed
Worked out by 2027
Aggressive
Decrease 10% p.a.
Decrease 20% p.a. (2025–2035)
Rapid
Gas up, electricity down (gas: $3.50/
gallon; electricity: 0.10 $/kWh)
Deployable for mass use in cities by
2021
Targets are tightened
Worked out by 2021
Selected drivers
Battery costs
Autonomous Vehicle components
costs
Consumer EV adoption
Energy prices (gas, electricity)
Commercial deployment of
self-driving on-demand services
CO2 emissions regulation (e.g., CAFE)
AV legislative framework
Most likely
Decrease 5% p.a. – in line with
consensus estimates
Decrease 12% p.a. (2025–2035), in
line with similar technologies
Gradual - driven by steady
infrastructure expansion
Constant (gas: 2.50 $/gallon;
electricity: 0.12 $/kWh)
Deployable for mass use in cities by
2025
Currently expected regulation
Worked out by 2025
Modeled scenario

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Profit pools will grow in
areas where incumbents
do not possess
competitive advantages

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The mobility industry will continue to grow, but profit
pools will shift to new technology
380
60%
40%
2030
336
74%
26%
2025
303
83%
2035
+2.9% p.a.
17%
2017
226
99%
1%
Emerging profit pools (incl. AV & BEV component suppliers, BEV car sales, data & connectivity and on-demand mobility)
Classic profit pools (incl. classic component supply, ICE car sales, financing and aftermarket)
Profits, $billion
Revenues, $trillion
3.7 4.7 5.3 5.8
Source: BCG analysis
AV=autonomous vehicles; BEV=battery-powered electric vehicles; ICE=internal combustion engine

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< 0 < 01154247967
Today, the long-established car business is driving
industry profits
Profit pools – today (2017, in $B)
 $226 billion
~7% ~9%~5% < 0%~13% n/a < 0%~10%
Average profitability (RoS)
Emerging profit poolsTraditional profit pools
AV and BEV
components
Aftermarket
Data &
Connectivity
On-demand
mobility
'Classic'
components
New car sales
(BEV)
New car sales
(ICE & hybrids)
Financing
Source: BCG analysis

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But future growth takes place in fields in which auto
players do not possess competitive advantages
Profit pools - future (2035, in $B)
Emerging profit poolsTraditional profit pools
2017
AV and BEV
components
Aftermarket
Data &
Connectivity
On-demand
mobility
'Classic'
components
New car sales
(BEV)
New car sales
(ICE & hybrids)
Financing
 $380 billion
~8%~4% ~3%~13% ~14% ~10%~10%
Average profitability (RoS)
~6%
2035
70
(+3)
26
(+25)
60
(-19)
21
(+21)
66
(+12)
28
(+27)
76
(+76)
33
(+9)
Source: BCG analysis

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We expect a significant structural shift in profit pools
New-car sales stall after 2025 as on-demand models in cities pick up
New-car sales margins structurally decline with electrification and
higher share of fleet business
With growth of AV and BEV components, value creation shifts further
away from OEMs to suppliers
Aftermarket business negatively affected by switch to electrified
vehicles (EVs), but effect comes slowly
On-demand mobility explodes, as self-driving cars make services
affordable and convenient
New profit pools in data & connectivity emerge, taking off with self-
driving cars

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Substantial investments will be
necessary to unlock growth areas
They include
• AV technology
• Battery production capacity
• Charging infrastructure
• Self-driving taxi fleets

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4. Self-driving taxi fleet
Cumulated investment, in $B
>72M self-driving taxis produced
For reference:
$1,800B = 4.3% of cumulated
OEM car sales revenue
through 2035
3. Charging infrastructure
Cumulated investment, in $B
> 38M additional public charging
spots
For reference:
$130B = 40% of German Federal
Budget 2017
2. Battery prod. capacities
Cumulated investment, in $B
“57 additional Giga-factories”
For reference:
$220B = 13% of battery
supplier revenue through 2035
1. AV technology (R&D)
Cumulated investment, in $B
> 5,000 additional engineers
required
For reference:
$45B = 1.7% of cumulated OEMs
R&D expenses through 2035
45 220 130 1,800
AV and BEV
components
Aftermarket
Data and
connectivity
‘Classic’
components
New car sales
(BEV)
New car sales
(ICE and hybrids)
Financing
On-demand
mobility
Cumulated investment through 2030 Cumulated investment through 2035
Substantial industry wide investments required to unlock growth areas: >$900B
through 2030 (> $2.4T through 2035)
Source: BCG analysis

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OEMs face a ‘double whammy’ challenge: margins will
decline while growth areas require new investments
Source: BCG analysis
Simulated effect on OEM profitability in the medium-term
While profit goes down… ...Investments will need to go up
Ø OEM CAPEX/revenue
8.0%
6.8%
~ +1%pt
6.6%
~ -1%pt
Ø OEM RoS
5.5%
2017 20252017 2025

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searched for:
strong kid
Market landscape is
transforming, with new
tech players having good
chance to gain
momentum

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Shift in market structure expected
Mobility industry in the future
End userCities
Digital integrators
On-demand platforms
...
OEMs
Source: BCG analysis
Cities:
Emerge as new relevant players, with a
strong influence on future urban mobility
Digital integrators:
Tech giants natively integrate services—
and capture the customer interface
On-demand platforms:
Broker autonomous on-demand rides
OEMs:
Face stronger suppliers and risk losing the
customer interface
Suppliers:
Electronics and software become crucial—
newcomers find themselves in strong
positions
e.g., Bosch, Continental, Nvidia, LG, Delphi, ZF
e.g., VW BMW Daimler GM
Google Apple Tencent
Suppliers

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Large option space for industry players still exists
Traffic management and infrastructure integration
On-demand platform
On-demand fleet management (ops, financing)
Data and connectivity services
Autonomous driving software and data
HD maps
AV sensors and ECUs
EV batteries and components
EV charging infrastructure
Not exhaustive
Source: BCG analysis
Mobility
services
Auto
makers
Suppliers Cities

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Author team and regional experts Selected publications and research
Thomas Dauner
Senior partner
BCG Stuttgart
Carsten M. Schaetzberger
Partner
BCG Stuttgart
Nikolaus S. Lang
Senior partner
BCG Munich
Rolf Kilian
Senior partner
BCG Stuttgart
Andreas Jentzsch
Partner
BCG Munich
Thomas Palme
Principal
BCG Stuttgart
Michelle Andersen
Partner
BCG Detroit
Philipp Sadek
Associate
BCG Vienna
Davide Di Domenico
Partner
BCG Milan
The Reimagined Car: Shared,
Autonomous, and Electric
A report by BCG
December 2017
Connected Vehicles and the Road to
Revenue
An article by BCG
December 2017
Self-Driving Vehicles, Robo-Taxis, and the
Urban Mobility Revolution
A report by BCG and the World Economic Forum
July 2016
To request more information on this research,
please contact BCG-Info@bcg.com.
To request a media interview, please contact Eric
Gregoire at gregoire.eric@bcg.com.
To discuss the findings with a BCG expert, please
contact Irene Perzylo at perzylo.irene@bcg.com.
Making Autonomous Vehicles a Reality:
Lessons from Boston and Beyond
A report by BCG and the World Economic Forum
October 2017