Electric mobility changes the car industry

Historic changes are taking place in the car industry, as electric mobility requires expensive investments without promising immediate profits. The sector answers the call with reduction of cost and employment.

Marcus Berret, a manager of advising company Roland Berger, describes the car industry’s great dilemma in a few words: “It needs to spend many billions in new technologies, such as electric mobility, with which it is not certain to make a great profit, at least not for the first few years”. The difficulty of the task increases in an era when all major markets, especially China, begin to erode.

The pessimists believe that the rapid changes threaten big names of the sector with extinction, but also an entire way of life based on personal ownership and mobility.

Even if car companies manage to respond to the electric mobility changes, thousands of jobs will still be threatened, since electric cars are much simpler designs compared to current vehicles. Head of Volkswagen, Herbert Diess, believes that the investment for constructing an electric car is 30% less than a conventional model, while the Economic Research Institute (Ifo) of Munich speaks of a possible loss of 620,000 jobs.

The new mobility ideals

Many drivers are not interested to buy a car, since they prefer the experience to the ownership. New innovative car-sharing and pooling programs give the ability to call an autonomous vehicle to a specified place, make the predetermined route and leave it wherever convenient to be picked up by the next party. This means that all the more distances will be traveled with fewer transportation means, with beneficial effects for the environment, while it would reduce traffic in urban centers. A previous study by the Technical University of Munich calculates that if we drove autonomous vehicles everywhere, the total number of cars would be reduced by… 90%.

Volkswagen – the biggest car company in the world – still suffers from the fallout of the Dieselgate scandal and that is why it expands its efforts to gain ground with electric mobility. Until 2025, the group plans to increase sales of hybrid or electric vehicles to 25% of total sales, while in the next four years it will spend 44 billion Euros for research in new models, friendly to the environment. VW has already developed a construction platform which will remain open to other car companies in order to reduce cost. “We want to turn the MEB platform into the basic electric mobility model”, said the head of the group during the recent Geneva car show.

German company E.Go from Aachen, which builds small electric cars, is the first to be interested in participating in the platform. At the same time, negotiations continue with American Ford for building electric trucks and tractors. Marcus Berret believes that other car companies need to follow this route: To seek synergies and reduce cost. “Not even the biggest names of the car industry can shoulder the cost of the transition. It makes no sense to have 10 or 15 companies that want to reinvent the engine at the same time”.

However, investing in the future takes sacrifices. In the next five years VW is expected to layoff 5,000-7,000 workers. By automating production, saving materials and having a smaller range of models, the group plans to reduce production cost and increase profits by 5.9 billion Euros annually by 2023.

Competitors are active

At the same time, BMW loses ground. The famous Bavarian car company is used to success, but in 2019 it expects lower profits for yet another year. It will try to reduce production cost in order to save capital for necessary investments in electric mobility, but also autonomous driving. “The transformation of our sector is in full swing”, said Nicholas Peter, a member of BMW’s executive board. By 2022, the car company wants to save more than 12 billion Euros. Already, more than 1,500 workers of BMW participated in an early retirement program, while layoffs are expected to continue.

However, the most unexpected development was announced at the end of February: Former rivals BMW and Daimler are about to cooperate. Already, the two giants have merged their carsharing subsidiaries and soon they will unite their forces in autonomous vehicles. Already, BMW collaborates with Intel, Mobileye, FiatChrysler and other companies to promote research in this field. It is, of course, impossible to see a joint BMW-Daimler model, but as BMW’s head, Harald Krüger, said: “I have stopped making predictions about what may happen in the next five years”.

SEAA: Electric mobility will improve quality of life

Mr. George Vasilakis, as chairman of SEAA (Automotive Importers Association), has a wide and complete picture when it comes to electric mobility and what its establishment means for Greece. In this regard, his answers to cnn.gr mean a lot.

How optimistic are you for the government setting incentives for electric and hybrid vehicles?

Both political parties have expressed their clear intent to set incentives for electric cars. In general, there is a trend on behalf of European politicians in favor of electric mobility thanks to the extremely positive effects it has on pollution and noise levels in cities.

According to SEAA’s proposed incentives, do you believe that the corporate car market will become more acceptable to electric models?

Definitely, but not just based on the proposed incentives. A large percentage of corporate cars are stationed at the company either during the night or during the day and therefore, they have plenty of time to recharge. Furthermore, most of them move inside of cities and only few travel outside, where the issue of charging becomes more complex. While they are more expensive to buy, they are much cheaper to run and thus they create great savings in the annual transportation cost of a company. Also, they upgrade very effectively the social profile of a company and this is something that as time goes by, all the more companies take seriously into account.

Electrification should not begin with public vehicles in the wider sense: Obviously it should happen, as it occurs in most Western nations. In Greece, however, the public not only maintains the only buildings where smoking is fully allowed, but also has the oldest vehicles of any type in circulation. Servicing older vehicles can be partly explained through the lack of money, but the example of smoking that I mentioned shows the complete lack of interest for dealing with cardiovascular and other diseases caused by our way of life and the polluted environment we move in.

When do you believe electric mobility will attain a critical mass in our country, as long as there are incentives and proper infrastructure?

Apart from incentives and infrastructure, we need a full range of available electric vehicles from the manufacturers. Today, while most of them have expressed their clear will, there are only few that offer electric cars in their range. It seems it will take two more years to prepare. As for Greek consumers, the recent example of liberating diesel consumption in Athens/Thessaloniki where these cars raised their share from 11% to 64% in just 3 years, shows that we are accepting what is new. Therefore, I will not be surprised if in five years from now electric cars have a sizable share in new sales.

How much will electric mobility change the quality of life?

The existence of megacities with significantly reduced emissions and noise will no doubt improve the quality of life for inhabitants, it will raise life expectation and drastically reduce the cost of medical care. Moreover, visitor experience will improve with great benefits for our economy, since tourism remains its most basic pylon.

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