Will the COVID-19 Pandemic Accelerate Automotive Disruption?
The pandemic has seen the acceleration of new ways of working and tech adoption. In fact, it’s almost completely transformed how work is getting done. True flexible working with remote teams seemed like it was still years off back in January but now, almost all of us are doing it.
The automotive industry is nodding towards a similar kind of transformation, even if it’s not on quite as large a scale. There was already a push towards new forms of mobility in order to save our ailing planet and it wouldn’t have surprised anyone if sales of ICE vehicles fell. But then COVID-19 hits and we see wide-scale shut downs of plants and supply chains, impacting the industry in a huge way.
Automotive volumes drop thanks to COVID-19
Roland Berger predicts a plunge in automotive volumes of up to 40% but it’s very hard to predict the rate of recovery for the industry.
“The automotive industry, in particular, is in shock. It was already in the midst of a significant downturn before the virus struck, enduring falling volumes and margins, overcapacities, tighter emissions requirements and a costly shift towards electrification and digitalization. And now, fallout from the pandemic is driving changes in policy, consumer behavior and the economy that threaten automakers’ long-term business model.”
At the moment, automotive businesses are trying to survive in the short term, which means moving away from ACE (autonomous, connected, electric) initiatives and focusing on current demand rather than the future.
The issue here is that all those smaller future-looking brands will be able make steps forward over big manufacturers that are just trying to keep their heads above water.
Even before COVID-19, there was a huge push towards autonomous delivery vehicles, with Walmart beginning testing of these vehicles and announcing a partnership with robotics company Nuro. These types of initiatives have been able to continue thanks to minimal interactions needed between humans. Often, the autonomous vehicles are managed from a location where social distancing is easy, or the vehicles are managed by one handler who is responsible for being behind the wheel during test manoeuvers.
The road map is clear for transport tech
Things have become clearer for future-tech in the automotive industry. Roland Berger’s Automotive Disruption Radar talks about the development of intricate technological parts such as AI chips, smart-city infrastructure, and intelligent algorithms. These are the building blocks of the future of mobility and as advancements are being made, we get a step closer to a new world of transport.
These tech companies may have seen downturn in recent uncertain times but, unlike manufacturers, they don’t have to focus on pure sales activity to keep going. Instead, they can focus on the development of the tech that takes us closer to those ACE goals.
With manufacturers essentially taken out of the picture — even temporarily — they’re suddenly on the back foot when it comes to developing their own technology. This provides a great opportunity for future collaboration.
Are we seeing a global mindset shift?
It’s really hard to say whether the pandemic will actually accelerate the advancement and adoption of this technology but it’s worth looking at driving habits too.
I recently went on BBC Radio Norfolk to talk about how people could safely get back on the road and in my research it became quite clear that a lot of people were nervous about driving, with some even deciding that walking and cycling would be enough for them going forward.
Others are looking at the amount of money they’d saved not driving to work and suddenly wondering how they could keep saving that kind of money. Electric cars provide the perfect solution to drivers who don’t do many miles and don’t want to pay out for fuel on a regular basis.
Taking that a step further, transport as a service (TaaS) provides even more opportunities for the semi-regular drivers who don’t necessarily need their own cars, especially if many of them are now working from home and no longer need to commute.
One big barrier to wide-scale adoption of EVs and autonomous vehicles is public mindset. While the advancement of technology is one thing, there needs to be a huge shift in how people think about transport before ACE will become a firm reality.
For some, the pandemic has really made them think about how they get around and whether a combustion-engine car is necessary.
The future of the automotive industry will feature a large shift towards new ways of moving, whether that’s EVs, autonomous public transport or car sharing schemes. Consumers are already thinking about what the future will look like and younger generations are concerned about the environment, too. The next step will be to present more viable options to these people who want to move in a more affordable way that also benefits the planet.