5 Important Auto Industry Trends (2022-2024)
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The auto industry is one of the largest and most influential markets on the planet.
The industry itself, however, has remained relatively stable over the last decade.
That is now changing.
Rapid technological and environmental innovations have forced incumbents to adapt to new challenges.
And have led to new startups to come out of nowhere.
If you want to learn more about 5 of the most important auto industry trends for the next 18-36 months, read on.
1. Electric vehicle adoption increases worldwide
Probably the most important trend in the automotive industry is the worldwide shift to electric vehicles (EVs).
Searches for “electric vehicles” are up by 257% over the past five years.
The IEA estimates that global EV sales exceeded 3 million units in 2020. That’s over 4% of global vehicle sales.
EV sales grew from less than 1% of total vehicle sales a decade ago to more than 4% today.
After a disappointing 2019 in terms of EV sales, 2020 sales surpassed expectations, growing over 40% year-over-year.
Because of this growth, it’s estimated that there are now over 10 million electric cars on the road.
Over the last five years, China and Europe have been leading the way in EV sales growth.
The U.S. lost some ground after the poor 2019 results.
But it's impressive growth rate in 2020 should increase its share of the global EV market.
Sales for BEV and PHEV in Europe increased by 137% in 2020 compared with the previous year (despite a 20% year-over-year decrease in the total car market).
Europe now is the largest market for new plug-in electric vehicles, overtaking China's first spot.
Searches for "plug-in hybrid" are up 252% in five year.
And this trend isn’t expected to slow down anytime soon.
Bloomberg New Energy Finance expects EVs to account for 10% of all new car sales by 2025 and 58% by 2040.
Even with this rapid growth, EV’s share of cars on the road is expected to remain at just 8% by 2030.
The massive rotation in the global vehicle fleet is predicted to take place in the 2030s.
By the end of that decade, it’s predicted that over 30% of the cars on the road will be EVs.
Much of this growth will be driven by regulatory requirements.
Several countries have set out to achieve net-zero emissions by 2050.
Searches for “net zero” have increased by 270% in five years.
Some countries (and California) have even committed to phasing out all new sales of combustion engine vehicles over the next few decades.
Countries and states that have committed to phasing out the sale of internal combustion engines.
It’s estimated that to meet many of these net-zero emission goals, EVs will have to climb to at least half of all new car sales by 2050.
This is faster growth than predicted by many authorities, but other initiatives may help.
Increasing battery efficiency as well as EV charging infrastructure can both speed up adoption.
Lithium-ion battery prices have fallen by 89% over the last decade, reaching a price of $137/kWh in 2020.
In China, it was even reported that lithium-ion battery pack prices fell below $100/kWh for the first time.
Search results for “lithium-ion” are up 41% over the last 10 years.
Right now, there are only about 53,124 public EV charging stations across the U.S.
Number of EV charging stations per 100,000 residents in each state.
However, it is estimated that over 60% of all Americans have garages that will allow for electric vehicle charging.
The increasing range of EVs should also help alleviate concerns.
The 2020 Tesla Model S Long Range Plus has completely changed the perception of EV range. It can go over 400 miles on a single charge.
Tesla scrapped plans for a Model S Plaid+ after the success of the current version.
Searches for "Tesla" have risen 151% over the last five years.
It’s expected to have a range of over 500 miles.
2. Autonomous vehicles change the face of the auto industry
Autonomous vehicles (AVs) are set to disrupt the auto industry.
Searches for “autonomous driving” have increased 966% over the past 10 years.
The AV industry itself is just in its infancy, as there are only 1,400 self-driving cars on the road in the U.S. today.
However, it’s estimated that there will be 33 million autonomous vehicles on the road by 2040.
The Society of Automotive Engineers (SAE) “Levels of Driving Automation” standard shows how stages of vehicle automation progress.
The standard ranges from SAE Level 0 (no automation) to SAE Level 5 (full automation).
There are already over 30 million vehicles on the road that meet the Level 1 standard.
And predictions indicate that this number will grow to 54.2 million by 2024.
In addition, more than half of all vehicles are expected to fall into the Level 1-5 range by 2024.
The global autonomous vehicle market is currently valued at $54 billion.
And it is expected to grow by roughly 10x in the next four to six years.
Large automakers like Tesla, Alphabet, Ford, GM, and Volvo have all entered the autonomous vehicle space.
Search interest in “Waymo” over the last 10 years.
Searches for “Argo AI” have grown by 60% in 5 years.
As a result of this partnership, Ford is expected to launch its own self-driving car business in 2022.
And Tesla launched its full self-driving (FSD) beta service in October of 2020.
A major barrier to this relentless growth, however, is consumer and regulatory concerns.
The National Transportation Safety Board (NTSB) has already announced the need for stricter regulation of Tesla’s Autopilot program.
It also recently called on its sister agency – the National Highway Traffic Safety Administration (NHTSA) – for help.
And with about two-thirds of people saying they would rather drive than ride in an autonomous car, much of the near-term focus is on trucking.
Search growth for "self-driving" truck (3,800% in 10 years).
It’s expected that the $800 billion trucking industry could benefit from a significant reduction in the 4900 trucking-related deaths that occur each year if only Level 3 or 4 autonomy would gain traction.
This could allow drivers to retain their jobs, but avoid the injuries and deaths that result from exhaustion.
The number of autonomous trucks on the road was expected to increase from roughly 150 in 2020 to over 2000 in 2021.
One of the most promising companies in the autonomous trucking ecosystem is TuSimple.
Searches for “TuSimple” over the last five years.
The company has raised $648 million since its founding in 2015, including from some large transportation companies such as Union Pacific and Goodyear.
In addition, TuSimple has partnered with Navistar and UPS to test its software under supervised driving conditions.
The company already has 50 Level 4 autonomous trucks operating in the Southwestern United States.
And TuSimple is hoping to begin selling completely autonomous Level 4 trucks to fleet operators by 2024.
3. Cars become even more connected
As 5G and the internet of things (IoT) continue their growth, vehicles are becoming more and more connected.
This has led to the rise of the connected car.
Searches for “connected car” have risen by 133% over the last decade.
This type of vehicle is defined by its ability to communicate with other software systems and collect data from its surroundings.
It’s estimated that there were roughly 47.5 million connected cars sold in 2020.
And that number was predicted to rise by 20% in 2021.
The global connected car market is worth roughly $75.74 billion in 2022.
And it is expected to grow to $191.83 billion by 2028.
Size of the Global Connected Car Market between 2019 and 2028.
Much of this growth will be driven by the adoption of 5G technologies.
Statista predicted that global 5G smartphone subscriptions would triple by the end of 2021.
This kind of adoption should lead to much-improved 5G infrastructure, which could support vehicle connectivity.
Some of the largest tech companies are also now eyeing this market.
Google and Ford recently announced a connected car partnership called Team Upshift.
A Google/Ford partnership looks to add Android tech to a car's OS.
The two plan to equip Ford and Lincoln vehicles with a built-in Android operating system by 2023.
This connectivity should allow drivers to remain connected at all times.
In addition, the initiative will leverage the data collected by adding Google’s AI capabilities to Ford vehicles.
And Google isn’t the only one getting in on the action.
It has been reported that Apple is considering a $3.6 billion investment in Kia.
The two purportedly plan to begin manufacturing an autonomous Apple electric car by 2024.
Initial units are expected to number 100,000, but the project will have the capability to produce up to 400,000.
In addition, companies like Car IQ are bringing banking to the automotive industry.
In 2020, Car IQ teamed up with Discover to implement its payment technology in auto fleets owned by businesses.
The product will allow vehicles to automatically pay for things like repairs, insurance, fuel, parking, and tolls.
4. Vehicle purchases shift online
The internet is affecting every part of the car-buying process.
Over 90% of car purchasers perform online research before a transaction.
9 out of 10 car shoppers read reviews and perform online research online.
And increasingly, more and more sales are taking place completely online.
Pre-pandemic, about 4.2% of total car sales took place online.
This number is expected to have risen in 2020 as dealers everywhere turned to digital channels.
This makes sense, as 83% of car customers already said they wish they could save time by shopping online.
And 80% of buyers already used third-party sites to assist in purchasing a car in 2019.
These online vehicle retail services offer a major increase in buying efficiency.
(And a thread to the traditional car dealer-focused business model.)
In traditional dealership settings, customers spend over 3 hours on average in the dealer’s showroom.
With online transactions, customers can complete the purchase with the click of a mouse.
Searches for “Carvana” have increased by 733% over the last five years.
And Tesla had already decided to close all its stores in 2019, now selling all new cars online.
It’s no wonder these services have flourished.
Even before COVID-19, 43% of shoppers said they wished they could complete the entire car buying process online.
5. The automotive parts market continues to grow
The global automotive parts market has been steadily growing for the past twenty years.
Growth of the Automotive Parts Market.
And it’s this space achieved roughly $723 billion in sales in 2021.
Ecommerce has completely changed the auto parts market.
Now, 94% of consumers check the manufacturer’s website for product information before purchasing a part.
In addition, the auto parts ecommerce industry is projected to be worth $19 billion in 2022.
The parts industry is benefiting from the ever-increasing average age of vehicles on the road.
However, the demand for parts is also being diminished by the increasing quality of newly manufactured vehicle parts.
Much of this growth is being driven by the sale of new trucks and light SUVs.
This category of vehicle is more prone to higher accessory and part sales.
Even as new auto sales fell in 2020, light truck sales grew.
These five trends are causing major shake-ups in the automotive industry.
Environmental concerns and technological innovations are advancing faster than many anticipated. From electrification to IoT connectivity, these shifts are changing the way cars are manufactured, sold, repaired, and driven.
As technology progresses, expect these trends to influence every facet of the automotive sector.