The internal combustion engine is under attack from electric competitors and that is a scary time to be in the auto business. In an age where ridesharing is celebrated, the carmakers are looking at lowered sales. Globally, auto sales have gone down. It is little wonder that these companies are coming together to survive this. Fiat Chrysler and Renault were about to merge and then withdrew because of complications with governments. This proposal would have created the world’s third largest carmaker and the move was a response to the disruption that is threatening a whole industry.
United States, China and Japan make a lot of money selling cars and this industry is tanking slowly. This is going to be the biggest change we will have seen in the last century. Major companies are projected to spend over $400 billion collectively in the next five years to make electric cars and the technology needed to make them work.
The process is massive and will entail overhauling factories, getting qualified workers, reorganize supply networks and rethink markets of car owners.
The change is a case of adapting if they want to survive the massive changes that are rolling in. Companies like Rivian have taken large strides and will overtake Tesla’s electric car in terms of miles per single charge and power.
There is uncertainty because no one knows if the customers will accept the technology, be able to afford it or even turn a profit. Tesla for example, is a company that is beset by some serious problems and yet, its stock is valued higher than either Renault or Fiat Chrysler. Uber is worth more than the two of them combined even after they had a $1 billion quarterly loss.
Realigning this industry will not be easy. Companies like Volkswagen, Toyota and General Motors are some of the last ones that have huge factories where thousands of workers go daily for shifts. Globally, about 8 million people work directly for car making companies and even more for companies that make components like sensors and brakes among others. All these jobs are under threat.
Trump and his tariffs also damaged the market further. China’s automakers companies came to a halt and American carmakers suffered too. Ford for example lost 36% in sales for the first three months of 2019 because of the trade war.
Meanwhile in Europe, the carmakers are fueling emission levels partly because the population there has developed a taste for fuel guzzling SUVs and the carmakers are trying to sell as many as they can. Now, we are seeing more alliances by carmakers to ensure that they survive.
The reality is that the electric cars need less maintenance and fewer parts. This means that companies which uses to make parts for combustion engines will go out of business and the only way for this deficit in jobs to be taken care of is if the whole world makes the switch to renewable energy en masse to make sure that more jobs are created in that sector.