Congestion takes its economic toll as growing traffic runs up to infrastructure constraints. Unnecessary long commutes limit the accessibility of the job market. Supply delays curb the productivity of factories. Transportation is a key source of urban air pollution and meaningfully contributes to climate change, two environmental challenges that shape the policy agenda.

Mobility is at the beginning of a new era. We are seeing more and more electric cars on the road and Silicon Valley is putting the vision of autonomous vehicles to reality. Electric cars are at the cusp of mass market. Battery technology progress raises energy density, lengthens driving ranges between charges and improves every day comfort. The majority of consumers lose their range anxiety once the range exceeds 300 kilometers according to a leading automaker. A wave of new electric car models will come to the market over the coming years offering this kind of long mileage, increasing the choice and convenience for consumers. A breakthrough in battery technology is not necessary. Of course, electric cars are not the solution for those regularly driving long distances. Instead, the mass market should evolve one costumer segment at a time.

New services bring greater choice of options
There are more trends to watch beyond technology. The world population grows and wealth accumulates. The demand for transport increases in particular in Asia. China is the world’s largest car market. The world urbanizes. Cities have less cars as density favors mass and shared to individual transport solutions. Asian megacities already are at car ownership levels comparable to the western world. The golden age of booming car sales might be ending soon as urbanization and China’s changing demographics in part offset the wealth effect. There is also the trend towards using instead of owning. Services such as ride hailing or bike sharing have a profound impact. These services change the consumers’ attitude towards mobility, sharpen the perception of mobility needs and related costs, and bring a greater choice of options.

There are many different future pathways. These trends highlighted above could develop evolutionary. Or, electric cars, autonomous driving and mobility services could develop a self-reinforced, disruptive impact causing a mobility revolution. Electric vehicles and autonomous driving are complementary technologies. Affordable and convenient mobility services could follow the often referred to S-type adoption curve, boosted by the change in consumer attitude to using from owning. There has hardly ever been a vision as clear and uncontested as the coming era of electric, autonomous and pooled vehicles. However, the promise of self-driving cars depends on public policy. Electric cars solve the pollution issue, autonomous driving can solve the congestion issue. Demand for mobility grows with affordability. Solving congestion and keeping traffic flowing in part requires policy support for shared autonomous vehicles over individually owned self-driving cars.

Winners and losers: technology companies vs. automakers?
The impact is profound and will trigger large shifts of value pools, creating winners and losers. Cars provide a living for many industries, not only automakers. We stop at gas stations, regularly due maintenance and pay insurance. Among the main beneficiaries are auto suppliers. Hybridization, i.e. combining electric motors with combustion engines, is the most popular option to meet tightening emission and fuel efficiency limits. Auto suppliers deliver these parts. The technology sector seems particularly well positioned, as electric mobility and autonomous driving will lead to more electronics in cars. For automakers, the future holds more threats than opportunities. Electric mobility levels the playing field and new entrants intensify the competition. Significant investments in technology are necessary to stay on top requiring a solid financial health and access to capital. Declining car ownership and peaking car sales would be the consequence of the widespread use of shared, autonomous vehicles. This revolutionary scenario would force automakers to a challenging transition of their business model from selling cars to selling mobility services.

Oil demand could peak around 2035 as the future of the combustion engine is at stake. Rising fuel efficiency and electric cars dent road fuel use, which accounts for almost half of total oil consumption. Nevertheless, the energy business seems less at risk than commonly perceived. The oil companies have significant stakes in natural gas and chemicals, two markets where demand should continue to grow long term. The shale revolution brings abundant and affordable natural gas supplies. Meanwhile, the impact on electricity use tends to be overestimated. Electric cars raise household electricity use by roughly 50%. Households account for roughly a third of total electricity consumption. Even under very positive assumptions for electric car sales, it takes time for the entire fleet on the road to turn electric. Clean energy such as wind and solar become cost competitive contributing to ample electricity supply, which will more than adequately meet incrementally rising demand. For utilities, the clean energy threat is bigger than the electric mobility opportunity.

Contributing to a future that serves the next generations
The broader impact goes even further. The future mobility looks clean and affordable. Spending less on mobility means households have more budget available for other expenses, which overall adds to economic productivity. Autonomous driving makes mobility accessible for everyone. Distances shrink and social interactions expand. The urban space could change its face. Fleets of autonomous vehicles make on street parking obsolete, freeing up urban space for other use. Road funding dries up as fuel tax income declines with fuel use declining. The only viable option is mobility pricing, a political hot potato. Charging the car at home, potentially with rooftop solar exemplifies a bigger story: the democratization of energy. Energy use shifts from resources to technology, from trade to self-reliance, from big to small, which triggers a geopolitical power shift. Most importantly, as consumers, citizens and investors we contribute to shaping a future of mobility that serves the next generations.