A hopeful and complicated future for the auto industry

None of the disruptions facing carmakers over the last decade—new demands of tech-savvy drivers, alternative ownership models, shifting attitudes from societies fearful of the lasting environmental impact of the gasoline-powered car—have spelled the end for the automotive industry. Quite the contrary: They have forced automakers to remake their industry in a bold, new vision. But the outlook for future growth is complicated.

In PwC’s latest CEO Survey , automotive leaders (46%) are some of the least confident (relative to other industries) about their company’s prospects for revenue growth over the next 12 months. There are good reasons for this.

Over the last five years, virtually every major automotive company has had to expand its scope of operations and ratchet up capital investments to seize the opportunity created by electrification. In fact, electric vehicles (EVs) are the auto industry’s primary growth market, and EVs have already gained substantial share in vital markets like China and Europe. That points to a painful reality for auto executives: We’ve already hit the peak of internal combustion engine car sales. In a net-zero emissions world, EVs would ideally make up 100% of passenger vehicle sales 15 years from now, with all other classes of road vehicles—from two-wheelers to heavy commercial trucks—being either fully electric or fuel cell-powered by the early 2040s. There is also the matter of charging infrastructure for EVs, which is still developing around the world.?

And yet gas-powered cars aren’t going away any time soon. According to a report by Bloomberg New Energy Finance, EVs currently make up only about 4% of passenger car sales. In 2025, Bloomberg estimates that number to reach 16%. That leaves a lot of gas-powered cars on the road and in carmakers’ portfolios. What’s more, while auto executives expect the market share of EVs to grow dramatically over the next decade, there is little consensus about what market share they can conceivably capture.

Further complicating matters is an unstable automotive supply chain—e.g., uncertainty around the pricing and availability of key components for new vehicles, such as semiconductors, steel, and rare earth minerals. Couple that with a workforce challenged by pandemic shutdowns and changing government regulations around decarbonisation and you have a clouded picture.

The encouraging news is that many automotive leaders are using this window of opportunity to reimagine their core operations and strategy, and also contemplating new business models. They recognize that value is being generated in new ways, many of which are beyond the traditional car industry—for charging, Lithium-ion batteries, mobility software and services, and others. The auto industry is advancing innovations and taking bold bets—and not taking its eyes off of the road.