Old Year Wrings Out Auto Industry

The auto industry hasn’t had a year like 2019 in quite some time, if ever.
Mergers. Alliances. Plant closings. The longest, largest strike in decades.
And all of that activity was at least partly driven by the biggest change in the industry in more than a century: the move toward electric and self-driving vehicles.
“It’s been a hell of a year,” said Kristin Dziczek, vice president of industry labor and economics for the Center for Automotive Research, a Michigan think tank.
Changes to the industry had been forecast for years, but this was the year that the industry started to spend big dollars to get ready for that future, she added.
“A lot of the plans made in 2019 are going to be played out over the next decade to create a much different auto industry,” Dziczek said.
The companies are committing billions of dollars to develop the next generation of vehicles. GM’s three US plant closings during the year, which sparked a costly 40-day strike, were done to free up the money it said it would need for the those vehicles. Volkswagen’s Audi brand and Daimler Benz, announced plans to cut thousands of jobs each, as they move toward electrification and autonomous driving.
“What we’re seeing in 2019 is the industry preparing for its future,” said Jeremy Acevedo, senior manager, insights, at Edmunds. “It’s been a year of cleaning house and making some pivots to stay viable as the technology hits the industry.”
The need to develop vehicles has also prompted deals that will reshape the look of the industry for decades to come. The year ended with Italian American automaker Fiat Chrysler and French automaker PSA Group agreeing to a merger to create the world’s third largest automaker. It’s a move driven mostly by the need for both companies to get larger and share the cost of developing the next generation of cars.
Volkswagen and Ford, meanwhile, have agreed to an alliance to similarly share resources.
And money has started to come into the sector from deep-pocketed tech companies outside the industry. Amazon invested in startup Rivian, which plans to make electric pickup trucks, as well as in Aurora, a self-driving vehicle technology company.
The investments by the established automakers for electric and self-driving vehicles also dwarf anything they have done in the past. Volkswagen started to unveil a flood of what it says will be 70 electric cars it plans to roll out over the next decade, a plan it says will make it the largest maker of electric vehicles. It would dwarf electric-only rivals like Tesla and BYD in China.
But Tesla isn’t standing still. It is constructing its second assembly line in Shanghai, announcing plans for a third assembly line in Germany, and unveiled plans for a lower priced SUV, the Model Y, and an electric pickup — the Cybertruck. Tesla CEO Elon Musk predicts sales for the Model Y that would make it the bestselling SUV — gas or electric — in the United States.
The Cybertruck won’t be the only electric pickup on the market. Ford and GM have both announced plans for electric pickups. GM will build its truck in a Detroit factory that it had been planning to close. Ford has plans for an electric version of the F-150, the bestselling vehicle of any kind in the United States every year over the last four decades.
The fact that the US industry is making these changes proactively, rather than waiting for change to overtake them, is perhaps the most surprising aspect of this transformation, said Acevedo.
“These guys are notoriously flatfooted in terms of change,” he said. “It’s years and years down the line before the majority of cars are electrics or self-driving. But we’re seeing actions and not just words.”