Ashwin Shirvaikar, CFA

Itay Michaeli

Todd Bault

Tsubasa Sasaki

Timothy Thein

Kenneth Wong

Philip Watkins

Manabu Hagiwara

Jim Suva, CPA

Arifumi Yoshida

Michael Rollins, CFA

Jamshed Dadabhoy

Christopher Reenock

Justin Barell

Paul Gong

Atsushi Ikeda

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Jim Suva

Kota Ezawa

Christian Wetherbee

Arthur Lai

Steven Holzer

Atif Malik

Jonathan Raviv

Raghav Gupta-Chaudhary

Ethan Kim

Beatrice Lam

Angus Tweedie

Bradley Eyster

Seshadri R

Chetna Pant

Looking back at old futuristic movies and television shows, the creative people who made them did those same two things. Interestingly, most believed how we were going to traverse this planet would be vastly different. Be it some type of Star Trek transporter that digitizes your molecules and sends them hurtling through space, or a personal spaceship that you use to commute, the future thinkers in Hollywood didn’t start their shared vision resigned to the idea they would be jumping in a car and driving themselves to their next destination. So how close are we to ditching our personal cars in the future? While we may not be up to personal flying taxis yet, it does seem that reality may finally be catching up with the hype. A handful of companies are pursuing various level-4 RoboTaxi services (where the car is totally in control and humans are just passengers) to build urban rideshare networks in the coming one to three years. These are being planned for cities and surrounding suburbs and the race to launch and commercialize these RoboTaxi’s is all about building a powerful network effect. This network effect is determined by who can introduce and scale safe, reliable, fast, and low-cost urban RoboTaxi fleets. But there’s more to come. Around 2020-2021 we expect to see more autonomous vehicle (AV) features sold on personal cars — like vehicles that can drive themselves on highways — and offered in the same way advanced safety options are today. In the early/mid 2020s, we see the expansion of AVs into personally-owned vehicles that consumers can subscribe to. An AV Subscriber network attempts to preserve the value of instant-car-access “ownership” with a shared network. A ‘lease’ payment for an AV Subscriber would include use of the car, plus insurance and maintenance. In addition to extra AV safety features on this car, the car will drive itself to get serviced in the middle of the night or a new car with enough seats to pick up the whole family at the airport can be sent to your house overnight. The consumer can also decide to leverage the network platform for peer-to-peer sharing and have their car make money when it’s not being used. Ultimately, we see the RoboTaxi networks and the AV Subscriber network integrating together and once you own the network, new forms of mobility can be integrated — such as “flying cars” operating on certain routes. We estimate the U.S. high-population-density urban RoboTaxi addressable market (TAM) alone could exceed $350 billion — with high margins for the network leaders — yielding a nearly $1 trillion enterprise value create at 15x EBIT (earnings before interest and tax). We also we see the market for Tier-1 suppliers in advanced driver-assistance systems and autonomous vehicles rising to > $100 billion by 2030E from the current $5-6 billion today and the post 2021 adoption curve for AV being steeper than expected. With cars sorted out, what else should we change in the future?Authors: Itay Michaeli,Justin Barell,Jamshed Dadabhoy,Kota Ezawa,Raghav Gupta-Chaudhary,Manabu Hagiwara,Ethan Kim,Arthur Lai,Beatrice Lam,Atif Malik,Jonathan Raviv,Jim Suva, CPA,Angus Tweedie,Christian Wetherbee,Arifumi Yoshida,Steven Holzer,Bradley Eyster,Seshadri R,Chetna Pant,

Looking back at old futuristic movies and television shows, the creative people who made them did those same two things. Interestingly, most believed how we were going to traverse this planet would be vastly different. Be it some type of Star Trek transporter that digitizes your molecules and sends them hurtling through space, or a personal spaceship that you use to commute, the future thinkers in Hollywood didn&rsquo;t start their shared vision resigned to the idea they would be jumping in a car and driving themselves to their next destination. So how close are we to ditching our personal cars in the future? While we may not be up to personal flying taxis yet, it does seem that reality may finally be catching up with the hype. A handful of companies are pursuing various level-4 RoboTaxi services (where the car is totally in control and humans are just passengers) to build urban rideshare networks in the coming one to three years. These are being planned for cities and surrounding suburbs and the race to launch and commercialize these RoboTaxi&rsquo;s is all about building a powerful network effect. This network effect is determined by who can introduce and scale safe, reliable, fast, and low-cost urban RoboTaxi fleets. But there&rsquo;s more to come. Around 2020-2021 we expect to see more autonomous vehicle (AV) features sold on personal cars &mdash; like vehicles that can drive themselves on highways &mdash; and offered in the same way advanced safety options are today. In the early/mid 2020s, we see the expansion of AVs into personally-owned vehicles that consumers can subscribe to. An AV Subscriber network attempts to preserve the value of instant-car-access &ldquo;ownership&rdquo; with a shared network. A &lsquo;lease&rsquo; payment for an AV Subscriber would include use of the car, plus insurance and maintenance. In addition to extra AV safety features on this car, the car will drive itself to get serviced in the middle of the night or a new car with enough seats to pick up the whole family at the airport can be sent to your house overnight. The consumer can also decide to leverage the network platform for peer-to-peer sharing and have their car make money when it&rsquo;s not being used. Ultimately, we see the RoboTaxi networks and the AV Subscriber network integrating together and once you own the network, new forms of mobility can be integrated &mdash; such as &ldquo;flying cars&rdquo; operating on certain routes. We estimate the U.S. high-population-density urban RoboTaxi addressable market (TAM) alone could exceed $350 billion &mdash; with high margins for the network leaders &mdash; yielding a nearly $1 trillion enterprise value create at 15x EBIT (earnings before interest and tax). We also we see the market for Tier-1 suppliers in advanced driver-assistance systems and autonomous vehicles rising to &gt; $100 billion by 2030E from the current $5-6 billion today and the post 2021 adoption curve for AV being steeper than expected. With cars sorted out, what else should we change in the future?Authors: Itay Michaeli,Justin Barell,Jamshed Dadabhoy,Kota Ezawa,Raghav Gupta-Chaudhary,Manabu Hagiwara,Ethan Kim,Arthur Lai,Beatrice Lam,Atif Malik,Jonathan Raviv,Jim Suva, CPA,Angus Tweedie,Christian Wetherbee,Arifumi Yoshida,Steven Holzer,Bradley Eyster,Seshadri R,Chetna Pant,

The Race for the Future of Networked Mobility

If you were asked to think outside the box and give your vision of the future there are two things you would need to do. First, you would need to categorize those things that you think will stay constant throughout time, next, you would think of those things that will change. On the constant side, you may believe you’re always going to live in a house-like structure on land versus living underwater, or that you’re always going to wear clothes and not a digital outfit projected from your cell phone. On the change side, however, you probably have a mix of things you envision could be improved in the future.

Car of the Future v4.0

Ashwin Shirvaikar

Michael Rollins

Our latest Car of the Future report (v 2.0) aims to offer a one-stop shop to understanding and evaluating global automotive technologies that will shape tomorrow’s cars — how they are built, powered, equipped and serviced. By ‘future’, we generally aim to focus on the next 5-10 years in order to keep the topics both interesting and investable. The report features both new contributions and themes from several Citi analyst teams around the world as well as the integration and updates of recently published thematic reports by Citi’s global analysts. Besides integrating and updating all past discussions, Car of the Future v2.0 delves into some new “outside the box” discussions, such as: (1) ADAS as the most powerful trend in the history of the automobile, in which we highlight options for further penetration via insurance savings (Citi’s Autonomous Driving Subscription Model) and game-changing potential in subscription-based automated driving offerings (Citi’s ADAS Subscription Model); (2) A deep dive into the human machine interface (HMI), an increasingly critical frontier that might shape how automakers differentiate their automated driving offerings — full digital clusters, head-up displays and even augmented reality; (3) An updated thought-provoking view on the future of “new mobility” and mobility-as-a-service; and (4) A deeper look into the consumer demand for the ideal driving range of electric vehicles (EV). As we continue to research and explore deeper into the world of futuristic and emerging automotive technologies, it is easy to fall under the seduction of these “sexy” technologies and forget entirely to connect the dots to an investable framework. As such, we aim to tie our Car of the Future report to the investable areas of future automotive technology by focusing on both Tier-1 and Tier-2 auto suppliers that play into the most compelling trends of our Car of the Future thematic report. Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,

Our latest Car of the Future report (v 2.0) aims to offer a one-stop shop to understanding and evaluating global automotive technologies that will shape tomorrow&rsquo;s cars &mdash; how they are built, powered, equipped and serviced. By &lsquo;future&rsquo;, we generally aim to focus on the next 5-10 years in order to keep the topics both interesting and investable. The report features both new contributions and themes from several Citi analyst teams around the world as well as the integration and updates of recently published thematic reports by Citi&rsquo;s global analysts. Besides integrating and updating all past discussions, Car of the Future v2.0 delves into some new &ldquo;outside the box&rdquo; discussions, such as: (1) ADAS as the most powerful trend in the history of the automobile, in which we highlight options for further penetration via insurance savings (Citi&rsquo;s Autonomous Driving Subscription Model) and game-changing potential in subscription-based automated driving offerings (Citi&rsquo;s ADAS Subscription Model); (2) A deep dive into the human machine interface (HMI), an increasingly critical frontier that might shape how automakers differentiate their automated driving offerings &mdash; full digital clusters, head-up displays and even augmented reality; (3) An updated thought-provoking view on the future of &ldquo;new mobility&rdquo; and mobility-as-a-service; and (4) A deeper look into the consumer demand for the ideal driving range of electric vehicles (EV). As we continue to research and explore deeper into the world of futuristic and emerging automotive technologies, it is easy to fall under the seduction of these &ldquo;sexy&rdquo; technologies and forget entirely to connect the dots to an investable framework. As such, we aim to tie our Car of the Future report to the investable areas of future automotive technology by focusing on both Tier-1 and Tier-2 auto suppliers that play into the most compelling trends of our Car of the Future thematic report. Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,Authors: Itay Michaeli,Todd Bault, FCAS,Jamshed Dadabhoy,Manabu Hagiwara,Christopher Reenock,Tsubasa Sasaki, CFA,Jim Suva, CPA,Kenneth Wong, CFA,Philip Watkins,Justin Barell,Paul Gong,Atsushi Ikeda,Michael Rollins, CFA,Ashwin Shirvaikar, CFA,Timothy Thein, CFA,Arifumi Yoshida,

Mobility Transformation: Full Steam Ahead

It has been quite a year for the Car of the Future theme! Discussions that were deemed theoretical only a few years ago have become reality. Silicon Valley companies have taken increasing interest in selling into and perhaps even building cars. New mobility services have gained rapid momentum. Technology events like the Consumer Electronics Show (CES) have increasingly begun to look like auto shows. And to think...it’s only the beginning.

The Car of the Future v2.0

In this Car of the Future report, we attempt to explain and evaluate those global automotive technologies that will shape tomorrow’s cars — from assembly and safety to fuel. In identifying and evaluating these future technologies, we also put together a basic investor framework that evaluates the potential for each technology by asking some simple questions — things like “Is there a specific regulatory driver?” or “Is it reasonably affordable to consumers?” We think this is a good starting point for sorting through the plethora of opportunity and change that’s out there. Regulation plays an important role as a driver for some of the change that’s coming up. New regulation on fuel efficiency is leading manufacturers to decrease the weight of vehicles through lightweighting of materials. New operating models like car sharing are changing the way that we traditionally think of vehicle sales and affordable/low-cost green cars are increasing the global statistics for car ownership while being environmentally considerate. After years of fits and starts, electric vehicles are finally starting to get some traction as advances in battery technology improve drive time and the prospect of a battery operator model could be the path to a low-cost vehicle. Alternative fuel sources (compressed natural gas and fuel cell vehicles) are also helped by global regulatory requirements that are now largely enacted and are stringent on emissions reduction. Where we may be coming closest to the Jetson spaceship is in technology — the Connected Car. Auto parts manufacturer Continental forecasts growth in telematics of around 34% from now until 2020 versus market growth of 4%, reflecting the convergence of active safety through advanced drive assistance systems and embedded connectivity. The driver's seat will soon resemble a cockpit with heads-up displays and personalized interfaces driven both by technological advances and consumer demand. What about a self-driving car? The foundation for autonomous driving already exists and can be seen through the new advanced driver assistance systems, but it’s not likely to be a commercial reality before 2025. And who knows? We could all be driving spaceships to work by then.

In this Car of the Future report, we attempt to explain and evaluate those global automotive technologies that will shape tomorrow&rsquo;s cars &mdash; from assembly and&nbsp;safety to fuel. In identifying and evaluating these future technologies, we also put together a basic investor framework that evaluates the potential for each technology by asking some simple questions &mdash; things like &ldquo;Is there a specific regulatory driver?&rdquo; or &ldquo;Is it reasonably affordable to consumers?&rdquo; We think this is a good starting point for sorting through the plethora of opportunity and change that&rsquo;s out there.
Regulation plays an important role as a driver for some of the change that&rsquo;s coming up. New regulation on fuel efficiency is leading manufacturers to decrease the weight of vehicles through lightweighting of materials. New operating models like car sharing are changing the way that we traditionally think of vehicle sales and affordable/low-cost green cars are increasing the global statistics for car ownership while being environmentally considerate.
After years of fits and starts, electric vehicles are finally starting to get some traction as advances in battery technology improve drive time and the prospect of a battery operator model could be the path to a low-cost vehicle. Alternative fuel sources (compressed natural gas and fuel cell vehicles) are also helped by global regulatory requirements that are now largely enacted and are stringent on emissions reduction.
Where we may be coming closest to the Jetson spaceship is in technology &mdash; the Connected Car. Auto parts manufacturer Continental forecasts growth in telematics&nbsp;of around 34% from now until 2020 versus market growth of 4%, reflecting the convergence of active safety through advanced drive assistance systems and embedded connectivity. The driver's seat will soon resemble a cockpit with heads-up displays and personalized interfaces driven both by technological advances and consumer demand.
What about a self-driving car? The foundation for autonomous driving already exists and can be seen through the new advanced driver assistance systems, but it&rsquo;s not likely to be a commercial reality before 2025. And who knows? We could all be driving spaceships to work by then.

Transforming Mobility As We Know It

For anyone who grew up watching after-school or Saturday morning television, cartoons like The Jetsons and the vision of George Jetson getting into his spaceship and commuting to work on a space highway is a familiar memory. That 1960s vision of how the future world would look was influenced by the race to be the first to land on the moon and the beginnings of real advancements in computer development. Although we’re not all jumping into our spaceships to get to the office, there has been an amazing transformation in automobile technology over the past 40-plus years. And this is just the beginning.

The Car of the Future

This investment approach has and remains fairly straightforward. Seek out auto suppliers providing the necessary components that automakers will be forced to add no matter what happens at the macro level — and if those components also happen to improve the value proposition of the car— you could find suppliers with profitable growth profiles in excess of global auto production. Indeed, our Auto Technology Investing Framework has focused mainly on identifying such stories — and to be sure — this theme remains alive and well and addressed in this report. Regulatory driven stories remain powerful and consistent. Yet the theme is also evolving in a major way. We believe the next Car of the Future chapter expands from a content-into-the-car theme into a new-economics-of-the-car-itself theme. Fully autonomous cars, driverless on-demand ridesharing networks and eventually integrated mobile networks, connectivity, over-the-air and big data aren’t necessarily verticals that automakers are being forced to pursue. Rather, they’re being pursued because of potentially game-changing business model economics. It’s no coincidence that several prominent technology companies are entering or are reported to be considering entering the mobility space, just as it’s no coincidence that the Consumer Electronics Show (CES) has become something of an auto show. And it’s not hard to see why this is happening. Even after tremendous technological advances in recent decades, the car as we know it today falls well short of maximizing its potential in terms of efficiency (both operating cost/mile & resource sharing), safety, data collection and monetization, personalization, and updating. Not only does that make the car something of an untapped well of new revenue sources, but each inefficiency also brings with it an added cost — insurance, fuel, economic, societal, recall-related, time spent driving in situations where consumers would rather not drive (like traffic jams). And the degree of stakeholder alignment is perhaps unprecedented — autonomous electric cars promise to be safer and greener, while shared on-demand mobility promises to unclog congestion in major cities. Peak auto? Hardly, the profit potential of the car is more likely at its earlier stages, in our view. A year or two ago many of these new mobility themes were merely concepts. Now we have a number of industry players promising fully autonomous cars within five years! This means that the investment approach must also expand and evolve. Auto/Tech investing is no longer just about identifying which components go into car (though this is still a very important topic), but rather about who wins the driverless race & how, where and how will autonomous business models unfold, how will shifting industry forces impact various automakers/suppliers, and how will connectivity & data change the equation? So whereas the prior investing framework essentially entailed one stream, today we think it entails two broad streams: (1) The content-additions that will shape the Car of the Future; and (2) The mobility providers of the future and the resulting industry implications on various players. We note that the scope of our analysis is the next 10-15 years. Welcome to Car of the Future v 3.0. Authors: Authors: Itay Michaeli,Trent Allen,Justin Barell,Antonella Bianchessi,Jamshed Dadabhoy,Kota Ezawa,Manabu Hagiwara,Ethan Kim,Jim Suva, CPA,Michael J Tyndall,Clarke Wilkins,Arifumi Yoshida,Authors: Itay Michaeli,Trent Allen,Justin Barell,Antonella Bianchessi,Jamshed Dadabhoy,Kota Ezawa,Manabu Hagiwara,Ethan Kim,Jim Suva, CPA,Michael J Tyndall,Clarke Wilkins,Arifumi Yoshida,

This investment approach has and remains fairly straightforward. Seek out auto suppliers providing the necessary components that automakers will be forced to add no matter what happens at the macro level &mdash; and if those components also happen to improve the value proposition of the car&mdash; you could find suppliers with profitable growth profiles in excess of global auto production. Indeed, our Auto Technology Investing Framework has focused mainly on identifying such stories &mdash; and to be sure &mdash; this theme remains alive and well and addressed in this report. Regulatory driven stories remain powerful and consistent. Yet the theme is also evolving in a major way. We believe the next Car of the Future chapter expands from a content-into-the-car theme into a new-economics-of-the-car-itself theme. Fully autonomous cars, driverless on-demand ridesharing networks and eventually integrated mobile networks, connectivity, over-the-air and big data aren&rsquo;t necessarily verticals that automakers are being forced to pursue. Rather, they&rsquo;re being pursued because of potentially game-changing business model economics. It&rsquo;s no coincidence that several prominent technology companies are entering or are reported to be considering entering the mobility space, just as it&rsquo;s no coincidence that the Consumer Electronics Show (CES) has become something of an auto show. And it&rsquo;s not hard to see why this is happening. Even after tremendous technological advances in recent decades, the car as we know it today falls well short of maximizing its potential in terms of efficiency (both operating cost/mile &amp; resource sharing), safety, data collection and monetization, personalization, and updating. Not only does that make the car something of an untapped well of new revenue sources, but each inefficiency also brings with it an added cost &mdash; insurance, fuel, economic, societal, recall-related, time spent driving in situations where consumers would rather not drive (like traffic jams). And the degree of stakeholder alignment is perhaps unprecedented &mdash; autonomous electric cars promise to be safer and greener, while shared on-demand mobility promises to unclog congestion in major cities. Peak auto? Hardly, the profit potential of the car is more likely at its earlier stages, in our view. A year or two ago many of these new mobility themes were merely concepts. Now we have a number of industry players promising fully autonomous cars within five years! This means that the investment approach must also expand and evolve. Auto/Tech investing is no longer just about identifying which components go into car (though this is still a very important topic), but rather about who wins the driverless race &amp; how, where and how will autonomous business models unfold, how will shifting industry forces impact various automakers/suppliers, and how will connectivity &amp; data change the equation? So whereas the prior investing framework essentially entailed one stream, today we think it entails two broad streams: (1) The content-additions that will shape the Car of the Future; and (2) The mobility providers of the future and the resulting industry implications on various players. We note that the scope of our analysis is the next 10-15 years. Welcome to Car of the Future v 3.0. Authors: Authors: Itay Michaeli,Trent Allen,Justin Barell,Antonella Bianchessi,Jamshed Dadabhoy,Kota Ezawa,Manabu Hagiwara,Ethan Kim,Jim Suva, CPA,Michael J Tyndall,Clarke Wilkins,Arifumi Yoshida,Authors: Itay Michaeli,Trent Allen,Justin Barell,Antonella Bianchessi,Jamshed Dadabhoy,Kota Ezawa,Manabu Hagiwara,Ethan Kim,Jim Suva, CPA,Michael J Tyndall,Clarke Wilkins,Arifumi Yoshida,

Mobility 2030

Throughout the years, the Car of the Future investment process was mostly defined as themes surrounding the addition of new content into the car, and usually because of regulatory elements. Think of turbochargers, stop-start systems or electrified vehicles helping automakers meet emission standards, or ADAS components and associated electronics helping automakers meet safety regulations. This process often meant that auto suppliers gained profitable content while automakers…well not so much.

Car of the Future v3.0

We've been writing in Citi GPS about the potential for electric vehicles (EVs) since 2014, when we featured the topic in our Disruptive Innovations II report. Back then we predicted we'd see an early-mover leader emerge in four to six years.

Electric Vehicle Transition

In our Car of the Future series, we started by attempting to explain and evaluate the global automotive technologies that will shape tomorrow’s cars — from assembly and safety to fuel. In identifying and evaluating these future technologies, we also put together a basic investor framework that evaluates the potential for each technology by asking some simple questions — things like “Is there a specific regulatory driver?” or “Is it reasonably affordable to consumers?” The next chapter in the series expands from a content-into-the-car theme into a new-economics-of the car-itself theme. Fully autonomous cars, driverless on-demand ridesharing networks, and eventually integrated mobile networks, connectivity, over-the-air, and big data are areas being pursued by automakers because of potentially game-changing business model economics.

The Car of the Future v2.0

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Car of the Future v4.0

The Car of the Future

Car of the Future v3.0

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