Even Though we may believe that it may take EM to follow DM by decades.It may not be so in future.Best example has been the growth in smart phones .If the cost Vs performance with better technology gives a unbeatable proposition markets will boom.Battery technogies are being rapidly upgraded.Sooner than later this will give unbeatable advantage of EV over ICEV.Parallelly Solar energy reaching grid parity will make it a complete green solution .it is interesting to watch how stalwarts of ICE technogies like Bosch prepare for this.Except for the IC engine and its components makers all other part makers like AC, Electricals etc may not see disruption effecting them
Praveen,
I never said EMs will follow DMs by decades in technology adoption. The EV technology cost curve needs to develop further until 2018 or 2019 for mass adoption to become a reality in DMs itself. For EMs it will take a while longer. Take the example of the $33000 Tesla Model 3 coming out in 2018, that is a Rs. 21.78 lac car before import and custom duties. That is not a mass adoption car for India. The mass adoption EV will need to be made in India for India. That will require huge investments in battery technology which are not present currently. Then there is the support infrastructure needed of charging on the go and uninterrupted power supply at such stations. Solving these problems from an Indian perspective will take some time and cannot be solved all at once. That is why I suggested multiple 5 year frameworks to forecast what developments will happen when.
As for solar energy, there are multitude of problems affecting the technology that is stopping its mass adoption. We have to careful with terms like grid parity as to see how it is defined. I recently came to know that when solar project promoters talk about grid parity they are referring to the generating capacity at the peak of the day rather than as an average. Further problems involved are the intermittent nature of supply (due to clouds) and lack of dependability at certain times.
Same problems affect wind power, as one has no control over the speed of the wind. These create huge problems in predicting and maintaining power supply in a constant and uniform fashion.
So I am skeptical of a complete green solution. However pairing solar and wind with industrial size battery storage maybe the answer but again the batteries add to the already expensive solution. Other forms of power storage like pumped hydro and steam are promising but less efficient than battery solutions due to conversion of electric power into other forms of energy (potential) and back to electric has its energy losses.
I do agree with you that other traditional automotive systems like the electrics, pneumatics, sealing systems, and many others should be safe in the advent of EVs.
I personally do not think ICEVs will be eradicated completely from existence, there will be old timers and enthusiasts who would still want to enjoy an old gas guzzler. And maybe with cheaper fuel it will not be cost prohibitive. Would like to hear all your views on this.
On a side note do watch this very interesting and informative video:
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Just read an article about the next big disruption happening at a very rapid pace in the auto industry - Driverless Cars. And the timelines has shifted from decades to couple of years!!
My feeling is that the driverless cars would disrupt the industry first, until the time an efficient, reliable and economic battery innovation to power the automobiles is found out.
Is anyone aware of any startups/listed companies in pursuit of driverless tech.?
SOURCE: Fortune India Augâ16 issue. Article: âSome Assembly Requiredâ
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It is highly simplistic to assume that electric cars would upend 90% of auto ancillary companies. Such thinking - similar to peak oil thesis- does not take into account the 2nd and 3rd order effects of major changes.
While electric cars will not use the transmission system ( crankshafts, pumps, fuel injection systems etc.) of a conventional car, there will be plenty of sensors and other electronic components that they would need. Regular accessories such as mirrors, lamps, blow moulded plastic components in car interiors etc will all be needed.
I recently test drove a Tesla model S in San Francisco and found the interior of the car similar to any BMW or Audi.
Furthermore, over the years change has been a constant for auto ancillary companies - e.g in fuel injection technology, sensors replacing cables/switches, alloys replacing steel in wheel rims etc. They arenât going to sit around twiddling their thumbs as new technologies come up. Most will simply switch to manufacturing new parts in demand. As a recent example, Bharat Forge is using its oil and gas component facility to make aerospace components.
Since Boeing was founded 100 years ago in 1916, Aviation technology has changed unrecognisably however the company still continues to dominate.
The best auto ancillary companies today will continue to do well electric car or not.
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Devansh,
Excellent point. I was unable to find the article though. Would you mind sharing it with us. Thank you in advance.
I wish I could. Just read it today. I have Magzter Gold subscription but I donât know how to share complete articles. I tried, but I can only post one screenshot at one time.
Oh no problem. I thought it was available freely. Thanks anyways.
YesâŚThatâs it !! Whatdâ you think about it?
Abhinav
i think cost curve will definitely develop at a much faster rate than the earlier instances because it is no more only automobile companies but all kinds of companies chasing this technologies. I remember to have read that many chinese companies ( Xaomi, Leco ) are all raising R & D capabilities for EV. Tesla Model 3 costing $33000 ( Rs 21,78 Lacs) is the first disruption in the costing of EV and as more and more players come in and battery technologies develop cost curve will drop further.As far as india is concerned you can just see the lap up of audis and high end SUV in the urban markets proves that there is a latent demand for this cars if marketed well.As you rightly said mass adoption can only come in with price and ease of use compared to ICV.Indian perspective will definately take time due to infrastructure problems.But with the new governments focus on power sector we may be progressing very fast.All said and done it may take up to a decade for EV to make some inroads in India.But if some government support is fortcoming like in solar projects it may move happen earlier.
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Devansh,
The article was a good amalgamation of all the innovations and efforts of automobile companies to turn into driverless mobility companies. Like the article says that currently a car ownership has the worst asset utilization in the global economy of 4%. This is a very big factor that could bring down carbon emissions from transportation sector in a big way even if all those driverless cars are not EVs. Particularly liked the fact that with no parking needs we could have bigger and greener streets.
Now if I try to look at a mobility service provider company from an investor point of view I would be skeptical but that is perhaps my conservatism playing out. I see a big challenge in the form of regulations and not just in the center but from local city economies. Just imagine if all the drivers lost their jobs. There should be repurcussions.
It must be mentioned as well that the same was said about UBER by early VC investors. They missed the opportunity to invest citing repurcussions from the local taxi driver unions and while this has played out in some local pockets overall globally the BM has been accepted and successful. But going driverless will displace a lot more jobs and the repurcussions are a big concern for me.
I read somewhere else that Autonomous cars require clear lane markings to drive properly. If that is true their will be trouble for driverless cars in certain patches.
Just got to wait to see how it plays out. Exciting times we live in.
Chao.
Of course there will be repercussions. Wonât be a serious disruption until it happens, people lose jobs, get pissed off etc. THAT is the nature of disruption. And that is what always happens when things/processes become more automated/machine based.
Take for example the case of Tonga-Wallahs. Whatever happened to them by the car would happen to the drivers by self driven cars, i.e. drivers would become extinct!! Now, you see tongas only near villages, Old Delhi 
and few other niche places. Same would be the case with drivers. And no doubt, the drivers out of jobs would sure find different/new jobs. Like, with the advent of computers, so many jobs were taken which were manual and labour intensive. Doesnât mean that unemployment increased (I may be wrong here, havenât checked the stats, but going by gut feeling here). Efficiency increased and people found new ways to be productive and earn more money.
True there would be challenges. But, Govts. would go the extra mile to implement it due to many incremental benefits, more time â> more efficiency/productivity, safer roads, lower car ownership ----> lower street congestion, greenery⌠the benefits are numerous.
The teething problems, would definitely be worth it.
Devansh you will find this interesting.
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E verito launched by Mahindra. Though itâs kind of a proof of concept right now. But interesting to keep track of future developments.
Yes Abhinav, exactly my line of thinking!!!
I thought the following in my head the first time I thought about this situation. (Copy-Pasting the last para of the article)
"If self-driving cars make taxi rides a lot cheaper, people will take a lot more taxi rides. And that could create more jobs even if the number of jobs per ride goes down. In the long run, there wonât be someone sitting in the driverâs seat, but there will be lots of other jobs supporting cars â things like maintaining, repairing, and cleaning the vehicles, handling customer service calls, keeping maps updated, and so forth.
Some jobs will be destroyed; others will be created. The net impact on the job market isnât obvious."
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What would you say are the transferable skills of a driver who has been displaced (made redundant) and is now looking for a new job completely out of his area of expertise.
I think, jobs loss is one tangent of the Huge disruption about to happen in the transportation industry. And not so important IMHO. We need to re-focus the discussion on the areas probable to gain and those probable to lose out the most.
Mostly, we need to refocus the discussion on the wheat, instead of the chaff⌠
No trade deficits -> Exchange rate stabilisation (even Rupee appreciation, as India gets a lot of remittances from Indians abroad and Foreign investments) -> Unfavourable for exports , Control on inflation , Low interest rates etc.
Speculating on impact on tyre industry. Growth in tyre industry comes from new car purchases and replacement demand from wear and tear. If transportation becomes more like a utility service where mobility is available on demand almost instantly then car ownership is predicted to reduce. With time most of this demand shall be replaced by the car fleet additions to be made by such mobility utility providers but it is difficult to say whether new purchase demand will increase or decrease without running the numbers. For a few years when the transportation system is absorbing and adjusting to the addition of fleet cars, the new car purchase tyre demand should increase. After a few years with slowdown in private car ownership, fleet car additions would dictate the majority of new purchase demand.
Now replacement demand is a factor of total distance driven and fleet cars will be driven much much more than single ownership cars, so replacement demand arising from wear and tear should increase. But since the total distance driven as a population should be remain constant, we may see increasing portion of replacement demand also coming from fleets but overall replacement demand as an economy should be constant. However, this will bring trouble for tyre manufacturer, before mobility services they used to have a wide fragmented client base who had no pricing power. Now, with car fleets concentrated between a few companies the tyre purchasers should have increased pricing power to ask for better prices.
Additionally, the whole distribution network may be made redundant with no need for multiple retailers, wholesalers and distributors in local geographies. All this is speculation of course.
Any thoughts?