1、The Mother Of All Tech BattlesAUTOTECHImportant disclosures appear at the back of this reportGP Bullhound LLP is authorised and regulated by the Financial Conduct Authority GP Bullhound Inc is a member of FINRASubscribe to receive GP Bullhound Research and News on in TechnologyFebruary 20193AUTOTECH
2、01 THE VIEW FROM GP BULLHOUND03 CHAPTER 1:A TIME OF UNPRECEDENTED CHANGE09 CHAPTER 2:THE GROWING INFLUENCE AND POWER OF TECH PLAYERS 17 EXPERT VIEW Christian Herrmann,Daimler15 CHAPTER 3:AUTOTECH INVESTMENTS GROWING FROM STRENGTH TO STRENGTH27 CHAPTER 4:FOUR KEY TRENDS IN AUTOTECH 30 EXPERT VIEW Ala
3、in Tiquet,Nvidia 36 EXPERT VIEW Martin Anderlind,Northvolt 43 EXPERT VIEW Stan Boland,FiveAI 49 EXPERT VIEW Magnus Olsson,Careem 56 EXPERT VIEW Dieter May,BMW58 CHAPTER 5:Future Battlefronts 61 EXPERT VIEW Darren Jobling,Zerolight 63 EXPERT VIEW Timo Buetefisch,Cooltra 65 EXPERT VIEW Lewis Horne,Uni
4、ti58 CHAPTER 6:JOCKEYING FOR POSITION71 METHODOLOGYCONTENTS5AUTOTECHSven Raeymaekers PartnerGuillaume Bonneton PartnerEXECUTIVE SUMMARYFrom the moment that Karl Benz built the first petrol-powered internal combustion engine automobile in Mannheim in 1885,car culture has relentlessly spread across th
5、e globe.Its impact has been nothing less than extraordinary:Das Auto has transformed global economies,shaped entire societies and tested the limits of engineering time and time again.It is unquestionably one of the most important inventions in history.As it stands today,if the industry were an econo
6、my,it would be among the ten largest on earth.More than 100 years after the petrol-powered car passed go for the first time-and despite worldwide sales at a record high in 2018-stress fractures are starting to appear.Tesla is on track to outsell both BMW and Mercedes-Benz in the US,car sales in Chin
7、a are declining for the first time in decades,and several global automakers have issued profit warnings in recent months.Indeed,the multi-trillion-dollar industry is facing unprecedented change across a number of fronts,including:Social:urbanisation and changing trends in car ownership Political:reg
8、ulation and pollution levels Technological:autonomous driving,electrification and connectivityOver the next 10-15 years,four trends are set to converge and potentially change the industry forever.They are:Electrification,autonomous driving,shared mobility,and connected experiences.Car makers are,con
9、sequently,confronted with a myriad of challenges,particularly in relation to design and manufacturing,alongside changes to the business model and customer relationships.In this new world,profits are expected to be redirected to areas where car makers lack prior knowledge and experience,while investm
10、ent needs to be routed towards technology that in many cases remains untested.As a result,we will undoubtedly see the emergence of new and powerful players in the mobility ecosystem.Its common to compare the trials and tribulations of automotive with those of the mobile device industry,where value h
11、as shifted from hardware to software and ecosystems and,ultimately,has led to the demise of several global giants.In this fast-moving world,one thing is for sure:auto industry leaders have no desire to see history repeat itself.THE VIEWFrom GP Bullhound4A TIME OFUnprecedented Change7AUTOTECHCHAPTER
12、16MACRO-ENVIRONMENTAL FACTORS Are Impacting The Automotive IndustrySources:GP Bullhound analysis,BCG analysis,1.Insee,2015Impacted by a number of macro-environmental factors,the multi-trillion-dollar auto industry is facing unprecedented change,with a number of social,political and technological dri
13、vers shifting and altering how businesses will perform for years to come.SocialWith people continuing to value the concept of sustainable living and embracing a pay-per-use and sharing economy,car ownership continues to fall in cities around the world,despite the worlds urban population growing from
14、 52%in 2010 to 55%today.Adding in time lost in seemingly endless traffic jams,ever-increasing parking costs,and the availability of various alternative modes of transport,including bikes,scooters and mopeds,its perhaps not surprising to see only 36%of Parisian households owning a car in 2015,compare
15、d to 80%across France as a whole.PoliticalIncreasingly concerned with the wellbeing and protection of vehicle occupants and vulnerable road users,and equally applying to new standards in vehicle safety equipment as well as the operation of new mobility services,central and local authorities are call
16、ing for more stringent regulation to increase road safety.At the same time,pressure to limit the environmental impact of road transport is mounting,as illustrated by the introduction of emission targets,ICE bans,and subsidies for electrified vehicles.As vehicles progressively turn into data centres
17、on wheels,more rigid rules are being called for around privacy data protection.TechnologicalOver the past few years,weve experienced tremendous progress in terms of enabling technologies,providing a foundation for the advent of connected,autonomous,shared,and electric driving platforms.These technol
18、ogies include advances in artificial intelligence,computer vision,and sheer computational power,as well as connectivity(bandwidth is set to increase hugely following the roll-out of 5G),fast evolving energy storage efficiency,and material management(such as 3D printing for instance).1617181920-2425-
19、2930-3440-4445-4950-5455-5960-6465-6970100%50%0%Licensed drivers35-39Age19832014Millennials vs parentsProportion of age groups owning a drivers license(USA)-19%35-3920-249AUTOTECH8CHAPTER 1WHAT ARE THE KEY Tech DisruptionsDISRUPTION HAS COME LATE But Will Have Lasting EffectsHeld back in part by the
20、 progress in foundational technologies,and in comparison with eCommerce and digital media,disruption of the automotive industry has taken much longer to arrive.Indeed,recent progress in key enablers,such as artificial intelligence,computer vision,broadband mobile connectivity and energy management h
21、ave paved the way for Autotech to really flourish.Smartphone penetration for one,has been instrumental in the widespread adoption of the industrys so called killer app:ride hailing.At the same time,capital investment for Electrification,Autonomy and Shared Mobility start-ups tend to be significant,a
22、nd required a sufficiently mature venture industry to be able to finance daring bets in these spaces.After a slow start,Electrification,Autonomy,Shared Mobility and Connectivity are set to converge over the next 10-15 years and profoundly change the automotive industry in its wake,effecting lasting
23、changes on product design,supply chain management,manufacturing,distribution,business models,sales and marketing.The key questions those in the industry will need to answer going forward are:How will value be distributed?Who will own the customer relationship?Sources:GP Bullhound analysis,BCG analys
24、is,http:/www.umich.edu/Despite seeing global sales of new electric vehicles quadruple between 2014 and 2017,the absolute share of plug-ins remains remarkably small.Compelled by increasingly tight emission standards and fear of being left behind,OEMs are nevertheless committing billions towards Elect
25、rification.Assuming price parity by 2024,and sufficient investment in supporting infrastructure,we can see the global electrified car count top 100 million by 2030.ELECTRIFICATIONSHARED MOBILITYWith the potential to rid the transportation industry of its single largest cost,while at the same time ma
26、king transport safer,cheaper,and more enjoyable,the stakes are monumental.With well over 50 companies investing heavily in driverless R&D,the market is experiencing a flurry of investments,partnerships and acquisitions.While Waymo and Cruise are arguably pulling out ahead,autonomous driving is very
27、much a city-by-city battle leaving ample room for regional contenders to step up.Having received the lions share of investments since 2014,shared mobility truly epitomises the coming of age of Autotech.Spearheaded by Uber and Didi 2018 saw over half a billion people use some kind of ride hailing ser
28、vice the sector continues to expand into new geographies and new modes of transportation.Once content with just minority stakes,OEMs and Tier 1 suppliers are increasing their grip on the space,launching their own services and acquiring competition in the process.The sheer volume of data being genera
29、ted within the future automotive ecosystem will not only improve road safety,traffic management and efficiency,but will also transform how people interact with vehicles and experience mobility altogether.The explosion of data,effectively turning cars into data centres on wheels,will however require
30、a redesign of both in-vehicle and vehicle-to-everything communication technology,as well as a fundamental discussion around data privacy and security.AUTONOMYCONNECTIVITYFuturemobilityKey hurdle:1.Legislative frameworks2.Technology readiness Key hurdle:1.Supporting infrastructure2.Price parityKey hu
31、rdle:1.Standardisation2.Privacy and security Key hurdle:1.Legislative frameworks2.Integration,multi-modality2010 Avg.Autotech1999 Avg.digital media1997 Avg.eCommerceLaunch date of current eCommerce,digital media and Autotech leaders11AUTOTECH10CHAPTER XSOFTWARE IS EATING The CarSince 1885,the key co
32、mpetencies of carmakers have arguably centered on shell design and the internal combustion engine.Software has never been core and,until recently,it was mostly outsourced to a supplier network.In a similar vein to the reshaping of the mobile device industry in the 21st century,where value moved from
33、 hardware to software and ecosystems,profits are expected to shift to areas where original equipment manufacturers do not have a legacy-or disappear altogether.Sources:Goldman Sachs,HBS,BCG https:/ profit pools includes mobility,data and connectivity,BEV car sales,AV and BEV component suppliers.BEV:
34、Battery Electric Vehicle.ICE:Internal Combustion EngineTHE CAR IS DEAD Long Live MobilityThe automotive value chain similar to its key competencies has remained largely unchanged over the last 100 years,with a direct line between suppliers and customers tightly controlled by omnipotent auto manufact
35、urers.As the actual product shifts from the car to mobility-as-a-service,original equipment manufacturers find themselves in a new and increasingly more complex value chain,with several new entrants all vying to gain control of the customer relationship and reduce car makers to de facto contract man
36、ufacturers.Sources:AT KearneyCHAPTER 1Profit pools future(2035,in$bn)Average profitabilty(RoS)Total$380bn20172035The developing notion of urban mobility is also rapidly expanding carmakers competitive landscape,and now includes bikes,scooters,high speed underground pods,and even aircrafts.We have se
37、em Daimler invest in Volocopter,Tencent leading a$90m round in Lilium Aviation,and GM unfolding plans to bring electric bikes to market in 2019.Old Value ChainRAW MATERIALSTIER 2&SUB-TIER SUPPLIERS(i.e component suppliers)TIER 1 SUPPLIERS(i.e module/sub assembly;component suppliers)OEMsDEALER NETWOR
38、KSEND CUSTOMERSTraditional profit pools70(+3%)Classic components60(-19%)New car sales(ICE&hybrids)33(+9%)Financing66(+12%)Aftermarket26(+25%)AV&BEV components21(+21%)New car sales(BEV)28(+27%)Data&connectivity76(+76%)On-demand mobilityEmerging profit pools8%3%14%10%6%4%13%10%Average ProfitabilityRAW
39、 MATERIALSTIER 2&SUB-TIER SUPPLIERSTIER 1 SUPPLIERSOEMsAGGREGATORS(i.e Google Maps)OPTIMISERS(i.e Uber,Lyft,Ola)FLEET MANAGERSEND CUSTOMERSSELF DRIVING TECHSmart factories,Connected supply chains,Changing value differentiatorsMobility as a service,Autonomous vehiclesNew Value Chain13AUTOTECH12CHAPTE
40、R XCHAPTER 2THE GROWING INFLUENCEAnd Power Of Tech PlayersAUTOMOTIVE WALL STREET KINGSOusted By Tech UsurpersTop US companies in 1970General MotorsExxon MobilIBMTexacoGulf OilFord MotorChevronTexacoMobilKodakDuPont1970 Net income($m)1,7111,048934770611547454435401356Top US companies in 2018AppleMicr
41、osoftJP Morgan ChaseAlphabetBank of AmericaBerkshire HathawayAT&TJohnson&JohnsonFacebookIntel2018E Net income($m)59,33833,47731,52131,45925,99024,15423,68822,26221,53021,299AutoAuto-relatedTechNetworkSources:Capital IQ.Note:As of 31 Dec 201810 Largest US-based Public Companies By Net IncomeWith seve
42、n out of ten of the highest earning corporations being either car makers or oil and gas businesses in the 1970s,automotive dominated big business in the US.Flash forward to 2018,and these auto giants have all been replaced by tech companies12345678910123456789101215AUTOTECH14CHAPTER XCHAPTER 214Cumu
43、lative market cap in Dec 2018(in$bn)5064,363Top ten automotive companiesTop ten tech companiesCumulative net income in 2018 (in$bn)85255Top ten automotive companiesTop ten tech companiesCumulative R&D in 2017 (in bn)70110Top ten automotive companiesTop ten tech companiesTHE GROWING INFLUENCE AND POW
44、EROf Tech PlayersSources:Capital IQ,McKinsey.Tech companies are Apple,Samsung,Microsoft,Alphabet,Intel,IBM,Facebook,Tencent,Softbank,Amazon.Automotive companies are Volkswagen,Toyota,Renault,General Motors,Hyundai,Ford,Honda,Fiat,Peugeot,Daimler.Tech leaders now hold a clear advantage in terms of sc
45、ale:their profits are superior and growing faster,and their cumulative market capitalisations are almost ten-fold larger than in automotive.As a result,their ability to finance research projects,and expand into new and unproven fields is considerably larger.Furthermore,leading tech companies investe
46、d almost twice as much in R&D as their automotive counterparts in 2017,whilst increasing their R&D spend more than five times faster annually.R&D growth 2016-20173.5%19%Top ten automotive companiesTop ten tech companiesTECH PLAYERSKey MovementsStart date of communicationAutotech PP1Autotech M&A1Stra
47、tegy200920142014Early presence in cars via Google maps and Waze.Building Waymo as the worlds leading autonomous driving solution.Partnering with automakers to equip cars with Android Auto&Google AssistantOffering automakers the CarPlay entertainment OS(available on car models from automakers such as
48、 Volkswagen,Peugeot,BMW,Honda etc.)Developing project Apollo:autonomous driving open source software platform offering free HD mapping,autonomous driving&testing platform,data sharing and deep learning capability-100+partners to date,10,000 developersNotes:Transactions from 2015 to 2018,(1)Through A
49、RM Holdingsc.5c.10c.102014201520142014AV:2016AV:2016Combining Intel processor technology with Mobileye computer vision expertise,in order to offer automotive leaders smart and connected solutions for transportation.Favouring partnerships with market participants such as Baidu,BMW and Fiat ChryslerAu
50、tomotive division reinforced by acquisition of Harman(infotainment)in 2016.Launched a USD 300m autonomous driving investment fund in 2017.Unveiled in January 2018 DRVline,a hardware and software platform delivering autonomous driving to auto manufacturer partnersNumerous investments across the value