A storm is coming
The car industry braces for impact
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