Editor’s note: This is an excerpted report on the state of the auto industry transformation written by Gary Silberg, Global Head of Automotive at the KPMG International consulting firm.

Car manufacturers have rarely faced such an array of technological and business-model changes since the dawn of the automotive industry 130 years ago. Flying taxis, cars by subscription, ubiquitous and fast EV charging stations, big-tech car entrants – these are some of the developments we can expect in the next 10 years, according to our 2021 annual survey of more than 1,000 executives in the global automotive industry.

Yet there are urgent questions executives need to answer right now: Have they learned recent lessons needed to build more resilient supply chains? How will the industry navigate multiple fundamental changes, ranging from new powertrains and autonomous vehicles to new business models, and do so simultaneously? What impact will the new and well-funded entrants have on the industry? How will the established automakers respond?

Here are our main findings:

FUTURE OF POWERTRAINS

• Executives expect the market share of EVs will grow dramatically by 2030, but there is a very wide range of views and
• no consensus on the approximate share they will capture.
• Their expectations are based on the view that EVs will reach cost parity with ICE vehicles by 2030.
• They believe EVs can be widely adopted without government subsidies, but the majority still supports such programs.
• The survey finds EV adoption will depend partly on significant investments in DC fast-charging infrastructure, as 77

  Gary Silberg

• percent of executives expect consumers to require charge times under 30 minutes when traveling. The vast majority of
• charging stations in service today take more than three hours.

VULNERABLE SUPPLY CHAINS

• Executives are worried by a range of issues affecting the supply chain, including the price and availability of
• semiconductors, steel, rare earth elements, and other exotic materials.
• Fifty-five percent of executives are very or extremely concerned about labor shortages.

NEW TECHNOLOGIES AND NEW ENTRANTS

• The technology and automotive industries are converging, leading to new alliances and new entrants. Startups are raising billions, and executives believe tech companies such as Google, Apple, Amazon, and Huawei will enter the market.
• Many automakers and suppliers will divest nonstrategic assets, raising cash to invest in new technology, talent and new business models.

DIGITAL CONSUMERS 

• Executives foresee a fundamental change in how vehicles will be purchased. Most respondents expect the majority of
• vehicles to be sold online by 2030. Three-quarters also predict more than 40 percent of vehicles will be sold directly by
• automakers, bypassing dealers.
• They expect a seamless purchase and ownership experience will be even more important than vehicle performance in
• consumers’ buying decisions.
• Automobiles will likely generate vast amounts of data that automakers may be able to monetize. Forty-three percent of
• executives expect automakers to sell data to auto insurance companies.

THE GLOBAL OUTLOOK

• Fifty-three percent of respondents are confident that the auto industry will see more profitable growth in the next five years. This compares with only 38 percent who are concerned about the outlook for profits.
• Executives’ confidence is reflected in other areas, such as their ability to withstand the next great disruption.
• Optimism varies by country, with only 49 percent confident in Germany about the prospects for more profitable growth, compared with 66 percent in the U.S.

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Jerry Hirsch November 18, 2021

The Ford Ranger, Ram 1500 and GM’s heavy-duty trucks scored well in Consumer Reports’ annual auto and truck reliability rankings.