Imagining the industry’s future

May 1, 2013

The road to 2033

How might carmaking look 20 years from now?

(The following is a reprint from The Economist, 4/30/2013)

THE PAST TWO decades have been an exciting time for the motor industry, but not always in a good way. The battle to achieve scale to survive in a global market produced victims as well as winners, and some of the resulting deals were better than others. Toyota’s absorption of Honda in 2027 went surprisingly well, though it cost a Japanese minister his job. VW’s merger with Tata Motors came as something of a surprise, but with hindsight it made sense: it allowed the combined company to claim the crown as the world’s biggest carmaker and take the lead in the booming South Asian market. Fiat-Chrysler’s alliance with Japan’s Suzuki and its Indian partner, Maruti, has proved rather unwieldy and is still not working smoothly. Hyundai-Kia has worked hard at pushing up its share of the market, having mopped up some casualties among Chinese carmakers.

China now has its very own car giant, Zhongguo Tongyong Qiche (China General Motors), the majority-owned affiliate of America’s GM that emerged from the messy break-up of joint ventures between Chinese and foreign carmakers in the early 2020s. China General Motors and China People’s Car (the country’s second car company, better known as China Volkswagen) have pleased the government by launching Chinese-branded and –styled cars that are enjoying rising sales across Asia.

In the euro zone years of painful restructuring are at last paying off, with GM’s Peugeot-Opel division enjoying a revival. But excess carmaking capacity almost everywhere means that nobody is making much money. Further consolidation looks likely, and not just among car companies. The recent takeover of Ford by IBM follows naturally from the carmaker’s argument that it should be seen primarily as a software and systems-integration firm. But IBM’s plan to sell Ford’s manufacturing operations to Magna, a big components-maker, has fallen through.

By the late 2010s battery technology had got so much better that some carmakers lost interest in internal-combustion engines, but they had to think again. The opening up of the vast shale- gas fields across Asia made gas a much more attractive proposition. Since gas is much cleaner to burn than petrol or diesel, many carmakers were able to meet the 2020 targets for carbon-dioxide emissions with relative ease by offering natural-gas hybrids. And breakthroughs in the early 2020s in making methane gas and liquid fuels from bacteria and algae made the even stricter CO2 targets for 2025 much more attainable.

Some carmakers are still doggedly working away at hydrogen fuel cells, but these are competitive only in countries where the government has mandated the provision of hydrogen filling stations. Similarly, fully electric cars are predominant only in countries that can produce electricity cheaply, such as nuclear-powered France.

The self-driving car took a temporary knock when the mysterious hacking incident of 2023 (which was never resolved) caused a spate of crashes of cars running on autopilot, leading to a flurry of liability suits. Even so, city governments in China pressed ahead with their ban on manual driving on busy arterial roads to cut congestion and accidents. Now the practice is spreading to Western cities. The mayor of Toronto, Justin Bieber, recently pushed through a radical plan to ban all private cars in the city centre and replace all cabs with driverless taxis. Similar moves in California have prompted the creation of the Steering Wheel Club, which defends Americans’ right to drive. It is led by a former lobbyist for the National Rifle Association.

Licence not to kill

Cars are now considered perfectly safe when piloting themselves in any situation. Even so, lawmakers in most countries have been slow to repeal the laws on driving tests and licences, and in most places the rules still call for at least one sober “driver” sitting in a front seat. But driving tests have been simplified now that there is no longer a need for manual manoeuvring into parking bays. The Silver Riders, a pressure group formed by octogenarian baby-boomers, is campaigning to scrap driving licences altogether so that elderly Americans can get around in their self-driving motors no matter what physical shape they are in. The campaign has now become generation-spanning, attracting support from many teenagers who want to skip driving lessons.

Ubiquitous on-board systems for monitoring speed limits and other traffic restrictions on every stretch of road have yielded some unexpected savings: highways authorities no longer have to maintain superfluous traffic signs. Britain’s Royal Automobile Club recently launched a nostalgia-fuelled drive to exhibit a representative collection of them in a new museum alongside Birmingham’s Spaghetti Junction.


From the print edition: Special report