The once unstoppable auto industry, a 20th century titan synonymous with manufacturing disruption and progress, is now caught in the perfect storm. Inflation, the relentless march of electrification, the rise of AI and robotics, the complex web of global geopolitics and chip supply chains, and shifts in domestic policy on subsidies all combine to disrupt not only assembly line processes but also personal It threatens the very functioning of our economy. And the city moves.
While headlines often focus on the transition to electric vehicles (EVs), the bigger picture reveals a more complex and precarious situation for incumbent automakers. Recent labor disputes and layoffs at major companies such as GM, Ford, Stellantis, and even Tesla paint a grim picture that the transition to electric vehicles (EVs) will not be smooth. This technological innovation, coupled with a constant focus on efficiency, is part of a larger wave of change that is coming.
Intense competition from Chinese EV companies like BYD is looming, threatening to overwhelm established European and North American markets. Even startups like Vietnam's VinFast are entering the U.S. market and further disrupting the established order.
Adding to the worries, the sticker shock of car ownership, with rising car manufacturing costs and new car prices and interest rates at all-time highs, means that for most people, buying and driving a new car is completely out of reach. means. .
The existential question facing traditional original equipment manufacturers (OEMs) is whether they can weather this perfect storm. Can anyone do about that?
Beyond electrification: The robot revolution on the assembly line
The electric revolution is just the beginning of this huge story of change. The bigger change lies in the complete overhaul of the manufacturing process. Artificial intelligence (AI) and robotics are poised to become leaders in new production lines that manage large numbers of automated machines. This means that the automation of current car manufacturing tasks will be greatly accelerated, significantly reducing time-to-production and the need for human labor.
This constant pursuit of efficiency creates a Faustian bargain for traditional automakers. Automation promises more efficient and cost-effective operations, but it may come at the expense of high-wage human jobs. The factory of the future is likely to resemble an automated warehouse or data center environment with minimal human oversight.
Chip wars and lost parts:
This is where supply chain disruptions add another layer of complexity to the equation. Geopolitical tensions, regional polarization, and a surge in demand for a variety of electronic products have led to a continuing global chip shortage that could cost the auto industry tens of billions of dollars in lost revenue. This shortage will hinder not only the production of EVs, but also the technology itself needed for the next even bigger wave of disruption: autonomous vehicles (AVs). While Waymo methodically rolls out its robotaxi fleet, Elon Musk once again made ambitious predictions that his personal Tesla cars will have full self-driving capabilities by this summer.
An urbanist's dream, a politician's nightmare
Urban planners dream of fewer cars, and some even ban them from city centers. They advocate a shift to walking, cycling and robust public transport. But a century of subsidies for car manufacturing, fuel production, and road infrastructure (and related jobs) have distorted the economics of the transportation sector. While governments prioritize these industries through subsidies that encourage car ownership and consumption, local governments grapple with the consequences of pollution, infrastructure costs, and pedestrian safety concerns. Traditional sources of revenue based on gas taxes and motor vehicle fees are under threat.
The dream of a future with ubiquitous walking, cycling, shared mobility, public transport, electric and self-driving cars will disrupt traditional revenue streams, not only for car manufacturers but also for infrastructure and public service providers. . Reducing car ownership, emissions, and use is critical for the environment and public health, but it conflicts with governments that rely on the traditional economic drivers of car sales and manufacturing jobs. This is not just a problem for the auto industry, but a systemic challenge that ripples throughout the economy.
The cost of doing nothing: extinction or takeover?
Legacy automakers are at a crossroads. Technological disruption, workforce displacement, and the revaluation of car ownership require new approaches. Can we find ways to reduce emissions and consumption while ensuring affordable and accessible mobility? Can we create new manufacturing paradigms that prioritize efficiency without sacrificing livelihoods? Can we do all of this while ensuring our bottom line is met? If we don't adapt, we will be left out as big tech companies and Chinese manufacturers, who are investing heavily in automation and EV technology, take the lead. there is a possibility.
But who “wins” this race is less important than the overall result. Conflicting subsidies and conflicts between countries may cloud the picture, but the ultimate goal is a sustainable and accessible future with cleaner air, healthier populations, and more resilient transportation systems. It should be. This requires systemic changes.
• Upskilling employees: Automation and AI will undoubtedly reshape the automotive industry and the entire transportation workforce. Job changes, job separations, and new employment opportunities also occur at the same time. Prepare for automation by providing a comprehensive training program for workers who are on the fast track to new technology.
• Untangling your supply chain: 3D printing and local material sourcing can play a key role in breaking the shackles of supply chain instability. This change, coupled with innovative manufacturing processes, can create a more resilient and geographically diverse production environment.
• Multimodal mobility mix: By rapidly transitioning to electric vehicles, investing in walkable communities, bike-friendly infrastructure, and strengthening robust public transportation and sharing options, we are making car ownership, unaffordable costs, and Consequently, significant reductions in emissions can be achieved. Cleaner air, improved sanitation, and affordable access will be natural rewards for capital.
• Rethinking urban transportation revenue: As car ownership models change, cities need to identify different revenue sources to effectively manage their transportation systems. Data-driven strategies and innovative new systems that fairly price access based on time, location, scale, and use are critical to separating revenue models from traditional car-centric approaches.
• Beyond the car: A platform for the future: Change does not mean extinction, but it does require adaptation. The need to move people and goods continues, with billions of foot, device and vehicle journeys occurring around the world every day, generating valuable data and creating new revenue opportunities. Winners in this mobility game will not be bound by 20th century manufacturing models and mindsets. Companies that adopt a platform approach, systems thinking, and the integration of manufacturing, data analytics, and service delivery will succeed. Those adapting may be traditional vehicle manufacturers (OEMs) or entirely new entrants. The future belongs to those who see the bigger picture and seize the opportunities presented to them.
Transportation: A leader in change
This is not just a story for the automotive industry. It's a story about how we adapt to automation, prioritize sustainability and build a future where efficiency, access, opportunity and environmental responsibility work together. This upheaval will spill over into other sectors, forcing us to face fundamental questions about work, resource management, and the future we want to create. The choices we make today will determine the kind of future we inherit.