Future of Mobility Primer

THE COWEN INSIGHT

The mobility industry is ripe for transformation given technology advancements in semiconductors, batteries, and sensing equipment that are enabling the EVs and AVs of the future. The sector is shifting to one that is more software-focused versus one centered around hardware. We see software and processing as the deciding factor in determining the winners and losers in the industry.

This report explores the investment implications from the intersection of technology, innovation, and the mobility sector. They are driving a dramatic transformation throughout the world in the way people and goods move about.

We see the shift towards sustainable, safe, green, and connected vehicles having a profound impact on semiconductors, sensors, and battery materials. 20 countries have announced the banning of internal combustion engines so far. Norway is the first in 2025 with many more through 2030 and 2040. OEMs and Tier 1 suppliers that will win will need to get software as well as hardware right since both have become democratized.

EMERGING TRENDS IN THE MOBILITY SECTOR

This report represents a collaboration of 16 analysts from various sectors that are enabling these emerging trends or are affected by their pace of development. We have explored the technologies needed to make these megatrends happen. We also opine on secondary impacts in areas like trucking, aviation, package delivery, electricity demand, and oil usage.

FORECASTING EV MARKET PENETRATION

We now forecast EV penetration at 21.4% in 2025 and 33.2% in 2030, up from our prior forecast of 9.6% and 25.7% respectively. The 2025 forecast is now just over 2.5x higher than our prior forecast. We see these levels for 2025 as near a “red line” for EV adoption even if demand were higher than anticipated given availability of battery materials, in particular lithium and nickel sulfate.

THEMES TO WATCH IN MOBILITY

We highlight three primary themes to monitor:

  1. OEMs evolving toward system solution providers and in an electrified and automated world, controlling less of the cost of the vehicle. We see this as a secular driver for Tier 1 auto suppliers who get the abstraction of hardware and software right.
  2. With the move toward electrified powertrains, we see increased content of semiconductors, sensors, and domain controllers/central computing systems as the winning formula.
  3. The lithium-ion battery will remain the dominant tech that powers the electrification of vehicles, leaving opportunity for disruption, particularly as the industry could use a step-change in energy density/safety.
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