As we look at the next four years, in the waning days of the pandemic and beyond, the automotive industry will look quite different. While COVID-19 has put a lot of changes in motion, there have been some long-term shifts for quite some time. In fact, in some ways, the global pandemic can be said to have accelerated trends that experts have already been noting. Let’s take a closer look at some of the industry trends we can expect to see in the coming years, as reported by ExplodingTopics.com.
1. Electric Vehicle Adoption Will Grow Significantly
One of the biggest trends in the global automotive industry is the shift to EVs, or electrical vehicles. According to ExplodingTopics.com, searches for “electric vehicles” have increased 272% over the last five years. The International Energy Agency (IEA) also reports that even in the midst of the COVID-19 pandemic, EV sales continued to grow to 3 million units in 2020, representing over 4% of total sales, with European and Chinese markets leading the way. This is a growth of 40% year-year-over compared to 2019.
According to Bloomberg New Energy Finance, EVs are expected to make up 10% of all new car sales by 2025 and 58% by 2040, driven largely by regulatory legislation issued by countries who are striving for net-zero emissions by 2050.
2. Autonomous Vehicles Will Be a Disruptor to the Automotive Industry
While the AV (autonomous vehicle) industry may appear to be just getting started — with just 1,400 self-driving cars on the road today in the U.S. — experts are projecting that by the year 2040 there will be 33 million AVs on the road.
And that’s just taking into account fully autonomous vehicles. Driving automation standards are currently categorized by The Society of Automotive Engineers (SAE) on a scale from Level 0 (no automation) to Level 5 (full automation). In 2019, there were 31.4 million Level 1 vehicles on the road, and this is predicted to grow to 54.2 million by 2024, according to International Data Corporation (IDC).
Some of the largest automakers, such as Tesla, Alphabet, Ford, GM, and Volvo, are already active in the AV space. For instance, Waymo, a subsidiary of Alphabet Inc. started a robo-taxi company in Phoenix in October 2020. At the same time, consumer and regulatory bodies such as the National Transportation Safety Board (NTSB) are raising concerns, which may prove to be a challenge to self-driving vehicle makers.
3. Consumers Will Prefer to Buy Their Vehicles Online
Just as in other industries, eCommerce trends — which have been accelerated by the pandemic — are changing the way automakers and dealers are selling vehicles.
92 percent of people who purchase a car do online research before buying. Not only that, an increasing number of vehicle sales are happening online without shoppers stepping foot into a dealership.
Just look at Carvana, who sold 244,111 cars in 2020 — up 37 percent compared to 2019.
And consider Tesla, who made the decision to close its stores even before the pandemic in 2019 in order to sell cars online instead.
With these trends, more and more OEMs and dealerships are adopting or enhancing their digital retail experience.
While the automotive industry has seemed rather stable for the past decade, in truth, changes have been under way, and the pandemic has accelerated many of them. The three trends above are sure to cause major waves over the next several years. While the changes might seem overwhelming at first, they’re sure to keep things interesting for automakers and dealers. By being aware of the trends, you’re already on your way to preparing for them.