The fate of car manufacturers is being decided by how well those in charge make the transition from combustion engines to electric batteries, says KPMG. By 2030, the excess production capacity for conventional cars will be equivalent to 200 disused assembly plants.
Car manufacturers are investing more than $200 billion in the electric car sector, which is more than NASA spent on putting the first man on the moon, according to analysts at KPMG. But there’s more to it than investing: you have to start out on the right track.
The consultancy group has just released a new research paper, simply titled Place Your Billion-Dollar Bets Wisely, which includes an estimate that battery-powered vehicles will account for 24-37% of the global market by 2030.
‘A massive structural change. New dominant positions will be established, and the old empires may fall. The stakes couldn’t be higher’, suggests KPMG.
The alarmist study explains that the fate of the automotive industry depends on good management by those in charge of the different groups, in order to balance out the rise of electric power with the decline of fossil fuel engines. If electric vehicles reach a 30% market share in the next nine years, a critical excess production capacity will follow: around 40 million petrol/diesel vehicles or the equivalent of 200 disused factories per year.
By jumping in to electricity too early and too big, manufacturers risk being left without the vehicles they need to carry on making a profit. But falling behind in the electric market could spell the end for slowcoaches who cling to traditional fuels for too long, says KPMG.
‘Getting the timing wrong is very risky. If you’re out by five years, you’re likely to go bankrupt. There could be big crashes’, the study’s co-author Gary Silberg, head of Automotive Practice at KPMG US, told Bloomberg.
The study predicts that several of the world’s leading car manufacturers will experience significant challenges in managing this technological transition during the next decade.
That’s why it is extremely important for them to remain agile and to be able to count on reliable partners.