The automotive industry is at a very challenging time in its history. How can it predict the future?
Digital technology ‘ technological miracles have occasionally become brand-new consumer goods and services. And what is most impressive is how fast they have come to be regarded as requirements.
Consider in the past few decades colour television, personal laptops, flat panel displays, wireless connections, digital photography and photo store, LED light sources, contact and internet-based services.
In each case, it took a few years for these innovations to become widely used, a state where record is immediately forgotten. Who remembers 35mm film cameras, light bulbs or Television devices with cathode ray tube? Or 78rpm files?
A world where such significant innovations are immediately accepted as normal also encourages the anticipation of fresh markets created by innovations and the anticipation that like markets may be immediately accepted to the point of establishing significant fresh industries.
If the business size advancements do not match expectations, investing in for future markets calls for significant amounts of capital and opportunities for great profit or loss. This funding issue is currently facing the automotive industry.
Planning is a significant challenge for market planners and investors because the more capital and architectural investment are needed, the bigger the expected market opportunity.
Industrial managers have been ruined by historical instances in which new electronic products eventually replace the outdated people 100 % of the time.
This essentially occurred with light, video displays, and digital cameras, where the rates of new devices dropped as sales volume increased to the point where older products became ineffective in a short period of time.
The success of the new products was based on outstanding performance, reliability, size and freedom.
However, it is too easy and dangerous to foresee that all new electronic devices will just completely replace older ones. This is not always a safe assumption, according to two recent examples: autonomous consumer vehicles and electronic vehicles ( EVs ).
Customer concerns persist over the safety of intelligent consumer vehicles in general traffic despite billions of dollars in investment.
Basic problems impede the mass deployment of self-driving cars, and until they are overcome, for vehicles will be niche machines used in controlled environments.
EVs that quickly found a market in the past few years saw a decrease in battery and production costs as well as improvements in technology and higher production rates. This opens up a bigger opportunity.
In the United States, EVs have quickly grown to account for 8 percent of all car sales in the last quarter of 2018, up from 2 % to 2 %. 1 % in the last quarter of 2023.
In the near future, in the next ten years or less, EVs will be largely replaced by internal combustion engines, according to this advancement.
Then, sales growth slowed, and this presumption is being tested. The Wall Street Journal published a feature article earlier this month that outlined the negative impact the EV industry leader had had on the company.
Is the decline in sales merely a temporary phenomenon or a result of consumer concerns? Did EV sales in 2024 decline as a result of consumers ‘ concerns about the inherent drawbacks of EVs, such as the need for battery chargers and the decline in performance at cold temperatures?
Many potential customers opted to buy conventional cars or new hybrid vehicles with some of the economic benefits of EVs without their handicaps, believing that their advantages were offset by handicaps that made them unattractive as family cars.
Are EVs a niche market or a complete replacement for conventional cars with combustion?
The decline in sales may be a temporary blip or a result of growing consumer skepticism. Time will tell, but uncertainty will leave manufacturers making difficult and costly decisions.
Industrialists had to make difficult choices as a result of the pace of large-scale technological innovations. None of the above come to mind, though, considering the serious economic repercussions of making the wrong choice for automakers.
Dr Henry Kressel is a technologist, inventor with many pioneering contributions, author and long term private equity investor in technology companies.