The new era of mobility—selling miles traveled instead of
cars—will bring about the greatest transformation since the dawn of
the automotive age
The automotive future will be different—though with some
noticeable similarities—as the convergence of disruptive
technologies, government policies and new business models usher in
a new era of multidimensional competition, says a new major
research initiative by IHS Markit (Nasdaq: INFO), a world leader in
critical information, analytics and solutions.
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Vehicle Miles Traveled - Light Duty
Vehicles in China, Europe, India and the United States (Baseline
Scenario). IHS Markit, "Reinventing the Wheel."
A shift from buying cars to buying “mobility” will be a driving
force of change in the automotive future, the study says. By 2040,
vehicle miles traveled (VMT) will have grown to an all-time high of
around 11 billion miles per year (a 65 percent increase since 2017)
in China, Europe, India and the United States—the key markets
examined for the study—and will keep growing. At the same time,
sales growth of new light-duty vehicles will slow
substantially.
The findings are part of Reinventing the Wheel, a major new
multi-client, scenarios-based research initiative by IHS Markit
that combines the industry-leading expertise of the company’s
energy, automotive and chemical teams to provide a
first-of-its-kind, system-wide analysis of the new reality of
transportation. The project focuses on the world’s largest
automotive markets: the United States, Europe and China. It also
covers India, a large and fast-growing market.
The competition between the internal combustion engine and
electric vehicles, the disruptive force of “mobility-as-a-service”
(MaaS)—such as ride hailing—and the much-anticipated emergence of
autonomous vehicles will lead to more profound changes in personal
transportation than experienced over the past century combined, the
study says.
“A great ‘automotive paradox’—where more travel via car than
ever, but fewer cars will be needed by individuals—will be a
defining quality of the new automotive future,” said Daniel Yergin,
IHS Markit vice chairman, Pulitzer Prize-winner and project
chairman. “The shift is just beginning. By 2040, the changes in
transportation will be accelerating in a way that will be visible
on roads and highways around the world. The pace and degree of this
dynamic shift will have significant implications for industry, for
public transportation systems and for how people get to work and
live their lives – and spend their money on transport.”
“We could very well be on the cusp of the greatest
transformation in personal transportation since the dawn of the
automotive age,” added Jim Burkhard, vice president, global energy
markets and mobility. “Understanding the implications of such a
transformation requires a broad perspective that goes beyond any
single industry or market.”
The continued emergence of mobility-as-a-service (MaaS)
providers will be among the most important and disruptive forces in
the future, the study says. The MaaS industry is expected to
purchase more than 10 million cars in the study’s key markets in
2040—compared to just 300,000 in 2017.
“Mobility service companies will be a prime driver of shifting
car sales from personal to fleet economics,” said Tom De
Vleesschauwer, transport and mobility practice leader, IHS Markit.
“Ride hailing has the potential to be so disruptive because it is
often the most convenient for consumers and can significantly
increase access to car transport, particularly in markets with low
car ownership rates.”
Oil’s monopoly as a transport fuel will erode, though it will
remain a major part of the automotive landscape, the study says.
Market share for cars primarily powered by gasoline and diesel will
still account for 62 percent of new cars in 2040 in the four major
key markets (down from 98 percent in 2016) with a total of 54
million new vehicle sales in 2040, according to the study’s
baseline scenario. In this scenario, global oil demand still rises
from 98 mbd today to 115 mbd in 2040 (the study also explores a
more radical scenario in which oil demand in 2040 is less than it
is today).
The dominance of the full internal combustion engine (ICE) will
slide away, the study says. ICE vehicles still comprise a majority
of new car sales in 2040—buoyed by sales of mild to full hybrids,
which still primarily rely on internal combustion engines. However,
cars powered solely by gasoline or diesel will have fallen below 50
percent of new car sales by 2031.
Higher fuel economy and emissions standards and the reduction in
gasoline’s share of new vehicle sales will lead to a decline in
aggregate gasoline demand in key markets during the 2020s, the
study says, even though overall oil demand will rise.
“Oil’s monopoly as a transport fuel will erode as a new era of
multidimensional competition takes hold—but it will remain a major
player,” Burkhard said. “Many of its advantages as a fuel, such as
its high energy density, will persist. And the size of the current
automotive ecosystem will moderate the pace of change.”
Electric vehicles (EVs)1 will account for more than 30 percent
of new cars sold in key automotive markets examined for the study
by 2040—up from just 1 percent of new car sales in 2016. A key
tipping point will be battery pack costs, which are expected to
decline to a price point in the 2030s that will make EVs cost
competitive with internal combustion engine vehicles, the study
says.
Autonomous vehicles are also expected to emerge as a significant
share of new vehicle sales after 2030, the study finds.
“It’s not only a matter of technology,” said Yergin. “Political,
regulatory, social and psychological barriers to adoption will also
need to be overcome.”
Mobility-as-a-service companies are expected to be among the key
adopters of electric and driverless cars with a shift towards
buying their own fleets as opposed to drivers providing their own
cars. The cheaper cost of electricity versus gasoline, easier
maintenance from fewer moving parts and the ability to utilize
centralized charging depots and networks for fleet-based
transportation are among the factors expected to contribute to
adoption of electric and autonomous vehicles for
“mobility-as-a-service.”
Reinventing the Wheel also examines the impacts of the new
automotive future on important industries such as chemicals and
electric power. For chemicals, changes to the automotive ecosystem
will deeply impact what is a major market for the industry, affect
the availability of feedstocks and have critical implications for
investments and competitive strategy.
“The move from ICEs to EVs offers one example of the big impacts
that will result from coming changes in the automotive industry,”
said Anthony Palmer, vice president, chemical consulting for IHS
Markit. “The growth of EVs as a share of new vehicle sales means
decreases in demand for chemicals and plastics materials
traditionally used in 'under-the-hood' applications, including
engineering plastics, that can withstand high temperatures, as well
as for commodity plastics, used in gasoline tanks. But the
transition to EVs also means new opportunities for chemical
companies, which are preparing for the changes by investing
significantly in future production for battery materials.”
The change in the use of liquid transportation fuels, as the
automotive industry moves toward EVs, will also affect the chemical
industry, Palmer said. “As the demand for gasoline and diesel fuel
used in light-duty vehicles weakens, more refinery products will be
available to serve as chemical feedstocks. Such a shift would
encourage investment in naphtha crackers in the growing Asian
demand centers, including China and India.”
For the power industry, greater adoption of EVs will nudge
electricity demand higher in the United States and Europe by 2040.
With U.S. and European on-grid electricity demand growth slowing
relative to historical rates, EVs provide an uplift to the
electricity market, the study says.
Though the coming decades will be a transformative period for
the automotive future, the sheer scale of the current automotive
ecosystem will serve as a moderating influence on the pace of
change, the study says.
“The automotive future will be defined by transformation unlike
anything we’ve seen since the dawn of the automotive age,” said Tom
De Vleesschauwer. “Still our analysis shows that there will be much
that looks familiar, even in 2040. The majority of new cars sold
and miles traveled will be in vehicles purchased for personal use.
And a large share of those will have internal combustion engines
that run on refined crude products. But the future of automotive
transport will be an era defined by multidimensional competition.
And the changes that future brings about will be profound and
permanent.”
About Reinventing the Wheel
Reinventing the Wheel is a major multi-client research
initiative that provides a first-of-its-kind, system-wide analysis
of the new reality of transportation and the potential implications
for the oil, gas, automotive, electric power and chemical
industries.
Chaired by Daniel Yergin, IHS Markit vice chairman and Pulitzer
Prize-winning author, Reinventing the Wheel combines the
industry-leading expertise from the chemical, automotive and energy
teams within IHS Markit. The project utilizes IHS Markit’s long
track record of scenarios development to envision content-rich
scenarios that encapsulate possible futures for cars and energy,
combined with comprehensive analytics and datasets based on the
modeling expertise of IHS Markit.
Reinventing the Wheel focuses on the world’s largest automotive
markets—the United States, Europe and China, as well as India—with
projections out to the year 2040.
Forthcoming research will assess the specific impacts,
investment implications and strategic choices for the automotive,
oil, gas, electric power and chemical industries.
The findings provided in this press release represent the
findings of the project’s baseline scenario, Rivalry.
Reinventing the Wheel also includes an accelerated scenario,
Autonomy which examines an increased pace of change exceeding the
baseline findings.
For more product information about Reinventing the Wheel, please
contact Kate Hardin (Energy), Kate.Hardin@ihsmarkit.com; Jabir
Khammal (Automotive) jabir.khammal@ihsmarkit.com; or Anthony Palmer
(Chemicals), Anthony.Palmer@ihsmarkit.com.
For media inquiries, please contact Jeff Marn
(Energy), Jeff.Marn@ihsmarkit.com; Michelle Culver (Automotive),
Michelle.Culver@ihsmarkit.com; or Melissa Manning (Chemicals),
Melissa.Manning@ihsmarkit.com.
About IHS Markit
(www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical
information, analytics and solutions for the major industries and
markets that drive economies worldwide. The company delivers
next-generation information, analytics and solutions to customers
in business, finance and government, improving their operational
efficiency and providing deep insights that lead to well-informed,
confident decisions. IHS Markit has more than 50,000 key business
and government customers, including 85 percent of the Fortune
Global 500 and the world’s leading financial institutions.
Headquartered in London, IHS Markit is committed to sustainable,
profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd and/or
its affiliates. All other company and product names may be
trademarks of their respective owners © 2017 IHS Markit Ltd. All
rights reserved.
________________1 Electric vehicles (EVs) are defined as both
plug-in hybrid electric vehicles and battery electric vehicles.
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