Future of Cars – Steel or Silicon (Part 2)

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In the first post in this series I discussed that America’s future might not depend on steel and aluminium but more in terms of silicon. Certainly there is a number of competitors vying with America over who can make the most efficient and profitable cars.

The West has ruled the world of cars for almost a century, seeming to own the “Internal Combustion Engine” (ICE). The East can only compete if the combustion engine becomes redundant, and unfortunately for us, this is the way things might be going.

The country which makes the most cars is currently China with approximately 28,000,000 being made in 2018, while the US made 11,000,000. (Largely due to Chinese tax breaks and subsidies.) You won’t have heard the cars made in China though, the Wuling Sunshine for instance as is it made only for the domestic market.

Chinese computer industry has often relied on re-engineering technology invented in the US and Europe. However, as the car market blends with the computer industry greater investment is justified in original R&D. Self-driving (or AV) cars are spurring much greater investment. Electronic Vehicles (EVs) are also driving this new interest. China has factories dedicated to making lithium-ion batteries, a necessary part of all electronic vehicles.

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Japan

The biggest player in the East around the 1970s was Japan – it was one of the Big Three countries (the other two being the US and Germany). In the 1980s they remained popular, but they now had competition from China. The autonomous driving is big here, with technology creating self-driving buses and trucks.

While Japan focused on exports, China had to build a domestic economy so they could sell something as expensive as a car to their own people. In other words China was rich in people and the more affluent the people become the more they can sell cars without shipping them great distances. That allows them to come from behind in the car sales race.

South Korea

In the US they have Detroit. In South Korea they have Seoul. 15 million square feet is dedicated to five factories which produce Kias, Hyundais and Genesises. Although South Korea’s rise is about cheap cars, which does come to the price of steel and aluminium, it is all about innovation too, they have even created an innovation center in Silicon Valley itself.

 

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As far as cars go, the investment seems to be in hydrogen fuel-cell vehicles and self-driving. The Korean government is funding what is known as a “K-City”, a testing area for self-driving cars and buses with a number of urban areas and other features built in.

India

The Indian car technology might be looking at more sustainable systems. One such idea floated in recent years is a car that runs on water. This could be India’s chance to get ahead of China and Japan. There are also a number of hybrid and electric vehicle factories planned.

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Other Competition outside the East

The US’s competition might also lie with Brazil, which is the biggest manufacturer of “flexible fuel cars” in the world. Flexible fuel cars shouldn’t be confused with hybrids, they are designed to work on either gasoline or ethanol (note the price of ethanol makes them more efficient to run a car than gasoline). Though I did say don’t get confused with hybrids, I should warn you that the Toyota Corolla will work on hybrid flex-fuel, in other words, either electric energy or ethanol.

So can the big giants in the US take on these innovative countries? Maybe, if they stop thinking it’s all about the substance of the car. It’s how it moves, how it operates too, what it runs on, and how you build it.

 

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