Traditional Automobiles: The End of the Road?

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Is it the end of the road for the traditional Automobile? Ritesh Sethi – BLP 2016

29 Jan 2016
- admin
- Industry Insights
The evolution of cars can be dated back to 1335, when Italians came out with the design of the first vehicle which was a wind driven automobile, driving through gears and thus the wheels. But it wasn’t until 1893 that Henry Ford had an engine running and by 1896 he had built his first car. And subsequently, in 1908, the gasoline-run-automobile came into existence.
Over the past century, the traditional automobile has undergone humongous changes in terms of its designs, shapes, efficiency, manufacturing processes etc. But one thing that has remained constant was the fuel on which all these varied cars ran.Motorcar Companies have acquired cult status as a result of their offerings. Owning a BMW or an Audi has had aspirational value attached to it and it satisfied the Self Esteem needs of individuals, as Maslow’s Need Hierarchy would put it. These car manufacturers have eventually entered the Fortune 500 list of top companies by selling cars which run on petrol or diesel.

However, a deeper examination into the latest trends around the world crops up a picture which these organisations won’t be comfortable seeing. A technology which has been only knocking the doors so far, has now come to the forefront: Electric Vehicles (EVs).Environmental Protection departments in various countries have been pushing car manufacturers to reduce the emission levels of cars. The Volkswagen Emission scandal can easily be considered as the last nail in the coffin, as the regulatory bodies around the world now are keeping an eagle’s eye on the traditional car makers.
Automobile sector had not seen any new major entrants in the last 50 years owing to the huge barriers to entry. These barriers, to name a few, ranged from huge capital investment, technology, economies of scale and customer loyalty. However, a new wave of Electricity powered vehicles seems to now have caught the eye of the corporations and consumers alike. This has in true sense of the word opened the door for innovation and possibilities, Tesla Motors being the front runner in innovations department.

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Their Founder & CEO, Mr. Elon Musk has this to say “Tesla will still aspire to make the most compelling electric vehicles, and that would be our goal, while at the same time helping other companies to make electric cars as well.”
Mr. Musk has outlined a vision of a future where all cars would be electric and autonomous. Tesla’s Model S – a sports car that ranges from £56,000 to £85,000 depending on the chosen battery capacity and performance – has been one of the bestselling electric cars of recent years. It can be enounced that electrification and autonomy are the two biggest innovations in the industry since the Moving Production Line. With the launch of the Model X, Tesla is hoping to cater to the SUV segment as well. The Model 3 expected to hit the US markets in 2017, with an expected base price of $35,000 and a range of 200 miles, is being viewed as the growth engine of the company and the ultimate affordable electric vehicle for the masses. Consumer’s interest in the EVs can be gauged from the fact that Tesla has registered 77% growth in the most recent quarter compared to the year-ago quarter and analysts believe this growth to be sustainable.

Nissan Motor, the Japanese automaker, has been offering an all-electric small car since 2010, named Nissan Leaf, which produces no tailpipe pollution or greenhouse gas emissions at the point of operation, and contributes to reduced dependence on petroleum. Nissan Leaf started selling in Japan, followed by US, Canada and European countries followed suit.

Joining the race is the richest company in the world: Apple Inc. In December of 2015, Apple registered three auto-related top-level domain names, including apple.car, apple.cars, and apple.auto adding to speculation about the company’s plans to develop an automobile. While the company has never openly acknowledged plans to build an electric car but they have been aggressive in hiring auto experts from Tesla and Mercedes Benz. Hence, it’s now an “open secret” that Apple is well on its way to producing an electric car by 2020.

Competition to the conventional car is approaching from China too, in the form of Faraday Future, a Chinese firm with a desire to build EVs to compete head-on with Tesla. The incredible thing to note is that their inspiration for designing cars is incredible and farfetched from the one’s going around. As the design head of Faraday Future puts it, “We design because we love design as a whole and the inspiration comes from architecture. Designs should be jaw-dropping.”

One of the top consulting firms of the world, KPMG says “Investment in hybrid electric vehicles technology will be top priority in the coming years”. Eighty-two per cent of the auto executives surveyed expected a major business model disruption in the next five years. According to KPMG global survey 3 out of 4 automotive industry executives in India rate investment in hybrid electric vehicles as the top priority in the next five years.
Does the advent of Electric vehicles, stricter regulations on emissions, disposition to scale down dependence on petroleum, consumer’s increased awareness about environment and frenzy for electric cars, mean the slow but sure demise of the traditional gasoline-run-vehicles? Probably Yes!

The next car you buy could be the last gasoline car to enter into your garage. Since the pace at which technology keeps becoming obsolete these days, it won’t be long before these EVs come into mass prominence and change the automobile sector forever. In conclusion, it’s fair to say that Electric Vehicles are here to stay and in due course of time they will change the dynamics of how efficiently people commute.

References:
http://www.ausbcomp.com/~bbott/cars/carhist.htm
https://en.wikipedia.org/wiki/Nissan_Leaf

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