A storm is com­ing

The car in­dus­try braces for im­pact

Executive Magazine - - Leaders -

The global au­to­mo­tive in­dus­try this fall looks a bit like a hy­po­thet­i­cal Caribbean re­sort on the verge of a par­tic­u­larly ac­tive and vi­cious hur­ri­cane sea­son. The wa­ter sparkles re­fresh­ingly. The mod­els are stun­ning. Ev­ery­thing is par­a­dis­i­cal. The big mo­tor shows (like the In­ter­na­tionale Au­to­mo­bil-Ausstel­lung, or IAA, held last month in Ger­many) are full of song and dance.

But be­hind their glam­orous shows, the mood of the spoiled denizens of Car Is­land is somber. The man­sions of the fa­mous mak­ers— the houses of Ford, Gen­eral Mo­tors, Fer­rari, Bent­ley, Jaguar, Volvo, PSA, Re­nault, Mercedes, Audi, Toy­ota, Nis­san, Kia, Hyundai, and so forth—are be­ing boarded up. Ev­ery­one knows hur­ri­canes are com­ing; the only un­known is where they will hit, and with what strength.

In a speech that kicked off this year’s IAA—which de­buted in 1897 and is still the world’s largest and long­est-run­ning car show—a top Ger­man auto-in­dus­try of­fi­cial, Matthias Wiss­mann, spoke of man­u­fac­tur­ers that had made mis­takes and trust that had been lost, in a darkly ob­vi­ous ref­er­ence to the in­dus­try’s ma­nip­u­la­tion of diesel-emis­sion tests, yet tried to as­sert that in­ter­nal com­bus­tion en­gines “still have enor­mous po­ten­tial” and that “mo­bil­ity to­mor­row will be even more in­di­vid­ual and more per­sonal.”

At the same time, he ac­knowl­edged that the in­dus­try is in “a high- speed race” with con­tenders for the new au­to­mo­tive fu­ture, in­volv­ing dig­i­ti­za­tion, al­ter­na­tive pow­er­trains, new mo­bil­ity con­cepts, al­ter­na­tive au­to­mo­tive power sources like hy­dro­gen and nat­u­ral gas, elec­tric ve­hi­cles, and au­tonomous cars.

The global mo­bil­ity story has in­deed ac­cel­er­ated be­yond imag­i­na­tion of eight or 10 years ago. With the rise of China and In­dia, the world’s largest car mar­kets are no longer un­der the con­trol of Western hemi­sphere col­lab­o­ra­tions be­tween the car in­dus­try and gov­ern­ments. So it made a huge im­pact when China de­clared that it is re­search­ing a time­line for phas­ing out all gas and diesel en­gines, the two in­ter­nal com­bus­tion en­gines which pow­ered the au­to­mo­tive cen­tury from their in­ven­tion.

Ob­servers are dis­cussing when, not if, the auto in­dus­try will shift to elec­tric ve­hi­cles. Ac­cord­ing to a Bloomberg story from Septem­ber, 80 per­cent of au­to­mo­tive mar­kets could be head­ing to­ward some exit from com­bus­tion. The world might soon be wit­ness­ing a pe­riod of cre­ative de­struc­tion in a man­u­fac­tur­ing in­dus­try with mil­lions of work­ers that could make dis­rup­tions of the ser­vices sec­tor, à la Uber and Airbnb, look cute by com­par­i­son.

This will af­fect Le­banon. Per­sonal mo­bil­ity is im­por­tant to the Le­banese, in spite of all the coun­try’s many bar­ri­ers against bet­ter mo­bil­ity or new so­lu­tions in this sec­tor: bad roads, moun­tain­ous ter­rain, poor fuel stan­dards, lousy elec­tric power sup­ply, ap­palling driver train­ing and eti­quette, lack of a gov­ern­ment mo­bil­ity strat­egy, deep slum­ber of distrib­u­tors, and to­tal ab­sence of a for­ward-ori­ented car man­u­fac­tur­ing in­dus­try.

The Le­banese mo­bil­ity sec­tor is be­set with an in­ad­e­quate car-tax­a­tion scheme that un­der­mines the re­moval of the most pol­lut­ing ve­hi­cles (see over­view page 32). It to­tally lacks in­cen­tives that could push driv­ers to con­sider buy­ing an elec­tric ve­hi­cle (EV) (see story page 38). And its ur­ban plan­ning shows no sign of jet­ti­son­ing by­gone car-cen­tric mo­bil­ity con­cepts and re­plac­ing them with ur­ban plan­ning (see story page 42).

It is not easy to come up with a coun­try that Le­banon could em­u­late. The world’s lead­ing coun­try in per­capita adop­tion of in­di­vid­ual elec­tric mo­bil­ity is Nor­way. Although not far from Le­banon in pop­u­la­tion size, at 5.2 mil­lion, it is in a whole dif­fer­ent league for ge­og­ra­phy, GDP (the third largest per-capita), cli­mate, and cul­ture. But the widest gap be­tween Nor­way and Le­banon might be in elec­tric mo­bil­ity and its un­der­ly­ing hard and soft in­fra­struc­tures: Nor­way gen­er­ates 98 per­cent of its elec­tric­ity from hy­dropower and has a tax­a­tion regime (e.g. 25 per­cent ba­sic VAT) that of­fers the gov­ern­ment room to nudge con­sumer be­hav­ior.

It’s im­pos­si­ble to know which mo­bil­ity so­lu­tions will be the win­ners in the com­ing era, defin­ing free­dom in a world grow­ing to a 10 bil­lion strong pop­u­la­tion. Some con­trib­u­tors to this month’s au­to­mo­tive cov­er­age in Ex­ec­u­tive see the Le­banese fu­ture, one gen­er­a­tion on, in cars with hy­dro­gen cells, some in pub­lic trans­port, and oth­ers in elec­tric mo­bil­ity and au­tonomous cars. One staff writer en­vi­sions fu­tur­is­tic air­borne

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