Automotive Revolution: Innovation, Industrial Autonomy, And Global Challenges

(MENAFN- Robotics & automation News) Automotive revolution: Innovation, industrial autonomy, and global challenges

February 10, 2025 by Mark Allinson

By Laurent Coussonnet , business development director, Linxens

The automotive industry is at a crossroads: between technological innovations and environmental challenges, it must reinvent its models for a sustainable future. But which regions, technologies, and policies will shape this global revolution?

Despite a 10 percent growth in 2023, global car sales are expected to slow to 2-3 percent in 2024, far from pre-pandemic levels.

Electric vehicles (EVs), the drivers of this transition, saw record growth of 32 percent in 2023, but rising interest rates and stricter credit conditions will weigh on the ability of households and businesses to finance capacities, postponing some vehicle purchases to 2025.

China and the rise of electric vehicles

Asia, led by China, is emerging as the epicenter of the global automotive industry. China is the leading producer and consumer of electric cars, with 6 million vehicles sold in 2023.

While China now accounts for nearly 50 percent of global electric vehicle sales, Europe and the United States are struggling to keep up: the share of EVs there remains at 22 percent and 12 percent respectively.

Western sanctions against Russia have benefited the Chinese automotive industry, with Russia becoming the top importer of Chinese vehicles in 2023.

In the United States, car production is expected to increase by 4 percent in 2024, supported by a 2.5 % increase in sales. In Europe, growth will be slower, between 1 percent and 2 percent.

Electric vehicles are driving new registrations in Europe, accounting for 15 percent of new vehicle sales in 2023, while in the United States, their market share will remain close to 10 percent in 2024.

The United States and the EU are working to strengthen their industrial and technological autonomy by developing battery production capacities and diversifying sources of critical raw materials to escape China's near-monopoly.

In the United States, the Inflation Reduction Act allocates $65 billion for the development of gigafactories. In Europe, the Critical Raw Materials Act aims to increase the capacity for extraction, refining, and recycling of critical raw materials (see Coface).

Innovation: The key to sustainable competitiveness

The automotive industry has always evolved. However, new innovations are emerging more rapidly to meet the needs of individuals and businesses, while improving driver safety, performance, and comfort, and complying with environmental regulations.

The industry has gradually turned towards vehicle automation, using technologies such as radar, sonar, and odometry to enable autonomous vehicles to make decisions based on information gathered from their environment.

Beyond lithium-ion batteries, emerging technologies such as solid-state batteries and hydrogen vehicles are opening new paths. These innovations, which are more efficient and eco-friendly, will be crucial in meeting tomorrow's needs while reducing environmental impact.

Although fully autonomous Level 5 vehicles will not be on the roads in 2024, as some suppliers predicted a few years ago, vehicles with lower levels of autonomy are already widespread.

Connected vehicles are increasingly integrating technologies such as intelligent mobility systems, autonomous driving, blockchain-based solutions, and vehicle-infrastructure networks.

These innovations are redefining mobility and improving its performance. As these technologies spread and gain consumer acceptance, automakers are adapting their strategies to stay competitive.

Ecological challenges: Battery recycling

However, these innovations also bring challenges. Indeed, the recycling of lithium batteries poses a major challenge for the automotive industry. Reducing carbon emissions and energy transition are no longer options but imperatives.

The automotive industry must evolve towards more ecological production chains, recyclable materials, and responsible innovations to achieve global climate goals. These batteries pose significant environmental problems at the end of their life.

The current recycling infrastructure is insufficient to keep up with the rapid growth of electric vehicles, which can lead to an accumulation of toxic waste.

Moreover, the recycling process is complex and costly. It requires massive investments in recycling technologies. Governments and companies must collaborate to develop sustainable and effective solutions for battery recycling to minimize environmental impact and ensure responsible resource management.

Impact on insurance

The growing adoption of electric vehicles also poses challenges for the insurance sector. Some insurers are reluctant to insure electric vehicles due to concerns about regulatory compliance, battery life, and safety.

Governments and regulators must work with insurers to establish clear and favorable regulatory frameworks to facilitate the insurance of electric vehicles and promote their adoption.

Incentives and subsidies can also be put in place to encourage insurers to offer insurance policies for electric vehicles.

Policy support is essential

The automotive sector plays a significant role in the growth of the French economy. Before Covid, it employed around 400,000 people, accounted for more than 10 percent of goods exports, and contributed more than €20 billion in value added.

However, it faces challenges due to the collapse of production in 2020, supply chain issues with semiconductors, rising raw material costs, and the transition to electric and hydrogen vehicles.

In the face of economic and environmental challenges, innovation remains the only driver capable of propelling the automotive industry towards a greener and more competitive future.

Manufacturers, governments, and consumers must act together to turn this vision into reality. These factors stimulate the need for investment and diversification in many automotive sites.

The advent of automated and connected vehicles is profoundly changing the sources of value creation in the automotive industry. New forms of mobility are being developed to meet environmental protection requirements and new consumption patterns.

Public authorities have taken massive and favorable measures for the industry: tax reductions, emergency aid, support for R&D, and Important Projects of Common European Interest (IPCEI) for electronics, batteries, and hydrogen. These measures aim to stimulate innovation, productive investment, and diversification.

The sector represents 8 percent of the EU's GDP, 30 percent of its R&D spending, and 13 million jobs. Facing competition from China and the United States, Europe must invent a hybrid model between private and public initiatives to maintain its position and remain competitive.

As proposed by Luca de Meo, CEO of the Renault Group and President of the European Automobile Manufacturers' Association (ACEA), it is necessary to create a single regulatory framework for mobility and the automotive industry.

This will create the conditions for structuring projects and European champions in key technologies, as initiated with Airbus.

Although global demand for automobiles remains strong, driven by a growing population and increased urbanization, government policies aimed at reducing carbon emissions and promoting green technologies are also a lever.

Let's not forget that the automotive sector is an important economic driver, creating jobs and stimulating innovation in related sectors such as technology, energy, and infrastructure.

To remain competitive in the market, traditional automakers and industry suppliers must accelerate innovation. The vehicle of tomorrow will be very different from what they have offered so far, and they must seek new drivers of innovation and new complementary expertise.

Imagining the car of tomorrow involves significant challenges in terms of manufacturing, safety, climate change, and accessibility.

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