Currently reading: The car industry now: New opportunities for start up firms
With the pandemic forcing business practices to change, fledgling companies could make an impact
Autocar
News
3 mins read
5 June 2020

In many ways, there couldn’t be a better time for automotive start-ups.

Many of the old ways of working and thinking just won’t apply or be relevant any more. Companies will need to be leaner and cleaner. Supply chains will need to be more localised and anything that can be moved online must be. The automotive industry will be well placed to work in this new world, too – and if the established players are unwilling to change, plenty of new names will be there to seize the opportunities.

Few industries are as creative and as innovative as the automotive one, whether it’s responding to seemingly impossible targets from legislators or meeting the demands of customers. When you consider how complex a car is, with so many parts and systems reliant on one another, it’s amazing that they are as reliable as they are and not more expensive. Cars remain one of the engineering wonders of our time, yet their complexity still allows many areas to be explored for improvement.

The industry has received more new players in recent years than since the era before the First World War, thanks to the switch to electrification. That covers everyone from Tesla to companies that make tiny computer chips.

As we’ve learned, the current crisis will only accelerate the switch to digital and electrification, with any incentives launched to get new car sales moving again likely to be linked to electric cars only. Legislators and the industry will view it as a chance to hit the reset button, but they alone won’t have all the ideas.

“Start-ups mean innovation,” says Felipe Muñoz, Jato Dynamics’ global analyst, “and in my opinion, innovation is what makes the difference between those who survive and don’t during the crisis. The motor industry has been working in the same way for more than 100 years. This is probably the best opportunity to change, and people and ideas from outside the industry can be a turning point.”

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Will car-sharing get popular?

The only short-term effect visible at present is a boom time for manufacturers of bicycles and scooters as urban travellers aim to find ways of practising social distancing when they return to work. It seems unlikely that car-sharing will get going again at a high level until the threat of infection has gone.

Private hire and taxi drivers are also in for a hard time, while customers of companies such as Zipcar aren’t likely to be trusting unless they can be sure their car has been thoroughly disinfected after the previous user.

For now, city authorities are all too aware that there’s likely to be very large dependence by commuters on personal transport, which will soon raise pollution levels, create traffic jams and generally bring back all the bad things that have disappeared during lockdown.

That in turn will speed demand for EVs, putting pressure on charging networks – and the National Grid – that may struggle to keep up with the rising demand.

READ MORE

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