The Tesla engine has only a few more moving parts than a shopping trolley. Given that it also comes with a 4 year warranty (8 year unlimited miles Battery and Drive Unit) it’s fair to say manufacturers of Electric Vehicles (EVs) are already competing with a high bar. It wasn’t until a recent visit to Shanghai that I realised EVs weren’t just a token gesture to the environmentalists, but an unstoppable force heading like a tsunami towards us. A tsunami which will at the very least reshape the automotive landscape, but possibly destroy it.
Once you take the first step on the mental journey as to where the car industry is heading it poses many questions to which answers need to be found.
If there are so few things to go wrong with EVs then where do car dealers expect their revenue to come from? I’ve never worked in a car dealership but I imagine the profit cornerstones for dealerships are from servicing, finance and a small contribution from the car sale. If servicing is removed from the equation what will happen to finance and car sales?
Dealerships need to change to evolve but the interesting question is how? My personal belief is that car dealerships need to start to further embrace change rather than deny it. The risk is they become obsolete in the modern EV world in a similar way that Kodak suffered at the hands of the digitalisation of the photograph.
RESIDUAL VALUES OF NON-EVs
If the world is indeed going electric that begs the question what happens to all the non-electric vehicles in circulation, and in particular, the second-hand car market? Surely the residual values of non-electric cars must be akin to a game of pass the parcel with the surprise being a once expensive car with no resale market – a parcel that nobody wants to take home.
THE FUTURE OF THE OIL INDUSTRY
The oil giants and the countries which supply their oil must logically be in danger too. BP appears to be in denial as to the threat to their business posed by EVs. BP counters that the rise of car usage in the developing world will more than off-set the loss of oil that is no longer required due to the adoption of the EV. I understand the logic of this but isn’t this assumption based on the developing world adopting the traditional engine? I just can’t see this happening. A developing world is aspirational and if a look over the water shows everyone driving the latest technologies why would an aspiring generation choose to drive a diesel? I personally think BP are in denial.
Countries like Saudi Arabia will suffer as the demand for oil drops and smaller producing countries like Scotland who are batting down the order will see their reserves as economically unviable as the deflated price per barrel will make these reserves economically unviable. Saudi Arabia is already selling off shares in the government owned Aramco to fund diversification elsewhere. Furthermore, if States and Big Oil Co are selling less oil then what happens to the tax revenues that countries’ governments depend on to boost the coffers? Surely they will find something else to tax or implement a road usage charge.
CAR BUYING IN THE FUTURE
One fascinating battle will be to see new brands enter the amphitheatre and how they fare against the incumbents that have dominated the car industry for so long. “Vorsprung Durch Tecknik” as the famous advert goes – “progress through technology”. And therein lies the answer. But the question is who will win the technology war? I imagine the answer will be in the value placed on the constituent parts of the proposition. Will brand equity and brand heritage of the motor manufacturers be relevant in the future automotive landscape or will the new masters of technology be the brands of the future?
And if driverless technology wins (which it must) then the question needs to be asked “what is a car” if it doesn’t need a driver? It becomes a personal version of the Docklands Light Railway… A driverless box which moves people from A to B whilst they are busy doing something else.
So, if there is no ‘driving experience’ (I imagine all cars will have to travel at the same speed) in a driverless world what is the point of actually owning a car at all? Access rather than ownership becomes even more important and that in itself is another huge topic of conversation.
CAR INSURANCE COMPANIES
So, for anyone to get in a driverless car then they must be safe, right? So safe there are no accidents? And if there are no accidents then surely there’s no need for insurance? And therein lies the problem for the insurance companies.
Perhaps Electric Vehicles won’t hit like a tsunami but it’s my belief that it will be a seismic change and we will look back at the car industry and the current car buying process in a similar way we look back on a world pre-internet.
Jonathan Bramley is the Managing Director of The Clear Idea, a company that specialises in helping automotive brands engage with customers in non-traditional environments. Their services include structure design, manufacture and roadshow execution.
The Clear Idea’s clients include Aston Martin, Audi, BMW, Ford, McLaren, Mercedes, Mini, Porsche.
More information can be found at www.theclearidea.com