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[[File:Screenshot 2023-09-05 110336.png|center|thumb|635x635px|<ref name=":0">https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/a-road-map-for-europes-automotive-industry#/</ref>]] | [[File:Screenshot 2023-09-05 110336.png|center|thumb|635x635px|<ref name=":0">https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/a-road-map-for-europes-automotive-industry#/</ref>]] | ||
* Since 2019, European incumbents have lost six percentage points of market share in their home market and five percentage points in China. Meanwhile, Chinese OEMs are gaining ground in both China and Europe, reaching 45 percent market share in their home market in 2022 and octupling their market share in Europe between 2020 and 2022. | * '''Since 2019, European incumbents have lost six percentage points of market share in their home market and five percentage points in China.''' Meanwhile, Chinese OEMs are gaining ground in both China and Europe, reaching 45 percent market share in their home market in 2022 and octupling their market share in Europe between 2020 and 2022. | ||
* Besides market share, European OEMs also face the challenge of running profitable BEV businesses. | * Besides market share, European OEMs also face the challenge of running profitable BEV businesses. | ||
* In the premium segment, European OEMs still hold 71 percent of global sales. But this segment is also becoming more challenging to hold: newcomers claimed 18 percent of the premium market in 2022. | * '''In the premium segment, European OEMs still hold 71 percent of global sales'''. But this segment is also becoming more challenging to hold: '''newcomers claimed 18 percent of the premium market in 2022.''' | ||
Research shows that successful automakers are developing cars defined by software, resulting in a tripling of software content per vehicle since 2015. As a result of this shift toward more centralized computing, portions of vehicles may become commoditized, and scale and incremental improvements may become the main drivers of competitiveness. | Research shows that successful automakers are developing cars defined by software, resulting in a '''tripling of software content per vehicle since 2015'''. As a result of this shift toward more centralized computing, portions of vehicles may become commoditized, and scale and incremental improvements may become the main drivers of competitiveness. | ||
Traditional suppliers find themselves sandwiched between “high-tech commodity” companies that provide semiconductors and batteries upstream and cost-pressured incumbent OEMs downstream. This dynamic threatens European supply chains. Consider that the current battery value chain is largely controlled by Chinese companies. | Traditional suppliers find themselves sandwiched between “high-tech commodity” companies that provide semiconductors and batteries upstream and cost-pressured incumbent OEMs downstream. This dynamic threatens European supply chains. Consider that the current battery value chain is largely controlled by Chinese companies. | ||
To counteract recent developments and establish a robust supply network similar to Europe's during the ICE era, major players in the industry are forming strategic partnerships. These partnerships aim to ensure access to essential resources and manufacturing capacity, particularly for batteries and semiconductors. Some established companies intend to enhance their influence over crucial parts of the value chain by collaborating with mine operators or investing in mining operations. However, | To counteract recent developments and establish a robust supply network similar to Europe's during the ICE era, major players in the industry are forming strategic partnerships. These partnerships aim to ensure access to essential resources and manufacturing capacity, particularly for batteries and semiconductors. Some established companies intend to enhance their influence over crucial parts of the value chain by collaborating with mine operators or investing in mining operations. However, d'''espite these initiatives being a positive step, the projected supply and capacity are still insufficient to meet the region's anticipated demand by 2030.''' Therefore, there is a pressing need for accelerated efforts in this direction. | ||
[[File:Screenshot 2023-09-05 112653.png|center|thumb|627x627px|<ref name=":0" />]]European automotive OEMs and suppliers earn about three times the revenue of their Chinese counterparts and five times the EBIT, which means the European industry can act from a position of strength. In short, the ecosystem approach that made Europe strong in the ICE era has to be translated to serve the era of software-defined, electrified cars. A rapid response from OEMs and suppliers in the European auto industry will be important. But other stakeholders—including adjacent industries such as the energy, research, and public sectors—would also need to act collaboratively to provide an environment that enables success for the European automotive industry (and mobility ecosystem) of the future. In short, the ecosystem approach that made Europe strong in the ICE era has to be translated to serve the era of software-defined, electrified cars. | [[File:Screenshot 2023-09-05 112653.png|center|thumb|627x627px|<ref name=":0" />]]'''European automotive OEMs and suppliers earn about three times the revenue of their Chinese counterparts and five times the EBIT, which means the European industry can act from a position of strength'''. In short, the ecosystem approach that made Europe strong in the ICE era has to be translated to serve the era of software-defined, electrified cars. A rapid response from OEMs and suppliers in the European auto industry will be important. But other stakeholders—including adjacent industries such as the energy, research, and public sectors—would also need to act collaboratively to provide an environment that enables success for the European automotive industry (and mobility ecosystem) of the future. In short, the ecosystem approach that made Europe strong in the ICE era has to be translated to serve the era of software-defined, electrified cars. | ||
[[File:Screenshot 2023-09-05 115416.png|center|thumb|580x580px|<ref name=":0" />]] | [[File:Screenshot 2023-09-05 115416.png|center|thumb|580x580px|<ref name=":0" />]] | ||
* '''Traditional consumer segmentation would need to be adapted for the era of software-defined electric vehicles''', with more-detailed consumer profiles and more-granular user profiles. | |||
* '''Chinese OEMs''' can turn their cost advantage into a competitive edge: our analysis shows that '''their costs are 20 to 30 percent lower than those of European OEMs'''. European OEMs could close up to 20 percentage points of the cost gap by adopting structural product design, vertically integrating battery production, scaling EV production, and improving productivity. As for the remaining 5 to 10 percentage-point cost gap, European OEMs could identify differentiating features that consumers would be willing to pay a premium. | |||
* European OEMs and suppliers would need a fundamental strategic overhaul to regain competitiveness in China and meet the preferences of Chinese customers. Chinese OEMs offer significantly lower price points, and their products are more appealing and tailored to Chinese consumers’ needs and preferences. According to our research, the average '''customer in China is 34 years old, compared with 58 in Europe. These consumers have significantly different purchasing criteria.''' | |||
* We project that the '''European supply–demand gap for batteries will reach almost 40 percent, or 500 gigawatt-hours (GWh), by 2030.''' '''To cover European battery demand locally, an additional 20 gigafactories, a €35 billion investment, would be needed. The continent would also need 37 new semiconductor fabs to cover local demand, requiring a €190 billion investment.''' | |||
* According to our analysis, '''only one European manufacturer is among the top ten in terms of market capitalization for battery manufacturing''', while in semiconductors, Europe needs to close the capability gap for the next wave of computing to deliver functionalities such as ADAS. | |||
* 51 percent of consumers worldwide would consider switching to some form of ADAS car in the future. To remain competitive, the European industry may need to form a cross-industry alliance. | |||
* Software is essential to the future of the automotive industry. But according to our analysis, '''only 15 to 20 percent of current R&D workers at European incumbents have software skills, compared with almost 45 percent at new entrants.''' To shrink the gap, industry stakeholders would need to find holistic solutions | |||
* Another critical catalyst of the European industry’s transition is EV infrastructure. According to our analysis''', the industry will need a cumulative €300 billion worth of infrastructure investments in electricity generation, the electricity grid, EV chargers, and hydrogen refueling systems through 2030. European stakeholders have begun to install public chargers at a pace of 2,000 charging points per week. But to meet demand, decision makers would need to build out charging infrastructure to the tune of 6,000 to 14,000 charging points per week.''' | |||
* the wind and solar assets required to fulfill the corresponding demand for '''energy with renewable sources would require four times as many workers in Europe by 2030 than are currently available.''' | |||
=== <big>BCG Research September 2023</big> === | === <big>BCG Research September 2023</big> === | ||