Reinventing the car

It’s not hard to understand why Peter Campbell, global motor industry correspondent at the Financial Times, is so excited about the future. As he explains in the first episode of Season 4 of the Future Says podcast, the automotive industry is experiencing unprecedented disruption.

In his role with the FT, Peter enjoys a front-row seat for the unfolding dramas that are reinventing not just the automotive industry, but the very definition of what a car is. During our conversation, Peter stressed how the scale of those challenges could hardly be greater. In their own right, the megatrends of electrification, autonomous driving, Mobility-as-a-Service and the connected car all represent revolutionary forces. In the global motor industry, they are landing simultaneously.

If that wasn’t enough raw material for a journalist, Peter flags up the role the automotive sector has played in major geopolitical events of recent years: Brexit, trade wars with China and the pandemic-induced shutdowns. Then there’s the colourful history of electric vehicle (EV) start-ups, and the growing influence of Chinese manufacturers. Finally, throw into the mix a cast of larger-than-life characters, including the one-man headline generator that is Elon Musk.

These topics will reappear numerous times throughout the next few months as we talk to data science industry leaders from some of the world's largest car companies - Renault, Nissan, Magna, Yazaki, Stellantis, Subaru, and more.

Who’s winning the race to electrification?

On the subject of EV start-ups, Peter points out that, compared to building a car powered by an internal combustion engine (ICE), an EV appears relatively straightforward. That’s one reason why it has attracted so many ambitious newcomers. But mass producing any type of car is still incredibly difficult, as some start-ups are now finding to their cost. It really comes down to what Elon Musk refers to as ‘production hell’, and serves to emphasise Tesla’s achievements in establishing itself as a serious player.

With the new generation of Chinese makers, Peter believes a different story is emerging. “China sees the electric vehicle revolution as its chance to take on the world.” The country is aiming for leadership in batteries, creating the opportunity to effectively own the powertrain of the future. Geely already owns, or has a significant stake in, brands such as Volvo, Mercedes and Lotus. The highly integrated BYD is another he believes is well worth watching.

Peter also predicts that the electric transition will be far from linear. In terms of what we will be driving in the next five to ten years, change for many people will actually be slow. “A huge amount comes down to who you are and where you are.” With a typical ICE running at only 30% efficiency, there is still plenty of room for improvement in legacy technologies. What’s more, regions such as Latin America simply do not lend themselves to wholesale electrification. Consequently, Peter says,

“there is going to be a very, very long tail of ICE for a long time to come in many parts of the world.”

In pursuit of decarbonization, there are a plenty of alternative technologies offering exciting potential, both within and beyond electrification. Solid state batteries and hydrogen fuel cells are definitely on that list. The key here will lie in energy storage. But Peter believes that another option, eFuels, are less likely to make a quick impact. Moreover, he highlights just how tricky it is to invest in blue sky development when regional regulators are imposing demanding timetables that favour electrification. Without any clear indication of future outcomes, placing long-term bets on alternatives is a high risk business.

When will the robots take over?

When it comes to autonomous driving, Peter is sceptical that we are on the cusp of the much hyped robot revolution. The crucial debate is around safety. And it’s another area where the engineering challenges should not be underestimated. Technically, it is extremely hard to deliver Level 5 autonomy in environments such as inner cities. Politically, societies simply won’t accept robots killing humans, even if they are much less likely to do so than a human driver. If driver monitoring and override systems become the norm, Peter believes it will be possible to eliminate the main causes of accidents without going fully autonomous. Self-driving technology will therefore remain focused on business segments such as robotaxis.

However, Peter believes a more important trend is the growing expectation that cars should provide a seamless extension of consumers’ digital lifestyles. He flags up software as a huge issue for manufacturers, and an area where western OEMs in particular do not have a great track record. Some have looked to create their own digital ecosystems, effectively going head to head with the likes of Apple and Google. Ultimately, if software interfaces defined by mobile phone makers become more important to consumers than the driving experience itself, car manufacturers will have to work even harder to differentiate their products. ??

In this search for new business models, data is one of the great hopes of the automotive industry. The connected car gives manufacturers access to vast amounts of monetizable data. They just need to work out what to do with it. Again, that’s a long way from the traditional engineering capabilities around which car makers have grown. ?

Into the labyrinth

Across all these topics, Peter returns to some universal truths. No one can be certain where the car and the motor industry are heading. And all car makers are facing the same problems, yet coming up with fundamentally different answers.

“It’s actually an industry entering a labyrinth, in which no one has any idea about which the right way to go is. That’s why it’s so fascinating."

All of which sets us up perfectly for a new season of Future Says. Over the next few months, I'll be talking to some of the most influential people working in the industry, and learning how tools such as AI, simulation and data analytics will be fundamental to navigating the journey ahead. You can tune in on Spotify, Apple Music, Amazon, Youtube, or wherever else you like to consume your podcasts!

Future Says Season 4