CASE (Connected, Autonomous, Shared and Electric): An InsightBy Peter Minshall, Executive Vice President of NETSOL Technologies Americas on 29-06-2022
Four megatrends in automotive technology have started to redefine the competitive landscape of the automotive sector. C.A.S.E, or Connected, Autonomous, Shared and Electrified are ushering a new era of operations for the global automotive industry.
In recent years, the automotive industry (and indeed several industries adjacent to it) has been driven by technological advancements such as the development of electric powertrains which are both affordable and sized appropriately, Artificial Intelligence (AI) - enabling vehicles to take more of their responsibility for action recommendations and decisions, and digital technologies around communications and UI/UX advancements, such as the Internet of Things (IoT), or mobile devices which can be presented anywhere. These advancements, for the most part, have created the acronym CASE (or sometimes ACES) which is regularly used to describe the four main strategic areas of focus for the industry - Connected, Autonomous, Shared, and Electrified.
A connected car communicates bi-directionally with other systems. This connectivity enables communication between vehicles, people and the wider IoT. In itself, this enables advances in areas such as safety, route-planning, congestion avoidance and managed maintenance. But, together with the use of AI and developments in the transmission of massive volumes of data, it has led the automotive industry towards enabling autonomous vehicles. An autonomous vehicle is one that, through technological advancements, can sense its surroundings and operate and perform vital activities with little to no need for human intervention. The Society of Automotive Engineers have defined 5 levels of vehicle autonomy. We have recently seen the first vehicles approved for public road use with level 3 - which allows for some actions to be taken completely by the vehicle itself, such as overtaking slow moving traffic.
Another surging trend in the automotive industry is shared mobility. Shared mobility refers to the usage of a vehicle collectively by commuters or commercial users, but without owning it. Sharing activity has been significantly enabled by advancements in digital mobile technology, and of course, the availability of always-on high-speed internet connectivity. Finally, with both a push from government policy around environmental issues and technological advancements, the growth of emission-free Electric Vehicles (EVs) in the automotive industry has rapidly increased. The present article aims to present brief insights into the four trends mentioned above.
Connected Car Market
The fully connected car will consist of an ecosystem that comprises of technologies enabling the car to receive and transfer large amounts of data. A connected car offers comfort, performance, safety, and security. Factors such as an increase in the need for constant connectivity, the surge in consumer demand for connectivity solutions, and high technology dependency have contributed to the growth of the global connected car market.
Fortune Business Insights reports that in 2020, the globally connected car market was valued at $55.56 billion. This valuation was in fact lower than the year before, when it was valued at $62.28 billion, due to the impacts of the COVID-19 pandemic. However, the connected car market was forecasted to grow at a CAGR of 18.1% from 2021 to 2028, and the total evaluation of the market is expected to reach $191.83 billion by 2028, according to the same report. Region wise, Asia Pacific is expected to lead the highest growth rate for the connected car market worldwide, with Japan, China and India playing a major role.
Autonomous Vehicle Market
The autonomous vehicle industry has undergone rapid technological advancements. An average self-driving vehicle uses a combination of cameras, sensors, LIDAR (Light Detection and Ranging), and RADAR (Radio Detection and Ranging). These technologies gather a large volume of data, which, when used by AI, enables the vehicle to see, hear, "think," and make decisions like human drivers. Such developments in the technological field are reducing traffic congestion, improving safety, and increasing connected infrastructure. These advancements have contributed to the autonomous vehicle industry's market growth. According to a report by Fortune Business Insights, the global autonomous vehicle market size was valued at 1.45 billion in 2020, exhibiting a decline of 20.3% from the year before due to the pandemic.
Interestingly, however, despite the crisis causing short-term sales to drop, the resultant changes in the behavior of employees and companies accelerated the adoption of autonomous vehicles worldwide. Delivery companies and health institutes made use of autonomous vehicles throughout the health crisis. During the outbreak, retail, dining, and daily living restrictions raised the demand for non-contact operations and corresponding investments into driverless deliveries. In the passenger car market, we have seen mainstream OEM's introduce level 3 autonomous vehicles, which makes use of different driver assistance systems and AI into the market as the technology evolution investments made over several years begin to bear fruit.
Due to such consumer behavioral changes and the rapidly evolving tech field, the global autonomous cars market was projected to grow from $1.64 billion in 2021 to $11.03 billion in 2028 at a CAGR of 31.3%, according to a report by Fortune Business Insights. This report can be furthered backed with a study by McKinsey which states that by 2030, 45 % of global new car sales could be at level-3 or above. It is also reported that by 2030, the Asia Pacific region will have the largest autonomous vehicle market share, followed by Europe and North America.
Shared Mobility Market
Globally, shared mobility, or commuters' shared use of vehicles, is becoming more popular. Cars, vans, electric bicycles, scooters, and motorbikes are all now common examples of shared mobility vehicles. It is cost-effective for consumers and also provides transportation accessibility without owning a vehicle. For these reasons, the shared car market size continues to grow. For instance, according to a report by McKinsey, the shared mobility market could reach a consumer-spending potential of $300 to $500 billion globally by 2030, which is three to four times larger than today's ride-for-hire or e-hailing market.
E-Hailing is today the dominant service in the shared mobility space (more than 90%) but shared mobility includes car sharing, peer-to-peer car sharing, shared micro-mobility (bicycles and scooters) and dynamic shuttle services or pooled e-hailing. The report also states that since 2010, more than $100 billion has been invested in shared mobility companies. With the given advancement in the tech field, particularly with AI, investments and adoption will continue to increase.
To support the McKinsey study above, Fortune Business Insights speculated growth in this market from $84.30 billion in 2021 to $242.37 billion in 2028, at a CAGR of 16.3%. According to a report by Statista, Asia Pacific is projected to have the largest shared mobility market size by 2028, followed by North America.
The global shared mobility market has significantly impacted the public transport sector due to shifting consumer preferences towards ride-hailing, one of the major market drivers for the public transport industry. Users can plan and select their transportation in real-time while traveling, thanks to services like Uber and Lyft, which provide shared mobility.
Uber has also helped solve the "last mile problem" by linking commuters from their houses or offices to train stations (and vice-versa) on discounted ride fares by partnering up with local and national transportation agencies. The last mile problem is the challenge of moving people between transportation hubs (like train stations and bus stops) and their starting point/final destinations.
Uber in selected cities displays information about the city's metro and bus service with data like real-time scheduling, pricing, arrival, departure, pickup, and drop-off times on its mobile app. With shared mobility playing one of the significant roles, the total revenue of the global public transport market is projected to reach $318.80 billion by 2026, according to a report by Statista.
Electric Vehicle Market
EVs have gained widespread interest because of their ability to reduce energy consumption and emissions. Electric automobiles create no carbon dioxide emissions when driving - they simply have no tailpipe. This significantly minimizes air pollution. Although concerns have been raised about greenhouse emissions during the manufacturing process of EVs and their batteries, a study from the Massachusetts's Institute of Technology Energy Initiative suggests that EVs create a much lower carbon footprint in their lifetimes than conventional internal combustion vehicles.
The International Council of Clean Transportation reported that various governments worldwide continue to make new policies and commitments for EV sales. The cost of manufacturing such vehicles continues to fall in pursuit of making them a more viable option than conventional internal combustion vehicles.
Due to these supportive policies, the electric vehicle market continues to grow globally. A market report by Fortune Business Insight states that the EV market size was valued at $287.36 billion in 2021 and is expected to reach $1,318.22 billion by 2028, at a CAGR of 24.3%. Countries like China, Japan, and South Korea enable Asia Pacific as the region to lead the electric vehicle market. China, being the world's top EV producer and user, has a stronghold on the EV market worldwide.
Automotive companies, including automakers, technology and service providers worldwide, are actively working towards solutions that could significantly change our everyday lives. A good example is Argo AI, an autonomous vehicle technology startup backed by Ford and Volkswagen, which provides people with a model of shared mobility. According to a report by Business Insider, in May 2022, the company announced fully driverless cars in Austin, TX, and Miami, FL. The car's self-driving technology comprises LIDARs, RADARs, sensors, and mapping software implemented in Ford and Volkswagen vehicles.
Argo AI will use its completely autonomous vehicles in Austin and Miami as part of partnerships with Lyft and Walmart's delivery services to provide driverless taxi trips and autonomous grocery deliveries, respectively. Similarly, Waymo, another autonomous vehicle technology company, announced in March this year that its total autonomous vehicles are ready to offer public ride-hailing services to its customers. Like Argo, Waymo is also partnered up with Lyft.
Another important step forward in automotive technology is a vehicle's in-vehicle infotainment (IVI) system combined with automotive driving capabilities through 5G connectivity. And it's a step that we have started to see a lot of lately across the automotive industry. For instance, Einride's T-pod - a driverless vehicle, running continuously at DB Schenker's logistics facilities in Jönköping, Sweden - is connected to the Ericsson Radio System and Ericsson Cloud Core for 5G connectivity. The 5G connectivity enables the vehicle to receive information at a high speed, which is required since real-time autonomous decisions must be taken in fractions of a second. This creates an efficient transport ecosystem for fleet management, with high connectivity through 5G, resulting in lower downtime.
In China, Baidu, a leading service provider of autonomous car technology, partnered with Chinese automaker Geely to make JiDU Automotive, an electric, level-4 autonomous vehicle. The car uses the NVIDIA DRIVE Orin system-on-a-chip (SoC), enabling continuous over-the-air software updates. The Orin SoC can support autonomous driving capabilities, as well as powering instrument clusters, infotainment systems, and passenger interface with AI, at a rate of 254 trillion operations per second (254 TOPS).
"Connected, autonomous, shared, and electrified" are the four megatrends reshaping the automotive industry. Supplemented by rapid technological developments, supportive government policies, and consumer behavioral changes in recent times, these four trends continue to take us closer to a driver-less, always connected, battery-powered future, all that without having the necessity to own a vehicle. This reshaping of the industry brings with it opportunities for incumbents, but also for others, as the traditional definition of "the automotive industry" is changing rapidly. This reshaping warrants a separate discussion and will certainly form the topic of future publications from NETSOL.
NETSOL has been proudly serving automotive finance and leasing companies worldwide with smart software technology for over four decades and is itself broadening its offering to the wider industry with solutions now covering services such as shared mobility and online vehicle retailing. To explore the company's modern technology solutions for the evolving global automotive finance and leasing industry, please click here.
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- Heineke, K., Kloss, B., Möller, T., & Wiemuth, C. (2021, August 13). Shared mobility: Where it stands, where it's headed. McKinsey & Company. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/sharedmobility-where-it-stands-where-its-headed
- Connected Car Market Size, Share & COVID-19 Impact Analysis, By Application Type (Mobility Management, Telematics, Infotainment, and Driver Assistance), By Network Type (3G, 4G, 5G, and Satellite), By Technology Type (Embedded, Tethered and Integrated), By Sales Channel Type (OEM and Aftermarket), By Communication Type (Vehicle to Vehicle and Vehicle to Infrastructure) and Regional Forecasts, 2021-2028. (2021, August). Fortune Business Insights. https://www.fortunebusinessinsights.com/industry-reports/connected-car-market-101606
- Autonomous Cars Market Size, Share & COVID-19 Impact Analysis, By Type (Fully Autonomous and Semi-Autonomous), By Vehicle Type (Passenger Cars and Commercial Vehicles), and Regional Forecasts, 2021-2028. (2021, August). Fortune Business Insights. https://www.fortunebusinessinsights.com/industryreports/autonomous-cars-market-100141
- Heinek, K., Kampshoff P. (2019, May 14). The trends transforming mobility's future. McKinsey & Company. https://www.mckinsey.com/industries/automotive-andassembly/our-insights/the-trends-transforming-mobilitys-future
- MIT Energy Initiative. (2019, November). Mobility of the Future. https://energy.mit.edu/research/mobilityofthefuture/
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- Statista. (2021, October 20). Global shared mobility market size forecast 2021-2028, by region. https://www.statista.com/statistics/1229470/shared-mobility-market-size-worldwide-by-region/
- Electric Vehicle Market. (2021, April). Markets and Markets. https://www.marketsandmarkets.com/Market-Reports/electric-vehicle-market-209371461.html
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- Connected Car Market. (2021, December). Markets and Markets. https://www.marketsandmarkets.com/Market-Reports/connected-car-market-102580117.html
Peter Minshall, Executive Vice President of NETSOL Technologies Americas
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