Patrick Dixon - Futurist Keynote Speaker     "How AI Will Change Your Life" - 18th book 

25 Years Experience in Future Trends Forecasting   >400 Global Clients - Every Industry and Region

We've seen huge media headlines in US and EU about "dumping" of low cost e-vehicles by China at ridiculously low prices, and fears for traditional car makers, but the bigger picture really matters. 

A. Major trade barriers against e-vehicle imports will fail

No country on earth will be able to resist for long the flooding of their domestic markets by low-cost e-vehicles made in emerging nations. Why is that?

• Drivers (and voters in democracies) want low cost cars
• For many people, running a vehicle is their largest outgoing each week apart from rent or mortgage on home
• Governments that slap 24% or 50% or 75% or 100% taxes on foreign e-vehicles will be very unpopular
• Short term trade blocks (high taxes) may give local car markers more time to convert to electric vehicle production
• However the risks are not only rewarding their lack of innovation, but also blocking local car makers from global markets as other nations retaliate with import blocks of their own
• Even if the whole of the EU and the US were to block 100% of e-vehicle imports (which will never happen) this will not stop rapid rise of e-vehicle sales across the rest of the world, at rapidly falling prices

B. E-vehicles are very easy to make

A Tesla has only 150 moving parts - including doors, windows and windscreen wipers.  A typical diesel or petrol car contains 10,000.  

It's a highly complex process to burn fuel, turn it into heat, push pistons, and turn engine gears, and billions of dollars of research has been spent on optimising all that over the last two decades. Far more to maintain, or to break.

Compare that to an e-vehicle which has a simple electric motor built into every wheel, connected to a battery, and not much else apart from accelerator and brake pedals, steering wheel, and passenger safety features.

Yes it is true that battery technology is expensive, and huge investments are being made there too.

But batteries are commodities: mass produced and can be bought on the open market by any small company wanting to build an e-vehicle of their own. That is why we are seeing so many new manufacturers of e-vehicles, and we will see many more.

C. Battery costs will fall rapidly

The cost of batteries for e-vehicles fell by 50% in 12 months from 2023-2024, partly because of over-production in China.

But the truth is that lithium battery tech is improving at great speed every day, and prices will continue to fall (with some peaks and troughs along the way).

D. Mass-market sales of e-vehicles will drive lower prices 

As with related tech such as solar cells, e-vehicle prices will fall even faster as volumes increase. We have not yet begun to see full optimisation of e-vehicle factories, powered by AI, linked to next-generation factory robots, using next-generation battery technology.

However, the truth is that many smaller e-vehicle manufacturers will do well without huge investment in robotics / AI, in nations where labour costs are low.

That is because e-vehicles are such basic machines (compared to fuel burning), so assembly lines are easier to set up and run.

It will not be long before we reach a critical point where buying an e-vehicle is the same cost as the equivalent petrol or diesel vehicle, with much lower running costs. This will cause a massive boom in the market for e-vehicles.

E. Our world needs a billion low-cost e-vehicles NOW

In any case, we cannot hope to achieve targets for reduction of carbon emissions without replacing most diesel and petrol vehicles with e-vehicles, which are responsible for 10% of global CO2.

That is why trade barriers against low cost e-vehicles make no sense at all from the environmental point of view.

What this all means for the future of the Auto Industry

No government on the planet is powerful enough to stop e-vehicles from taking over road transport in their own nations. The only question is by when.

While adding huge import taxes may sound like a vote-winner for workers in auto industry factories, the truth is that most governments have gone in the opposite direction, wanting to encourage e-vehicle sales by reducing car taxes etc.

Despite all the above, many nations which produce traditional cars WILL try to impose higher import taxes for a while.

This will not be enough to save some larger auto manufacturers, who will find it really hard to compete with e-vehicle manufacturers in China and India. 

As a result of all this, China, India and other emerging markets will dominate global e-vehicle production within the next decade.

So what should global auto industry giants do now?

All large, traditional auto companies will follow the same 10 strategies over the next 5-10 years in a fight to survive:

1. Close down almost all research and development into better diesel / petrol engine

2. Abandon plans to launch new models of diesel / petrol vehicles - except minor improvements on existing ones

3. Invest in building / expanding their own battery factories - expect greatest auto industry investment / innovation here

4. Invest in their own supply chains of precious metals needed for their own auto industry battery factories - major risks here

5. Try to develop up-market competitors to Tesla range, maintaining premium prices / "brand value" for new cars and lorries

6. Invest in hyper-efficient, AI-driven, robotic e-vehicle factories to try to compete with nations where labour is far cheaper

7. Slash auto industry management costs / overheads to absolute minimum - again aiming to reduce prices further

8. Collaborate, partner or even merge with auto industry competitors to give added global scale and speed towards 100% conversation of the auto market to e-vehicles

9. Exploit related opportunities - as Tesla has done. For example, selling huge battery blocks on their own to national electric companies to balance loads from wind and solar power

10. Encourage every state subsidy / support for the local auto industry that they can get hold of - ranging from grants to import taxes on e-vehicles from foreign competitors 

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