the future of mobility: implications for the energy sector...source: mckinsey automotive supplier...

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May 25, 2018

The Future of Mobility: Implications for the Energy Sector

World Energy Council Acapulco, Mexico

2 McKinsey & Company

Contents

State of the mobility industry

Scenarios of change

Opportunities of Oil & Gas players


Both automotive OEMs and supplier profits have rapidly recovered from the crisis and stabilized margins at 6-7%

1 Includes top 21 OEMs and top 75 suppliers 2 Numbers for 2017 still estimates

SOURCE: McKinsey automotive supplier profit pool, McKinsey automotive profit pool

STATE OF THE MOBILITY INDUSTRY

40

0%

6% 7%

6%

7%

0%

OEM operating profit ~$125 bn

Supplier operating profit ~$50 bn

49 10

50 11

37 12

37 13

37 15

38 14

15 2009

347 16

Supplier profit in % of OEM profit

Supplier & OEM automotive EBIT development1, outside-in, USD billions

TBD 172

X% Supplier EBIT margin X% OEM EBIT margin Suppliers OEMs

30

130 120 110 100

90 80 70 60 50

20 10

0


With disruptive scenarios becoming more likely, the share of revenues from disruptive business models could increase to 20-25% by 2030


2030

Automotive revenues based on consumer spend in 2016 and 2030 "Disruption to personal mobility" scenario, USD bn

One-time vehicle sales (incl. xEV and AV)

Aftermarket

2,600

1,270

~ 6,600

1,325

Shared mobility

250

840

3,800

~ 3,500

Disruptive business models

Traditional business models

2016 1 Revenues only, not comprising cost saving potentials

SOURCE: McKinsey Center for Future Mobility

35

Data-enabled services (connectivity)1


Current and future annual global vehicle sales, millions

Driven by macroeconomics, global vehicle sales will continue to grow, although at a slower pace


HIGH-DISRUPTION SCENARIO

102

22 32 92

13 115

Less private vehicles

New shared vehicles

2030 2016 Macro- economic growth

Private vehicles



Asia and rest of the world

Europe and North America

2 3

13

21

Current and future annual vehicle sales per city type, millions

The effects of car sharing, urbanization, and macroeconomics on vehicle sales vary greatly by region and city type

HIGH-DISRUPTION SCENARIO



"High-income, dense cities"

"High-income, suburban sprawl"

"Low-income, dense cities"

"Low-income, suburban sprawl"

"Small towns and rural regions"

25 21

9 8

23 22

3 4

2 3

8 10

Private vehicles New shared vehicles Less private vehicles Urbanization and macroeconomic growth

5 5

6

13

2016 2030 2016 2030 2016 2030 2016 2030 2016 2030


Contents


Scenarios of change

▪  Business models

▪  Electrification

▪  Autonomous driving



Contents


Scenarios of change






Business models

The mobility market in 2030 will continue to be product-focused

Future mobility will center around Mobility as a Service (MaaS) with the

car being a supplying part

vs.


The emerging mobility landscape consists of 5 layers centered around the consumer


SCENARIOS OF CHANGE

Platform owner or integrator

Provider

Producer

Supplier

Infrastructure

Mobility consumer


There are two competing camps emerging in the mobility industry with significant financial power

1 “Disruption to personal mobility” scenario 2 Rest is public transportation, car rental, etc.

SOURCE: McKinsey Center for Future Mobility, Capital IQ

SCENARIOS OF CHANGE

Mobility consumer

Revenue pool 20301

in USD

Business model in USD/miles

Miles travelled 20302

as % of total

Investments in USD

SIMPLIFIED

Platform/Provider Producer/Supplier

~37bn Investments in mobility startups since 2010 ~61bn

~168bn Capex 2017 of OEMs

Capex 2017 of OESs

1,325bn Shared mobility

250bn Aftermarket 1,270bn

One-time vehicles sales 3,800bn

Pay per use (mostly) 1.0 – 1.6 One-time

(mostly) 0.3 – 0.4

Shared mobility 3 – 10% Private ownership 55 – 65%

Data-enabled services (connectivity)


Looking forward, the industry will need to create new solutions to sustain and accelerate rideshare growth

SOURCE: McKinsey Center for Future Mobility, Lunar

SCENARIOS OF CHANGE

#3 Autonomous Vehicles

5+ years #1 Purpose built vehicles

1-3 years

#2 New Multi-Person Transportation Solutions

1-5 years


Contents


Scenarios of change






Electrification

We are at a tipping point: The race towards full electrification will

significantly increase in the next few years

Long transition phase: EVs cannot be the single solution and a mixed portfolio

is key

vs.


BEVs expected to reach 20-30+% of total vehicle sales in the EU+US+China by 2030

SOURCE: McKinsey, Literature search, ICCT

E-MOBILITY MARKET OUTLOOK

ICE BEV PHEV HEV

New vehicle sales by powertrain type, percent New vehicle sales by powertrain type, percent Base case EV breakthrough case

~70 USD/kwh ~10% shared vehicle sales

~70-120 g CO2/km

~50 USD/kwh ~15% shared vehicle sales

~60-100 g CO2/km

Co2 Co2

20

65 80

93 98

7 8

2020 2025

Base case assumptions in 2030

5

2 3

2015

9 2

6 32

52 71

92 98

2 2 3

9

2020 2025

EV breakthrough case assumptions in 2030

6

7

16

2030

7

Inflection

2015 2030


Established OEMs will launch around 103 new BEVs until 2024 with most being introduced around 2019/2020 x Number of BEV launches

PRELIMINARY

SCENARIOS OF CHANGE

1 Includes BMW, Daimler, FCA, Ford, GM, Honda, Hyundai-Kia, PSA, Renault-Nissan, Toyota and Volkswagen

SOURCE: IHS Markit Automotive (Oct 2017); Press; McKinsey

∑ 103 (EUR 40-50 bn invest)


50-55 mn chargers will be required to support the energy demand from BEVs expected to be on the road by 2030 across US, EU, China, India

SOURCE: McKinsey EV Charging Infrastructure model

Number of chargers, Thousands

2020

9.182

2025

32.616

2030

52.902 (invest of EUR ~150 bn

without grid upgrade)


While expected lithium capacities will significantly exceed EV demand by 2025, cobalt and class 1 nickel supply will fall short


52

Battery (EV – base)

262 -9%

239

Mine supply

Battery (EV – aggressive)

Demand Supply

210

Cobalt supply will remain short despite announced expansion projects

Cobalt balance in 2025, Kilotons refined metal

860

Mine supply

1,321


228


+54%

631

Demand Supply

Lithium balance in 2025, Kilotons lithium carbonate equivalent (LCE)

FORECAST

SCENARIOS OF CHANGE


1.24


-19%

Mine supply

Demand Supply

1.53

0.22

1.31

EV battery demand will become a major factor for Class 1 nickel demand

Class 1 nickel balance in 2025, Million metric tons

Announced capacity expansions sufficient to meet future lithium demand


Contents


Scenarios of change






The evolutionary approach will dominate the AV development and

European auto players are well set to master the challenges ahead

The revolutionary approach will create the AV breakthrough with tech and mobility players making the pace

vs. Autonomous driving

21 McKinsey & Company SOURCE: McKinsey Center for Future Mobility

SCENARIOS OF CHANGE


1 As of Sep 2017; 2 As of Mar 2017; 3 As of Dez 2017; 4 Full year 2017, according to California DMV disengagement report; 5 As of Mar 2018; 6 No information on AV pilots of Continental and Denso available; 7 Nov 2017

SOURCE: Press search, Company website, McKinsey analysis

System providers6

OEMs

Tech players

Announced date for L4/L5 AVs

25 locations across the US

>5 million4

~5,6004

2018

Boston, Singapore, San Jose, Mountain View, Napa Valley

1,8003

~22.54

2025

First large-scale pilot planned for 2018

200,000

25

2020

Highways in Tucson-Phoenix (Arizona, US) & Shanghai

15,000

n/a

2020

San Francisco, Phoenix (since May 2016)

175,0003

~1,2004

2019

Real-world Autopilot data; on-road testing in "various" locations

~2 billion (Autopilot)

~32

2018

Downtown San Francisco (since 2017)

2,244

4307

2020

Beijing, Wuzhen (since 2015)

<10,0003

~415

2020

Pittsburgh and Arizona (since 2017)

>1 million1 ~0.82 2021

Boston (since Dec 2017), Las Vegas

n/a n/a 2021

FOCUS ON CALIFORNIA

AUTONOMOUS DRIVING

Traditional OEMs and OESs with massive experience from ADAS systems: In 2016 every sold vehicle globally with already 1.5 ADAS features

Reliability rate Miles/disengagement Company

Waymo leading AD miles driven and reliability in the top-down approach AV pilots AD miles driven


The majority of the US market will be addressable by highly autonomous vehicles in the first half of the 2020s

SOURCE: Expert interviews, DOT, McKinsey Center for Future Mobility

Technology stage

Date becoming available

SCENARIOS OF CHANGE

5,000

3,000

4,000

2,000

0

1,000

Technologically addressable passenger trips in the US Billion passenger miles traveled

4,100 Total 2014 US PMT

Robotaxi 2.0 Robotaxi 3.0

2020-25 2025+

Aggressive introduction of highway driving

Introduction of night time driving

Ability to operate in urban environments

Ability to operate on mixed urban/ suburban + highway trips

All miles, including unmapped/rural areas

Development and validation

2018-20 Ongoing

Robotaxi 1.0

24 McKinsey & Company SOURCE: SILA, McKinsey, CapitalIQ, Pitchbook

Strongly accelerating

Tech players invest significantly more in technology start-ups than automotive players SCENARIOS OF CHANGE

VC/PE and public offering 50%

Tech Player (HW)

19%

111+ USD Bn (100% )

Auto Player 6%

Tech Player (SW)

25%

Total

Netlogic (semiconductors)

InvenSense (sensors)

Otto (self-driving trucks)

Gett (on-demand car service)

HopSkipDrive (ride-sharing service for children)

Turo (private shared vehicles)

Electrification

5

Connectivity 5

1

2

7

8

3

4

9

10 10 Smart Mobility

6

Autonomous 4

Total disclosed investment amount since 2010 Percent of total

Investment acceleration Example companies and invests

Accelerating Flat Significant similarity between companies Individual company

Mobvoi (speech recognition)

Cruise Automation (high-way autopilot system)


Contents


Scenarios of change



Opportunities for Oil & Gas players


EXAMPLES

Electrification: Do highway retail stations have the opportunity to own the fast charging market?

Business models: Is there a role for O&G players in the operations of shared-mobility fleets?

Autonomous Driving: What could be the role of the retail stations in the regular safety check of autonomous vehicles?

Across trends: Where are opportunities to grow in new value pools (e.g., batteries, sensors)?

the future of mobility: implications for the energy sector...source: mckinsey automotive supplier...

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