1、Automotive&Assembly PracticeA road map for Europes automotive industryKeeping Europes automotive industry competitive requires not just a refined focus on existing strengths but also an acceleration of existing efforts.August 2023 Sylvain Sonnet/Getty Imagesby Andreas Cornet,Ruth Heuss,Patrick Schau

2、fuss,and Andreas Tschiesner The automotive industry is a jewel of the European economy.For decades,the industry has been an important contributor to Europes economic growth,innovation,and prosperity,accounting for almost 7 percent of the regions GDP and being directly or indirectly responsible for e

3、mploying almost 14 million people.1 The industry also carries significant symbolic weight;taglines such as“Made in Germany,”“Italian car design,”“Euro NCAP for Saver Cars,”and“British racing”have come to stand for European innovation and craftsmanship.However,the status quo is being challenged and t

4、he industry faces massive ongoing transformations,such as the shift from internal combustion engines to electrified powertrains and a shift in focus from hardware to differentiation through software.This dynamic has allowed new entrants in Europe and abroadespecially in China,the largest automotive

5、market in the world2to disrupt the market and win market share.In 2022,China surpassed Germany in light-vehicle exports for the first time,with exports of about 3.0 million vehicles,in contrast 1“Automotive industry,”Directorate-General for Internal Market,Industry,Entrepreneurship and SMEs,European

6、 Commission,accessed August 15,2023;“The EU auto industry accounts for 7%of all jobs,”ACEA,September 1,2022;25 actions for a successful restart of the EUs automotive sector,CLEPA,May 2020.2“Automotive industry,”China-Country Commercial Guide,International Trade Administration,updated April 7,2023.3“

7、What if Germany stopped making cars?,”Economist,July 31,2023.to Germanys 2.6 million.3 These transformative forces overlap with a challenging macroeconomic environment in Europe,including rising energy costs,inflation,and geopolitical tensions.All of these factors have greatly affected the European

8、auto industry and make navigating the sectors transformation challenging.A prosperous future for the European automotive industry will therefore depend on how well and quickly it responds and how European stakeholders can shape the necessary conditions for future success.The need for action is urgen

9、t.To that end,we have sketched a road map that covers seven areas.Executing on this plan will require action from a variety of industry stakeholders.Speedy action from automotive companies will be important,but the regional ecosystem,including the public sector and multiple adjacent sectors,will nee

10、d to participate in shaping a level playing field and a fertile environment for the future of the European automotive industry.The regional ecosystem,including the public sector and multiple adjacent sectors,will need to participate in shaping a level playing field and a fertile environment for the

11、future of the European automotive industry.2A road map for Europes automotive industryA multidecade success storyThe European automotive industry has been an engine powering prosperity and growth,employment,and innovation and has contributed to Europes image and perception on the global stage(Exhibi

12、t 1).An economic powerhouse for the region,the automotive industry contributed about 10 percent of Europes exports in 2022.4 The sectors more than 17,300 companies form a network of OEMs and suppliers of all tiers.5 Significantly,the industry directly or indirectly employs more than 6 percent of the

13、 regions workforce,6 creating positive spillover effects outside the sector.The automotive industry has also been a nexus of innovation.Technical champions and small and medium-size businesses within the ecosystem have continuously innovated,especially in the areas of combustion engine powertrain,ch

14、assis,safety systems,and exterior and interior design.Indeed,about 30 percent of global automotive patents originated from European countries,the most of any 4 25 actions for a successful restart,May 2020;“European Union exports by category,”Trading Economics,accessed August 15,2023.5“Impact of elec

15、tromobility on the European automotive industry,”HitHorizons,February 21,2022.6“The EU auto industry accounts for 7%of all jobs,”September 1,2022.7 McKinsey analysis based on data about automotive industry global patents from IPlytics and Innography by Clarivate,accessed June 12,2023.8 Dave Taylor,“

16、Who owns the idea of German engineering among German car brands?,”Taylor Brand Group,April 8,2013.9“Largest automakers by market capitalization,”CompaniesM,accessed August 15,2023;brand value analysis based on 2023 data on European automotive companies from Brand Finance,accessed June 20,2023;Alex H

17、aigh,“2022 Automotive industry trends:Doubling down on electric and connected cars,”Brand Finance,February 22,2022.region.7 Significant investments into research and development have helped European automakers introduce new technologies that have contributed to major advances in sustainability and s

18、afety by improving fuel economies and reducing emissions,noise,and accidents.Progress and investment in the European auto industry over the past several decades have contributed to Europes global image.German engineering is widely touted,8 and our research suggests many European automakers are consi

19、dered front-runners in sustainability,with some of the most ambitious targets around electric vehicles(EVs),decarbonization,and safety.Thanks in part to this work,the brand value of the ten largest European auto companies is conservatively estimated at a combined 200 billion;five of the ten most val

20、uable car brands worldwide are European.9 The grand challenge now is to maintain and build on these assets in the face of profound and accelerating change.Exhibit 1InnovationEmploymentProsperity and growthNote:Due to data sourcing considerations for continental Europe as a whole,EU data was used for

21、 key fgures.Source:ACEA;Brand Finance;Eurostat;McKinsey analysis The automotive industry has been an economic success story for Europe.McKinsey&Company 1 trillionContribution to EU GDP in 20227%of EU GDP13.8 millionjobs in auto industry6.1%of total EU employment30%of total EU R&D spending60 billiona

22、nnual spending on R&D3A road map for Europes automotive industryDisruption and transformationThe historic strengths and recently reported record margins of European OEMs may create a false sense of safety for the industry.Accelerated disruptions around electrification,software,and new competitive pr

23、essures loom.Substantial market disruptions have been observed in other industries,with serious outcomes.For instance,European manufacturers lost more than 90 percent of their share of the smartphone market in just six years.10 McKinsey analysis shows that leading players in the film camera industry

24、 lost similar market share over nine years.Market share data suggest that European OEMs leadership position is being challenged as new entrants,especially from China,gain traction.Our analysis also suggests that European market conditions for local development and production are becoming less compet

25、itive.Analysis from the McKinsey Center for Future Mobility shows that since 2019,European incumbents have lost six percentage points of market share in their home market and five percentage points in China.Meanwhile,Chinese OEMs are gaining ground in both China and Europe,reaching 45 percent market

26、 share in their home market in 2022 and octupling 10“Global market share held by Nokia smartphones from 1st quarter 2007 to 2nd quarter 2013,”Statista Research Department,July 25,2013.11 McKinsey analysis based on 200222 data on global passenger-car sales from IHS Markit,accessed May 20,2023.12 Ibid

27、.13 Ibid.their market share in Europe between 2020 and 2022.11 This dynamic is even more apparent in battery electric vehicles(BEVs):new EV-focused entrants hold 51 percent of the global BEV market(Exhibit 2).12 Besides market share,European OEMs also face the challenge of running profitable BEV bus

28、inesses.A more detailed look at different segments offers a more nuanced picture of the industry.In the premium segmenthome turf for many European OEMsEuropean OEMs still hold 71 percent of global sales.But this segment is also becoming more challenging to hold:newcomers claimed 18 percent of the pr

29、emium market in 2022.13This shake-up stems from the fast pace of change in the industry.The transition from internal-combustion-engine(ICE)to zero-emissions vehicles is accelerating,with global EV sales growing 80 percent per year since 2020.McKinsey analysis suggests that many global mobility marke

30、ts will reach near-total EV penetration by the mid-2030s.In response,European OEMs have announced ambitious electrification plans to launch more than 150 EV models through 2030,according to McKinsey analysis.Since 2019,European incumbents have lost six percentage points of market share in their home

31、 market and five percentage points in China.4A road map for Europes automotive industryExhibit 2Global market share of passenger cars,%of sales1EV new entrants include BYD,GAC Aion,Hozon,Li Auto,Lucid,NIO,Polestar,Rivian,Tesla,and WM.Source:IHS Markit data for EV sales volumes;McKinsey analysisEurop

32、ean OEMs are losing market share while new entrants are dominating the battery-electric-vehicle market.McKinsey&CompanySales of battery electric vehicles,thousand units2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 20220510152025303520172018201920202021202205001,0001,5002,0002,5003,0003,5004,0002

33、6%Down 11%since 20178%Up 900%since 201751%Combined market share forEV new entrants in 20221 20%Combined market share for European incumbents in 2022European incumbentsElectric-vehicle(EV)new entrants5A road map for Europes automotive industryThe EV transition drives the industrys emphasis away from

34、hardware toward software and digital.According to our analysis,EV consumers are more than twice as likely to switch brands for better in-vehicle technology,such as advanced driver assistance systems(ADAS)features and connectivity services.Our research shows that successful automakers are developing

35、cars defined by software,resulting in a tripling of software content per vehicle since 2015.With electrified,software-defined cars becoming the norm,semiconductors and batteries are the new industry control points.In fact,more than a third of the value of a BEV is associated with the battery.Consequ

36、ently,the European supplier landscape is changing rapidly,and new capabilities are needed in development and manufacturing.Recently,software development and hardware development are increasingly decoupling.Weve observed that European suppliers have become proficient at the interaction between softwa

37、re and hardware in the context of specific control units that oversee specific components of a car,such as the engine or transmission.Modern vehicles may have as many as 150 control units in a distributed software architecture.Hardware and software will increasingly decouple as software becomes more

38、 centralized into domains such as the powertrain and in-vehicle connectivityand,eventually,into computers that oversee zones of the vehicle rather than components.As a result of this shift toward more centralized computing,portions of vehicles may become commoditized,and scale and incremental improv

39、ements may become the main drivers of competitiveness.As a result,several component markets increasingly resemble the smartphone industry,in which the core differentiator is software innovationin addition to economies of scale,14“Factbox:Automakers accelerate drive to secure battery raw materials,”R

40、euters,April 3,2023;Victoria Waldersee,“Volkswagen to invest in mines in bid to become global battery supplier,”Reuters,March 17,2023.industrial excellence,and quality in hardware.McKinsey analysis suggests that the number of build-to-print suppliers(which manufacture products and components to cust

41、omers detailed engineering instructions)in the automotive industry that provide components such as power electronics will increase.Weve found that about a third of OEMs requests for quotes in some powertrain components and systems are already build-to-print requests.New entrants are moving to supply

42、 the automotive market with critical future technologies such as batteries,semiconductors,and software.Traditional suppliers find themselves sandwiched between“high-tech commodity”companies that provide semiconductors and batteries upstream and cost-pressured incumbent OEMs downstream.This dynamic t

43、hreatens European supply chains.Consider that the current battery value chain is largely controlled by Chinese companies(Exhibit 3).To counteract these developments and form a strong supply network such as the one Europe created during the ICE era,major industry participants are announcing strategic

44、 partnerships to secure access to resources and manufacturing capacity,especially for batteries and semiconductors.For example,some incumbents plan to strengthen their control over critical portions of the value chain by partnering with mine operators or even acquiring stakes in mines.14 While these

45、 actions are steps in the right direction,the projected supply and capacity are not yet enough to meet the regions forecast demand by 2030.Accelerated efforts are necessary.Finally,these transformative forces overlap with a European macroeconomic environment that has a particularly acute impact on t

46、he regions auto industry(see sidebar“Macroeconomic challenges and the European automotive industry”).6A road map for Europes automotive industryExhibit 3Mining and refning,2021Active material production,2021Battery cell and vehicle production,2022Note:We expect the US Infation Reduction Act to boost

47、 US share of activity along the value chain.Source:International Energy Agency;McKinsey Battery Insights;MineSpans by McKinsey;McKinsey analysisCritical parts of the battery value chain are concentrated in China.McKinsey&CompanyShare of capacity in integrated lithium mining and refning,%Share of cat

48、hode-active material sales,%Share of lithium-ion battery cell supply,%Share of capacity in lithium refning,%Share of graphite anode active materials sales,%Share of electric-vehicle production,%3226690377051249011871111086617107ChinaEuropeNorth AmericaRest of world00Major industry participants are a

49、nnouncing strategic partnerships to secure access to resources and manufacturing capacity,especially for batteries and semiconductors.7A road map for Europes automotive industryMacroeconomic challenges and the European automotive industry 1 McKinsey analysis based on data from“China electricity pric

50、es,”GlobalPetrolP,December 2022;“Midwest Information Office:Average energy prices for the United States,regions,census divisions,and selected metropolitan areas,”US Bureau of Labor Statistics,accessed August 17,2023;and“Electricity price statistics,”Statistics Explained,Eurostat,data extracted April

51、 2023.2 McKinsey analysis based on data from“International trade in cars,”Statistics Explained,Eurostat,data extracted April 2023.3“Consumer prices up 4.9 percent from April 2022 to April 2023,”TED:The Economics Daily,US Bureau of Labor Statistics,May 15,2023.4“United States full year GDP growth,”Tr

52、ading Economics,accessed August 15,2023;“Priority reforms key for sustaining growth and achieving Chinas long-term goals-World Bank report,”World Bank,June 14,2023.In a perfect storm for the European auto industry,the current macroeconomic climate is turbulent,with multiple ongoing crises.Compared w

53、ith other regions,Europe is particularly exposed and affected,and the automotive sector is at a disadvantage compared with other important industries.These challenges fall into five major areas:Energy and resources.Wholesale electricity costs in Europe have surged to twice the costs in the United St

54、ates and triple the costs in China.1 This creates challenges for the auto industry,in which a significant portion of production costs come from energy requirements.Geopolitical tensions.The European auto industry generates a significantand higher compared with other regionsshare of its revenues thro

55、ugh exports,2 which means current geopolitical pressures have an outsize impact on European automakers.Supply chain challenges.Compared with other industries,the auto industry relies more heavily on timely deliveries of parts and components from international markets.The European auto industry is th

56、erefore at considerable risk when finely tuned international supply chains are disrupted.Inflation.Inflation has hit Europe much more severely than the United States or China,with labor costs for European automakers disproportionately affected compared with other industries.3 Productivity crisis.Eur

57、opes productivity and economic growth lag behind those of its peers,particularly in areas such as software engineering,in which the auto industry needs significant additional capacity.4 In service of helping the industry remain globally competitive,we outline a road map of seven pillars for stakehol

58、ders to act on.8A road map for Europes automotive industryRoad map for the European automotive industryThe European auto industry is in the midst of the greatest change in its history.In service of helping the industry remain globally competitive,we outline a road map of seven pillars for stakeholde

59、rs to act on(Exhibit 4).The time to act is now:according to our analysis,European automotive OEMs and suppliers earn about three times the revenue of their Chinese counterparts and five times the EBIT,which means the European industry can act from a position of strength.A rapid response from OEMs an

60、d suppliers in the European auto industry will be important.But other stakeholdersincluding adjacent industries such as the energy,research,and public sectorswould also need to act collaboratively to provide an environment that enables success for the European automotive industry(and mobility ecosys

61、tem)of the future.In short,the ecosystem approach that made Europe strong in the ICE era has to be translated to serve the era of software-defined,electrified cars.Exhibit 41Advanced driver assistance systems.A road map can help the European automotive industry remain competitive.McKinsey&CompanyRev

62、ive strengths in customer understanding,product design,and brandFocus relentlessly on cost and speedExecute a winning strategy for the Chinese marketCreate resilient,circular,and sustainable supply chainsHyperscale competitive European battery and semiconductor playersDesign a way forward for ADAS1

63、with policy supportClose the software skill gap to win the automotive digital transition9A road map for Europes automotive industryRevive strengths in customer understanding,product design,and brand The European automotive industry will need to extend its legacy of cutting-edge product design and su

64、perior brand value and transfer it into the new context of software-defined EVs.Of the 25 global brands with the highest brand value,all but three are European.15 Our data show that brand remains among the top five purchase criteria for European,American,and Chinese auto consumers.However,in the age

65、 of electrification and software-defined cars,purchase criteria will change and brand rankings might get reshuffled.To maintain superior brand value,European incumbent OEMs would need to analyze and understand customer needs and preferences to build desirable products.Traditional consumer segmentati

66、on would need to be adapted for the era of software-defined EVs,with more-detailed consumer profiles and more-granular user profiles.Owning and analyzing consumer data will enable OEMs to offer tailored mobility solutions and seamlessly engage consumers across the life cycle.They can also build thei

67、r product development organizations to reflect customer journeys and experiences,which would bring operational roles closer to the customer.As consumers desires change and technology advances,OEMs would need to continuously update their software remotely to bring the most up-to-date functionality to

68、 customers and meet their needs.Focus relentlessly on cost and speedMcKinsey research from 2022 shows that the vehicle purchase price is the most important buying factor for consumers across markets.16 Particularly in EVs,Chinese OEMs can turn their cost advantage into a competitive edge:our analysi

69、s shows that their costs are 20 to 30 percent lower than those of European OEMs.15“Luxury&premium 2023 ranking,”Brandirectory,Brand Finance,accessed August 15,2023.16 Annual MCFM Consumer Survey 2022,McKinsey Center for Future Mobility,global n=27,869,December 2022.To catch up,European OEMs could dr

70、ive down costs strategically.According to our analysis,European OEMs could close up to 20 percentage points of the cost gap by adopting structural product design,vertically integrating battery production,scaling EV production,and improving productivity.For example,battery insourcing could decrease E

71、uropean OEMs costs by three percentage points,and cost-efficient battery cell chemistry alternatives could save five to six percentage points for some vehicles and segments.As for the remaining five to ten percentage-point cost gap,European OEMs could identify differentiating features that consumers

72、 would be willing to pay a premium for,such as brand differentiation;environmental,social,and governance(ESG)leadership;and superior safety performance.Speed is another consideration.McKinsey analysis shows that European OEMs have a long development cycle compared with competitors from other regions

73、,with concept-to-pilot phases lasting up to four years.By contrast,weve found that the fastest automakers in China need only 21 months to move from concept to pilot,allowing them to respond to market trends much more quickly.To be clear,its not necessarily appropriate to make direct comparisons betw

74、een the Chinese and European automotive sectors or development cycles.However,European OEMs should take on the challenge and redesign their own processes to accelerate innovation,development,and industrialization.For instance,the product design process could be accelerated through iterative styling

75、methods.Subsequent product development could be optimized by decoupling hardware and software development and by applying agile principles to software development.Across all processes,co-locating cross-domain teams and setting up task forces for products that are behind schedule or components with s

76、upply bottlenecks can further accelerate development.10A road map for Europes automotive industryExecute a winning strategy for the Chinese marketOur research shows China will remain the biggest automotive market in the future,which means winning in China will be important for European OEMs and supp

77、liers that want to play a globally relevant role.European incumbents have lost five percentage points of market share in China since 2019,a substantial decrease.Meanwhile,our analysis shows that Chinese automakers are outpacing their competitors and have gained more than ten percentage points of mar

78、ket share in China,driven by their hold on more than 80 percent of the EV market.17 How have they done it?Chinese OEMs offer significantly lower price points,and their products are more appealing and tailored to Chinese consumers needs and preferences.They also bring targeted innovations to market r

79、apidly;our research shows that more than 70 percent of new vehicles unveiled at the Shanghai auto show in April 2023 came from Chinese OEMs.Like their OEM counterparts,European automotive suppliers have a hard time gaining traction with Chinese EV players,especially for EV powertrain components and

80、systems.While Western suppliers have held more than half of Chinas ICE powertrain 17 McKinsey analysis based on global passenger-car sales data from IHS Markit,200222,accessed May 20,2023.18 McKinsey analysis based on IHS Markit Production Forecast,number of model launches by powertrain for Aion,BMW

81、,BYD,Mercedes-Benz,NIO,Tesla,Volkswagen and Xpeng,data as of 2022,accessed June 10,2023.19 Thomas Fang,Mingyu Guan,Bill Peng,and Tony Zhou,“McKinsey China Auto Consumer Insights 2023,”McKinsey,July 14,2023.market,they hold less than 5 percent of the EV powertrain market.18 European OEMs and supplier

82、s would need a fundamental strategic overhaul to regain competitiveness in China and meet the preferences of Chinese customers.This starts with developing products specifically tailored for the Chinese market.According to our research,the average customer in China is 34 years old,compared with 58 in

83、 Europe.These consumers have significantly different purchasing criteria.For instance,Chinese consumers place higher value on cutting-edge technology,connectivity,ADAS,and on-board multimedia screens than European and American consumers do.Chinese car buyers also favor simplified vehicle choices wit

84、h preconfigured options.19 To implement a“l(fā)ocal for local”strategyin which R&D,production,and distribution are in close proximity to where products will be bought and usedEuropean players would need to adjust their operating models for the Chinese market.For example,OEMs could localize research and

85、development capabilities and transfer decision rights to local management.Entering local partnerships across the portfolio and supply chain will also be essential to develop a strong foothold in China and to benefit from the know-how and reputations of local partners.To implement a local for local s

86、trategy,European players would need to adjust their operating models for the Chinese market.11A road map for Europes automotive industryCreate resilient,circular,and sustainable supply chainsTo reduce bottlenecks and dependencies,the industry will need resilient,circular,and sustainable supply chain

87、s centered on batteries,semiconductors,and green materials.In 2021,the chip crisis led to a loss of ten million vehicles in global production,20 highlighting a need to increase supply chain resilience.To create resilient supply,localization is vital.We project that the European supplydemand gap for

88、batteries will reach almost 40 percent,or 500 gigawatt-hours(GWh),by 2030.To cover European battery demand locally,an additional 20 gigafactories,a 35 billion investment,would be needed.21 The continent would also need 37 new semiconductor fabrication plants to cover local demand,requiring a 190 bil

89、lion investment.22 As a first step,the European Chips Act will provide 43 billion in subsidies.Next steps could involve expanding the ecosystem along the value chain while safeguarding crucial supplies,with tactics such as increasing safety stock and implementing dual-sourcing strategies.At least in

90、 the midterm,improving the circularity of supply chains will further decrease Europes dependence on raw materials and components from other regions while increasing sustainability.It could also increase the share of local added value in critical EV components and create additional jobs and economic

91、growth.Our analysis shows that reusing materials from scrapped batteries can also save up to 10 percent of costs and avoid 20 percent of the CO2 required in production.To implement a circular value chain,industry stakeholders would need to commit to the use of recycled content and material efficienc

92、y and establish reverse operations at end of life.20“S&P Global Mobility on short-&long-term impact from chip shortage,”Auto Remarketing,July 14,2023.21 McKinsey Battery Insights analysis assumes a 500-GWh supplydemand gap and average capital expenditures of 70 million per gigawatt hour in Europe.Th

93、is leads to a 35 million investment need,in addition to the already announced 70 million for planned and existing factories in Europe.22 Annual report 2020:The automotive industry in facts and figures,Verband der Automobilindustrie,2020.23“Action partnerships:Battery passport,”Global Battery Allianc

94、e,accessed August 15,2023.End-to-end transparency on ESG criteria such as digital traceability is an important way to make critical supply chains more sustainable.As sustainability standards in key industries begin to developconsider the launch of the battery passport,which contains ESG data for bat

95、teries23the European auto industry should stay at the forefront of ESG performance to gain and maintain a competitive advantage in the future.Hyperscale competitive European battery and semiconductor players Weve observed that European players are underrepresented in battery manufacturing and high-e

96、nd compute and semiconductors that power artificial intelligence.According to our analysis,only one European manufacturer is among the top ten in terms of market capitalization for battery manufacturing,while in semiconductors,Europe needs to close the capability gap for the next wave of computing t

97、o deliver functionalities such as ADAS.A path to creating an ecosystem of technology champions consists of three elements.First,Europe should consider developing a pan-European regulatory rule book to scale high-growth firms,aligning tax standards,regulations,labor rules,and bureaucratic processes.S

98、econd,to stay at the forefront of technology,the region would need to build specialized knowledge and product innovation capabilities.Suppliers could tap into niche specialties,such as more-sustainable battery refining.Finally,the European industry would need a battery and semiconductor network,simi

99、lar to the one that serves the aerospace industry.European incumbents could form strategic partnerships with emerging entrants and research institutions.12A road map for Europes automotive industryDesign a way forward for ADAS with policy supportAdvanced driver assistance systems features are increa

100、singly important.They are becoming a key differentiator for vehicle buyers:According to our research,51 percent of consumers worldwide would consider switching to some form of ADAS car in the future.Competitive pressures around ADAS are also intensifying.In 2022,Mercedes-Benz was the first automotiv

101、e player to introduce and certify Level 3 autonomy,the threshold at which drivers can take their hands off the wheel.24 Other participants in the global industry are catching up using a variety of technology approaches.To remain competitive,the European industry may need to form a cross-industry all

102、iance.Players could collaborate in two main areas.The first area is where differentiation is negligible and where there are opportunities for savings.This would include standardizing sensor communication protocols,which would simplify the integration of new sensors.Standardizing middleware(which sit

103、s between front-and back-end technologies)and layers of the operating system are other approaches.The second area of collaboration is where scale and large databases could enable a faster,more robust development process for efforts including the continuous updates of software layers in mapsupdates s

104、uch as creating high-definition map-and location-based services.A shared pool of data could also be used for AI training and validation.The right regulatory environment could be critical in enabling this kind of cross-industry collaboration.Public-sector stakeholders could consider adapting existing

105、 guidelines to the context of autonomous driving.These updates could encourage collaborative precompetitive research and innovation that advance and accelerate technological progress and drive standardization.24 Andrew J.Hawkins,“Mercedes-Benz is the first to bring Level 3 automated driving to the U

106、S,”Verge,January 27,2023.Close the software skill gap to win the automotive digital transitionSoftware is essential to the future of the automotive industry.But according to our analysis,only 15 to 20 percent of current R&D workers at European incumbents have software skills,compared with almost 45

107、percent at new entrants.To shrink the gap,industry stakeholders would need to find holistic solutions.For example,European incumbents could create sharedor at least interoperablesoftware platforms across OEMs in Europe(and possibly other regions where the industry has strong partnerships)to compleme

108、nt individual participants capabilities and to avoid costly solo efforts.Early hiring,reskilling,and foreign talent can also help close the gap.Players can intensify early hiring directly from universities and boost STEM and software talent education through partnerships with universities and school

109、s.Our research shows that reskilling is already in progress:37 percent of European suppliers have ongoing reskilling efforts,and another 41 percent have plans to implement them.To draw skilled software talent from other regions,European employers would need to accelerate processes around work permit

110、s and accommodate foreign talents requirements on salary,benefits,and working conditions.Creating an environment that enables accelerated progressEuropean automotive players are moving in the right direction but should consider scaling and accelerating their efforts.To accomplish this,a wide variety

111、 of stakeholders in the region would need to create an environment that breeds progress and future wins for the regions automotive industry.The formula requires a road map,catalysts,and platforms for cooperation.13A road map for Europes automotive industryScan Download PersonalizeFind more content l

112、ike this on the McKinsey Insights AppA clear road map such as the one we outline is needed to help accelerate the European automotive industrys progress.Its seven pillars would need to be converted into actionable measures and quantifiable targets for industry stakeholderssuppliers,OEMs,players from

113、 adjacent industries,and regulatory bodies.Associations could take on a coordinating role.Catalysts play a significant role in implementing the road map.One is a competitive regulatory environment.Clearly defining and communicating common standards and codifying interoperability across all elements

114、of the road map is likely to be critical.Another critical catalyst of the European industrys transition is EV infrastructure.According to our analysis,the industry will need a cumulative 300 billion worth of infrastructure investments in electricity generation,the electricity grid,EV chargers,and hy

115、drogen refueling systems through 2030.25 European stakeholders have begun to install public chargers at a pace of 2,000 charging points per week.26 But to meet demand,decision makers would need to build out charging infrastructure to the tune of 6,000 to 14,000 charging points per week.27 We found t

116、hat the wind 25 European EV charging infrastructure masterplan,ACEA,March 2022.26 Ibid.27 Ibid.and solar assets required to fulfill the corresponding demand for energy with renewable sources would require four times as many workers in Europe by 2030 than are currently available.Finally,the industry

117、would need platforms for collaboration.As industry boundaries are redefined,three kinds of partnership will become more important:horizontal partnerships between entities in the same parts of the value chain(such as multiple car companies)for efforts such as software development or to gain a solid f

118、ooting in the Chinese market;vertical partnerships between entities in different parts of the value chain(such as car companies with tech companies)to secure access to technology and talent;and cross-industry partnerships,such as collaborations between automotive players and utilities to facilitate

119、structural goals such as seamless sector coupling.Our road map shows a way forward for a globally competitive European auto industry.The work will require action from an expansive array of regional stakeholders and a supportive administrative environment.Time is of the essence.Copyright 2023 McKinse

120、y&Company.All rights reserved.Andreas Cornet and Andreas Tschiesner are senior partners in McKinseys Munich office,where Patrick Schaufuss is a partner;Ruth Heuss is a senior partner in the Berlin office.The authors wish to thank Ondrej Burkacky,Julian Conzade,Johannes Deichmann,Lauritz Fischer,Maxi

121、milian Geirhos,Marco Groth,Volker Grntges,Antonia Gutzler,Martin Hattrup-Silberberg,Martin Kellner,Martin Linder,Nicoline Lhrs,Lukas Michor,Jan Paulitschek,and Kirsten Weerda for their contributions to this report.These insights were developed by the McKinsey Center for Future Mobility(MCFM).Since 2

122、011,the MCFM has worked with stakeholders across the mobility ecosystem by providing independent and integrated evidence about possible future-mobility scenarios.With our unique,bottom-up modeling approach,our insights enable an end-to-end analytics journey through the future of mobility,from consumer needs to modal mix across urban and rural areas,sales,value pools,and life cycle sustainability.Find out more about the McKinsey Center for Future Mobility on McK.14A road map for Europes automotive industry