Auto manufacturers are sprinting to develop electric and autonomous vehicles (AV). However, many industry experts are concerned that this race could soon spell disaster for the automotive industry. Billions of dollars have been invested in the space, yet many consumers seem unexcited or uninterested in the added expense of an autonomous or electric vehicle.
Recent trends have shown that the future is bleak for many automotive manufacturers involved in the AV/EV space. With massive amounts of capital and other resources being poured into AV/EV technology, some experts believe that the AV/EV marathon could be a race to the bottom. Competition in the space is also fierce, along with many consumers showing an unwillingness to pay extra for added technologies today’s AV/EV cars provide.
Due to the added expense of AV/EV technologies, most consumers have financed their vehicles through auto loan providers like CrediReady. Currently, almost 86% of all new car sales are either financed or leased. An auto loan or lease may be the only option available to an average consumer that’s looking to take part in the AV/EV revolution.
Auto manufacturers now have more electric vehicles in production than ever before. Currently, there are over 50 different EV models available on the North American market today. However, due to extremely high production costs and low sales volume, EVs could soon be unprofitable. In order to drive more sales, most auto manufacturers will soon have to resort to providing large incentives and discounts to stand out from the competition.
Due to the expense associated with EV vehicles, automakers have been hedging their risk by slowly introducing EV models alongside their combustion engine models. However, a study conducted by the independent consulting firm AlixPartners also shows that fully electric vehicles will take 35% of the Chinese automotive market, 30% of the European market, and 20% of the U.S market by the year 2030.
The news is just as ominous on the AV front. “A pile-up of epic proportions awaits this industry as hundreds of players are spending hundreds of billions of dollars on electric and autonomous technologies as they rush to stake a claim on the biggest change to hit this industry in a hundred years,” said John Hoffecker, vice chairman of AlixPartners.
Although Americans understand the potential safety and efficient benefits of autonomous cars, many are hesitant about letting the car take control. Many industry experts believe that the risky process of letting a car drive itself has scared a small group of consumers away. However, a study conducted by AAA shows that most motorists are now less wary of autonomous vehicles. The study found that today, only 63% of consumers said they would be afraid to ride in an autonomous vehicle, compared to 78% in 2017.
AlixPartners recent study also shows that $61 billion has been allocated for AV-based technologies in the future. Meanwhile, another AlixPartners study shows that consumers are not willing to pay the extra price for an autonomous vehicle just yet. Whether or not consumers will be willing to fork over thousands of dollars extra for an autonomous or electric vehicle will soon be realized, and the results could set the stage for the biggest innovations in the automobile industry.
For more information, head to CrediReady.