Study: All New Vehicles By 2020 Will Have Some Level of Hybridization

13 August 2008

Anticipated change in importance of external forces impacting the automotive industry in 2020. Click to enlarge.

While technological progress will continue to top the list of automotive priorities in 2020, sustainability shoots up to a close number two, according to a new study on the automotive industry by the IBM Institute for Business Value. The report, based on interviews with 125 executives in 15 countries from automotive OEMs, suppliers, and other thought leaders, finds that sustainability concerns will drive investments, product categories, and performance and convenience packaging decisions well into the next decades. Eight-five percent of the top auto companies worldwide participated in the study, including all of the top 10.

Alternative power will see continued innovation that extends far beyond 2020, with hybridization and battery technology leading the drive toward environmentally sustainable transportation, according to the report. Micro-, mild- and full-hybridization are currently undergoing extensive development today, and study participants believe strongly that by 2020 all new vehicles will have some level of hybridization.

The report, Automotive 2020: Clarity Beyond the Chaos, was unveiled at the Center for Automotive Research’s Management Briefing Seminars conference in Traverse City, Michigan.

Executives we interviewed project an unambiguous picture of the vehicle powertrain by 2020. Alternative power will see continued innovation for years beyond 2020. Battery technology will be ubiquitous. Lithium-ion technology holds the most promise and will see considerable investment and growth.

...The all-electric, plug-in battery-powered vehicle will be a reality by 2020. A range of 100 miles is already within reach, enough to satisfy needs of large population sections. OEMs are investing sizeable resources to making these a reality.

—“Automotive 2020”

Hydrogen fuel-cell vehicles will remain a viable alternative, but projections put only a small fraction of vehicle production migrating to this technology by 2020, due to cost-prohibitive processes and new infrastructures.

Our respondents were uniformly skeptical on this front. But success for this still-emerging technology will depend on generating, transporting, storing and distributing fuel efficiently. This will be no small task for an element with the properties of hydrogen. The added challenge of building an entirely new infrastructure may be cost prohibitive, at least by 2020.

—“Automotive 2020”

Executive ratings of the global portfolio of new vehicle production in 2020 with regard to producing environmentally friendly vehicles. Click to enlarge.

Biofuels will also see their share of investments, and use of non-food-based biofuels will grow. The study found that traditional fossil fuel-based vehicles are anticipated to make up 65% of new vehicle production by 2020, with average levels of CO₂ emissions are expected to reach 97 g/km and vehicle recyclability estimated to be at 88%.

The concept of total carbon footprint is increasingly the focus and will drive key decisions between now and 2020. Sustainability will be defined and broadly understood as a reflection of total carbon used in manufacturing and distributing across the entire value chain. This will pose some challenging choices. Satisfying consumer demand for electric power in certain geographies, as an example, is a high-carbon proposition (power generation based on coal).

—“Automotive 2020”

Consumers. Consumers continue to become better informed and more demanding and they will drive transformation in the current purchasing model for vehicles, the study found. The study concludes that consumers will expect to purchase or lease a vehicle that comes with flexible access to a diverse “garage” of vehicles. In the current model, consumers are often restricted by finances and buy a compromise vehicle, or they buy a car with features that don’t get used.

In the new model, consumers will drive a primary vehicle that best meets their daily needs, and have the option to change to a different model, as needed. For example, someone may drive a small, fuel-efficient vehicle during the week, but have access to a sport utility vehicle for a weekend ski trip or a luxury sedan to attend a wedding.

As these consumers seek out a comprehensive mobility experience, industry experts predict that flexible transportation services will replace the purchase of personal vehicles for multiple uses, and intelligent vehicles will cater to consumer demands for greater information, safety, and environmental responsibility.

The Intelligent Vehicle. Consumers are demanding more information and entertainment from their vehicles, as well as increased safety, economy, and environmental responsibility. This is spurring the manufacturing of “intelligent” vehicles—cars and trucks that use electronics to provide greater assistance with navigation, and provide more information about the vehicle, its environment, and connectivity. Technologies that will have a growing presence in vehicles by 2020 include telematics, including remote vehicle prognostics and active safety (capabilities that sense and respond to driving behaviors and road conditions); a wide array of entertainment choices such as data downloads and streaming media; and powertrain innovations.

Consumers will benefit from connectivity between their vehicles and other vehicles as well as road infrastructure. Information captured from breaking patterns—for example, from vehicles approaching a recent accident—will be transmitted to other vehicles. Alternate routing options delivered dynamically will help consumers avoid congestion and delays, and active safety features will enable crash avoidance.

Five Imperatives for the Automotive Industry. Based on the Automotive 2020 study and related research, IBM has defined five imperatives that are likely to distinguish the outperformers in the automotive world of 2020:

• Advance mobility. Auto companies must embrace new mobility models, such as new ownership and usage models and integration of other modes of transportation; e.g., when you arrive at the train station your car is waiting for you.

• Transform retail. Auto companies and dealers will need to find new ways to connect with sophisticated consumers and develop a new value proposition for dealerships.

• Simplify complexity. As vehicles become more connected and intelligent, their electronics and embedded software become more complex. IBM recommends that OEMs establish common processes, and standards so to enable innovations from traditional and non-traditional suppliers to be rapidly integrated.

• Partner extensively. To address the increasing cost of innovation, companies need to widen their enterprise innovation networks and extend the partnering concept to go beyond the current suppliers. Close relationships with companies in other industries, especially electronics, energy, and utilities, will become a necessity.

• Execute globally. OEMs and suppliers should create balanced, flexible operations aligned with local economies while having a positive social impact wherever business is done.

In the face of such significant and chaotic change, finding clarity will require the automotive industry to take sweeping and rapid action. Two of the greatest areas of opportunity are meeting consumer demands for environmental accountability and using technology to transform the way the industry develops products and goes to market.

—Sanjay Rishi, Vice President and Global Automotive Industry Leader for IBM

Resources

• Automotive 2020: Clarity beyond the chaos