"2023 McKinsey China Automotive CEO Special Issue" released! Driving to 2030 - the auto industry race

1. Driving to 2030 - The Auto industry Race

What we are experiencing is another great change in the automotive industry. Since the invention of the automobile in the 1880s, whether it is epoch-making assembly line production, or the rapid development of small-displacement vehicles under the shadow of the "oil crisis", or the fundamental improvement of passive safety brought by the popularity of seat belts and air bags, these new technologies and new models have greatly promoted the popularization and sustainable development of automobiles. But these single local changes are difficult to compare with the current smart electric vehicle revolution. Driven by the rapid development of intelligent electric vehicles, China's auto market is undergoing a change that is far deeper and wider than expected:

Power system change: electric drive is accelerating the replacement of internal combustion engine;

Core wins and losses change: The core wins and losses of "explosive" vehicles are gradually changing from hardware performance to software experience;

Profit model reform: The profit model of automobile enterprises has gradually evolved from the traditional "one hammer sale" of automobile sales to the value management of the whole life cycle of vehicles, as well as the identification of value realization opportunities at different stages of the cycle and the landing of the realization plan.

If before 2019, the development of intelligent electric vehicles is only a distant glimmer of light when the day will be bright and unknown, then since the explosion of electric vehicle sales in 2020, its vast trend has been like the brilliant sunrise in the East! In McKinsey's China Automotive CEO Quarterly 2019: In "Winning the Second Half of the Auto Industry", we have made ten prospects for China's auto industry in 2030, and six of them have become or are close to reality. Including the industry's high growth rate and high profit margin is difficult to reproduce, the demise of weak auto brands, the gradual disappearance of international brand premium rate, the importance of marketing services focused on customer journey experience, the decline and transformation of the traditional 4S model, and the dominance of independent brands on power batteries and low - and medium-price electric vehicle markets. Even if the changes are dramatic, these are the beginning, far from the climax, of great changes in the auto industry. And the real climax will be revealed one by one in the auto industry race to 2030:

Technology reshaping: Technology development in electric, network, intelligent and other fields will continue to profoundly shape the industry landscape and consumer demand;

Reshaping of brand positioning: Disruptive technological changes will create favorable conditions for new entrants to enter the market, thus rewriting the overall competitive landscape;

The transformation of value creation: new technologies and new entrants will continue to rewrite the business logic and value creation model of the industry;

Carbon reduction is imperative: As an industry responsible for nearly a quarter of global carbon emissions, carbon reduction efforts and progress in the automotive industry are critical to achieving the 1.5 ° C target on schedule.

Looking ahead to 2030, we believe that the development of smart electric vehicles will continue to penetrate into every corner of the Chinese automotive market. With established advantages in relevant areas and the desire to further consolidate their leading edge, we expect the competitiveness of Chinese car companies, especially some of the leaders, to be greatly strengthened. At the same time, the "volume king" that stands out in the fierce domestic market will also bring more "unheard of" cost-effective models to overseas consumers, and then profoundly change the competitive landscape of the international automobile industry. In an optimistic scenario, we expect 3 to 4 Chinese auto companies to be among the top 10 global auto companies, while 5 to 6 Chinese component suppliers will be among the top 20 global suppliers.

In the auto industry race to 2030, there will be one climax all the way. The next three years will be crucial for both established international giants and new domestic forces. If you can find the right feeling in the three years of competition and occupy a favorable position, you will have a great future! If we waste these three years of precious time and make little progress in the field of intelligent electric vehicles, the unbearable thing may not be far away!

Second, the road ahead is bumpy, do not slack off

The Chinese automotive industry's pursuit of the world's leading level and even catch-up is rooted in the leapfrog development of electric vehicles. After years of ups and downs, this "corner overtaking" strategy has finally revealed its edge in the auto industry race to 2030. Overtaking on corners is not a dream, but it is necessary to accurately control the steering wheel when overtaking on corners, so as not to run out of the track! At the same time, how to make full use of the advantages accumulated in the corner, maintain and expand the lead on the straight after the corner, will also be a subject that all Chinese car companies, especially the head companies, need to consider.