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Reinventing the Wheel - A Multiclient Study

The future of cars, oil, chemicals and electric power

How will major disruptive forces reshape the energy, automotive and chemical industries?

How can I analyze the opportunities, challenges and existential threats?

Major disruptive forces are now reshaping the energy, automotive and chemical industries. Transportation is at the nexus of these changes. Forces are converging to accelerate the pace and nature of this transformation, pointing to a new reality for transportation—with profound implications.

A broad perspective is necessary to make sense of these changes. Most current analysis takes a single-industry approach. Thus far, there has not been a system-wide analysis that brings to bear a deep understanding of the forces at work within each industry. IHS Markit uniquely offers the capability and expertise within each industry and the ability to look across industries and how they interact.

  • Who will be the key automotive players in 20 years?
  • Will new mobility options accelerate the peaking of world oil consumption?
  • What is the impact to chemical companies investments and competitive strategies?
  • Does the battery technology evolution change the game in coupling utilities to transportation creating new competition dynamics?

Reinventing the Wheel: The future of cars, oil, chemicals and electric power

Reinventing the Wheel is not simply about data projections and linear views of the future. At its heart, it is an exercise in understanding how different forces shaping the future can interact and create a future different from the world in which automotive, oil, electric power and chemical companies have operated in for more than a century. Developments in the automotive industry will impact energy and chemicals and vice versa. An approach that joins expertise and convenes a project community across these industries is essential for grasping how the forces of change are shaping the future.

Top-5 forces shaping the future

  1. Driverless technology is the major disruptive force because it can lower mobility costs, increase access to mobility, reduce road deaths and injuries, and amplify the impact of electric vehicles, mobility service companies, and urban design.
  2. Demand for mobility via the car will increase faster than previously expected due in part to the rise of $1 trillion+ mobility service industry. The growth of fleet sales and use is part of the new multidimensional competition in the auto industry.
  3. Nearly 1 of every 2 new car sales (46%)  will be hybrid-electric or plug-in electric by 2030 in RTW markets. This highlights the growing diversity of sales in terms of powertrain and degree of automated technology. But sales growth will slow as cars become more highly utilized.
  4. Global oil demand will flatten or even decline, but producing and selling oil will still be a big business. Fuel economy standards have a bigger impact on oil demand than growth in EV sales.
  5. There are important differences among regions—the forces of change will not have uniform impact. Mobility service companies, for example, will have a bigger impact in China than in Europe.

Study Components

The study will have two parts: The Summary is the build-up of the new knowledge universe and development of scenarios that articulate two different paths for the future of the car, energy and chemicals. The Industry Strategies will use the scenario framework to detail the investment implications and choices for each of the three industries.

Geographic coverage

Reinventing the Wheel covers the world’s largest automotive markets: United States, Europe and China. India, a large and fast-growing market, is also included. These markets accounted for 71% of global car sales in 2015 and 57% of car gasoline consumption and will set global trends. Our projections go out to 2040.

Driving forces of a changing world

A sound, fact-based understanding of what is unfolding today is an essential step toward assessing how forces of change will interact and shape the automotive industry to 2040. Our aim was to develop a knowledge universe. Key driving forces that we investigated, unpacked and assessed included the following:

  • Automotive policies and regulations that have an impact on Light-Duty Vehicle (LDV) technology and energy choices
  • Car and ride sharing: Impact on ownership and energy consumption
  • The new dimension: Autonomous LDVs-driverless cars are a truly new dimension to the future of transport
  • Values and behaviors: Millennials in the United States and China
  • Industry structure
  • Competitive positions of energy sources to power LDVs: Gasoline, diesel, natural gas, electricity/ batteries, biofuels and hydrogen
  • Chemical industry’s product interface with the automotive industry
Scenarios to 2040

IHS Markit, with the input of over 30 stakeholder companies, developed two scenarios that present distinctive views of the future of the automotive industry and the impact on energy to 2040, each driven by a determinative logic. Two IHS Markit scenarios, Rivalry and Autonomy, provided the starting point and macro framework. Rivalry is an evolutionary view of the future. Autonomy illustrates a disruptive pace of change.

Each content-rich scenario outlook includes a narrative describing the developments and surprises of a logically imagined future for cars and energy. The use of a scenario framework enhances decision making and tests choices in a complex, dynamic marketplace by illustrating conditions that may lead to success or failure for a company’s choices.

The narrative and associated data projections to 2040 address the following in the geographic areas that Reinventing the Wheel covers:

  • China, Europe, India and the United States
  • Policy and regulatory standards
  • How self-driving vehicles, electric cars and ride sharing unfold and impact the automotive industrial ecosystem
  • Car sales by Total Industry Volume (TIV) and by powertrain (gasoline, diesel, natural gas, mild and full hybrids, plug-in hybrid electric vehicles, pure battery electric vehicles, and hydrogen fuel cell vehicles)
  • Vehicle energy consumption by source (gasoline, diesel, natural gas, hydrogen, electricity and biofuels)
  • On-road fleet (car parc) by powertrain
  • Total vehicle miles traveled and average vehicle miles traveled per LDV
  • Average LDV fuel economy (new and on road) for cars and light commercial vehicles
  • Oil prices
Implications and Choices

Reinventing the Wheel identifies and addresses the big questions facing companies in each industry. The choices that companies will need to make, particularly regarding growth opportunities and divestment, was at the heart of the discussions. These Industry Strategies—one each for automotive, energy and chemicals—provide a framework for decision making amid great uncertainty about the future.

  • Automotive: Identifies and assesses key choices related to new entrants and new technologies and the effect on the automotive value chain.
  • Oil and Gas: Discusses the repercussions stemming from the changes in the automotive industrial ecoysystem, particularly with regard to what source of energy will be used to power cars.
    Electric Power: How the proliferation of electric power in vehicles changes the old paradigms of stationary predictable points of consumption and metering.
  • Chemical: Discusses the new feedstock picture and the changing demand pattern in one of chemical's largest user demand segments.

Events


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