Driverless tech’s ups and downs post pandemic
The pandemic has hit almost all economic sectors globally but it has had an especially harsh effect on automotive.
It has been called the single biggest risk factor facing the autos industry for many years, with global light vehicle sales forecast to decline 22%, to 70.3 million units, in 2020. Given the uncertainty surrounding the long-term effects of the pandemic, it remains difficult to say when global economies will return to their pre-virus levels.
The crisis has had a withering effect on AV development. For example, the Ford postponed for a year the commercial deployment of its AVs; Waymo, the self-driving unit of Google parent Alphabet, suspended its on-road testing in Arizona; and Uber Advanced Technologies Group announced layoffs of 3,500 workers because of the pandemic.
More generally, the potential damage to the sector is daunting:
- A global recession resulting from the epidemic may greatly undermine consumer confidence, which will impact carmaker revenues and profits long-term;
- Auto manufacturers may be forced to use capital to support ongoing operations, taking much-needed funds from R&D;
- Suppliers facing liquidity issues may succumb to rapidly deteriorating market conditions, causing widespread disruption and possibly catastrophic across the entire global automotive manufacturing ecosystem.
If that last item sounds overly alarmist, it should be noted that suppliers were already enduring hard times before the epidemic. Nearly all of them suffered year-on-year declines in operating profit in 2019 and many appear to lack the cash and assets on hand to cover financial obligations for far beyond the summer.
To read the complete article, visit TU-Automotive.