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19 Feb 19

How AVs will revolutionise fleet and OEM revenues by 2030

Business models in the fleet and automotive industry will be turned on their head within 10 years, analysts have warned.

KPMG forecasts a financial revolution by 2030 as electric and autonomous vehicles (EVs and AVs), and the development of Mobility as a Service (MaaS) disrupt a business model that has changed little in the past century.

“The downstream revenue of an electric, autonomous, shared vehicle could be up to 10 times greater than that of a private use vehicle today,” said Charlie Simpson, partner and head of Mobility 2030, KPMG.

New revenue sources

His department’s research indicates that by 2030 vehicle fleet management (9%) and new digital revenues (41%) will account for half of all downstream revenues, while service, maintenance, energy, insurance and finance will all see their share of TCO revenue decline.

“This highlights the sheer scale of the opportunity available to those players who can put together the compelling value propositions that will be digitally enabled around productivity, media, health care and education provided to autonomous vehicles as our time is freed up from having to drive,” said Simpson.

But the increased fleet efficiency of shared vehicles, as individuals and businesses move from vehicle ownership to usership, also means there will be many fewer vehicles on the road. MaaS Global, for example, suggests that it would take only 30,000 cars to replace Helsinki’s current parc of 600,000 cars, if they were were organised optimally.

KPMG’s analysis suggests EVs will achieve TCO parity with internal combustion engine vehicles by 2020 for vans and 2021 for cars, and that this cost per mile advantage could become as much as 40% within a decade, thanks to lower service, maintenance and energy costs.

Fleets first to adopt AVs

Light and heavy commercial vehicle fleets will be the first to seize AV opportunities, forecasts KPMG, due to the TCO advantages, safety improvements and their solution to driver shortages.

“The scale of disruption we are seeing across automotive, energy, infrastructure and logistics as well as public sector respresents a fundamental discontinuity,”said Simpson. “It’s one that throws up huge opportunities as well as challenges and demands changes in behaviour.”

Future winners

The question is how quickly will these changes arrive in different markets, and which businesses are best placed to exploit the opportunities. For example, who will own vehicles and fleets in future; OEMs, energy firms, tech giants, vehicle hire companies, or leasing operators and finance houses?

“It’s going to be necessary for a lot of companies to pivot their business models dramatically,” said Simpson.

He believes that major OEMs will remain at the heart of mobility, “at least for now”, although he added that, “mobility throws their 100-year old business model based on engineering excellence into considerable uncertainty, driven by the move from value of metal to value of service.”

OEMs under threat

The ability to aggregate fleet capacity with dynamic consumer demand, said Simpson, will become essential, playing into the hands of telecoms and tech players, rather than OEMs. Put bluntly, some businesses will become ingredients, while others will enjoy the higher value buisness opportunities of being aggregators.

“If we move into this [shared] fleet world, whose balance sheet do these fleets sit on, and who is going to be financing the long-term investment as we upgrade the energy infrastructure and roll out large scale battery storage? Who is going to be funding and building the integrated payment platforms that are implied by this connected mobility future?” asked Simpson.

Above all, he said, the winners have to commit now to their future strategies.

“The last four to five years have been pilot-level experiementation of technologies and concepts and we are now at the point where the winners are scaling up the size of their bets. It’s going to require bold decisions for companies to invest in scale outside their core business.”


Authored by: Jonathan Manning