Where does the automotive industry from here?


The reason why people are going from point A to point B is about to undergo the most radical change since the first cars replaced horses. Self-driving vehicles are about to change the way cars are driven, powered and used. In the future, many more people will probably buy rides instead of cars.

For General Motors (GM) and the rest of the auto industry, this imminent change is an existential threat.
That 's why GM has announced plans to close five plants in North America and to cut about 14,000 jobs by the end of next year: not because GM has problems today. 39, but because it will be soon it does not release the money it needs to radically change its business.

Autonomous cars will accelerate the shift from gasoline cars to electric cars. Sensors and triggering computers will need electricity rather than the power of gasoline engines.

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The concept of owning a car could also change. Today, private cars spend most of their lives parked and unused. Autonomous cars of the future should be on the roads for a larger part of the day – once they drive you to work, they can drive someone else to the grocery store. This means that the roads could be filled with fewer vehicles in general.

This could be a great opportunity for the auto industry: automakers could sell attractions rather than cars.

Last year, GM president Dan Ammann said his company earned an average of $ 30,000 per car built, between the selling price and maintenance. By selling driverless vehicles, he said GM could earn hundreds of thousands of dollars per car.
But there are other companies that hope to be the ones selling these rides. All of this technology and change is attracting new players to the field, including early-stage manufacturers such as Tesla (TSLA) and high-tech companies like Alphabet (GOOG), Apple (AAPL) and Uber.
When CNN Business asked Dara Khosrowshahi, CEO of Uber, to give him his prediction in 10 years, he replied, "Let's hope you do not own a car." He sees Uber, not GM, as the company that goes move people.

The race is on

The battle to provide the vehicles of the future belongs to traditional manufacturers such as GM and Ford (F). GM has changed its motto to "Zero Crashes, Zero Emissions, Zero Congestion", a sign of the transition to autonomous electric vehicles.

But it's a costly gamble – probably too expensive to finance by automakers with the way they currently handle business. And automakers will receive limited revenues from these futuristic vehicles over the next few years, if not decades.

This is the reason why automakers are looking to reduce their existing costs.

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"We believe these steps are necessary to ensure GM's long-term sustainability and independence," wrote Adam Jonas, Morgan Stanley's automotive analyst, in a note to customers.

GM says it should save $ 6 billion a year thanks to measures announced Monday. Ford said it plans to spend $ 11 billion over the next three to five years to reorganize the company, although it has not yet announced the changes and reductions it will make to release the money.
Ford is also discussing with Volkswagen a kind of alliance to share costs, with the exception of a full merger.
GM is also looking for new partners. It has set up a separate part of the company to focus on this new technology and has sold large holdings in Softbank and Honda (HMC).


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