Pandemic is changing automotive industry | News

The message emanating from the Society of Automotive Analysts’ 2021 Automotive Outlook Conference, held virtually last week, reinforced what Greek philosopher Heraclitus said some 2,500 years ago: “There is nothing permanent except change.”

COVID-19 has quickened the pace of change in an industry overwhelmed by the challenges of autonomous driving, shared mobility and driveline electrification, trends that are already upsetting traditional business models. Here’s how the current tsunami of events is affecting the automobile industry worldwide, according to industry analysts.

— The Pandemic’s impacted sales, but less than expected.

The Coronavirus Pandemic’s impact on light vehicle sales was neither as deep nor as protracted as the Great Recession of 2009, although demand plunged 14 percent worldwide and 16 percent in the United States. Sales are rising once again but aren’t forecast to return to pre-pandemic levels. Nevertheless, the nascent recovery is being weakened by a shortage of semiconductors.

— The sudden drop in earnings affected product introductions.

More than 50 percent of companies believe there will be a delay in upcoming vehicle technology and new product launches as a result of COVID-19, with lower sales and lower profits causing automakers to delay new products up to a year or more in an effort to rein in unexpectedly smaller research and development budgets.

— After killing sales, COVID stoked them.

With the pandemic running rampant, consumers embraced the perceived safety of the suburbs and private transportation. New vehicle demand quickly outstripped production, which was constrained as COVID spread. New vehicle inventories remain abnormally low, and remain below historic norms. But in the short term, production will outstrip demand as manufacturers restock dealer lots, improving automakers’ balance sheets for 2021 after a rocky 2020.

— Cars are about to change, and dramatically.

Vehicles will increasingly use electric motors, not internal combustion engines, a change driven by governmental response to accelerating climate change. Analysts expect electrified vehicle demand will increase in America as it has in Western Europe, where battery electric vehicle sales rose 86 percent last year in a market that was down 26 percent overall. A lack of choice in battery electric vehicles is currently holding back sales in the United States, not price, analysts say, which should change over the next two to three years as battery costs decline.

— New entrants will be battling for your bucks.

Tesla has established a template that other new EV startups are following, intensifying the competitive landscape in North America by 2027, with as many as 21 manufacturers producing vehicles here. Many will not have large volumes, at least not initially. Among those American companies with dreams of Tesla-like success are Bollinger Motors, Byton Technology, Faraday Future, Fisker, Lucid Motors, Rivian, SF Motors, in addition to foreign EV manufacturers like BYD, Nio and Polestar.

— Autonomous vehicles are changing automakers’ business.

All of these changes will transform automakers from product producers to service providers. On Wednesday, Ford announced that Spin, its micromobility subsidiary, will launch remotely-operated e-scooters to cities in North America and Europe in 2021, with technology that will allow riders to hail one from several blocks away. And last week, Honda announced that it will import autonomous vehicles developed by General Motors for its new mobility service in Japan. Meanwhile, GM announced last week that it has entered a long-term relationship with Microsoft to accelerate the commercialization of self-driving vehicles.

— Autonomous vehicles will steal market share, but not from where you’d expect.

Further out, the consumer changes wrought by COVID will fuel the rise of autonomous vehicles, which analysts expect will grab market share from mass transit and short haul airlines. Given that these vehicles will work 12 hours a day, seven days a week, accruing as much as 150,000 miles annually, it should increase vehicle demand.

It seems the future is coming on fast.