The document discusses several trends that will shape the future of the car industry, including: 1) Connectivity and electrification are becoming core parts of the industry and autonomous features will gradually increase; 2) Urbanization and shared mobility will impact vehicle ownership rates and infrastructure use; and 3) Collaboration between technology and automotive companies will be necessary as electronics and software become more important to vehicle design and manufacturing.

1. The Future
Of Cars
ALEXIS HOUSSOU - PRESIDENT
KIERAN PRADEEP - ANALYST
MAY 2017

2. Global Car Trends

3. The Car Industry Is
Worth Over $5 Trillion
A Year
Value-chain shifting toward software:
Worth 30% of profits in 2030.
Source: PWC

4. Global Car
Markets Are
Diverging
14 16
42
52
68
78
35
40
31
37
34 34
0
10
20
30
40
50
60
70
80
90
2000 2005 2010 2015 2020 2025
MILLIONSOFCARSSOLD
Emerging Markets
Advanced Markets
Developing markets: low-price, high sales.
Advanced markets: high-price, slow sales.
Source: Goldman Sachs

5. Global Car
Insurance
Markets Are Also
Diverging
Source: Swiss RE

6. Car Price A Limiting
Factor in Developing
Markets

7. Vehicle Ownership
Rates Are Declining In
The US
Source: Michael Sivak, Has
Motorization in the U.S. peaked?
University of Michagan, McKinsey

8. China Eclipses USA
and Japan As The
Biggest Car
Manufacturer
Source: KPCB Internet
Trends 2016

9. Source: DCA Chine-Analyse 2015
Bank of America Merrill Lynch “Not So trivial Facts”
China: 70.1% Share of Global
Smartphone Production (2011)
China: 26% Share of
Global Car
Production (2014)
A Comparison Of
Chinese Smartphone
& Car Manufacturing

10. 2005 2010 2015 2020 2025 2030 2035 2040 2045
Connectivity
Electrification
Autonomous
Features
Shared Mobility
Full Autonomy
The Car Industry Is
Shaped By Several
Interacting Trends
Urbanization

11. Connectivity

12. 0
200
400
600
800
1000
1200
1400
1600
1800
2012 2013 2014 2015 2016 2017 2018 2019 2020
CarUnits(Millions)
Global Installed Cars Base
Non-Connected Connected
30% Growth In
Connected Cars
Per Year
260 million connected cars
on the road by 2020.
Source: McKinsey, Carpark

13. Safety, Advanced
Driver Assistance And
Mobility Services Will
Become Core
Business
Source: Business Insider
Intelligence, 2015
Connected-Car Revenue From Providing Systems

14. Establishing
Communication
Infrastructure Will Be A
Major Challenge

15. Autonomous Cars
Will Require Faster
Data Rates: A 5G
Network

16. 5G Will Be Rolled Out
Across Existing
Networks To Ensure
Continuous Coverage
5G
Source: Ericsson Mobility
Report 2016

17. Urbanization
Source: Omar Ureta, Wired

18. Source: United Nations, Department of Economic and Social Affairs,
Population Division (2014). World Urbanization Prospects: The 2014
Revision & UN Population Division (2011). World Urbanization
Prospects: the 2009 Revision Population Database
Humanity Is Now
A Majority Urban
Species

19. Yet We Don’t Use
Our Urban
Infrastructure
Efficiently

20. 1 Billion Parking
Spaces In The US for
253 Million Vehicles
Source: University of California
Berkeley

21. Cars Are Idle 96% Of
The Time
Source: Prof Stefan Heck

22. The Cost Of Parking
Spaces Is Priced Into
Buildings And Services

23. Commuting Takes Up A
Significant Portion Of
Total Driving Time

24. Average Cost of
Congestion For
Individual Households
Per Year
2230
2580
2187
1736
2596
2804
2412
1985
2891 2977
2649
2155
3217 3163
2927
2301
0
500
1000
1500
2000
2500
3000
3500
UK France Germany USA
Costsin($)
Country-level: average direct and indirect costs of congestion per individual car commuting household,
Dollars
2013 2020 2025 2030
Source:
INRIX, Cebr Analysis
Based on the economic impact of lost-time, wasted fuel and
lower productivity.

25. Source: Economist, AAA
Lifecycle Cost Of Car
Ownership

26. Shared Mobility

27. Source: University of Michigan
Transportation Research Unit
Driver’s Licenses Are
Becoming Less Of A
Necessity In The US

28. Source: Morgan Stanley
Research
Miles Driven Will
Increase Even As
Car Sales Slow

29. Source: Morgan Stanley
Research, The Fuse
Shared Mobility Will
Increase Its % Of
Global Miles
Travelled

30. Electrification

31. 2020: Electric Cars
Will Reach Cost
Parity With Gasoline
Cars

32. Batteries account for
1/3 of an Electric
Vehicle’s Production
cost
Source: Benedict Evans, Andressen Horowitz

33. Total Cost Of
Launching A New
Car Is $1-6 Billion
Source: Autoblog
John Wolkonowicz, Senior Auto Analyst for North
America at IHS Global - "It can be as much as $6 billion if
it's an all-new car on all-new platform with an all-new
engine and an all-new transmission and nothing carrying
over from the old model."
Ford Mondeo Mk1 cost $6B to develop...

34. Autonomous
Features To Full
Autonomy

35. Source: Business Insider
Intelligence, 2015
Estimated Global Installed Base Of Cars
With Self-Driving Features
Cars Will Offer
Increasingly
Autonomous
Features

36. Source: KPCB Internet
Trends 2016
Detroit Vs Silicon Valley:
Gradual Adoption Or Full
Autonomy?

37. Waymo (Total Miles)
Source: Google Waymo Disengage Report, The Verge
Human Intervention Is
Decreasing As
Driverless Mileage
Increases

38. Source: Wired
Sensor Cost Is A Real
Bottleneck

39. Autonomous Cars Create
Large Market
Opportunities For Chip
Makers

40. Autonomy Would Save
Upto $1.2 Trillion In
The US Alone
Assuming 100% Adoption
Rate, 2013 baseline

41. Key Finding:
200K Autonomous
Taxis Could
Replace All 800K
Cars In Singapore
On-Demand Mobility
To Become On-Demand
Autonomous Mobility?

42. Tesla =
Airbnb Model
Will Autonomy Make
The Car An Asset or A
Service?
Everyone Else =
Fleets + Mobility-As-A-Service
BA

43. Commercial Trucking
Likely The Earliest
Victim of Autonomous
Transformation
Source: Trucks.com

44. EVs & Autonomy
Allow Greater
Design Freedom
Source: IDEO

45. UberPOOL: A
New Model For
Public
Transport?
London: CityMapper =
UberPOOL + Smartbus

46. Humans Are
Dangerous?
Source: WHO 2015
Human Error
90%
Other CausesCar Accident Causes:
10%

47. Uptake of Car Safety
Features Mean
Personal Liability
Claims Will Decrease

48. Car Insurance Market
Will Shrink by 60% by
2040

49. Human Drivers &
Autonomous Vehicles:
Different Strengths In
Different Contexts
Source: Implications of
Connected and
Automated Vehicles on
the Safety and Operations
of Roadway Networks: A
Final Report, Center for
Transportation Research
The University of Texas at
Austin 2016.

50. Silicon Valley
& Detroit

51. The Car As A New
Computing Platform

52. 2030: Electronics Will
Account For 50% Of
Automobile
Manufacturing Costs

53. Electric Vehicles
Lower Barriers To
Competition

54. Will The Car Industry
Go Fabless Like
Smartphones Did?
Inhouse Software &
Manufacturing OS
Manufacturing
Brand
Components

55. How To Make A Car?
Detroit Vs Silicon
Valley
50+ Suppliers 24 Suppliers

56. Detroit Capex
Vs
Silicon Valley Capex
Source: Benedict Evans, Andressen Horowitz

57. Source: McKinsey 2016
Detroit Capex
Vs
Silicon Valley Capex

58. Scaling Is A Huge
Challenge

59. Cars: Low Volume,
High Price
Smartphones: High
Volume, Low Price
Source: Benedict Evans, Andressen Horowitz

60. 0
0.2
0.4
0.6
0.8
1
1.2
Ford Toyota Daimler Volkswagon Microsoft Facebook Apple Alphabet
EBIT
Car
Smartphone
EBIT Margin Comparison
Detroit Generates Higher
Revenues But Silicon
Valley Generates Higher
Profit
Source: Google Finance

61. The Boeing Scenario:
Detroit Becomes The
Factory For Silicon
Valley?
Source:
McKinsey,
2016

62. Detroit Acquiring Tech
Talent

63. Source: CB Insights
Car Tech VC Investment
Doubled Between 2015 &
2016

64. Alexis Houssou
@a_houssou
Co-founder & President
@hardware_club
The Team
Kieran Pradeep
@ciaranocarolan
Analyst
@hardware_club

65. @a_houssou @hardware_club
Thanks!
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