(MENAFN- Asia Times) The automotive industry is in a most difficult period of its history. How can it predict the future?
Technological marvels enabled by digital electronics have periodically emerged as new consumer products and services. And what is most remarkable is how quickly they have become accepted as necessities.
Consider in the past few decades color television, personal computers, flat panel displays, wireless communications, digital photography and image storage, LED light sources, email and internet-based services.
In each case, it took a few years for these innovations to go from start-up to widespread adoption where history is quickly forgotten. Who remembers 35mm film cameras, light bulbs or TV receivers with cathode ray tubes? Or 78rpm records?
A world where such profound innovations become quickly accepted as normal also leads to the anticipation of new markets created by innovations and further anticipation that such markets will be rapidly accepted to the point of creating major new industries.
Betting on such future markets calls for massive amounts of capital and consequent opportunities for great profit-or loss if the market size developments do not meet expectations. The automobile industry now faces this investment challenge.
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Industrial planners have been spoiled by historical examples where new electronic products eventually displace 100% of the old ones.
This effectively happened with digital cameras, video displays and lighting devices where prices of new devices dropped as sales volume grew to the point that old products became non-competitive in just a few years.
The success of the new products was based on superior performance, reliability, size and flexibility.
But it is too easy and risky to anticipate that all new electronic products will simply fully displace older ones. Two recent examples show that this is not always a safe assumption: autonomous consumer vehicles and electronic vehicles (EVs).
After billions of dollars of investment, autonomous consumer vehicles remain in the future as consumers remain worried about the safety of such vehicles in general traffic.
Basic issues impede the mass adoption of self-driving vehicles, and until they are overcome, such vehicles will remain niche machines used in controlled environments.
A bigger opportunity has been created by EVs that quickly found a market in the past few years as battery and production costs dropped with improving technology and higher production rates.
In the United States, EVs have gained a significant market share in a short period, increasing from about 2% of all car sales during the last quarter of 2018 to 8.1% in the last quarter of 2023.
Such progress appeared to promise that vehicles with internal combustion engines will be largely replaced by EVs within a foreseeable future of a decade or less.
Then sales growth slowed and this assumption is being tested.“How Tesla fell to Earth”, the Wall Street Journal headlined a feature article earlier this month describing the woeful market impact on the EV industry leader.
Is the sales slowdown temporary or the result of consumer concerns? Did EV sales in 2024 slow as consumers became concerned with inherent disadvantages of EVs related to battery charging requirements and cold temperature performance degradation?
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Did many potential customers decide that EVs' benefits were offset by handicaps that made them unattractive as family cars and purchased conventional cars or new hybrid cars offering some economic advantages of EVs without their handicaps?
Are EVs a niche market or a total replacement for conventional combustion engine vehicles?
The sales growth slowdown could be just temporary or the result of increasing consumer skepticism. Time will tell but the uncertainty leaves manufacturers with difficult and costly decisions.
Past big technology innovations confronted industrialists with difficult choices. But none that comes to mind with the enormous economic consequences of making the wrong choice for automotive companies.
Dr Henry Kressel is a technologist, inventor with many pioneering contributions, author and long term private equity investor in technology companies.
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