Search
  • ABC

How China will help fuel the revolution in autonomous vehicles


The talk about autonomous vehicles has been booming. From driverless taxis to automated cargo trucks, autonomous vehicles (AVs) will change the nature of on-road driving. In the process, autonomous vehicles will revolutionize the automotive and mobility industries, especially for China. When the driver-less phenomenon occurs in China, the payoff will be trillions of dollars.

During this shift to autonomous vehicles, the market for mobility also changes. The biggest change will be shifting the market value away from buying the products (such as purchasing the cars) to paying for the service. This “mobility-as-service” transformation will result in dramatic changes for sales volumes, business models, and company capabilities. Today, we see automakers sell cars to consumers, whereas in the future we may see automakers sell driverless car functionality to consumers. Theoretically, China will see this transformation nine to ten years from now.

According to McKinsey’s research, autonomous vehicles could, at some point, take over most of the automotive market in China. For instance, McKinsey conducted a survey where industry respondents “indicate passenger vehicles used for mobility services such as “robo-taxis” will see a peak adoption rate of 62 percent, followed by private premium vehicles (51 percent) and private mass-market cars (38 percent)”. Furthermore, the research indicated that “mobility services will lead due to the autonomous vehicle’s expected increased utilization (close to 24/7 operation) and lower labor costs (no drivers)”.

China has the potential to become the world’s largest market for autonomous vehicles. In Mckinsey’s base forecast, such vehicles could account for as much as 66 percent of the passenger-kilometers traveled in 2040 (Exhibit 1), generating market revenue of $1.1 trillion from mobility services and $0.9 trillion from sales of autonomous vehicles by that year. In unit terms, that means autonomous vehicles will make up just over 40 percent of new vehicle sales in 2040, and 12 percent of the vehicle installed base.

For more information, please read https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-china-will-help-fuel-the-revolution-in-autonomous-vehicles.

0 views
  • Black Facebook Icon
Special Thanks to Our Biggest Sponsors for the 29th Conference
banner_club_7436_51613132.png
DufeyGunter.jpg

Professor Emeritus Gunter Dufey

701 Tappan Ave, Ann Arbor, MI 48109

chentt@umich.edu  |  leyin@umich.edu

  • Black Facebook Icon
  • Black Instagram Icon

@2020 Ross School of Business