Auto Meltdown - End of an era (Part III - Final Part)

In my earlier blogs in this series I had covered about the current state of auto industry and how the US auto industry got into this mess. In this post I be focusing on my thoughts around the future of the auto Industry.

Auto Industry is in a serious need for disruptive innovation. The internal combustion engine technology was invented in 1870's in Germany. It is the same technology that has been running our cars for well over 130+ yrs!! While there has been improvements, optimizations etc the base technology is still the same. Compare this with other fields - Energy/Power, Medicine, Telecom, IT, Aviation or any other field for that matter, we've had multiple disruptive innovations and technology has evolved leaps and bounds during the last century. Due to cheap availability of oil, the auto industry was complacent and failed to innovate. The auto industry in the current state is not sustainable. The technology running our autos need a complete refresh and be environment friendly for the industry to recover and maintain its growth. Since the beginning of this decade awareness of this issue has increased amongst auto companies. Huge amounts of money is being pumped into research in alternate technology cars. I expect this to spawn off a wave of disruptive innovations in the next 1-2 decades. We are currently at the beginning of this cycle.

Alternate energy/Clean tech cars are the buzz words these days. In terms of technology, Electric plug-ins leads the pack, Some of the other key alternate technologies that hold a lot of promise incude fuel cell, Solar etc. It will be few more years before these technologies mature. While all the auto majors(GM, Ford, Toyota, Honda etc) are researching in new technologies and are in various stages of development of alternate energy cars, there is a slew of VC funded startups that are working in parallel to come up with nextgen cars. Some of these start ups like Tesla, Aptera, Fisker etc are in advanced stages and plan to roll out their cars in the next 12-18 months. I expect some of these new startups to take off and go mainstream(if they dont get acquired!). This transition into alternate tech cars is going to shake up the industry in the next decade. Those players that are not in the forefront and capitalizing on this trend would get left behind and eventually perish. I also see the current gas-electric hybrid cars to be more of a stop gap till alternate energy cars mature . These will eventually get replaced. I expect this transition to clean tech to occur in the next couple of decades.

Next turning to key markets for car consumption US market is past its peak demand. As highlighted in my earlier post due to easy availability of credit & low fuel costs the demand had spiked during the last decade causing an auto bubble. The net new sales of 17-18M vehicles/yr is not sustainable. I see this number settling to between 12-15M vehicles/yr in the near to medium term(once we are out of this recession). US will be upstaged by China as the top car market in the world. Over the next decade I expect the car consumption in China, India and other developing countries to fuel the growth of car industry. This is the beginning of end of US domination of auto industry.

To sum up this series, we are currently in the midst of an unprecedented shake up in the auto industry. I expect this change to unravel over the next decade and will result in changing the complete landscape including technology, key players, key markets etc. It will be interesting to watch which players survive and which players will perish in this shake up. The time is here to clean up the auto industry and recreate it as a more sustainable and green industry!

Pls let me know your comments and thoughts on this series. Pls feel free to share your views on how you think the auto industry would evolve in the next 1-2 decades.

Photo credits: geeksg, cobra_x, Solaris_bot

Comments

blog comments powered by Disqus
Related Posts with Thumbnails

Search my Social Networks

Subscribe Now





My podcasts


Visitors

Google Friend Connect

Label Cloud

My Affiliations



wibiya widget