Wagering on the uncertain future of the auto industry
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Illustration: Sarah Grillo/Axios
The emergence of intelligent, electric, automated vehicles is every bit as monumental as the shift away from the horse-and-buggy in the early 20th century.
Why it matters: Gigantic leaps in artificial intelligence and other technologies are enabling a future where cars don't crash, or pollute the air, and everyone can go where they want, regardless of their age, abilities or the size of their wallets.
- Robots will handle most of the driving, while passengers relax (or work) in cabins customized to their personal preferences.
- Cars will learn passengers' routines, tailoring the ride experience to their mood, and automatically suggesting reminders or conveniences.
- Gasoline stations will gradually disappear, replaced by EV charging stations decked out with restaurants, workspaces and other amenities.
- On-demand robotaxis will cruise efficiently about cities, eliminating the need for land-gobbling parking lots.
Automakers are betting heavily on this future, with multibillion-dollar investments in EVs, AVs and software-defined vehicles.
- In 2021, automakers and suppliers were projecting to spend $330 billion globally on EVs by 2025. Two years later, their projections grew to $616 billion by 2027, according to AlixPartners.
- But predictions don't always play out as expected, and the regulatory and competitive landscape keeps changing.
The big picture: Geopolitical uncertainties, rising tariffs and slower-than-expected EV adoption rates are changing the calculus that informed automakers' decisions just a few years ago.
- The stunning rise of innovative, low-cost competitors from China is an existential threat that has heightened the sense of urgency.
- "Everyone talks about how good they are or how cheap they are," Ford CEO Jim Farley said, referring to Chinese carmakers, at a recent investor conference. "What they should be talking about is how fast they are."
- Meanwhile, the frenetic regulatory overhaul of the Trump administration, an exploding trade war and an uncertain economy present new threats.
With pressure building from all sides, automakers are rethinking their strategies and rebalancing competing priorities.
- General Motors scrapped its ambitious Cruise robotaxi effort, while Ford hired a bunch of Tesla veterans to design a low-cost EV platform in California, far away from its own engineering hub in Dearborn, Michigan.
- Tesla is hoping a robotaxi launch this summer will distract from its plunging EV sales, while Stellantis, reeling from a disastrous 2024, is looking for a new CEO to lead the maker of Jeeps and Ram trucks.
- Expect even more global alliances like GM-Hyundai and Volkswagen-Rivian, as companies look for help shouldering the risks and costs associated with new technologies.
The bottom line: The once-in-a-century transformation of the auto industry has reached an inflection point.
- Carmakers need to do something different, and do it quickly.
- The auto industry is likely to change more in the next five years than it did in the last 100.
