Massive, disruptive and permanent change is underway in the automotive industry.
The automotive industry is speeding toward a new era marked by electric-powered vehicles, autonomous vehicles and shared mobility. Even as global sales tick downward,1 individual vehicles will be used more intensively, spending less time parked and more time on the road, transporting people and goods in a growing number of ways. For automotive chemical companies in particular, the new mobility will mean a dramatic shift in product portfolios, clients, end-users and business models to address an industry ecosystem that's becoming larger, more dynamic and far more interconnected.
The growing adoption of electric, autonomous and shared vehicles will affect the number, type and amount of chemicals required by automotive OEMs, not to mention supply chains, aftermarkets and market structures.
Consider the electric vehicle. Almost everything is simpler compared to a vehicle powered by an internal combustion engine (ICE). Except for tire rotations and cabin air filters, an electric vehicle might well require little or no preventive maintenance for the effective life of the vehicle.
At the same time, electric vehicles will remain a strategic market for plastics and other lightweight materials. Just as traditional OEMs have long been committed to reducing vehicle weight for increased gasoline mileage, OEMs for electric vehicles will want the same weight efficiencies to help extend the range of an electric vehicle per charge.
With autonomous vehicles, research suggests that driver-assist technologies such as stability control, automatic braking and lane centering can decrease the number and severity of some types of accidents. This could significantly impact demand for materials related to repair, replacement and repainting.
In addition, autonomous vehicles operating in dense urban areas may never travel faster than 25 miles per hour, leading to a re-evaluation of strict crash-test requirements for vehicles. These trends could drive the greater adoption of even lighter weight vehicles with advanced composites and aluminum alloys.
Vehicle exteriors and interiors could also change in a shift from private to public vehicles. As with today's urban transportation systems, the surfaces of a shared vehicle need to be aesthetically pleasing but also resistant to a heavy volume of passengers as well as potential vandalism. Vehicles in shared fleets could be increasingly modular, with future designs focused on replacing interior components that fail from increased wear and tear before the rest of the vehicle. The interior could be completely reconfigured for both commuting and entertainment, creating new demands for the materials needed to enable that experience, such as high-definition touchscreens and molded instrument panels.
The growing adoption of autonomous and shared vehicles will also disrupt traditional, OEM-centric business models for chemical manufacturers. In the future, large fleet operators will represent a greater share of the automotive market, and chemical companies might find that their primary customer is no longer the OEM and end user.
In short, massive, disruptive and permanent change is underway in the automotive industry, affecting chemical companies at multiple levels. In the face of these changes, chemical companies will have to rethink their business models, reconsider key markets and recalculate the value propositions for every product in their portfolio.
1Source: Worldwide premium light vehicle sales growth rate from 2011 to 2020, Statista (PDF 1.90 MB)