Auto Industry's $300B Bet on EVs, AVs Is Risky But Vital
If there's whatsoever doubt that a revolution is underway in the automotive industry, merely follow the coin.
In just the last five years, more than $60 billion has been spent on developing autonomous vehicle technology, while a whopping $255 billion will be invested in electric vehicles by 2023, co-ordinate to global consulting firm AlixPartners.
But AlixPartners believes that the mountain of money amassed around EV and AV engineering will create "a pile-up of epic proportions" in the automotive industry and that "billions will be lost" on these investments. And the house points to a variety of factors that volition lead to a burst of the EV/AV bubble.
It notes that EVs even so represent a small fraction of vehicles sold worldwide. And it adds that EVs will continue to be "unprofitable due to currently high systems costs, low volumes, and intense competition."
The firm adds that the $61 billion invested in AV engineering thus far—which information technology calls "just the opening ante"—is at odds with what the market will bear. AlixPartners conducted a survey in which consumers said they are willing to pay approximately $two,300 extra for autonomy, just it calculates that the engineering science could cost manufacturers around $22,900 per vehicle.
This all comes at a time when the auto manufacture is on a downward trend. The US motorcar market, for instance, is expected to drib to 16.8 million vehicles sold this year compared to 17.2 million in 2022 and is "headed to a likely trough of around fifteen.1 million in 2022," AlixPartners forecasts.
The irrational exuberance surrounding EV and AV investment is reminiscent of the advent of the internet 20 years agone, when investors were throwing crazy greenbacks at dot-coms. While the internet bubble did eventually burst, no one could accept predicted how the technology would ultimately reshape business organisation and society—and create billions in wealth.
Rewriting the Rules of Transportation
Similar internet naysayers 2 decades agone, who thought people would always want to read newspapers or have landline phones, the AlixPartners written report applies traditional metrics—in this case, vehicle sales—to technologies that will completely rewrite the rules of transportation. Later all, I doubtfulness that Waymo, Uber, or even traditional automakers are pouring billions into EV and AV technology expecting to compensate their investments on motorcar dealerships.
AlixPartners' predictions also don't account for unpredictable consumer behavior. The rapid rise of ride-sharing services shows how a simple technology solution tin quickly disrupt an entrenched industry, and that consumers typically cull convenience and price.
And while Uber has been hemorrhaging money, replacing drivers with machines will drastically lower operating costs. Autonomous ride-sharing fleets also will eventually transition to EVs, since most of their trips are short distances and maintenance costs will be significantly lower compared with conventional gasoline-powered vehicles.
Fifty-fifty long-haul trucking is looking into—and in many ways is leading the charge with—EVs and AVs. Tesla made a splash earlier this twelvemonth when it introduced its fully electric semi, and several others have followed suite. Daimler is heavily investing in autonomous technology for its Freightliner trucks, while startups like the Uber-owned Otto and others are likewise paving the way for cocky-driving big rigs.
Then there are the second- and third-society effects of EV and AV technology. Last year RethinkX, which has a track record of anticipating technology's bear on, released a report that predicts that the use of shared autonomous EVs will save the average The states household at least $five,600 a year by giving up their gas-powered vehicles and associated costs.
Truth is, no one knows for sure how engineering science will transform transportation. Just as no 1 predicted the influence of video-sharing sites and social media on concern and club.
AlixPartners also points out that the car manufacture is defenseless "between a rock and a hard place," and "if they don't participate in some way in the 'new-mobility' revolution that'southward coming they stand to lose out on what might be the biggest affair always in this industry." And while the wager may be loftier, that's a bet the auto industry can't afford not to have.
About Doug Newcomb
Source: https://sea.pcmag.com/opinion/28214/auto-industrys-300b-bet-on-evs-avs-is-risky-but-vital
Posted by: whiteknotans.blogspot.com
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