New technologies often emerge to great fanfare only to sink into obscurity or fall short of early expectations. Within the mobility sector, which is rapidly transforming thanks to the growth of electric vehicles (EVs), autonomous driving, and other innovations, pinpointing the potential winners—or even predicting the pace of change—can be particularly difficult.

While some uncertainty will always persist, it’s possible to better understand a technology’s potential by examining data on patents and research, investment levels, adoption rates, and other metrics. The McKinsey Technology Council follows this approach in an annual report (the latest published in July 2023)1
that examines innovations that have momentum across industries.

We have taken the council’s research a step further by conducting a data-driven analysis of 3,500 industrial companies that primarily specialize in autonomous driving, connectivity, electrification, and shared mobility (ACES).2
Our analysis focuses on ten of the cross-industry trends, ranging from next-generation software development to quantum computing to Web3, that the council highlighted (see sidebar “Ten transformative technologies in mobility”). The goal is to obtain a sector-specific view of innovation by determining how many companies in our sample are already working on products that are related to these trends or enabled by them (for instance, greater automation that requires applied-AI algorithms).3
We have found that about 20 percent of the businesses analyzed fall into this category, with most focusing on innovations related to applied AI.

While the ten tech trends already have momentum, we anticipate even more disruption in the near future because more companies are beginning to focus on these areas. As that number increases, so could the amount of emerging innovative products and services that transform vehicles, provide consumers with new mobility options, and improve revenues. Within mobility companies, these innovations could enhance every step of the value chain, including engineering, life cycle services, logistics, manufacturing and production, marketing and sales, R&D, procurement, and product development. What’s more, companies that serve the automotive market, including those in cloud computing, engineering, and semiconductors, may also find new opportunities as the ten trends accelerate.

The mobility revolution is gaining speed. Scooters and shared e-bikes are now common in many cities, and a recent survey showed that 46 percent of respondents were open to replacing their private vehicles with other transportation options over the next ten years.4
Cars themselves are also evolving, as EVs become more sophisticated and autonomous-driving capabilities—everything from blind spot sensors to self-driving vehicles—attract major investment.

Tech advances are propelling these changes and easing the transition to more sustainable and inclusive forms of transport. EV adoption is growing partly because of recent improvements in battery range and reliability, for instance. While multiple advances are transforming mobility, we have focused on ten of those cited in the most recent McKinsey Technology Council report5
:

Of the 20 percent of companies studied that are already working on products or services related to these trends, many have already secured investment to develop their solutions. These companies are in good financial health, with total funding above $200 billion, and 64 percent are working on applied-AI applications or tech enabled by applied AI, making that tech trend the leader by far (Exhibit 1).

The other tech trends in the top five are advanced connectivity, cloud and edge computing, Web3, and immersive-reality tech. The companies in our sample do not divide their investments equally, however, since some technologies are more relevant to specific ACES trends than others are (Exhibit 2). For instance, Web3 tech is most commonly involved in developing use cases with shared mobility, such as those related to building decentralized platforms. It is used much less frequently at companies that focus on autonomous driving.

Although only about 20 percent of the companies in our analysis are working on products or services related to the ten tech trends, this number could rise significantly in response to growing consumer demand for innovative products, such as enhanced, immersive infotainment systems in vehicles and mobility platforms that allow travelers to use different modes of transportation seamlessly in a single trip. Mobility companies are also under growing pressure to optimize internal operations and could pursue one or more of the new tech advances to increase efficiency and reduce costs.

We have also conducted a geographic analysis to pinpoint where each tech has the most traction. In our sample, companies based in the United States are most likely to report that they are working on one or more of the top five tech trends (Exhibit 3). With applied AI, for instance, 33 percent of companies working on this tech are based in the United States. Since the enterprise database we analyzed did not contain all Chinese companies, it is possible that our analysis underestimates China’s contribution in some categories. The regions that have the most companies focusing on ACES trends and other digital solutions are likely to play a greater role than others in determining how future mobility evolves.

After analyzing our results, we examined applied AI in more detail because it is by far the most popular tech of the ten trends we examined, and it is poised to disrupt multiple aspects of the mobility ecosystem. The prominence of applied AI within mobility is unsurprising because it enhances so many processes, enables automation, and addresses long-standing pain points. Consider a few examples that underline its current and growing benefits in mobility:

We expect investment in applied AI to rise because OEMs are increasingly interested in automation—a shift that relies on the AI algorithms that enable automated processes. In a McKinsey survey, respondents expected spending on automation to account for more than 30 percent of their companies’ capital expenditures over the next five years, up from 22 percent for the previous five years.8
About 8 percent of respondents in the automotive sector stated that a five-year investment in automation would total more than $500 million. AI-enabled automation could improve the workplace by bridging increasing labor gaps and taking on some of the least desirable tasks (for instance, by having physical robots complement human labor).

Beyond automation, companies are increasingly using applied AI to improve other areas of operations. For instance, some OEMs are enhancing R&D by using digital twins—a virtual representation of a product—to improve manufacturing processes.

While OEMs and other mobility stakeholders are committed to innovation, applied-AI implementation often poses challenges. This problem arises across industries. McKinsey research shows that 90 percent of companies have launched a digital transformation, but the resulting revenue benefits have been about one-third of the expected amount.9

Within mobility, companies could potentially capture much greater revenues from applied AI if they could overcome the implementation hurdles and capitalize on the tech megatrends. Such improvement would require that OEMs and mobility stakeholders fundamentally rewire how they operate by undertaking a broad and integrated set of changes that involve strategy, organization, risk management, talent, tech, data, and the best processes for adopting and scaling new tech:

As more mobility companies begin to pursue innovations related to the ten discussed tech trends, disruption will be inevitable and the stakes will become higher. Every business within the industry, including traditional OEMs, must understand which innovations have momentum and which leading-edge technologies are best for their vehicles and other products. Even companies in other industries, such as semiconductors, should take heed of tech trends within mobility because they could affect revenues from the automotive sector, which often includes some of their most important customers. Those companies that become aware of the most important trends now may gain an early advantage as the market evolves.