Auto Sector Transformation

CROSS-SECTOR
SECTOR IN-DEPTH Cross-Sector - Global

16 July 2018
Auto sector transformation will drive global
multi-sector credit trends
TABLE OF CONTENTS Summary
Summary 1 The automotive sector is undergoing a fundamental shift in terms of how cars are made,
Four trends are transforming the used, insured and financed, a technology-driven transformation that will have major
automotive market, influencing credit
conditions in multiple ways 2 ramifications for multiple sectors globally. This transformation is comparable in scope to the
CAAR trends will create credit dawn of the automotive age a century ago, which shaped trends in several industries beyond
opportunities and challenges for auto manufacturing. This report offers a framework to assess the credit implications of this
many different industries 4
Technology, government policy,
21st century shift.
consumer preferences and corporate
strategy will shape the CAAR trends 10 » Four trends are transforming the automotive market. Connectivity of vehicles,
Alternative fuel vehicle case study 13 Alternative fuel vehicles (AFVs), Autonomous vehicles and Ride sharing, four trends that
Moody’s related publications 16 we collectively call “CAAR,” will usher in major changes to the automobile market. The
automotive industry's extensive, global links to multiple sectors will amplify the credit
impact of these changes. The auto sector itself accounts for an estimated $320 billion
Contacts
in rated debt; that number jumps to more than $5 trillion when including the debt of all
Robard Williams +1.212.553.0592 non-financial corporates with links to the auto sector.
Senior Vice President
robard.williams@moodys.com » Each CAAR trend brings varying opportunities and challenges, and hence credit
Matthias Hellstern +49.69.70730.745 implications, to different sectors. Of the four trends, connectivity offers mostly
MD-Corporate Finance opportunities, either for new products or for increased efficiency, whereas the other three
matthias.hellstern@moodys.com
trends bring a mix of challenges and opportunities to various sectors. How individual
Robert Jankowitz +1.212.553.1318 entities within each sector respond to these opportunities and challenges will influence
MD-Corporate Finance
robert.jankowitz@moodys.com their respective credit profiles.
Jennifer Zong +1.212.553.0110 » Technology, government policy, consumer preferences and corporate strategy
Associate Analyst/CSR
will shape how each CAAR trend develops. Technology is pushing forward all four
jennifer.zong@moodys.com
CAAR trends, but the pace of change and the interaction between trends will depend
Atsi Sheth +1.212.553.7825
on government policy, consumer adoption and corporate strategy, which vary across
MD-Credit Strategy
atsi.sheth@moodys.com geographies. Therefore the business and credit implications of each trend for a particular
company could be quite different depending on sector opportunities and challenges,
Anne Van Praagh +1.212.553.3744
MD-Gbl Strategy & Research regional policy and preferences, and company-level strategy.
anne.vanpraagh@moodys.com
» Alternative fuel vehicle case study. Our global growth forecasts for battery electric
and hybrid vehicles, a subset of AFVs, illustrate how the market penetration of these
vehicles will differ across regions based on technological developments, government
policy, consumer preferences and corporate strategy.
MOODY'S INVESTORS SERVICE CROSS-SECTOR
Four trends are transforming the automotive market, influencing credit conditions in multiple ways
The essence of the automobile will evolve as a result of four developments that we collectively call the “CAAR” trends: Connectivity
of vehicles, Alternative fuel vehicles (AFVs), Autonomous driving and Ride sharing. The changes will be incremental and gradual
rather than sudden and rapid. Although these shifts will take decades, they will nonetheless transform the complex ecosystem of
manufacturers, suppliers, users and technologies that facilitate personal and commercial mobility.
Automakers' strategies will determine the credit impact of sector transformation

For automakers, the journey to developing products and capabilities spurred by the CAAR trends will add cost and competitive
pressures, but it will also create some opportunities in the form of efficiency gains and new revenue streams.
The automotive sector enters this period of transformation already grappling with the challenges of heavy competition, tight margins,
regulatory and policy changes, oil price volatility and changing consumer preferences. Exhibit 1 describes the additional challenges
and opportunities of each CAAR trend for the auto sector. How automakers capture the benefits and address the challenges of the
transformation will determine the impact on their credit profiles.
Exhibit 1
Sector transformation presents opportunities and challenges for automakers
Connectivity Alternative fuel vehicles Autonomy Ride sharing
Opportunities
Challenges
Connectivity
Opportunities • Automakers could enter tie-ups with retail, media and other entities
Challenges • Consumers will expect connectivity as a standard feature in vehicles (from high-end to low-end), with
manufacturers largely bearing the costs
Alternative fuel vehicles
Challenges • Regulatory rules necessitate heavy capital investments in AFVs, while range and charging infrastructure
limitations are slowing consumer adoption
• Investment returns on BEVs will depend on reducing battery costs, technical improvements and scale of
production
Autonomy
Opportunities • Risk of losing first-mover advantage is lower for automakers than for software makers in race to develop Level 5
autonomous software
• Combined with connectivity, autonomy offers potential for new product development and safety improvements
Ride sharing
Opportunities • Fleet demand offers new opportunities, in conjunction with autonomy and connectivity
Challenges • Potential for decline in sales to households if consumer preference for car ownership declines
Source: Moody's Investors Service
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on
www.moodys.com for the most updated credit rating action information and rating history.
2 16 July 2018 Cross-Sector - Global: Auto sector transformation will drive global multi-sector credit trends
The auto sector is a bellwether for economic conditions owing to its multi-sector links
The auto sector became vital to global growth, employment and trade over the course of the 20th century through the globalization of
automobile production, cross-sector linkages and widespread vehicle ownership, a role that will evolve in varied ways throughout the
21st century.
The development of the automobile had a direct impact on other sectors through demand for petroleum, metals, auto financing,
insurance and infrastructure. It also affected government revenues, through taxes on the output of autos as well as on fuel. These
effects also had second- and third-round consequences for more sectors and instruments. For instance, expanded construction of
highways and toll roads led to the creation of parking revenue-based bonds and toll-road, fee-related financial instruments. Road
infrastructure that developed for cars and trucks, in turn, supported retail as well as suburban housing developments. Therefore,
any changes in how vehicles are made, used, insured or financed will affect credit conditions in multiple ways, and for a variety of
sectors and financial instruments. The obvious example is the impact of a large-scale shift toward AFVs on auto sector demand for
gasoline, which now accounts for about 45% of the refined product from crude oil. Similarly, widespread adoption of ride sharing and
autonomous driving could change business models in the auto insurance sector, which accounts for more than 40% of the global
property and casualty insurance market.
The auto sector itself accounts for about 3% of global corporate debt that we rate, and adding various sectors affected by its
transformation, ranging from commodities to technology, the share rises to almost 54% of rated global corporate debt. As Exhibit
2 shows, rated debt outstanding for the auto sector totals an estimated $320 billion. Including the debt of all related non-financial
corporates, that number jumps to more than $5 trillion. These numbers do not include the debt of financial institutions, utilities
and structured finance, infrastructure and public sector issuers that derive some portion of their revenue from automobile use, sales,
financing or production.
Exhibit 2
The auto sector's global, multi-sector links amplify its significance for credit markets
Rated debt refers to Moody's rated global corporate debt. Figures not available for all sectors. For captive finance, captive lenders only accounts for about 30% of the auto financing
market.
CAAR trends will create credit opportunities and challenges for many different industries
Connectivity in cars creates new demands for technology
Increased connectivity of vehicles with each other and other systems can enhance safety, efficiency and entertainment in a vehicle. As
Exhibit 3 illustrates, connectivity refers to a variety of features and functionality, such as increased integration of environmental sensors
with onboard computer systems, connectivity to Wi-Fi, telematics and digital platforms.
Exhibit 3
Connectivity: Cars as the next wave of mobile devices
Sources: Moody's Investors Service, National Highway Traffic Safety Administration, Mercedes-Benz, Amazon AWS
As consumers begin to expect connectivity features as standard in vehicles, production costs, as well as the risk of technological
obsolescence, could rise for auto manufacturers. At the same time, telematics could offer insurers more precise data for underwriting
while the safety features of connected cars could reduce claims. For governments, connectivity could make it easier to collect fees and
fines. The development of car connectivity also creates new demands for energy, telecommunications, media consumption, software
systems and vehicle maintenance, bringing opportunities to sectors including technology, utilities, media and telecoms, auto dealers
and parts retailers, as Exhibit 4 shows.
Exhibit 4
Vehicle connectivity offers opportunities for a wide range of sectors
Auto dealers and
Insurance Technology Media and telco Public sector Utilities
parts retailers
Opportunities
Challenges
Insurance
Opportunities • Telematics may lead to more tailored products and pricing
• Advanced safety features will likely reduce the number of accidents and claims
Challenges • Data privacy concerns may emerge, as well as uncertainty around pricing of new products
Technology
Opportunities • Demand could rise for cloud service providers and chip and software makers
• Leaders in various technologies and systems will likely gain competitive advantages
Media and telco

Opportunities • More in-vehicle use will help spur demand for coming 5G services
• Media companies can benefit from rising demand for in-vehicle infotainment
Auto dealers and parts retailers

Opportunities • Breadth of features will support service operations
Public sector
Opportunities • Collecting revenue from tolls and traffic-related fees and fines will become more efficient
Utilities
Opportunities • Added components will boost electricity demand
Challenges • Increased dependency on electric grid raises stakes for reliability management
AFVs could shift energy and commodity demand and auto resale value
The increased policy and consumer focus on global climate change, greenhouse gas emissions and fuel-efficiency related regulations
will likely promote growth in the share of AFVs. As Exhibit 5 shows, we estimate that AFVs will account for 35% of global auto sales
by the late 2020s, with BEVs taking a slightly higher share than non-BEV AFVs (for details, see Automakers fully engaged on Battery
Electric Vehicles, but the transition will pressure returns, 23 January 2018). Decreasing battery costs, as illustrated in Exhibit 6, in
addition to driving range improvements and an expansion of charging infrastucture, contribute to our expectations of an acceleration in
the penetration rate of AFVs.
Exhibit 5 Exhibit 6
Global penetration of AFVs: BEVs and non-BEV AFVs A further decline in battery costs could support increased BEV and
% of total vehicle sales hybrid penetration
$/kWh $/kWh projections Projections trend
1,200
1,000
Cost ($) per kilowatt hour
800
600
400
200
-
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Based on regional estimates of penetration rates, weighted by the region's current relative Downward trend in projection is based on a reduction in production costs as a result of the
contribution to total automotive sales. All figures are estimates. development of new chemistries and improved processes.
Source: Moody's Investors Service Sources: Bloomberg New Energy Finance, Moody's Investors Service
A range of actors, including traditional and new-entrant auto manufacturers, technology companies and public/private partnerships,
are actively engaged in developing low- and zero-emissions vehicles. These vehicles range from hybrids and plug-in hybrids, to pure
BEVs, to other alternatives that are still in development, including fuel-cell and solid state-battery vehicles.
The global market share of AFVs has grown over the past decade, an indication of the trend away from purely gasoline-driven vehicles.
However, a dominant (and cost-effective) technology, widespread customer acceptance and a solution to infrastructure requirements
have yet to fully emerge. Therefore, it will take decades before the fossil-fueled, manually operated vehicle loses dominance.
The rise of AFVs will bring a mixture of opportunities and challenges to different sectors, as Exhibit 7 shows. The increased demand for
batteries leads to opportunities for the metals and mining sector, with the risk of stranded investment in the event that alternative
battery arrays using different materials are developed. The shift in fuel to electricity will dampen demand for gasoline, though at the
same time it may provide alternative revenue opportunities to oil companies focused on innovation. While AFVs will have the most
obvious cross-sector impact on the energy and commodities sectors, this technology also will bring uncertainty to the auto finance and
secondary markets.
Exhibit 7
AFVs have an impact on the energy, commodity, auto finance and public sectors
Auto finance and
Utilities Oil and gas Public sector Metals and mining
secondary markets
Opportunities
Challenges
Utilities
Opportunities • AFVs may help drive revenue growth and help keep rates lower
• Utilities would benefit from capital spending on charging stations and grid upgrades
Oil and gas

Opportunities • Development and operation of charging stations could provide alternative revenue opportunities
Challenges • AFV penetration would dampen incremental increase in demand for gasoline, which now accounts for 45% of
demand for refined oil products
Auto finance and secondary markets

Challenges • Future price trends will be uncertain as battery costs and government incentives/subsidies evolve
• Risks will include technological obsolescence, demand patterns and residual value risks
• Financing industry may have to transition to accommodating financing products
Public sector
Opportunities • Per-mile travelled tax or point-of-charging tax could provide new revenue
Challenges • Loss of gasoline tax revenue is a risk
Metals and mining

Opportunities • Demand for raw materials will increase, although significant investment will be needed to develop new supply
Challenges • Stranded investment will be a risk if rising prices slow AFV demand or alternative battery arrays are developed
Vehicle autonomy could enhance safety and efficiency, depending on how infrastructure and regulation respond
The driver of the future is increasingly likely to be a computer, or, more precisely, a network of computerized systems that operates an
autonomous vehicle. However, the shift to fully autonomous vehicles that require no manual intervention is far from imminent, and
such vehicles would have to overcome technological, regulatory infrastructure and consumer acceptance hurdles before this shift could
occur.
For instance, progress towards vehicle autonomy will have to address the definition of liability and implications for insurance as well
as whether current road and traffic infrastructure is adequate for autonomous vehicles to share the road with human-guided vehicles.
Therefore, regulation, as it pertains to both of these issues, as well as safety more broadly, may be just as important as technology in
determining when and how autonomous vehicles become mainstream.
Still, as Exhibit 8 illustrates, many of the features and capabilities associated with autonomy are already in use today: from cruise
control to “auto pilot” to a variety of advanced safety features such as lane-departure assist and predictive braking. Automakers will
likely incorporate more of these features in new vehicles in the coming years, particularly in areas where this technology confers
meaningful safety benefits.
Exhibit 8
Automobiles are on the path toward full autonomy
Sources: National Highway Traffic Safety Administration, Society of Automotive Engineers
As automobiles proceed toward Level 5 full autonomy, as described in Exhibit 8, a transformation is likely in auto design, sales and
financing, the costs and convenience of car ownership, the use of public transport, and in employment and lifestyles.
Autonomous driving allows technology companies to enter the auto market, but also imposes upon them the consequences of
software errors and cybersecurity breaches. The increased safety of autonomous vehicles and the utilization of big data would enable
insurance companies to model risk more precisely, create a new customer base for auto finance and secondary markets, and provide
opportunities for integrated transportation systems and “smart cities” in the public sector. On the flip side, this new technology brings
to insurance companies and auto finance and secondary markets the challenges of decreased demand for auto insurance and the need
to develop new insurance pricing and financing models and, for the public sector, the challenge of maintaining public transportation
and revamping current infrastructures, as Exhibit 9 shows.
Exhibit 9
Autonomy poses opportunities and challenges for sectors including technology and insurance
Auto finance and
Technology Insurance Public sector
secondary markets
Opportunities
Challenges
Technology
Opportunities • Tech companies can enter auto market through navigation/operating systems, and developing overarching
platforms
• The first company to develop Level 5 full autonomy will have significant first-mover advantage
Challenges • Liability for software errors/malfunctions could pose large risk to developers
• Cybersecurity will remain a concern
Insurance
Opportunities • Fewer auto accidents would reduce claims
• Mapping of specific car and driver risk patterns could become more precise
Challenges • Insurers will need to develop new products and pricing, and address liability issues for car owners, manufacturers
and system providers
• Repair costs will rise; for example, repairs to sensors near bumpers
• Auto insurance demand will shift
• Cybersecurity risks will be an issue

Opportunities • A customer base for financing products such as subscription-based services could develop
• Financing opportunities could arise from evolution of commercial/corporate business models
Challenges • Risks will include technological obsolescence, demand patterns and residual value risks
• Financing industry may have to transition to accommodating financing products
Public sector
Opportunities • Fewer accidents will have health and safety benefits
• Integrated mobility systems will incorporate ride sharing, bike sharing and public transit
• Governments will have impetus to invest in "smart cities"
Challenges • Underlying revenue for instruments such as parking-revenue bonds will be affected
• Substitution effect could affect public transportation use
• Autonomy could require infrastructure revamp
Ride sharing could become a core component of personal mobility

Ride sharing and other alternative transportation business models provide passengers with a convenient digital link to automobiles,
operated by a third-party driver or themselves, without the expense or responsibility of ownership. While still representing only a
small share of total vehicle miles driven, these business models are likely to become a core component of the new mode of personal
mobility, particularly in urban areas.
More recently, new services have begun to proliferate that facilitate sharing of privately owned cars or that charge a monthly fee to
subscribe to a vehicle, providing an opportunity to increase the utility of vehicles. When combined with other trends, car sharing has
the potential to contribute to declining rates of individual car ownership, as Exhibit 10 shows.
Exhibit 10
Ride sharing and other alternative transportation services
Source: Moody's Investors Service, Deloitte, CNET
The benefits of these transportation services go beyond simple convenience, offering the potential to expand and enhance the mobility
of individuals who may be unable to drive themselves, and for those for whom public transportation is inaccessible or does not meet
their needs in terms of proximity to their home or their destination.
The integration of ride sharing and other business models with autonomous systems and electrification could provide an important
economic boost to this form of mobility as the more intensive use of shared vehicles increases the cost benefits of using an
autonomous AFV. Some market analyses suggest that the cost per mile traveled in an autonomous ride-sharing service could fall to as
low as 20 cents to 30 cents from $2 to $3 currently for individually owned gasoline-powered cars.
Ride sharing could reduce incentives for individual automobile ownership while at the same time provide new demand for automobiles
from ride-sharing fleets. This shift would bring a mixture of opportunities and challenges to auto dealers, parts retailers, and auto
finance and insurance companies, as Exhibit 11 shows.
Exhibit 11
Ride sharing to shape business models in the auto, rental car, auto finance and insurance sectors
Auto dealers and parts Auto finance and
Car rental services Insurance
retailers secondary markets
Opportunities
Challenges
Auto dealers and parts retailers

Opportunities • Dealers would likely retain a portion of sales revenue if fleets account for more vehicle sales
• Dealers could enter new businesses and strategic tie-ups
Challenges • A decline in individual car ownership and servicing needs could reduce dealer revenue from those sources
Car rental services

Opportunities • Rental companies could benefit from new product lines and business tie-ups
Challenges • Competion could rise from ride sharing and possible new entrants in the rental business

Opportunities • Drivers may have more flexibility in getting shorter-term financing contracts that could mitigate risks from longer-
term financing
• Ride sharing could present new opportunities for auto lenders
Challenges • Ride sharing could reduce demand for vehicles in some cases and reduce financing demand
• Risk assessment challenges could emerge related to financing large ride-sharing groups
• Rental car ABS performance would weaken if financial durability of rental car companies weakens significantly as a
result of competition
Insurance
Opportunities • Commercial insurers may fare better in areas where ride-sharing services demand commercial auto coverage for
their fleet
Challenges • Marginal decline in individual car ownership could reduce demand for insurance products
Technology, government policy, consumer preferences and corporate strategy will shape the CAAR
trends
Demographic shifts, technological innovation and climate change are often perceived as trends that will only be visible in credit
outcomes over the long term. However, these trends are likely behind several incremental changes over the short term. And they are
reflected in product innovation, government policy, consumer preferences and corporate strategy. These factors, in turn, are shaping
the direction and pace of change in auto connectivity, AFVs, autonomous vehicles and ride sharing.
Technology makes it possible to improve existing products or introduce new offerings, add efficiencies to the production process
and collaborate across businesses in new ways. The application of artificial intelligence and sensors in autonomous vehicles is a clear
example of technological advancement driving the development of a product that is also addressing emerging consumer preferences.
Government policy, in addressing emerging issues or societal concerns, drives responses on the part of corporations as well as
consumers. The move toward AFVs is an example of this response, because it reflects government policies and incentives to reduce
greenhouse gas emissions, while also reflecting societal and consumer interest in lower carbon footprints as a means to ameliorating
climate change.
Consumer preferences can shift for a variety of reasons, including changes in demographics. For example, transportation preferences
of millennials or of an aging population could differ from those of other generations. Ride sharing as a primary means of transport, as
opposed to personal car ownership, is currently more prevalent in urban, rather than rural areas, because of geographic conditions as
well as rapid consumer acceptance.
And finally, corporate strategies, driven by the pursuit of market share or efficiency gains, are also contributing to the emergence and
path of these trends. For instance, retail and media businesses will leverage connectivity and the “internet of things” to increase their
product offerings and deliver them more efficiently. Similarly, insurance companies are providing support for the development of
telematics to collect and transmit data while in motion about location, driving conditions and car performance.
Exhibit 12
Demographics, technology and climate change underpin CAAR trends
The key secular trends driving global credit in 2018
A combination of technology, government policy, consumer preferences and corporate strategy led to gasoline-fueled automobiles
becoming a dominant mode of transport in the 20th century, as Exhibit 13 illustrates. Technology and corporate strategies combined
to increase the scale of and lower the cost per unit of production, while government spending on road infrastructure, regulations
around driving and traffic, and affordable gasoline all supported the increased use of automobiles by commercial entities, individuals
and households. The agility of corporations in offering insurance and financing products further supported demand growth. By the
middle of the century, as advancements in technology coincided with global trade integration, vehicle production was spread across
countries in ways that maximized efficient use of capital and the availability of lower-cost labor. Consequently, the auto sector became
a major contributor to global growth, trade and employment.
Exhibit 13
Four factors shaped the development of the 20th century automobile ...
For the 21st century automobile, as Exhibit 14 illustrates, the four factors of technology, government policy, consumer preferences and
corporate strategy are playing out in new ways that reflect developments in demographics, as well as climate change and technological
innovation. However, each factor does not have the same effect on individual CAAR trends. While technology supports change in the
direction of the four trends identified, technological change is proceeding at different speeds in each area, and therefore the three
other factors may determine how rapidly a particular trend evolves. For instance, consumers may embrace connectivity in automobiles
and ride sharing more readily than they adopt AFVs. Also, government incentives and subsidies, or the capacity of utility providers to
expand charging facilities, may be what nudge adoption of AFVs. The next section considers the BEV as an example of how the four
factors are shaping the alternative-fuel trend in vehicles, and why adoption will continue to vary across geographies.
Exhibit 14
… and will be key to the continued transformation of the 21st century version
Alternative fuel vehicle case study

Adoption trends across regions reflect government policy, consumer preferences and corporate strategies
Government rules around auto emissions as well as subsidies and incentives for adopting carbon alternatives have prompted
automakers to turn to producing AFVs despite their high costs and low margins. Government policy, in turn, has been influenced by
country specific air quality concerns as well as international commitments to emissions control to address climate change.
Within this policy context, technological change, particularly as it relates to the cost of batteries, could affect how rapidly electric
vehicles gain market share. While the market share of electric cars is rising, partly because of subsidies, the pace and spread of adoption
is slow. One reason for consumer hesitance is the cost of BEVs. Therefore, any decline in costs will likely spur greater adoption.
A second reason for the slow adoption of BEVs is range anxiety on the part of the consumer. BEVs require an extensive recharging
network, and the current maximum driving range is about 300 miles. Therefore, the development of a charging infrastructure will be
key to shifting preferences of consumers, who include both household users of automobiles as well as purchasers of car fleets or trucks
for commercial purposes.
Given how each factor will likely shape the BEV market, we see this particular CAAR trend as playing out very differently depending on
geography. We expect global penetration of BEVs as a percentage of annual sales to increase; however, significant penetration of BEVs
in the global car stock is many years away, especially as the durability and average fleet age of existing vehicles continue to increase.
We expect BEV penetration of the global fleet to reach around 2% by the mid-2020s and 5% by the late 2020s.
Exhibit 15 shows our estimates for the penetration rate, in terms of the percentage of total vehicle sales, of BEVs and non-BEV
AFVs in four major auto markets: the US, Europe, China and Japan, as well as the rest of the world. For all regions, we estimate that
the penetration rate will grow in the next decade, with the highest AFV penetration in Europe, at 60%-75%, and the highest BEV
penetration in China, at 31%-34%, by the late 2020s.
Exhibit 15
Market penetration of BEVs and non-BEV AFVs
% of total vehicle sales
Non-BEV AFV figures for China include plug-in hybrid electric vehicles only.
Source: Moody’s Investors Service estimates, China Association of Automobile Manufacturers
Key factors in BEV forecasts that are unique to certain regions include, in the United States, the potential adoption by more states of
more restrictive emissions regulations that would encourage more consumers to consider AFVs. In Europe, the declining popularity
of diesel engines and stricter European Union emissions targets that will take effect in 2020 will likely spur more interest in AFVs.
However, BEVs likely will not be available to the European mass market by 2020; therefore, sales of hybrids are likely to rise in the
meantime. We expect BEV sales in Europe to begin to rise significantly after 2025 when the offerings become more broadly available.
In China, the government has set forth ambitious initiatives to promote BEV production, with China's regulatory regimes likely to
require aggressive adoption of BEVs, similar to that of the European Union. In Japan, hybrid penetration is already high, as is support
among Japanese manufacturers for fuel-cell technology. We estimate total AFVs will account for about 60% of total unit sales of
vehicles in Japan by 2030, with BEVs representing roughly 10%. BEVs currently have very little penetration in the rest of the world
owing to financial limitations for building out charging infrastructure.
Contributors
Bruce Clark (Auto OEMs and parts suppliers) Dan Seymour (Public finance)
Senior Vice President Vice President - Senior Analyst
bruce.clark@moodys.com dan.seymour@moodys.com
+1.212.553.4814 +1.212.553.4871
Falk Frey (Auto OEMs and parts suppliers) Jasper Cooper (Insurance)
Senior Vice President Vice President - Senior Analyst
falk.frey@moodys.com jasper.cooper@moodys.com
+49.697.073.0712 +1.212.553.1366
Charlie O'Shea (Car dealers and parts retailers) Jason Grohotolski (Auto financing)
Vice President - Senior Credit Officer Vice President - Senior Credit Officer
charles.o'shea@moodys.com jason.grohotolski@moodys.com
+1.212.553.3722 +1.212.553.1067
Carol Cowan (Metals and mining) JingJing (Nicky) Dang (Auto ABS)
Senior Vice President Senior Vice President / Manager
carol.cowan@moodys.com jingJing.dang@moodys.com
+1.212.553.4999 +1.212.553.4801
Neil Begley (Media and telecom) Jerome Cheng (Auto ABS)

Senior Vice President Senior Vice President
neil.begley@moodys.com jerome.cheng@moodys.com
+1.212.553.7793 +852.3758.1309
Neil Mack (Media and telecom) Anthony Parry (Auto ABS)

Vice President - Senior Analyst Senior Vice President / Manager
neil.mack@moodys.com anthony.parry@moodys.com
+1.212.553.7278 +44.207.772.5594
Richard Lane (Technology) William Coley (Ratings and Process Oversight)

Senior Vice President Senior Vice President
richard.lane@moodys.com william.coley@moodys.com
+1.212.553.7863 +44.207.772.8799
Swami Venkataraman (Utilities) Mariarosa Verde (Ratings and Process Oversight)

Senior Vice President Vice President - Senior Credit Officer
swami.venkat@moodys.com mariarosa.verde@moodys.com
+1.212.553.7950 +1.212.553.6949
Toby Shea (Utilities) Martha Graybow (Research)

Vice President - Senior Credit Officer Vice President - Senior Research Writer
toby.shea@moodys.com martha.graybow@moodys.com
+1.212.553.1779 +1.212.553.7135
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CROSS-SECTOR

SECTOR IN-DEPTH Cross-Sector - Global

Automakers' strategies will determine the credit impact of sector transformation

Connectivity Alternative fuel vehicles Autonomy Ride sharing

Media and telco

Auto dealers and parts retailers

Oil and gas

Auto finance and secondary markets

Metals and mining

Sources: National Highway Traffic Safety Administration, Society of Automotive Engineers

Auto finance and secondary markets

Ride sharing could become a core component of personal mobility

Source: Moody's Investors Service, Deloitte, CNET

Auto dealers and parts retailers

Car rental services

Auto finance and secondary markets

Source: Moody's Investors Service

Source: Moody's Investors Service

Source: Moody's Investors Service

Alternative fuel vehicle case study

Neil Begley (Media and telecom) Jerome Cheng (Auto ABS)

Neil Mack (Media and telecom) Anthony Parry (Auto ABS)

Richard Lane (Technology) William Coley (Ratings and Process Oversight)

Swami Venkataraman (Utilities) Mariarosa Verde (Ratings and Process Oversight)

Toby Shea (Utilities) Martha Graybow (Research)

Moody’s related publications

Auto finance and structured finance

» Global Auto ABS Market Comparison Tool, June 2018

Metals and mining

REPORT NUMBER 1122611

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