Overview:

The change in the automotive industry from the ICE to electric vehicles is a primary focus of the CEOs and the board of directors of automotive OEMs and the suppliers. The companies are focusing on improving the production capacity by leveraging the current technologies and also by increasing the M&A. The international market of the automotive industry is currently facing numerous problems which include the shortage of semiconductors, the tight labour market and the supply chain constraints. The article is all about analysing the current trends the automotive industry is adopting and how it is going to change the face of the industry. 

Analysis

At this very moment, the companies are positioned to increase the investments related to the production of batteries. Looking at the demand for electric vehicles the OEMs are not surprised but are definitely anxious. The economic constraints the rising inflation rates and the supply shortage is making the life of the OEMs very difficult. For instance, the issues which are related to the supply of steel are an example of how one issue can create a bottleneck situation for the suppliers

The current trend in the automotive industry currently includes the implementation of digitalization and AI in most of the processes. The implementation will bring up several benefits like cost reduction and minimizing the room for errors. Players like GM, Volkswagen Tesla and many other prominent players are very much focused on how they will be able to have a cost advantage. The cost advantage will help them improve their profit margins and at the same time have a competitive advantage. 

There has been a decline in the demand for passenger cars if we specifically focus on the Europe market, but commercial cars are gaining optimal growth with approx. 6.2% Y-o-Y growth rate. The reasons for the decline in the demand for passenger cars are mostly because of the rising clouds of recession in the major economies of the Europe region. The strategies which have been generated by the OEMs will certainly look at the economic conditions of the region in future.

The Tier 1 OEMS which are established and are enjoying a market share of more than 20 to 30% globally are up to a new way of looking at the supply chain management. This includes the increase in the in-house production of batteries. The in-house batteries will help the companies to save money in terms saving the logistics cost. Also, the issues related to tariffs and export & import duties were increasing the operational cost for the firms. 

The adaptation of electric vehicles has been the greatest revolution compared to the past years in the automotive industry. The rise in e-bikes and also the implementation of electric vehicles in the commercial segment promises the future growth of electric vehicles. Now, this was the positive side every coin has two sides so does the automotive industry. The major concerns that the automotive industry will be acknowledging as of now will be the infrastructure and the high investment barriers. The charging stations and the investments which are required to set up them will be dependent on the economic factor of that particular nation. For instance, the survey stated the production of electric vehicles in Mexico is high but the people are not buying.

The reason was, people living in Mexico country are not confident about the fact of are there enough charging stations and is the government plans and programs are aligned with the adaptation of electric vehicles. The developed countries might cope, but what about the struggling economies?

The Landscape

Climate concerns are the major element which is the reason why, electric vehicles growth is promised. The goal of every nation is to reduce carbon emissions to meet the net zero carbon emission goal will be contributing to the growth of E mobility. 

The suppliers who are directly and indirectly connected with the OEMs have claimed that they aim to redesign the product. The redesigning will be based on making the products much lighter and greener. Greener as in the use of renewable energy sources will be done at the highest level. The automotive industry is also turning its heads toward more implementation of technologies which will make the driver’s journey more relaxed able with high safety features. Another interesting fact that is worth sharing is related to shortages of chips and parts. The consultants of the automotive industry believe the suppliers are in the reactive zone, which means the companies are reacting after the global disruptions are happening which declares the lack of monitoring and environmental scanning. The suppliers need to be on their toes for avoiding adversity in terms of supply. This was a brief analysis of what are the current scenarios of the automotive industry as of now.

Key Highlights

• The economic condition will decide the growth of the industry.
• The rising investments and the demand promise a positive gateway for electric vehicles.
• The global disruptions need to be pre-analysed and instead of reactive pre-analysing and monitoring should be the approach. 
• Any changes in the government regulations related to the tariffs or subsidy cuts will affect the sales.