THE END OF CERTAINTY – CHALLENGE AND CHANGE FOR AUTOMOTIVITY IN 2019

In this article, AutoMate’s Harrison Boudakin looks ahead to some of the important trends, questions and discussions which will characterise tomorrow’s global car market

A glance back across the automotive landscape of 2018 shows that last year, the only constant for car makers was change.
New battle lines continued to be drawn across the face of global mobility, meaning automakers spent the last 12 months fending off challenges on multiple flanks: tougher legislators on one hand, rising marketplace disruptors on the other. Couple that with the dampener that was put on global trade as the tariffs walls rose alongside the general softening of the consumer economy, and the result was quite a challenging environment in which to set strategy and steer a course for automotive success.
In a nutshell, 2019 looks set to follow a similar prescription. For automakers staring at the chess board and weighing up the state of play, there are now some questions to consider, and we in the automotive industry will begin feeling the effects of the decisions they make in relatively short order.
So what are the big-ticket items on the automotive change agenda for the next 12 months? And where do the heavyweights of industry see their companies – and their competitors – heading?
In terms of setting a global pace and rhythm for motor manufacturing, it is always worth starting with the place that started it all: Germany. Having battled through the lingering entrails of the diesel emissions scandal in 2018, going forward the big German automakers now hope to clear the cobwebs and really get back to the main game of making world-class automobiles. But as they well recognise, that main game is now crowded out and complicated by some key push factors.

Electrification is now firmly on the cards, with Audi and Mercedes preparing to lean heavily on two new SUVs (the E-tron and the EQC 400) for an initial push into mainstream electro-mobility. These two vehicles will form a valuable proof-of-concept for the conservative Germans, whose management are loathe to jump the EV shark and get too far ahead of the market on a loss. Launching these vehicles presents a complex, expensive, but ultimately necessary challenge: EVs’ battery cells have not yet reached price parity with ICEs; the charging infrastructure is hugely variable from nation-to-nation and even region-to-region, and the EV supply chain is a new and unfamiliar beast.
Even so, the trend towards electrification in the global market is undeniable – in Europe alone plug-in and full electric sales increased 37 percent last year and most of the major players are gearing up for big offensives. BMW plans to offer 12 full-electric vehicles by 2025; meanwhile Volkswagen has ‘booked’ its new modular MEB platform for 15 million vehicles worldwide.
That includes having sourced the battery cells for each one of those 15 million cars, the first of which will be the Golf-sized I.D, set to launch late this year. Alongside the Tesla Model 3 (whose influence as a semi-affordable EV will be determined largely by its maker’s ability to deliver them on time and ‘on-quality’ to eager customers), the I.D looks set to be a real pace-setter: offering a 400-600km of range, fast, with Passat-rivalling interior space and a price to match an equivalent diesel hatchback. With the right infrastructure and sales pitch, it’s not beyond the wit of man to imagine this car doing well in major cities across the world; including in Australia.

In fact, Australia will be playing perhaps more of a role in getting the EV revolution up than you might expect. The icons of our old car-manufacturing industry may have long closed their doors, but the global race to normalise electric motoring has created a massive spike in demand for lithium, of which Western Australia alone produces more than half the world’s supply. Over the last two years, exports have now increased by a factor of six, and show no sign of letting up as the automotive superpowers quench their EV thirst. Better still, lithium processing has also taken off in WA, with an Australian-American-Chinese joint venture now the world’s largest lithium-processing plant.
In that sense, Australia is in ‘pole position’ to benefit from the growth of EVs, not just in Europe, but more importantly in China, whose market is now the world’s largest for EVs and for EV battery production. Witness, for example, the rise of CATL, the Chinese firm whose enormous Fujian plant currently supplies batteries to Nissan, Mercedes, the VW Group and BMW. CATL has now signaled a desire to expand with a factory in the European market, prompting calls from the German Chancellor, Angela Merkel, for the EU’s car manufacturers to “get their act together” on their own form of local battery production.

Her government’s fear is that Germany’s automakers are becoming too dependent on Chinese batteries for their EVs, and have shown little interest in establishing a local supply chain in the face of China’s established success with battery production. Merkel’s calls for a “Airbus” of battery manufacturing, referencing the successful pan-European effort to take on Boeing, are a sign of just how broadly the EV issue reaches, pulling in interests from all corners of the political, economic and social spectrum. Trying to reconcile all these will be a key determinant of whether not just Europe’s but the world’s auto-manufacturers succeed beyond 2019 with their strategies to re-point the raft more clearly and firmly towards an EV orientation.
Or to put it another way, as VW’s CEO said, “the low-hanging fruit is gone.” Gone are the days of easy, evolutionary progress in the industry, where tried and tested ideas were (often greatly) improved upon, but never fundamentally challenged. In 2019, the automotive metronome is set fast; and it is not so much a question of if the radical change will come, but rather, how soon, and who will succeed when it does.
Written by Harrison Boudakin for AutoMate Training, an industry leading provider of online, on-demand digital training.

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