Chi­nese au­tomak­ers should look be­yond EVs

China Daily European Weekly - - Cover Story - The au­thor is Ac­cen­ture’s man­ag­ing di­rec­tor and global lead of its au­to­mo­tive prac­tice. The views do not nec­es­sar­ily re­flect those of China Daily.

Keys to suc­cess in in­dus­try of future in­clude con­nected-car and self-driv­ing tech­nol­ogy as well as mo­bil­ity ser­vices

there are more opportunities for Chi­nese au­tomak­ers.

Don’t get me wrong. Elec­tri­fy­ing state-ofthe-art cars and in­vest­ing in bat­tery and other in­fra­struc­ture are very valid strate­gies, and Chi­nese OEMs should con­tinue to im­ple­ment them. But to re­ally reap all of the re­wards re­lated to the elec­tric driv­e­train, they need to see the big­ger pic­ture.

EV tech­nol­ogy not only re­places in­ter­nal com­bus­tion en­gines, it is poised to change the en­tire auto in­dus­try. That is be­cause it will usher in en­ter new in­dus­try con­cepts, busi­ness mod­els and strate­gies. Au­tomak­ers that want to win in the future must rad­i­cally re­think their cur­rent ap­proach to mak­ing and sell­ing cars.

For ex­am­ple, since elec­tric driv­e­trains are much less com­plex than gaso­line or diesel ones, this en­ables new busi­ness mod­els around sim­pli­fied, cheaper car builds, new in­fra­struc­ture and new ser­vices. But even though most OEMs are aware of this, only a few have tried to build such a busi­ness.

As a re­sult, new play­ers are en­ter­ing the mar­ket. For ex­am­ple, US EV man­u­fac­turer Tesla not only pi­o­neered the idea of a mass-mar­ket EV, but has also rev­o­lu­tion­ized the OEM busi­ness model by in­te­grat­ing so­lar en­ergy and en­ergy stor­age so­lu­tions. And the com­pany con­tin­ues to in­no­vate around mar­ket­ing, ve­hi­cle sales and charg­ing ser­vices.

The elec­tric driv­e­train will also be a cat­a­lyst for the “mo­bil­ity-as-a-ser­vice” busi­ness model, which is set to dis­rupt the Chi­nese auto in­dus­try as well as other ma­jor mar­kets. Mo­bil­ity-asa-ser­vice in­te­grates a va­ri­ety of trans­porta­tion ser­vices into a sin­gle mo­bil­ity ser­vice that is ac­ces­si­ble on de­mand.

In the next 15 years, EV tech­nol­ogy will con­verge with con­nected-car and self-driv­ing tech­nol­ogy, which will change ev­ery­thing about the way ve­hi­cles are built and used. Self­driv­ing and con­nected-car tech­nol­ogy will al­low for the free shar­ing and on-de­mand use of cars that drive them­selves, their own­ers or other pas­sen­gers to wher­ever they want to go. And the elec­tric driv­e­train will make sure that they do so at very high use rates, with lim­ited need for main­te­nance and repairs. That is be­cause EVs have fewer mov­ing parts that can wear, tear and break than cars with in­ter­nal com­bus­tion en­gines.

The re­sults of this could be rev­o­lu­tion­ary. Fewer peo­ple may choose to buy a car. Some ex­perts be­lieve that the cost of buy­ing a ride in a shared, self-driv­ing elec­tric car could fall be­low 5 cents (4 euro cents; 4 pence) per kilo­me­ter.

Sales of “legacy” cars are fore­cast to be­gin to slow, and the mar­ket for “mo­bil­ity-as-a-ser­vice” is ex­pected to ex­plode — from zero to­day to more than 1.2 tril­lion eu­ros ($1.4 tril­lion; £1.1 tril­lion) by 2030 — more than half the size of the pre­dicted legacy car mar­ket for the same pe­riod. This will boost the need for EVs even more, be­cause shared ve­hi­cles will likely be driven more than un­shared ones. And the more EV cars are driven, the more eco­nom­i­cal bat­tery packs will be­come.

None of this could hap­pen with EV tech­nol­ogy alone — but none of it could hap­pen with­out it, ei­ther. And that is the key take­away for ev­ery OEM, sup­plier, and startup: The auto in­dus­try of the future will not be run by those who mas­ter EV tech­nol­ogy alone, but by those who are in the po­si­tion to mas­ter the elec­tric driv­e­train, con­nected-car and self-driv­ing tech­nol­ogy, and mo­bil­ity ser­vices.

This means au­tomak­ers that want to se­cure a sig­nif­i­cant share in th­ese mar­kets must not stop at build­ing EVs — but con­tinue to make bold moves in or­der to mas­ter the other three re­quired ca­pa­bil­i­ties.

So if you’re work­ing in the Chi­nese auto in­dus­try, con­tinue to push for new, elec­tric ver­sions of ex­ist­ing mod­els. But do look fur­ther also: Pur­sue big­ger ideas and broader strate­gies that make use of your busi­ness’s ex­ist­ing strengths and add new ones that will be needed to win the future.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.