Car makers are sounding the alarm as to big changes in the automotive market as it shifts to electric vehicles.
Ford CEO Jim Farley said this month he expects consolidation in the industry even among long established car makers. Where today, car companies are partnering up to develop electric vehicles (GM with Honda, Ford with Volkswagen), in the future we’ll see one company acquiring another, he said.
The switch to EVs requires so much capital, and the pressure to bring down the cost of vehicles is so competitive, it will drive the industry to consolidation, said Farley as reported by CNBC.
Chinese car brands are also expected to have an advantage in the EV market and could gain a foothold in the US, creating even more competition, said CNBC.
The need to reduce costs was echoed this week by Stellantis (Chrysler). Its Chief Manufacturing Officer, Arnaud Deboeuf went so far as to predict the “doom” and “collapse” of the car industry unless it figures out how to cut the price of electric vehicles, reported Automotive News.
Toyota’s CEO issued a similar warning last December, said The Detroit Bureau.
Stellantis hopes to slash the cost of manufacturing EVs by 40 percent by 2030.
This comes at a time when the price of automobile parts is on the rise. Tesla just raised prices up to $6,000 per vehicle and Tesla has the advantage of selling direct to consumers, which cuts out $2,000 per vehicle compared to Ford, claimed Farley.
EVs currently account for only 4 percent of car sales but are expected to reach 60 percent by 2035-2040. The Biden administration’s goal is to hit 50 percent by 2030.
Source: CNBC, Automotive News
