By Mark Richards.
The car industry is changing rapidly as both the big manufacturers and the internal combustion engine come under threat. Will the big names survive? How much impact will driverless technology have? And will our children ever own a car?
Cars have been much in the news this week. The big story, of course, was Nissan’s decision to build the new X-Trail not in Sunderland, but back home in Japan.
But let us start with a different type of car – a car that does not need a driver. We have written about driverless cars – and the race to develop them – before. Now, though, there is something new. According to a report in City AM yesterday, driverless cars will be on British roads this year, as the Department of Transport said that it would be ‘overhauling existing regulations.’
The Minister for Transport is, of course, Chris Grayling, an old friend of this column and the man who presided over the demise of Carillion, oversaw the introduction of the new rail timetable and has recently awarded a ferry contract to a company that owns no ships.
So we can have complete confidence…
The change in the regulations will allow driverless cars to be trialled on any public road, providing they have passed ‘rigorous safety assessments.’ If everything goes according to plan then self-driving cars may be in circulation by 2021, with the technology estimated to be worth £52bn to the UK over the next 15 years.
“The UK is the perfect testing ground [for driverless cars],” said Paul Newman, Oxbotica’s founder, “Thanks to its complex and diverse roads.” And potholes. Don’t forget the potholes, Mr Newman…
Why have Nissan gone back to Japan?
As we mentioned above, the week’s big story was Nissan’s decision not to build the X-Trail in Sunderland, but instead move production back to Japan. There were plenty of people quick to blame the decision on Brexit, with one Welsh Labour councillor suggesting that the first people to be laid off should be those who had voted ‘Leave.’
In fact, the decision has virtually nothing to do with Brexit. Carlos Ghosn, the Nissan CEO who made the decision to build the X-Trail in Sunderland is now on trial for fraud, and the company is to be run by a far more Japan-centric management.
But it is not even the internal problems of Nissan that are the main reason: the decision to take the X-Trail back to Japan has far more to do with the future of the car industry – which is where it ties into the development of driverless cars.
The car industry was complacent
For as long as I have been alive the car industry has been dominated by the big manufacturers. Occasionally they would merge, occasionally one of them would run into trouble – but they would always be rescued by another of the big manufacturers and the world would go on as before. Every year they would bring a new model out, but real innovation was non-existent. The internal combustion engine reigned supreme and no-one new could enter the industry – the costs of doing so were just too great. The big manufacturers sat back and laughed at upstarts like Tesla, Google and Uber as they tried to break the monopoly…
But suddenly, all that is changing. ‘The great car economy’ – Margaret Thatcher’s vision of two cars on the driveway of every middle-class home – is facing serious new challenges and challengers. Google, Tesla and Uber have been joined by Dyson which, since 2015, has invested £2.5bn to develop an electric car with some element of driverless control.
Suddenly the internal combustion energy – and the big carmakers’ dominance – is under threat as never before. It is not just electric cars: it may turn out that hydrogen fuel cells prove to be the low-emission, carbon-neutral replacement for petrol and diesel. Plenty of companies are looking that way, with Toyota recently launching a hydrogen car, the Mirai (from the Japanese word for ‘future’). Crucially, a hydrogen-powered car can be refuelled in minutes.
Some analysts have dubbed the battle – hydrogen vs. electric – the car industry’s equivalent of Betamax vs. VHS. Let us not forget that ultimately both of them were blown away by DVDs.
Governments against the car industry
Not only do the car manufacturers have to contend with new technology and new competitors, but they also have to contend with the most destructive force on the planet – politicians.
All over Western Europe, politicians are competing with each other to introduce low-emission and ultra-low emission zones and/or looking for an outright ban on cars entering cities. Another contributory factor in the X-Trail being taken back to Japan was Michael Gove’s announcement in 2017 (echoed in France) that all new diesel and petrol cars will be banned from 2040.
Why is the new technology so important?
This is where we come back to driverless cars. If the technology is successful then it will slash the cost of taking a taxi. No driver to pay, no tip to add and a driverless car does not charge double after midnight or multiply the price by ten on Boxing Day. And that could undermine car ownership altogether, especially in cities. This is already happening in America, as a recent study shows.
I look at my three children and wonder if they will ever own a car. I think the answer is yes, but car ownership is certainly not the goal for them that it was for my generation. As for my (theoretical at the moment) grandchildren – the world will have moved on significantly by then.
And inevitably, it may have moved on to China. The country, recently damned for its record on pollution, has taken to electric cars with enthusiasm. In 2018 the Chinese bought a million electric cars – an increase of 60% in two years. No wonder James Dyson wanted to move his company HQ to Singapore: he wanted to be near the centre of the electric car revolution.
What will the car industry look like when the dust has settled? Driverless for certain. And quite possibly with a lot of the ‘household names’ consigned to the history books. Never mind the Sunderland plant, Nissan itself may not even exist…