The automotive industry is undergoing a massive transformation, shaped by electrification, automation, software-defined vehicles, and shifting global markets. By 2040, these four trends—Polarization, Automation, Connectivity, and Electrification (PACE)—will define the future of mobility, forcing automakers to rethink strategies, innovate faster, and embrace new business models.
Polarization (Market Divergence)
The global automotive landscape is becoming increasingly fragmented, with diverging growth trajectories across regions:
Mature economies are reaching peak vehicle ownership, while emerging markets continue to drive demand.
China, Southeast Asia, and South America will lead global automotive expansion, whereas Europe and North America are expected to see stagnation in traditional vehicle sales.
Automakers and suppliers must adopt regionalized production and supply chain strategies to navigate shifting demand patterns and geopolitical uncertainties.
Automation (The Rise of Autonomous Vehicles & Smart Manufacturing)
Autonomous technology and AI-driven manufacturing will play a pivotal role in the industry’s future:
Level 4 and 5 autonomous driving technology will be widely adopted by 2035, revolutionizing urban mobility and logistics.
AI-powered smart factories will enhance operational efficiency, optimize production, and reduce costs.
Traditional OEMs must invest in advanced AI, robotics, and vehicle-to-everything (V2X) communication to stay competitive in the evolving market.
Connectivity (The Era of Software-Defined Vehicles)
As digital transformation accelerates, software will become the defining element of vehicle value:
The shift to Software-Defined Vehicles (SDVs) will redefine automakers' business models.
By 2040, over 70% of a car’s total value will be derived from software, creating new monetization opportunities such as subscription-based services and over-the-air (OTA) updates.
Data monetization will emerge as a major revenue driver, with automakers leveraging AI-powered analytics, cloud computing, and digital services.
Electrification (EV Dominance & Sustainability)
With the push for sustainability, electric vehicles (EVs) will dominate the automotive landscape:
By 2040, Battery Electric Vehicles (BEVs) will account for over 71% of global market share, driven by advances in battery technology and increasingly stringent emissions regulations.
Hydrogen fuel cell technology will play a key role in commercial transport and long-haul applications.
Automakers must optimize battery supply chains and invest in renewable energy-powered manufacturing to meet sustainability mandates and global ESG requirements.
Key Takeaways
Polarization: Market growth will be driven by emerging economies, while mature markets stabilize.
Automation: Autonomous vehicles and AI-driven manufacturing will revolutionize production and mobility.
Connectivity: Software-defined vehicles (SDVs) will unlock new revenue streams through digital services.
Electrification: BEVs will dominate, with hydrogen playing a role in commercial transport.
Source
📌 Roland Berger Automotive Outlook 2040