Coming Revolution in Automotive Industry

 

Indian automotive industry is grappling with one change after another last few years:

1. Demonetisation in fag end of 2016 washing out sales in second half of year
2. BS IV norms implemented from April 2017,                                                               
3. GST implementation in July 2017 and associated changes at OEM and partners, 
4. Leapfrogging to BS VI from April 2020

and not to forget other things like historic high fuel prices, corona pandemic etc. etc.

Now new change like five year moved forward target of compulsory 20% ethanol blending is staring in ace of automotive industry.

And as if this was less, greenhouse gas reduction targets are pushing government to accelerate adaption of electric vehicles supported with FAME subsidies.

Adaption of EV presents biggest opportunity as well challenge for automotive industry it has seen after invention of IC engines. This era will be probably similar to the initial days of IC engines wherein lot many innovations took place, many new players came in and many perished (It is said in USA over 2000 automotive manufacturers were registered in last century and at the turn of century only 3 survived and they too were not in financially great shape)

Adaption of EV raises lot many unanswered questions few of which are:

1. Which technology to bet on - Hybrid, LI-ion batteries or hydrogen cells or ? 
2. Which chemistry to bet on in fast changing cutting edge battery technology               
3. Whether to make batteries (constituting ~ 40% of vehicle cost) in-house or outsource
4. How charging infra will develop - battery swapping or fast charging or something else
5. How to substitute lost aftersales revenues with EV adaption for both OE & channel

Also, earlier IC engine vehicles was monopoly of mechanical engineers, but EV will require many new competencies like electrical engineering for battery & motor, chemistry knowledge for Battery chemistry, power electronics and computer knowledge for Battery Management System.

This presents catch 22 situations for existing automotive players; if they take early stance but bet on wrong technology it will mean huge wasted investment and if they don’t, upcoming players will eat their lunch.

Probably stock markets are sensing these changes and today Tesla has become not only the most valuable automotive company in the world but also more valuable than the next six automakers combined.

One thing is for sure, next decade landscape of automotive industry will be much different than what it is today and will bring out some new hero's and zero's in automotive industry.