The automotive industry is revolutionized and reinventing itself. An unprecedented transformation is taking place. While Western countries such as France and Germany claim that within ten years it will not be possible to produce a traditional car in their territory, China has just taken a big step in the same direction. China leads, once again, a change at the global level.
The new regulation sanctioned by the Communist Party of China, conditions the distribution of the traditional cars, giving place to electric cars.
The Chinese government has ordered that any automobile manufacturer producing more than 30,000 units (which is the vast majority in China), should produce at least 10% of its cars, electric, hydrogen-powered or hybrid by 2019. This policy will be progressive. The 10% will turn into 12% by the year 2020. And so on.
The automotive market in China has grown from 2 to 28 million between 2000 and 2016. Estimations say it will exceed 30 million by 2020. The country itself is the most competitive large-scale electric car manufacturer in the world. Vehicles made in China pose a threat to those manufactured in the US or Mexico, since, as in most cases, the Chinese can do it very well and at low cost.
China is today, the main consumer and producer (using government incentives) of electric cars. It is estimated that by 2025, the country will have produced about 4 million units in its territory.
The exponential growth of the electric car market in China is one of the main reasons why automakers around the world pay special attention to this trend, which clearly has no way back.
The Asian giant has already transformed other industries in the past, such is the case of clothing and steel among many others. Generally, these transformations implemented by China are based on cheap labor and government incentives. In the case of vehicles, the transformation of the industry driven by China seems to be extraordinary and on a large-scale.
Electric cars
To a greater or lesser extent, the world’s leading automakers are already adapting to this situation. Some are at the forefront, others just follow the trend. The truth is that the replacement of gasoline or diesel cars by electric or hybrid vehicles is already a way of no return.
Ford
The company has announced that it will bring to market 13 different models of electric cars, investing exorbitant amounts in technology. The objective? That 70% their vehicles are hybrids by the year 2025.
Among the models, Ford is working on is a fully electric SUV. Also, hybrid versions of its iconic Mustang and F-150 models. As if this were not enough, the American company works on a fully self-contained commercial vehicle and two hybrid police vehicles with high-speed pursuit capability.
This year, Ford announced the expansion of its research department and the dramatic increase of its budget on technological developments. In command, there’s a special team called Team Edison; this group will be dedicated to the research and development of electric vehicles. This will be a totally independent project, separated from the previous efforts of the company in the matter of electrification.
As if all this were not enough, the company founded by Henry Ford in 1903, also announced that it will use resources, originally for the development of traditional models, for the development of electric cars. Clearly, the focus and the priorities are changing.
General Motors
Even when Ford invests millions, it is far behind General Motors. GM says it will launch 20 electric vehicles by 2023. The company’s vice president, global product development manager, Mark Reuss, said: “General Motors believes the future will be totally electric and the world will be free of toxic emissions”. Who would have imagined this 10 years ago? Only a few.
Volkswagen
The German automotive giant turned to the development, production and commercialization of electric cars after the recent scandals (some of its vehicles emitting illegal diesel grades in 2015).
The company already sells the e-Golf, the electric version of one of its best-selling vehicles in history. The company plans to launch a large number of electric cars soon.
Volvo
The traditional Swedish automaker announced that in 2019, it will stop introducing to the market cars equipped with internal combustion engines only. The company also confirmed that its first all-electric unit will be the XC40 Compact Crossover.
Mercedes Benz
At first, one of the companies that sponsored Tesla with more enthusiasm, Mercedes-Benz has announced that it will have available electric versions of all its models by 2022. This represents billions of dollars.
Market
The automotive market is changing forever and will never be the same again. There will be fluctuations in the value of the automobile companies and in the price of their shares. The consequences that this automotive revolution will have for each one of the automakers, will depend on the audacity with which they move and manage to adapt to the new situation.
The car manufacturers that led the industry for decades can adapt, or not. Car manufacturing companies that once were among the least profitable can become the most. These are times of change. Change in priorities, production, and everything that has to do with government incentives to promote the speed of this change.
Companies that produce vehicles that are not in line with this change, will go down. As the traditional vehicles will.
