The race to build self-driving cars: Who will win?

The race to build the fully connected car and, ultimately, the completely autonomous vehicle, is already under way. Who will cross the finish line successfully, and where exactly that finish line is, remains to be seen.

In a report – based on extensive market research, interviews with auto industry experts, and engagement with auto manufacturers, suppliers, and technology companies across the globe – the automotive practice of Strategy&, PwC’s strategy consulting group, addresses these questions.

Today, 70 per cent of global connected service sales come from premium brands. By 2022, that number will fall to 50 per cent, at the expense of falling margins. Although connected services will generate sales of $155 billion, most of this value will be offset by falling sales from legacy features such as navigation, entertainment, and safety systems, says PwC’s report Connected car report 2016: Opportunities, risk, and turmoil on the road to autonomous vehicles.

These trends will contribute to a squeeze in profits for OEMs and suppliers, the report added. Higher R&D expenses will not convert into higher overall sales. On the supply side, by 2030, profits available to traditional automakers and suppliers may drop from 70 per cent to less than 50 per cent of the industry total.

The balance of $120bn may be captured by new entrants, including suppliers of new technology, mobility services, or digital services, it added. Many of today’s manufacturers and suppliers lack the skill, agility, and boldness to turn their companies digital quickly enough to take advantage of this change.

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