Two years ago there was little doubt among motoring experts that the big trends were summed up with the acronym CASE. The cars of the very near future were to be increasingly Connected, Autonomous, Shared and Electric.
Since then, the pandemic has slowed — though not halted — interest in the idea of sharing vehicles, while the realisation is landing that full self-driving cars are still some way away, despite anything Elon Musk might say. The first 95 per cent of automotive autonomy was achieved relatively quickly, but the last bit is proving far more complex and expensive than previously thought.
Still, automotive technology is progressing at a pace that is fast and furious. There are step changes in almost every area of the industry, from the way cars are designed, to the way they are built, marketed and sold.
While so-called Level 5 self-driving, which is to say complete autonomy with no pedals or steering wheel inside the vehicle, won’t be within the hands of private buyers any time soon, there have been massive improvements in Level 2 and Level 3 systems. Some of today’s cars have the capability to drive themselves between cities, hands-off.
This “on-ramp to off-ramp” expressway driving ability, on cars such as the BMW iX, is still waiting for regulatory approval in most places, but the carmakers are confident it’s coming. That ability aside, many vehicles now have surprising “smarts”. They will recognise roundabouts and intersections and slow themselves in advance, or brake autonomously when another comes into view while you are reversing.
The switch to electric is gathering speed and many believe the point where a battery car is the same price as a comparable ICE (internal combustion engine) car is only four or five years away.
The Connected part of CASE is also proceeding swiftly, with many models receiving software updates (or features upgrades) over the air, and being fitted with onboard safety systems that can detect a crash and notify emergency services. The interlinking of automotive and domestic systems, as shown by Google’s Android Automotive car operating system, will enable drivers to preheat their home and turn on its lights when leaving work, or to cool their car and check its battery levels while at their keyboard or phone.
What are the other big trends? For a start, there is a sales revolution happening, with at least three brands – Tesla, Genesis and Polestar – selling direct to consumers via the internet and two others, Honda and Mercedes-Benz, favouring an agency model. The latter means cars will be sold through showrooms, as now, but via what will be called agents rather than dealers. In other words, what consumers pay will be fixed at head office; the relationship will be directly between the buyer and the importer.
The largely digital strategy of electric brand Polestar is a harbinger of how many players — new and old — are likely to sell cars. Australia’s newest brand (it is a division of China’s Geely, which also owns Volvo, and is based in Sweden though builds in China) will sell online, offering test drives through a small number of “Spaces”, not dealerships.
Last month [November] Australian managing director Samantha Johnson explained in a round table press conference how they were working hard to build confidence before the first cars are delivered to customers early next year.
“We have our website live … people can sign up for test drive interest. We also have our local Polestar support team here offering a really personalised level of customer experience and we are also working through our retail strategy at the moment, so we will have retail locations in all the key cities in Australia other than Darwin.
“The Polestar 2 comes with five years’ service, five years’ warranty, eight on the battery, five years’ roadside assistance. In encouraging people to move from ICE engines over to an EV, we want to give them some comfort.”
This comfort includes a guaranteed residual value, because Polestar is asking buyers to switch not only power sources, but to move to a brand with no real pedigree. It is a challenge others will be facing soon. As Deloitte Automotive observes: “Australia supports 71 brands and is the most competitive market in the world. There could be as many as 9 to 10 new brands looking to enter the market.”
These new sales models are bound to influence others as importers seek to streamline the buying process, and to increase margins. However, there is a much-publicised lawsuit from aggrieved Mercedes-Benz dealers, claiming $650 million for “theft of goodwill”, so the industry is watching this closely.
And what about the environment? There are huge changes there too. Yes, there is a certain amount of greenwashing, but there is exciting progress beyond the general switch to batteries for all or some of the propulsion. Manufacturing plants are increasingly running on renewables, while accountability is being pushed through the supply chains of many makers. There’s little point, as many now acknowledge, reducing car emissions “at the tailpipe” if the production process is not also cleaned up, or a blind eye is turned to human rights violations or environmental degradation in the procurement and treatment of materials.
The last trend to note is the explosion of new brands. For decades, the barriers to entry in this capital-intensive industry were considered too high. There’s a new landscape, however. Many parts — including entire platforms with built-in electrical drive systems — are available off the shelf, and a greater proportion of a car’s total value is made up of software. This has led to a rash of start-ups developing new cars, technology companies launching or backing their own ventures, and established car industry players spinning off new electric brands and sub-brands to target sectors of an increasingly complex market.
Then there’s the rise of China. Already the biggest carmaker on earth, by virtue of its massive domestic market, China now supplies most of Australia’s electric cars, via its own brands such as MG (the venerable British brand purchased by Shanghai Automotive Industry Corporation from another Chinese company in 2007) and familiar players, with many Volvos and all Teslas among those built there for our market.
Various other, primarily electric, brands from China, such as BYD and Lynk & Co are also expected to land here soon. The quality of Chinese cars is already very good and big leaps are being made in technology, so we can expect the disruption to intensify.