Original equipment manufacturers (OEMs) can still compete in the race for electric and autonomous mobility if they make the right trade-offs and establish strategic partnerships.
FREMONT, CA : Original equipment manufacturers (OEMs) are racing to keep up with tech firms as they have secured their areas in the fast lane of an electrified, autonomous world.
As some OEMs race to keep up with digitally savvy and cash-flush tech companies, the Covid-19 pandemic threatens to restrain their advancement. Cash conservation and cost containment are now top priorities, necessitating careful planning and development of R&D and capex investments. This inevitably requires difficult decisions.
The choices taken by automotive leadership teams in the following months will be crucial in deciding their future competitiveness. With so many options, no single company can afford to win each battleground on its own. OEMs can do a couple of useful things right now to reorganize themselves for the upcoming EV- and AV-driven future. It begins with evaluating the opportunities, deciding where to play, and making the necessary investment trade-offs and collaborations to remain competitive in their chosen space.
How OEMs can stay in the race
OEMs have reached a critical point caused by the pandemic. Leadership teams recognize that they have little or no financial cushion and that their choices in the coming months will probably decide the business's future.
They also understand that few, if any, businesses presently have the funds to invest in the wealth of opportunities presented by the development of both EVs and AVs, necessitating difficult decisions. Even those with the scale and abilities to break into both segments will need to focus on areas of brand differentiation if they are to surpass strong tech competitors.
OEMs can take a few prompt actions for electric vehicle investments to sustain the market and prevent regulatory penalties.
Here are some of the actions taken by OEMs.
Decrease complexity and costs to manage higher costs of EVs-
Top automakers will decrease their product lineups and change their investments to abilities that distinguish the brand in the eyes of consumers.
Win new customer segments-
OEMs can connect with customers directly through advanced new business models like subscription services. Other programs, such as flexible leasing, can compensate for higher EV prices and attract new customers.
Strong collaborations can assist manufacturers in planning for next-generation batteries and securing expertise in cell technology and manufacturing.