In his keynote session at ETI's ToolTech 2021, speaker John McElroy, Autoline, provided key transitions currently happening in the automotive industry, as well as an outlook on the near future.
“What we see going on in the industry now is phenomenal,” McElroy said, comparing it to what the automotive industry experienced in the early 1900s.
Several notable transitions from his presentation include:
Increase in startups
Historically, it was tough to get into the automotive industry, McElroy noted. From needing a large amount of capital and access to forging plants, casting plants, body shops, and assembly lines to needing experts and a way to sell and service those vehicles nationwide were challenges.
Today, these barriers are now easily attainable. Investors, engineering, manufacturing, and distribution are easy to come by, thus we are experiencing an increase in startups.
McElroy credits this increase to special purpose acquisition companies (SPAC), also known as reverse mergers or blank check companies. SPACs are generally formed by a group of investors to raise a certain amount of capital to get listed on one of the major stock exchanges.
“This is the shortcut to the money and has revolutionized how these startups have been able to get into the market,” McElroy said.
Whereas the more traditional way to raise capital through an initial public offering (IPO) is not so common anymore.
“The investment community is looking for top line growth and gross margins,” McElroy noted. “As long as [the startups] are growing in the 50 percent+ range, they see the next Apple or Google.”
Sudden rise of electric vehicles
The move towards electric vehicles is on the rise, move than ever. Why? Government mandates, McElroy stated.
Countries around the world are pushing stronger than ever to go electric. Some expecting to ban internal combustion engines (ICE) as early as 2025.
Not only countries, but automotive manufacturers as well. Some companies have taken it upon themselves to stop selling ICE by a certain timeframe. For Volvo, they plan to stop by 2025 and Cadillac by 2030.
Banning of ICE challenges
If internal combustion engines go away, many jobs in connection to making them become jeopardized since there won’t be a need for pistons, crankshafts, fuel injectors, radiators, and many other components.
The United Auto Workers (UAW) Research Department reported 30,000 jobs are tied to internal combustion engines that will eventually go away.
“Roughly one out of every three jobs will go away in plants that make electric vehicles,” McElroy noted.
McElroy believes ICE will be around longer than expected — at least 20 to 30 years, noting there are still many factors that EV companies need to remedy such as the need for more charging stations, faster charging times, and the ability to maintain the EVs range in colder temperatures (currently EVs lose up to 50 percent of its range in temperatures around 20 degrees F).
Autonomous vehicles and VTOLs
“They are here, and they are coming,” McElroy said in terms of autonomous vehicles (AVs) and vertical take-off and landing (VTOL) aircraft.
AVs can already be seen around the country such as in Phoenix, Arizona and San Francisco, California. We can expect to see more both level four and level five AVs soon. To note, the vehicle stays within a geofence area for level four, whereas level five means the vehicle can go anywhere.
As for VTOLs, or passenger drones, McElroy said it’s a race to see which country will lead this revolution.
Many automotive manufacturers have already shown interest in VTOLs including Mercedes, Hyundai, and General Motors. By moving to the sky, traffic congestion will be solved and help users move from place to another in a fraction of the time.
