Changing lanes
A changing car industry should result in more choice and better motoring
The future may be hard for some, but for others it could be as bright as a shiny new car
SINCE THE first motorist sparked up a Benz Patent Motorwagen, little has changed. Cars powered by an ICE and carrying four or five passengers have done the same job for 130 years. Several firms that flourished at the outset (including Peugeot and what became Mercedes-Benz) survive. But electrification, tech and autonomous driving may now upend an industry used only to slow change.
The legacy industry must reinvent itself to cope with competition from new carmakers starting from scratch or emerging from China—or both. New technologies demand new ways of doing business as revenues from services are needed to plug the gap of dwindling volumes and EVs that are not as profitable as ICE cars. Ashwani Gupta, chief financial officer of Nissan, says the switch is from “one time transaction to lifetime engagement”. Not every firm will manage it. While scale is less of an issue for newcomers, it matters for existing firms that must pay for massive restructuring. Weaker ones, especially small Japanese makers like Subaru or Mazda, may not survive unless they team up with bigger ones.
Can even big companies adjust their cost structures as volumes decline? It may be easier at the upper end of the market, although Tesla as well as China’s Xpeng and Nio are…
