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GLOBALOUTLOOK AUTOMOTIVE


Strandedin transition T


HAS THE CAR INDUSTRY BECOME REDUNDANT? JACOPO DETTONI REPORTS


he European Automobile Manuafacturers Association (ACEA) counts 298 automobile


factories operating across Europe and employing about 2.7 million people. Thousands of other production sites and millions of jobs are in the value chain. The specifics of internal combustion engines (ICEs) — with thousands of parts to produce and transport along the value chain — call for this abundance of producers and suppliers and create the business case for an industry that has been the backbone of industrial economies for decades. Electric vehicles (EVs) make


most of these details redundant, however. Instead of thousands of moving parts, EVs need dozens; instead of thousands of workers, the new generation of highly automated assembly lines needs only hundreds.


After missing the starting gun,


legacy original equipment manufacturers (OEMs) are committing to EVs to close the gap with EV-native competitors such as Tesla as electric mobility (e-mobility) gains momentum. However, they face a delicate


transition: while they ‘electrify’ their production base, they have to divest or repurpose existing facilities serving ICE models. Production sites worth billions of dollars risk becoming ‘stranded assets’, whose use case weakens as the uptake of EVs accelerates. The future of these sites is in jeopardy, and will eventually determine how successfully the legacy OEMs transition to EVs.


Risks of stranding After sending mixed signals to the market for years,major OEMs have publicly embraced the EV revolution


as the Covid-19 pandemic gave governments a chance to reset their mobility policies while producers revisited their production plans. The biggest names in the sector have comeout with ambitious proposals to ‘electrify’ their offer and production base. None has been as vocal as Volkswagen. The German powerhouse, whose environmental policies were tainted by the ‘dieselgate’ scandal that hit the group in 2015, made a splash in early 2021 when it announced total investments in e-mobility of €35bn. Its goal is to sell1melectric vehicles per year by 2025 and and have 70 all- electric models across the whole group by 2030. Volkswagen announced that the


new e-cars will be built at eight facilities across Europe, China and the US, while six ‘gigafactories’ will produce the batteries needed to power them — though it has made


Charging ahead: electric vehicles may have made the traditional auto sector redundant 42 www.fDiIntelligence.com June/July 2021


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