The pandemic will permanently change the auto industry

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The pandemic will permanently change the auto industry | via nytimes

FRANKFURT, Germany — Some automakers may emerge stronger, others too weak to survive on their own. Factories will shut down. The pressure to go electric could become more intense.

“We shouldn’t be too optimistic and expect that in 2021 everything is going to go back to normal as if nothing happened,” Ola Källenius, the chief executive of Daimler, told reporters during a recent conference call. The pandemic, he said, “will probably have a huge effect on the economy and we have to prepare.”Automakers worldwide had at least 20% more factory capacity than they needed before the coronavirus hit, analysts say.

In April, lockdowns caught up with electric cars, too, and their sales fell 31%, according to Schmidt’s estimate. But that was nothing compared with the total European car market, which plummeted 80%. “Especially in this period, they are looking to sell the most profitable cars as long as they meet the targets,” Schmidt said.

For other challengers, the pandemic has been a huge setback. Ride-hailing services like Uber and Lyft, which threatened to make car ownership obsolete for urban residents, have suffered because everyone is staying home. The Silicon Valley companies that promised self-driving cars by 2020 are still years away, and the pandemic is interfering with the human road testing they need to perfect their technology.Few sectors get less love from investors than the old-line carmakers.

But foreign investment might be welcome if it helps preserve jobs. Geely has revived Volvo Cars and the region around its home base in Goteborg, Sweden.Carmakers will face even more pressure to spread around the cost of developing electric cars and other new technologies. Existing partnerships, such as the one between Volkswagen and Ford Motor to develop autonomous driving software, could be expanded.

 

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