Chinese automakers should look beyond EVs
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.