INSUBCONTINENT EXCLUSIVE:
The race to develop autonomous and electric vehicles could be a race to the bottom for the automotive industry — at least in the
near-term.
A new global study by consulting firm AlixPartners paints an ominous forecast for automakers in the next few years, a toxic
cocktail of big spending and lots of competition mixed with softening sales in some markets and an unwillingness of consumers to fork over
AlixPartners& Global Automotive Outlook is based onan analysis of data from public and proprietary sources and two online consumer surveys
of Americans age 18 and older possessing driver licenses.
Last year, automakers spent $226 million — a 47 percent increase from 2012 —
on electrification and autonomous vehicle technology
And AlixPartners predicts companies will spend $255 billion in RD and capital expenditures globally by 2023 on electric vehicles
Some 207 electric models are set to hit the market by 2022.
That good news for prospective EV consumers
But AlixPartners predictsmany of those impending EVs will be unprofitable due to currently high systems costs, low volumes and intense
For instance, automakers will likely offer high incentives to buy EVs, which would depress used-vehicle residual values and allow the spiral
of lower new-vehicle sales to continue.
The situation is just as tenuous on the AV front
Some 55 percent of the 175 mergers and acquisition deals in the past two years have been related to electric and autonomous vehicles, with
another pileup in AVs coming.
&A pile-up of epic proportions awaits this industry as hundreds of players are spending hundreds of billions
of dollars on electric and autonomous technologies as they rush to stake a claim on the biggest change to hit this industry in a hundred
years,& saidJohn Hoffecker, global vice chairman at AlixPartners, adding that &billions will be lost by many.&
An additional $61 billion has
been earmarked for autonomous-vehicle technologies, according to the study
However, a separate survey conducted by AlixPartners found consumers are only willing to pay $2,300 for autonomy, compared with the industry
costs of around $22,900 to provide that technology in a vehicle
That a 10-fold misalignment on cost.
Of course, there is evidence that consumers, such as Tesla fans, are willing to pay more than $2,300
for a system far short of fully autonomous
An enhanced version of Tesla Autopilot feature, which promises to match traffic speeds, keep within a lane, change lanes and exit the
For another $3,000, Tesla sells &full self-driving& packages for even more automation sometime in the future
This feature doesn&t yet exist for public use, although customers can — and have — purchased it in advance.
Meanwhile, theAlixPartners
study predicts weakening vehicles sales
The studyforecasts that the global auto market will grow at an annual rate of 2.4 percent through 2025, lagging expected worldwide GDP
market will continue its cyclical downturn this year, absorbing 16.8 million units, down from 17.2 million in 2017, the study predicts
sales will hit a trough of around 15.1 million in 2020
Autonomous ride-hailing fleets will start cutting into sales by 2030, the study forecasts.
Amid the chaos and lost billions, there are some
rosier outlooks in theAlixPartners study
Full battery-electric vehicles will reach about 20 percent of the U.S
market, about 30 percent of the European market and about 35 percent of the Chinese market by 2030, the study predicts
A separate AlixPartners& consumer survey found 22.5 percent of Americans are &likely& to purchase a plug-in electric vehicle as their next
car.And autonomous vehicles will account for 3 million in sales in the U.S
