The Future of Automotive Mobility Holds Some Surprises

Despite the increasing number of choices in personal mobility available today, the desire to own vehicles has not changed much over the last three years. Perhaps surprisingly, when asked if “owning a car is important,” consumers under the age of 30 agreed with the highest percentage rate.

This was one of the findings of a 2018 survey on automotive mobility involving 8,000 people in 13 countries spread across North America, Europe and Asia that the consulting firm Arthur D. Little recently concluded. The 2018 survey updates findings from a similar one undertaken by the firm in 2015 involving 6,500 people, and over time, some trends have emerged. We spoke with Dr. Klaus Schmitz, a partner at Arthur D. Little involved in the study, to find out more about their discoveries.

Car ownership as important to the under-30s. Isn’t this counterintuitive?

First off, we were interested in delving into the statistic that people under 30, as a group, are the most likely to answer affirmatively that car ownership is important to them (53 percent). This might seem surprising because, after all, haven’t we heard that millennials are more interested in their smartphones than driving?

Dr. Schmitz agrees, saying it is indeed, “counter industry wisdom." But when the same question was asked in 2015, precisely the same percentage of under-30s said ownership was important then as well—a response that Dr. Schmitz says caused much discussion that year. However, with the results being consistent in the 2015 and 2018 studies, researchers have concluded this finding is not a statistical error.

To be clear: the 8,000 people surveyed were pre-qualified as being in possession of a driver's license (whether or not they regularly drove or owned cars). Therefore, we suggested the data may be skewed toward drivers and therefore doesn’t necessarily accurately represent the entire population. While to some extent that may be true, Dr. Schmitz said, a high percentage of people in all age groups have a driving license.

In any case, as the survey was careful to include balanced numbers by age group, the comparison between the age groups is certainly valid. What the researchers found to be a clear trend is that the perceived importance in owning a vehicle decreases with age. For example, people in the 45 to 65 age group answered that car ownership is important at the rate of only 33 percent and 34 percent in the 2015 and 2018 surveys, respectively.

Unfortunately, the survey doesn’t provide a definitive answer as to why younger respondents found ownership more important than we might have expected, but Dr. Schmitz thinks it might be explained by the way survey questions are asked in general. For example, if you ask, “is your smartphone” important, you might find the under-30s answer “yes” at the highest rate, and you might even find they say it’s the most important thing to them. But that doesn’t mean they wouldn’t say car ownership is also important to them—they are not mutually exclusive desires, and as such, both things can be true at once.

How robust is the sharing economy in the automotive space?

Another potentially surprising finding is that although we hear a lot about the sharing economy, it does not appear to be a growing trend as far as automobiles are concerned.

The idea of peer-to-peer car sharing is down overall. When asked, “would you share your private car during times when you do not need it?” in the 2018 survey, 23 percent of participants said they would, falling by three percentage points since 2015. Notably, there is variation by country. For example, in China, 42 percent answered yes to this question (up from 39 percent in 2015) while in Japan just 9 percent said they’d consider it (down from 17 percent in 2015).

Again, it’s not entirely clear why country variations exist, but Dr. Schmitz says since the survey focused only on commercial peer-to-peer (PTP) sharing (i.e., private vehicle owner-sharing via a commercial app), variation might be explained by what offerings are available in each country; maybe some operations are being better marketed in some places than others, for example.

It should be noted here that sharing does not encompass the likes of Uber or Lyft, as these are seen as e-hailing services, more akin to taxi services. But still, Dr. Schmitz is less than bullish on the future of PTP car sharing (or short-term, by-the-hour car rentals), seeing these as likely transitional options until self-driving cars come into commercial operation.

Skepticism exists in the adoption of autonomous vehicles

The survey also found some apparent cooling of people’s comfort level with driverless cars. Though there’s a lot of buzz and a lot of investment in developing self-driving cars, otherwise called autonomous vehicles (AVs) when asked, “would you use cars that are fully autonomous” the number of people answering either, “yes they would” or “perhaps” has fallen by 7 percent overall between 2015 and 2018, with only 57 percent now saying they would ride in an AV.

The growing trust gap is subject to regional variation, though, with people in China being most comfortable with the idea of riding in AVs (78 percent) while respondents in France expressed the least comfort (47 percent).

Dr. Schmitz says the decline in trust in AVs is likely explained by reports of accidents involving fully autonomous vehicles, as well as reports of drivers placing an over reliance on advanced semi-autonomous driver assistance systems, which have led to either collisions or death recently.

Indeed, getting AV technology right is critical. Dr. Schmitz says although AVs will certainly be safer in the long run than having humans behind the wheel, he asserts, “AVs need to be at least 100 times more safe than cars driven by humans.”

For example, there are approximately 4,000 fatalities a year involving motor vehicles in Germany, so even one percent of that amount—40 casualties—would be still too many people to be killed by machines, he says. AVs will need to be held to a higher standard of safety by orders of magnitude in order to be viable.

Data privacy concerns also extend to autonomous vehicles

Another concern respondents have with AVs is data privacy. Again, regional variation exists here. Unsurprisingly, in Germany people are concerned about the security of their personal and private data with regard to autonomous driving, but Dr. Schmitz was surprised to find that people in the U.S. (where historically privacy has been less guarded than in Europe) are similarly concerned.

In fact, when asked “how concerned are you about security of your personal and private data with regard to autonomous driving?”—on the scale of “no issue at all” to “showstopper”—30 percent of U.S. respondents answered "showstopper," a rate even higher than people in Germany (21 percent). Conversely, only 7 percent of responders in China were similarly worried.

Good news—power trains will become cleaner

The drive trains in future vehicles, on the plus side, look like they are going to get significantly cleaner. Fifty percent of those surveyed said they would pay more for both hybrid and full-battery electric vehicles, while 41 percent said a factor for switching to electric vehicles would be their own contribution toward fighting climate change.

Significantly, while 70 percent of respondents surveyed own a gasoline-powered car, only 35 percent expect the drive train on their next vehicle to be gasoline-powered—most said they planned to purchase a hybrid, plug-in hybrid or a full-battery electric vehicle.

In the future, diesel sales are anticipated to be cut in half, such that if respondents follow through on their projected replacement vehicle choice, diesels will make up only 11.7 percent of the vehicle mix, just slightly ahead of full-battery electric vehicles at almost 10 percent. Hybrids and plug-in hybrids combined will dominate the market at 38 percent for those surveyed.

While barriers to purchasing electric vehicles are still price and range, this concern is diminishing. In 2015, while price was a barrier for 64 percent of those surveyed, that fell to 51 percent in 2018, while range anxiety as a barrier fell from 53 percent in 2015 to 39 percent in 2018. No doubt, better ongoing battery technology is being felt here.

Though electric vehicles are making headway, with the study showing people are now, more than ever, keen to make the shift to electrification, Dr. Schmitz says, “the success of the battery electric vehicle will be highly dependent on the charging infrastructure,” going on to say it will be crucial how city apartment dwellers can charge EVs as opposed to more privileged consumers (being the early adopters) who can charge in their own garages.

The overarching take-away, however, is despite a shift in automotive preference and concerns over automation, there is still a lot of interest in the automobile—and the vehicle market is almost certain to continue to grow.

Image credits: Arthur D. Little