2023 Mobility Predictions
Authors: Brook Porter, Zach Barasz, Monica Varman, Neel Mehta
At G2, we spend a lot of time contemplating the future of mobility, so it’s no surprise that we want to kick off the year with some predictions on how the mobility space will evolve over the next 12 months. This year’s predictions focus on a few categories including autonomy/safety, electrification, charging infrastructure, IRA tax incentives, and shared mobility.
Let us know which predictions you agree (disagree) with and whether you have any bold predictions of your own. We’ll check back in at the end of the year to see how we did!
Autonomy / Safety
1. Tesla will quietly back away from vision-only autonomy in its pursuit of Full Self-Driving (FSD), first by incorporating imaging radar into all cars and eventually announcing LiDAR in high-end models. Elon famously referred to LiDAR as a “fool’s errand”, but he will relax his stance as the safety-critical sensor decosts below $1K. (Neel)
2. Taking it a step further, Tesla’s autopilot investigation will result in the National Highway Traffic Safety Administration (NHTSA) requiring Tesla to adopt redundant sensors, specifically LiDAR and radar, to avoid crashing into emergency vehicles. (Brook)
3. Sentiment on L4+ passenger autonomy (robotaxi) will sharply rebound as the captive AV players (e.g., Cruise/GM, Waymo/Alphabet, Zoox/Amazon) scale driverless deployments in larger, more complex geofences beyond pilots. Tens of thousands of people in select cities will take their first ride in a fully driverless vehicle shining a light on the progress made by the AV industry. The independent, non-captive AV players will rush to find buyers as capital remains scarce. (Neel)
4. Apple and Tesla announce collaboration on pedestrian safety, whereby Apple products are capable of producing constant low-latency signals (termed Pedestrian to Vehicle — P2V) which communicate directly with (initially) Tesla vehicles to avoid collision under all conditions. This ‘virtual airbag’ provides a new level of safety for walkers, bikers, and micro-mobility users carrying Apple devices in urban environments. (Brook)
5. The automotive industry will finally be able to attract much-needed SW talent on the back of ‘big tech’ layoffs. The automotive ecosystem will leverage this talent to jump-start the transition to the “software-defined architecture”, whereby a vehicle’s features and functionality are enabled in real-time through software. Automakers will continue to lag Tesla, but we’ll begin to see more sophisticated OTA (over-the-air) update capabilities that enhance the performance and safety of vehicles. (Neel)
Electrification
6. Tesla falls below $50/share as market share plummets in the face of nascent competition from incumbent OEMs. Tesla has had a great decade with essentially no competition from other long range EVs. That’s quickly changing, as other OEMs (from Kia to BMW and Hyundai to Mercedes) have launched great options to compete with every model in Tesla’s product line. People like expressing their individuality through their vehicles, and nothing deflates that individuality like parking your Model 3 next to seven others at the grocery store. At the same time, Tesla’s quality, ride, and fit and finish issues will become obvious compared to offers from luxury OEMs, making Tesla feel like a second choice to many. Finally, the Inflation Reduction Act will fuel a massive buildout of public L3 charging, eroding the last great moat Tesla has, its Supercharger network. (Zach)
7. Automakers continue to pull back investments in passenger AVs in favor of accelerating investments in electrification. (Monica)
8. Year of the EV and battery factory backout: 2022 saw an explosion in announcements related to domestic EV and battery production. A combined $73.6B of investments in manufacturing facilities were announced, 3x the previous year. In 2023, we will likely see a wave of announcements canceling, postponing, or scaling back these factory buildouts given rising interest rates, the specter of recession, and relaxing domestic supply requirements in IRA. (Zach)
9. Electric boats will generate buzz as the $50B recreational boating industry becomes enamored with the advantages of going electric (e.g., zero emissions, no fumes, no noise, instant torque, and lower total cost of ownership). Electric outboard motors will become increasingly common and longer-range electric boats, including hydrofoils, will start appearing in popular waterways. (Neel)
Charging Infrastructure
10. Tesla will enable bi-directional charging in non-leased vehicles, in response to competitive offerings from Ford. Tesla launches its own home integration solution to enable islanding of the home for V2H (vehicle-to-home). (Monica)
11. As EV adoption inflects in 2023, Level 3 charging station access will become more critical to OEMs. This attractive consumer segment will gain the attention of a major restaurant partner and we’ll see the first OEM/L3+QSR partnership (e.g., Volkswagen/Electrify America + Sweetgreen). Michelin ratings enter the age of electrification. (Brook)
Inflation Reduction Act (IRA) Incentive
12. Treasury guidelines regarding IRA implementation will significantly relax the domestic content requirements for EV tax credits, taking an expansive view of qualifying geographies including U.S. allies (e.g., Europe, South Korea, Japan). This is being driven by geopolitical pressures from countries with major automakers that smicro-mobilityrkets and concerns about the feasibility of ramping a North American EV supply chain end-to-end to meet IRA requirements. (Monica)
Shared Mobility
13. Car ownership will become the most cost prohibitive it has been in decades as high interest rates, record-high new car prices, and persistent supply chain issues lift the average monthly car payment above $750 (currently ~$720). Demand for shared mobility (rideshare, carpooling, etc), public transit, and micro mobility will make a ‘post-COVID’ comeback in cities and surrounding suburbs. (Neel)
14. “Transportation equity” will emerge as an important theme as public transit clashes with increasing congestion from passenger cars, rideshare, and delivery trucks. City officials will make a more concerted effort to prop up public transit by tapping into federal funding from the Biden infrastructure bill. We’ll also see more dedicated bus lanes and congestion pricing rolled out in urban centers. (Neel)
