The automotive industry is under intense pressure to lower emissions and increase fuel efficiency – and, as evidenced by VW’s recent scandal, this crucial question is costing the industry a lot of money. The roadmap to dramatically cleaning up transportation includes many options, which include lightweight materials, increasing electrification, autonomy, and alternative fuels – but picking the right mix of options is tricky. To guide clients, we developed a new bottom-up model for automotive innovation for fuel economy improvements, analyzing how cost-effective various pathways are towards regulatory targets. We used this model to develop a likely-case scenario for the average vehicle of 2025, predict the effects within the automotive supply chain, and highlight surprising opportunities that may result from the coming shakeout.
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