"We have to expect a dramatic change in the landscape of the automotive industry; similar to the moment when the stagecoach was replaced by the automobile." - Hajo Weber
The first production of a gas-powered vehicle occurred in 1887, over a hundred years after the first steam-powered vehicle was invented in 1769. However, the branch did not flourish until the two world wars, which acted as catalysts for the development of engine technology. The corona pandemic plays a similar role in global digitization, which also includes the automotive industry. The acceleration of digital change caused by the pandemic is widening the gap in demand and the technological level of classic providers. This gives technology companies from the USA and Asia a competitive advantage, since they are able to fill this gap promptly. Due to the acceleration that technology development has experienced as a result of the pandemic, traditional automobile manufacturers are being urged to revise their schedules. The same applies to suppliers in the industry. American and Asian manufacturers enjoy the advantage of having the market leaders in digitization within their national borders. There is also the replacement of the internal combustion engine by electric motors and other drives. Many nations have already set a date for a ban on the registration of internal combustion engines.
| Land | CO² Exit |
|---|---|
| Denmark | 2030 |
| GB | 2035 |
| France | 2040 |
| India | 2030 |
| Ireland | 2030 |
| Iceland | 2030 |
| Israel | 2030 |
| Canada | 2040 |
| Netherlands | 2030 |
| Norway | 2025 |
| Scotland | 2032 |
| Sweden | 2030 |
| Slovenia | 2030 |
| Taiwan | 2035 |
Concerning electric propulsion, again the American and Asian manufacturers seem to have an advantage due to the accessibility of the required resources. In times of such rapid change, large traditional automobile manufacturers have the significant disadvantage that they are bound by contracts to suppliers and product ranges, which makes them immobile. The dynamism and flexibility of smaller companies entering the business give them a significant competitive advantage.
It should be noted that different scenarios can and will play out for different sectors of the industry: private vehicles, commercial vehicles, transport and public transport. Circumstances vary depending on the intended use. The automotive industry makes over five trillion dollars in profits annually. Annual new registrations account around 70 million, while over a billion cars are already registered. Half of the production is in Asia, a third of the new registrations in China. The company with the highest sales is the Japanese automobile manufacturer Toyota, even if the German group VW generates the highest revenue. In 1980 Europe alone accounted for over 70% of the market, today it is 40%. In addition to China, India is also playing an increasingly important role. The trend away from Europe to Asia is accelerated by digitization and e-mobility. The US holds its place as number two. The further development of the industry is determined by three factors:
- The transformation of the classic automobile from a pure means of transport to a digital service provider.
- Environmentally friendly propulsion system
- Cost reduction
In the following we want to give a brief overview of the individual points:
Driving computers:
After more than a hundred years in the automotive market, customer enthusiasm for vehicles with high hp is declining and shifting towards digital services. The change in preference among customers has gone so far that a decline in the number of driving licenses among the younger population is evident. Using the additional time in vehicles that are driven by someone else is becoming more and more important for the individual and the economy. Time savings and greater safety in automated traffic and the elimination of the need to search for a parking space in city centers are additional factors that will have a positive effect on the overall economy and well-being of people. In this context, Apple's entry into the automotive industry is a significant step and will attract stragglers and cause a bigger quake than Tesla. The fact that their partners choose an Asian manufacturer (Hyundai) should give the local industry some food for thought. Should other tech giants such as Amazon or Google (who is initially concentrating primarily on the provision of software with Waymo), take similar steps in the coming years, manufacturers who can agree on a partnership will secure their share of the future market. It is to be expected that automobile manufacturers who do not adapt to change will either be forced out of the market or be degraded to suppliers to the automobile industry.
Propulsion system:
The trend towards e-cars goes hand in hand with the digitization of vehicles. An autonomously driving vehicle is dependent on electronics and thus also on high-quality batteries. A small fault in the power supply could be devastating in such a vehicle. There is no other explanation for the strong tendency towards a concept that does not have enough raw materials to dominate the market. The most optimistic estimates of global lithium reserves wouldn't even cover half of the world's vehicles. In addition, the competition comes from the use of lithium-ion batteries in smartphones, which the automotive industry is clearly inferior to. For more detailed information see Energy Industry Overview .
The argument that electric motors are CO²-neutral is not tenable given the current state of the energy industry. Energy from coal-fired power plants still accounts for the largest share of electricity generation worldwide, which results in an even worse CO² balance than internal combustion engines. Renewable energies are the fastest growing sector in the energy industry, but their share in electricity is currently still at 20% (in Germany over 40%). If the development of electricity networks is compared with the increasing share of electric cars, it can be seen that there is no threat of overloading the electricity network in the industrialized nations. Instantaneous complete switch to electromobility in Germany would mean around 15% more demand based on the current situation. Another environmentally friendly drive with a neutral CO² balance is the fuel cell, on which both Toyota and German automobile manufacturers are concentrating. The hydrogen car can be refueled quickly and has a long-range, especially in the partial load range.
It should be noted, however, that motors based on fuel cells require more electricity than electric motors due to their lower efficiency (overall efficiency around 0.3). Since hydrogen does not occur in its pure form in nature, it is separated from oxygen by electrolysis or produced and stored from natural gas and water through steam reforming. This hydrogen is then used again in the fuel cell to generate electricity. So there is a double loss, which is why they are a greater burden on the power grid than electric vehicles. They consume more electricity, which is currently being generated. associated with a high level of CO² emissions and is therefore not economical. Most of the hydrogen today comes from steam reforming, which means that the hydrogen car has a similar CO² balance as an LPG vehicle.
The greatest uncertain factor in this context is the success of energy generation through fusion reactors, which have been worked on for many decades. The article mentioned above provides information in this context. The safety risk when using fuel cell engines is another argument against the establishment of this technology. Hydrogen is a very flammable element, which also raises safety issues. Storage inside the vehicle is a complex matter, and maintenance costs are very high. Whether the fuel cell engine can hold its own in comparison to the internal combustion engine depends on the development of many factors. Should the higher costs of refueling due to the above-mentioned processes and manufacture of the engines decrease with advancing technology, it can be used as a substitute for combustion engines. The low availability of lithium for the construction of electric motors will pave the way for the fuel cell if no more effective methods are found to use lithium in accumulators. However, it will still take some time before the comprehensively installation of expensive hydrogen filling stations is worthwhile. Vehicles with a combined drive may come onto the market in the future, whereby the consumer can get the best of both types of propulsion between city traffic and long distances. The major automobile manufacturers are investing in various types of propulsion. However, it remains to be seen whether each major manufacturer will cover the range of drives for vehicles or specialize in certain ones.
Biofuels:
First-generation biofuels from rural cultivation failed because they took up space and increased food prices, which led to problems, especially in developing countries. Yet 40% of corn production ends up in the fuel tanks of vehicles. The second-generation minimizes this problem in that the whole plant can be used to produce fuel and thus no longer has to resort to food. However, the process is expensive and has therefore not entered the market. One way to produce biofuel entirely without using land is to grow algae in seas and oceans. The yield per area is significantly higher than with rural biofuels, especially when there is high solar radiation. However, with today's technology, the operation of the plant and the conversion of algae into liquid fuel is far too expensive and therefore not economical. On the other hand, since there are extensive efforts by large companies to reduce these costs, an optimistic forecast for the future of algae fuel is justified. A major advantage of biofuels in addition to the neutral CO² balance is the fact that there is no need to change the existing methods significantly at petrol stations, vehicles or when transporting biofuels. It could be transported via pipelines, ships and trucks and could be distributed in today's gas stations. Even the highly developed internal combustion engines of today would not become extinct, but would only be subjected to minimal modifications to achieve optimal performance.
The propulsion system of the future will likely be a mix of many types of propulsion, similar to today's power supply. The assumption that city traffic is dominated by electromobility, due to the low level of noise pollution, no emissions, and the comparably lower range and greater accessibility to charging stations, is reasonable. For public transport, a mixture of electric drive and fuel cell seems to make sense, as their interaction combines high range with clean air, which are decisive criteria for large vehicles which drive in and between cities. Since pollutant emissions play a subordinate role for the transport sector, apart from CO², it stands to reason that this sector is dominated by either biofuels or hydrogen, depending on which fuel is more economical to produce. The same applies to commercial vehicles.
The evolving variation of drives and fuels will mean a restructuring of the oil companies and in some cases the business closure. This will make way for new competitors who will help shape the energy landscape in the coming decades. One possible development is the reshaping of the large corporations that already exist into general energy companies that cover all types of fuel, as they already have large financial resources at their disposal and they also use them to research new energy generation methods. For companies new to the market, the concentration on the production of only one type of fuel seems more likely.
Cost reduction:
The main features of the costs for various drive models were discussed above. Which of them will prevail is determined by their profitability. However, there are more ways for cost reduction than the choose the right type of propulsion. The digitization of traffic has great potential for reducing costs. Artificial intelligence and algorithms that control public transport as required can significantly reduce the volume of traffic. There are already approaches to this in some cities. Car sharing, carpooling or ride pooling: autonomous vehicles reduce the time required and the distance traveled. Intelligent and interactive traffic systems enable a smoother flow of traffic, which reduces waiting times at traffic lights and counteracts the formation of traffic jams. It is not only the fuel savings that are relevant here. People's time savings counted in their hourly wages can make up a significantly larger amount.
Conclusion
The automotive landscape will be completely transformed. Similar to the development of the mobile phone from a simple spoken language communication tool to an all-round talent, that is used in all areas of life, the automobile, connected to its own digital network, will penetrate our lives to a similar extent. The immense expenditure on the development of autonomous driving and the associated overall social benefits for people, the environment and the economy as well as the change in consumer preferences suggest that self-driving is being pushed back step by step until it is only tolerated as entertainment on separate routes. The entire infrastructure will adapt to progress and there will be a digital transport system. Many industries, such as driving schools, will disappear. The preference for automobiles as well as the global infrastructure that is part of the classic automobile is adapted and has proven itself for over a hundred years, will not stand in the way of this development, as history teaches us. For millennia, horses have been the main means of transportation for mankind. Despite the passion for riding and the practical use of horses, riding with the purpose of transportation was practically dissolved within a few years and horse paths were converted into motorways. Riding horses has become a hobby that is only permitted on designated routes, like it will happen with riding mandriven cars.
Progress has always generated new desires and preferences and therefore has never been threatened by outdated predilections. So time will not spare the automobile either - the automobile disappears, the era of smart cars begins!