Navigating the Evolving Landscape of the Automotive Industry

The automotive industry has undergone a turbulent phase characterized by disruptions in sales and delivery capacity, including challenges like supply chain shortages and reduction of governmental incentives in key markets. As the industry experiences significant transformation and various factors impact its development and consumer purchasing behavior, OEMs face substantial demands to effectively navigate these issues and secure long-term success.

Recovery from the pandemic
The global car sales rebounded in 2022, reaching 67.2 million units sold, and with an Electric Vehicle (EV) record, surpassing 10 million units, constituting 16% of total car sales. Even tough the future growth forecast is optimistic; the 2023 light vehicle production volumes are not projected to exceed the 2019 levels.

EV sales plummet with subsidy and tax credits cuts
Many countries have experienced a steep drop in EV sales due to the abrupt termination of subsidies and tax credits, but also supply chain issues and lack of charging infrastructures.

“Ensuring the continued growth requires not only subsidies but also accessible and affordable charging infrastructure.”

China, that was heavily reliant on government subsidies, have experienced a sharp decline after the removal and has recently decided for new EV subsidies that will run until 2027. However, ensuring the continued growth requires not only subsidies but also accessible and affordable charging infrastructure. Another noteworthy trend is the substantial price reductions by OEMs on their EVs, leading to price pressure on commodities and a growing emphasis on unique content and features to differentiate from competitors. For example, Tesla has changed their pricing models offering a massive discount and triggering a large volume of pre-orders.

Capture market share with autonomous drive
In addition to the EV trend, OEMs must advance in autonomous technology. The autonomous market is projected to grow at a CAGR of 54.6% from 2022 to 2030 driven by technology advancements, demand for connected cars, and government regulations. The journey towards full autonomy involves multiple steps, with a significant current interest in driver assistance solutions, and challenges to address includes infrastructure development and concerns about cybersecurity. To gain a competitive edge, leading players like Tesla, Audi, BMW, and Volvo are focusing on inorganic growth strategies such as collaboration, partnerships, and mergers and acquisitions.

Multimodal focus is needed to succeed
Going forward, focusing on electrification will be crucial for OEMs in order to secure a strong position in the evolving automotive industry. For instance, in Europe, electric car sales are expected to rise further with the implementation of stricter CO2 emission standards and incentives under the 'Fit for 55' package. Investing in autonomous driving is another important delivery area together with enabling real value adding content and features in the car.