The auto-industry has undergone massive shifts over the past few years and I’ve highlighted the key drivers shaping the future of transportation in my first blog. From ride-sharing to electric vehicles and automated factories, the entire automobile value chain has seen tremendous change.

Take vehicle sales as an example. In 2015, vehicle sales contributed 41 per cent (refer to Figure 1) – the lion’s share – of the industry’s total profits. Accenture Strategy analysis estimates by 2030, it is expected to account for just 29 per cent. On the contrary, shared mobility, which was nearly non-existent in 2015, is set to take up 20 per cent of the industry’s profits.

Figure 1: Shifts in automotive industry profits

Source: Accenture Strategy analysis

We are seeing new opportunities emerge across the rest of the value chain, generating an additional US$200 billion in value for the industry over the past five years, driven by the twin engines of sustainability and technology.

Users no longer just want a comfortable ride; they want their ride to be environmentally friendly, with a view towards lightening their carbon footprint. Technology has also reshaped consumer behaviour in fundamental ways. This partially explains the drop in vehicle sales – why buy when you can hail a ride?

Where are the opportunities?

The implications of this shift are manifold. Across the value chain, opportunities are emerging for companies to rethink their value proposition in the auto industry.

Look at the advent of electric vehicles (EVs) and autonomous vehicles (AVs), for instance. EVs generate a whole new supply chain, providing numerous opportunities to rethink their value chain. Instead of combustion engines, electric motors are being manufactured. Batteries, in particular, have become critical.

That is why Tesla, the world’s largest EV manufacturer, has focused solely on developing their own supply chains. The company’s Gigafactory is manufacturing and developing efficient battery technology and renewable energy products that aim to meet their own internal production volumes.

Likewise, the development of AVs is also accelerating. Non-traditional automobile companies, empowered by the development of AI, are joining the field to race towards the development of mainstream use of AVs. Apple, for instance, has started an electric car project back in 2018, with a view to a driverless future.

For companies downstream, there are also huge opportunities for companies to rethink how sustainable transportation can boost efficiency and raise optimisation levels. Ride-hailing companies, for instance, are increasingly electrifying their entire fleet, partly because of rising demand but also because of resource optimisation. Uber, for instance, has committed US$800 million to incentivise the early adoption of EVs. Similarly, Amazon has partnered with MIT to incorporate driver knowledge in their AI models. This reduces accidents and fuel costs while improving results for time-sensitive deliveries.

Sustainable infrastructure is also key to supporting the growth of greener transportation. And while the focus has so far been on car manufacturers, there is much potential for companies in the infrastructure development sector.

Swiss engineering company, ABB, has emerged as a clear winner on this front. They are a clear leader when it comes to the development, building and installation of charging infrastructure for electric public bus fleets around the world.

Apart from the production and development of physical infrastructure, new business opportunities will emerge with sustainable transportation. Allianz has begun offering green insurance solutions for sustainable mobility. The impact will be even more keenly felt when AVs come onstream – how do you provide insurance for a software-driven vehicle? These will pose deep and important questions for car owners and insurance companies alike.

Servicing and regulatory bodies need to adapt too. New standards for EV testing and certification will be required.

What do they have to get right?

  1. Create a “shared value” business narrative
    Businesses must create a “shared value” business narrative. In an age where the fixation with economic growth is frowned upon, it is harder for businesses to legitimise profit maximisation for the sake of it. Instead, businesses need to refine their purpose to align the pursuit of economic success with societal benefits. This helps them secure their place as an essential contributor to society.

  2. Bet on the right technology and innovation focus
    When considering technology and innovation, businesses will need to embed the need for human-centred designs and customer experiences. This involves understanding the motivations that drive consumer behaviour. As the green revolution changes consumer motivation, technological innovations must take such changes into account.

  3. Build new partnership capabilities
    But sustainable businesses cannot just be about empty words – being a contributor to society also means enabling your stakeholders. On this front, businesses will need to enable effective partnership with the wider mobility ecosystem – from partner drivers, research and development providers, non-governmental organisations, and the government.

  4. Find enablement in big data capabilities
    To optimise capacity and resources, businesses must first be enabled by big data capabilities. With the development of data processing technology, businesses have the unprecedented ability to uncover hidden trends and optimise their resources. This reduces waste and allows businesses to focus on the “new”.

  5. Workforce planning and transition (Human + Machine)
    When streamlining business operations, automating traditional roles with AI can improve processes and deliver better customer experiences. More than that, new roles – and opportunities – that augment man and machine will emerge. A World Economic Forum report estimates that 97 million new roles may emerge by 2025 due to a new dynamic[1] between people and technology. What this means is businesses that move boldly to equip employees with new skillsets, upskill them early, or reimagine talent mobility will find themselves with a competitive advantage.

As the environmental revolution changes the transportation industry, businesses must position themselves to take advantage of such a shift so that they continue to be relevant for the future. While many pin their focus on the adoption of new technologies, being sustainable goes beyond that. Instead, it means building a holistic approach that addresses end-to-end business operations – by creating shared value, adopting a user-centric business model, and enabling workers and stakeholders.

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Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors. This document may refer to marks owned by third parties. All such third-party marks are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such marks is intended, expressed or implied.

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Jurgen Coppens

Managing Director – Strategy & Consulting, Sustainability Lead, Southeast Asia

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