Nearly half of the world’s drivers are interested in autonomous driving, 65% customers in India would like to buy electric car, etc are some of the interesting findings of Germany-based Roland Berger’s second Automotive Disruption Radar, a global auto industry tracker.
When it comes to putting new mobility concepts into practice, the Netherlands tops a comparative ranking of countries worldwide. The country has addressed auto industry’s key issues such as shared mobility, autonomous driving, digitisation, e-mobility and, above all, both the regulatory framework and the infrastructure that enable such innovations, according to the second Automotive Disruption Radar (ADR), in which Roland Berger regularly investigates the automotive industry’s transition to a forward-thinking mobility service provider. As part of ADR, around 11,000 consumers were surveyed in eleven countries: China, Germany, France, the UK, India, Italy, Japan, the Netherlands, Singapore, South Korea and the US.
While the Netherlands has kept its top position in the rankings, China moved to second place - the only major automotive market represented in the top 3. Singapore follows at number three position. Other major automotive markets, such as Germany, France, Japan or the US, are ranked in the middle or at the bottom. Major Western automotive markets will need to speed up implementation of existing strategies and technologies in order to minimise the risk of China taking the lead in autonomous driving.
Compared to the first ADR, the most obvious changes this time around affect customer interest, technology and regulation. In all three categories, Asian countries – namely China, Singapore and South Korea – are leading the way. Singapore, for example, has lowered the bureaucratic barriers to autonomous driving and launched experiments with self-driving tourist buses and driverless trucks. If these trials go well, the city-state could make a major breakthrough in innovative traffic concepts.
“The future belongs to autonomous driving - first and foremost in Asia. While countries like Singapore are stepping on the gas in the area of legislation, traditional automotive markets such as Germany are right now more preoccupied with damage limitation in the wake of the diesel scandal,” says Marcus Berret, head of Roland Berger's global Automotive Competence Center. ADR nevertheless shows that drivers themselves are very open to change: 45% of respondents worldwide expressed an interest in autonomous driving.
Open to e-vehicles, but they still too expensive
Drivers are clearly also open to new developments in e-mobility. Fully 35% of respondents worldwide can imagine buying an electric car as their next vehicle. Here again, Asia is out in front, with half of Asian respondents saying they would willingly buy an electric car. For example, 65% customers in India would be happy to ‘go electric’ when buying their next car, says ADR.
In individual countries, this figure actually rises as high as two thirds – compared to a figure of only 30% in Western Europe and a mere 15% of survey participants in the US. “These varying preferences are also reflected in the sales figures. The number of plug-in hybrids and electric cars sold in Asia in the first half of 2017 was almost twice as high as in Western Europe and two-and-a-half times as high as in the US,” notes Wilfried Aulbur, Managing Partner at Roland Berger India.
There is, however, one point on which consumers in all countries agree: Electric cars are still too expensive. The second most powerful argument against buying an electric car is the poor charging infrastructure. Once again, the only Western European country that leads the way is the Netherlands. “Although the sales figures for e-vehicles and plug-in hybrids have lately declined due to reduced subsidies, the country boasts an outstanding charging infrastructure. And that lays the foundation for a further increase in sales in the future,” explains Aulbur.
Regulatory framework: A boost to autonomous driving
China, too, occupies a leading position in e-mobility and car sharing. That is the reason why the country occupies second place in the overall ranking - with considerable development potential still in reserve. On top of this, Wolfgang Bernhart, Partner, Roland Berger, predicts that following on from e-mobility, China has every chance of becoming a leading market for autonomous driving, too. One essential driver of the development of autonomous driving is the legal and regulatory framework in place in individual countries. “On this score, China is in the fast lane, with plans to approve autonomous car models and new test circuits,” adds the automotive expert.
Germany continues to lag behind. True, the Federal Ministry of Transport’s Ethics Commission has now set out initial guidelines for self-driving cars. However, there is still no news on when individual types may be approved, even though – as in other countries – individual approvals will be granted for a first crop of ‘partially autonomous’ vehicles. “If Germany and other European countries don’t want to be left standing, the legislator must quickly support new traffic concepts and innovative mobility solutions. Only then can the market develop and grow accordingly,” says Marcus Berret.
Has Western Europe lost the race for future mobility?
In an analysis of 11 countries, ADR has named the Netherlands as the leading country for introducing autonomous vehicles. The only major automotive market to rank was China at second place, while other key markets are at best in the midfield. Especially with respect to regulation of autonomous vehicles, countries are quickly making significant progress in providing a legal framework for testing the new technology on public roads. For example, Singapore introduced a more flexible legal framework for approving automated vehicles on public roads, enabling the first commercialisation of ‘robocab’ business models.
The results of such tests are likely to be positive, as the customer survey of 11,000 people shows that 45% are interested in autonomous mobility services. This technology is sure to be ‘the next big thing’ in the automotive industry, and the race is on: markets that have strong customer demand, low regulatory hurdles, general technology readiness, and sufficient infrastructure will take the lead.
While Asian countries like Singapore, China, or South Korea are speeding up their activities, it looks as though mature Western markets – and German OEMs in particular – are busy protecting themselves as they manage the ‘Dieselgate’ and NOx emissions crisis.
As a result, there is a chance that China will become a leader in autonomous driving just as it did for EVs/PHEVs. Recently discussed diesel vehicle bans in Western European cities might be the right signal to shift OEMs towards electrified, autonomous mobility and maneuver the customer away from (diesel) combustion engines. Again, regulation would open the door to more sustainable mobility, and traditional OEMs would gain the trust of their customers by pushing for it.
Customers waiting for cost-competitive non-ICE mobility solutions
Current industry scandals, such as diesel emissions after-treatment (Dieselgate) and NOx emissions in city centers, are raising customer awareness of environmentally balanced mobility. In addition, the level of trust placed in the industry has suffered a major blow (especially in Western Europe). As a consequence, it is likely that customers will be more open to satisfying their mobility demand through new players, threatening traditional OEM business.
The 2nd edition of the ADR survey confirmed high customer demand and interest in electrified and autonomous mobility; this momentum is expected to continue.
As a result, 35% of all customers worldwide are considering buying an EV as their next vehicle, clearly led by Asian countries (India 65%, China 60% and South Korea 55%), while Western European countries show an average interest level. There is particularly low interest in the Netherlands (25%), driven mainly by reduced subsidies for EVs, which in turn caused a significant drop in EV/PHEV sales (from 5.1% to 1.5% sales share).
All other countries saw a significant increase in the sales share of EVs/PHEVs. In the first half of 2017, more than 220,000 units were sold. Although China remains the largest market in terms of total sales (some 180,000 units in the first half of 2017), the highest relative increases were in Germany (1.2% vs 0.7% sales share), Japan, and Italy (1.2% vs 0.5% each). EV/PHEV models' share of the total product portfolio increased from 11% to 12% in Western Europe and from 10% to 11% in the US.
Countries pushing for push ICE bans
In 2017, many countries took action specifically to ban conventional vehicles from the road. For example, the UK and France announced plans to prohibit ICE vehicles as of 2040. While these actions will not take effect until decades in the future, there are other initiatives already in place today that target diesel engines: Paris is planning to ban diesel vehicles by 2020, and currently prohibits vehicles built prior to 2001 from driving in the city on workdays. The Netherlands has 13 environmental zones, in which commercial vehicles built prior to 2001 are banned. In the cities of Utrecht and Rotterdam, the ban includes passenger vehicles, too.
Germany has also defined environmental zones; if diesel vehicles wish to obtain permanent access to these zones, they need to comply with EU3+DPF or at least EU4. However, these actions were not sufficient to meet NOx limits, and recent court decisions in France and Germany ordered cities to enforce compliance with the set limits; otherwise, a city-wide driving ban will be imposed. Observers expect further ICE regulations to take effect over the next 12 months, which will influence the indicator rating in the ADR. In addition to ongoing actions for restricting ICEs, governments have made moves towards enabling commercialisation of IL4+ vehicles.
While the US allows vehicle self-certification and thus has no regulatory roadblock for introducing (semi-)autonomous vehicles to the market, other nations are in the process of adapting existing laws. For example, Japan created a special zone near Haneda Airport for the first tests of driverless vehicles. The country also set approval criteria for road testing driverless vehicles. In Germany, an ethics commission provided a framework for defining a vehicle approval process. Singapore shows the most acceleration in activities: autonomous vehicle (AV) trials can now take place on public roads in Singapore, after the Road Traffic Act (RTA) was amended in February to give the Land Transport Authority (LTA) flexibility to keep pace with the rapidly evolving technology.
The LTA is now allowed to create new rules that can place time and space limits on the AV trials, set standards for the design of the AV equipment, and impose requirements to share data from the trials.
The regulatory framework can also exempt AVs, operators of AVs, and those conducting or participating in trials of AVs from existing RTA provisions that make a human driver responsible for the safe use of a motor vehicle while on a public road. Singapore wants to provide the flexibility needed to assess the appropriate regulatory response more quickly and limited these special rules to a five-year timeframe.
OEMs co-developing autonomous vehicle technology
During the past few years, several alliances were formed to develop technology and lobby for autonomous vehicles. In addition, the industry is investing more VC in mobility ($ 12.5 billion, +35%) and artificial intelligence ($ 1.9 billion, +21%) compared to last year. But it is not only external factors that are increasing; several factors within the industry have made progress over the last six months:
At the same time, the number of announcements concerning full test fleets and the realisation date of autonomous vehicles rose, too. Based on the identified increase in R&D efforts, it looks like industry players are pushing to carry out their announced activities.
The number of plug-in hybrids and electric cars sold in Asia in the first half of 2017 was almost twice as high as in Western Europe and two-and-a-half times as high as in the US.
- Wilfried Aulbur,
Managing Partner at Roland Berger India
The Automotive Disruption Radar evaluates 11 countries as they move towards a new paradigm of mobility: commercial, largescale introduction of autonomous driving. It has defined a set of 27 indicators along 5 dimensions:
As per second ADR, countries were ranked as follows:
According to ADR, India, ranked seventh, is driven mainly by high customer interest in all categories. But key enablers like technology infrastructure and EV/PHEV development are not sufficient, it says. Plans to push e-mobility in India have been announced, but not yet implemented.
Driverless car gains traction
ADR has identified certain acceleration in the trend towards autonomous mobility:
Article Courtesy: Roland Berger GmbH, a leading global consultancy firm