For all my life there have been three fundamental facts about the car industry.
- Cars were driven by people
- People owned cars – and aspired to own cars
- And the cars were powered by the internal combustion engine.
But suddenly, all that is changing. Driverless cars have moved from science fiction to simple fact. My two boys, Dan and Rory, will both learn to drive – but I’m almost certain that their children won’t need to.
The dream of owning your first car? The step up from a Ford to an Audi, and the confirmation you were moving up the company ladder? Last year, half a billion people around the world used a ride-hailing app, pushing the value of companies like Uber and Chinese firm DiDi to over $50bn.
And now the internal combustion engine is giving way to the electric car – and quite possibly to the hydrogen cell.
But it’s not going to end there.
Consider these simple facts. Fifty-six companies have obtained a permit to conduct tests on autonomous vehicles (self-driving cars) in the state of California. (Remember that if California were a country it would have the 5th largest GDP in the world: we are not talking an insignificant sample here.)
Of those 56 companies, 71% are ‘tech native’ companies – from Google and Apple that you’ve heard of, to companies like Drive.ai, Zoox and Pony.ai that you probably haven’t.
And governments around the world are ever more concerned about emission targets, road safety and subsidies for electric vehicles – as people continue to embrace a pay-per-use and sharing economy, and car ownership starts to fall.
Clearly, the traditional car industry is under attack, much as the traditional banking sector is under attack from the challenger banks and fintech. You might argue that the car industry is making a better fist of fighting back than the banks – the luxury car brands, for example, have a powerful hold on their customers, at least for now. And the big car makers have been busy with mergers, acquisitions and partnerships.
But in the long term the continued success of the traditional car industry will depend on its ability to attract the talented software engineers that would otherwise join Google, Amazon and Apple – and on its ability to fight off competition from the Far East.
And now let’s change tack completely: from the internal combustion engine to veganism. Go back nine years to when I started this blog and most people knew three or four vegetarians. Now? Recent data suggests that the number of vegans in the UK has soared by 700% in the last two years. There are reports than one person in seven now identifies as a vegetarian.
And that is being reflected in business and finance. In the US, investment is pouring into ‘alternative food’ manufacturers: NotCo, a company that ‘combines AI with food science to craft cutting-edge plant based foods’ has just attracted $30m of investment, including money from Jeff Bezos’ family vehicle.
What astonishes me is that how many ideas that were on the drawing board, or which were the stuff of fantasy* nine years ago are now accepted technological developments.
I frequently write that the world is changing at an ever faster pace. Sometimes you think ‘well, is it really?’ But then I go back to my original blog posts and know that it absolutely is. Management consultants McKinsey have suggested that this AI-powered fourth industrial revolution is advancing ten times faster and at 300 times the scale of the original industrial revolution.
So quite clearly entire industries – and countries – are going to be affected. The German economy has been the engine driving Europe, but it only narrowly averted a technical recession in the last quarter. According to Bloomberg, the German auto industry employs 835,000 people: it accounts for 20% of the country’s exports. Suddenly the three fundamental changes outlined above put the industry – and Germany’s seemingly inevitable balance of payments surplus – under threat as never before.
And very clearly, what happens in Germany will mirror what happens in other countries, including the UK. When he was Chancellor George Osborne was very fond of saying how the UK could never be immune to what happened in the wider world. Equally clearly, it cannot be immune to changes in consumer behaviour and the technology that drives those changes. What is happening in the car industry and in food production will happen in countless other industries – very possibly including yours and mine.
We are living through exciting times – but we’re all going to face unprecedented challenges. If there was ever a time when you needed the strength of the TAB community around you, that time is now.
*Sadly, Newcastle United’s dominance of Europe remains the stuff of fantasy…
By Ed Reid, TAB UK
Read more of Ed’s Blogs here:
- The Reason why Franchises Work
- The Importance of Cyber Security for Your Business
- What Can Businesses Learn from the Vegan Sausage Roll?