At the beginning of 2017, the automobile industry, a showcase for many others, is immersed in a transition toward new engines and cleaner fuels, safer autonomous vehicles, and a new mindset enabling it to see its vehicles as a service rather than products to be owned. Every company is locked in a race to produce more revolutionary vehicles that are more autonomous and more connected...
But contrary to what many people think, the real challenge facing the industry is not incremental in nature, but about disruption: the companies that will succeed into the future will be those able to self-destruct.
In business management, the concept of self-destruction involves one fundamental problem: however provocative and attractive it may seem in terms of radical reinvention, very few companies dare put it into practice, other than making a few gestures. Instead, the incremental route is much safer, keeping us in familiar terrain, competing against others who play by our rules, communicating through the same old media and turning up at the same car shows we have known since the industry started out.
Just take a look at the upcoming North American International Auto Show (NAIAS) in Detroit, where I'll be in a few days, to see how brands are locked in a senseless race to come up with the most striking prototype.
Everything indicates that a tech company like Google or a newcomer like Tesla have hit the automotive industry so hard that it is still trying to work out what is going on. But however much power the automotive industry claims to have, it turns out that several years on, nobody has come up with anything to match the level of autonomy of the models tested by Google, and none that can compare with the brilliance and efficiency of Tesla’s vehicles. And that hurts. A lot. The fact that Google has no interest in selling cars, claiming it is not creating a car, but a driver, while Tesla has manufactured just under 80,000 units in 2016 compared to the millions of the traditional automobile industry, and seems to be positioning itself more as a company dedicated to the production of batteries that of automobiles, does not help much. After many decades of dedicating yourself to something, an outsider comes along, proves that things can be done incomparably better, and turns your industry on its head.
My position when I go to a car show is simple: I am not even remotely interested in anything that produces smoke. And neither is my daughter, or most of the people her age I know. I not only believe that the era of fossil fuels is over, but that car companies, by continuing to manufacture vehicles with internal combustion engines, are failing to meet the most obvious standards of corporate social responsibility. That's why, when I see races – never was the word more appropriate – to present the most autonomous vehicle or the most powerful hybrid, my attention automatically turns away from an industry still tragically dominated by petrol-heads who are turned on by the roar of a powerful engine. The incremental approach, based on burning fuel, is going nowhere. For the traditional automotive industry, the internal combustion engine remains the cornerstone on which they have built their empires. And saying goodbye to it is akin to the destruction of the car as we know it. In other words, self-destruction.
Has it never occurred to anybody in the automotive industry just how pathetic it is that an absolute beginner in the category such as Elon Musk has been able to manufacture the best car ever in an industry with decades and decades of experience? And what is more, that after having manufactured it, he has released his patents for use by any other company, and yet no rival has emerged to give him a run for his money?
How is it possible that while one company has consistently demonstrated that it is possible to make attractive non-polluting vehicles, the rest of the industry remains committed to the hybrid and is basically engaged in an exercise in self-deception, preferring to compete to make more powerful and dirty engines? The answer is simple: focus, or lack of it. The traditional automobile industry, faced with an avalanche of change, is completely lacking in focus.
If the traditional industry really wants to change, there is only one route: self-destruction by committing to consigning the internal combustion engine to history. We know from Tesla that this is now possible, instead, the industry lacks the guts to do it. Right now, the only question in the automotive industry should be which will be the first brand to decide to stop making internal combustion engines.
Given that Daimler made the first vehicle with an internal combustion engine, it would make sense for it to lead the way. The company has demonstrated its Schumpeterian vocation by investing in companies such as MyTaxi, Car2go or Moovel, which if successful, would clearly reduce the incentive for city dwellers to purchase one of their vehicles. The company also believes that urban transport should be free of charge; but there is still a long way to go from that to announcing "Daimler will abandon the manufacture of internal combustion engines in 2019” or the like.
Similarly, there would be something almost heroic if Volkswagen, now immersed in the biggest crisis of its history as it faces multi-billion dollar sanctions after its emissions scandal, were to lead the way. But I just doubt it. I doubt they can, and I doubt they would.
Another potential candidate could be Ford, the brand largely responsible for the dream of individual car ownership by developing the assembly line, a dream that long ago proved environmentally unsustainable. It would be a nice way of making up for all the damage it has done over the last century by turning the automobile into a prestige consumer product, a "must have." But although the brand has cancelled its investment in a conventional plant in Mexico after being trolled and harassed by Donald Trump and instead will inject $700 million in a factory in Michigan dedicated to electrified vehicles, most of those electric vehicles are in fact hybrids. Please note the difference: electrified, not electric. And we all know, that whatever the automobile industry says, its commitment to hybrids is just an irresponsible and unethical way of prolonging the life of the internal combustion engine. Through its hybrid vehicles, Ford is making significant investments in autonomous driving, working with technology companies and grappling with the idea of replacing privately owned vehicles with fleets on a pay-per-use basis, but it still remains committed to the idea of burning gasoline. After so many years making a living out of it, it probably got too deeply imbricated into their DNA.
As 2017 gets underway, and with Tesla’s battery gigafactory in production, the big question for the automotive industry remains the same: who will be the first mark to put a date on the end of production of dirty engines?
