Tesla's rise made 2020 the year the U.S. auto industry went electric

By Joseph White
DETROIT (Reuters) - Tesla Inc and Wall Street made 2020 the year the U.S. auto industry chose to go electric.
Tesla's market cap surged to over $ 600 billion. That made the once shaky startup founded by billionaire Elon Musk worth more than the five best-selling global automakers combined. The exclamation point came on Friday as Tesla hit a record high in frantic trading ahead of the stock's much-anticipated entry into the S&P 500 benchmark index.
In 2021, all signs point to the industry accelerating its shift towards electrification. This turning point is as historically significant as the start of Ford Motor Co's moving assembly line for the 2009 Model T or General Motors bankruptcy.
Tesla's rise came the same year that activist hedge funds and other investors put pressure on companies to fight climate change. There is growing evidence that more investors have come to the conclusion that the centuries-old dominance of internal combustion engines - "ICE" in industry parlance - will end within a decade.
From London to Beijing to California, political leaders also endorsed plans to phase out pure combustion-engine vehicles as early as 2030. The pressure to cut greenhouse gas emissions undermines the logic for significant new investments in ICE engines. In the US, UK, Germany, France, Japan and other countries, thousands of manufacturing jobs are currently tied to internal incineration.
Other powerful forces also shook the status quo of the auto industry that year. The COVID-19 pandemic has wiped out the sales and profits that incumbent automakers had expected to fund methodological transitions to electric vehicles. China's rapid recovery from the pandemic was an even stronger drag on industrial investment.
Are the consumers plugging in?
That was the year GM CEO Mary Barra and other top industry executives began repeating Tesla's Musk. They said that electric vehicle battery costs could soon reach parity with combustion technology. However, it remained to be seen whether consumers, particularly in the US, are ready to say goodbye to petroleum-powered pickups and SUVs.
The best-selling vehicles in the U.S. are still large petroleum-burning pickups. Demand for these vehicles fueled a rebound in Detroit automakers after the pandemic forced factories to stall in the spring.
The best manufacturers of electric vehicles and batteries could launch models that match the up-front costs of incineration as early as 2023, broker Bernstein wrote in a report.
"The ICE game is over with BEV ~ 2030," wrote Bernstein's auto analysts using the industry acronyms for the internal combustion engine and battery-electric vehicle.
The move to electric vehicles is accelerating a parallel conversion of vehicles into largely digital machines that derive much of their value from software that supports rich visual indicators and functions such as automated driving systems.
Centuries-old manufacturers like Daimler AG are trying to recruit programmers and artificial intelligence experts across the industry.
The ability of software to manage autonomous driving systems, the flow of electricity from batteries, and the flow of data to and from vehicles is replacing performance as a measure of the performance of vehicle technology.
Tesla's use of smartphone-style wireless software upgrades was once a unique feature of the Silicon Valley brand. In 2020, the best-selling model line in the US, the Ford F-150 Pickup, was redesigned to offer wireless software updates that make the technology as mainstream as possible.
The pandemic and China
In the best of times, conventional internal combustion vehicles would have incurred enormous costs and disruptions for their workforce to evolve into electric, software-intensive vehicles. But the shock from the coronavirus pandemic gave manufacturers much less money and time to adjust.
The consulting firm IHS Markit predicts that global vehicle production will only return to the level of 2019 in 2023. Automakers will produce 20 million fewer vehicles by 2023 than they could have built if production had stayed at 2019 levels.
"Only the most agile with a Darwinian spirit will survive," said Carlos Tavares, head of Peugeot SA, who will lead the combined Peugeot and Fiat Chrysler when this merger is complete.
The pandemic also increased the importance of China for the future of industry. This country's rapid recovery from the pandemic added attraction to its huge auto investment market, despite anti-China rhetoric from US and European politicians.
China's drive to reduce its dependence on petroleum is forcing automakers to shift investment in battery-electric and hybrid vehicles, and to move design and engineering from traditional hubs in Nagoya, Wolfsburg and Detroit to Chinese cities. Tesla said it will set up a design and research center in China.
Ola Kaellenius, CEO of Daimler AG, put it bluntly in October: "We have to review our production site and move our production where it makes sense," he said during a video call. “Last year we sold around 700,000 passenger cars in China. The next largest market is the US with 320,000 to 330,000 cars. "
(Reporting by Joe White; Editing by David Gregorio)

You should check here to buy the best price guaranteed products.

Last News

Forecasters warn of 16-foot waves on Lake Michigan, ‘life-threatening’ conditions and the possibility of beach erosion, flooding

When the stock market pulls back, keep buying — especially these five companies

Watch: Ryder Cup range interaction between Brooks Koepka, Bryson DeChambeau hints at restored relations

Biden says U.S. "ready to work" with nations to solve problems in U.N. speech

Freerunner Pasha Petkuns bounces around in giant “human pinball” machine

What to expect from the September Fed meeting