The Future of Cars Is Still Bright

Predictions about the future of automobiles are pouring in. News reports say that new technologies such as batteries will reshape the market in the years ahead. In fact, companies are also increasing investment in related fields, creating the sense that some astonishing change is just around the corner. Will conventional automobiles really lose their competitiveness and be replaced by innovative products?

Today’s automobiles are the result of having been tested by consumers over a long period of time. The efficient production system developed by the Ford Motor Company in the United States made mass production—and consequently mass consumption—possible. Consumers were able to own cars at low prices, ushering in an era of abundance. It can truly be called the crowning achievement of the Industrial Revolution.

Even afterward, advances in mechanical engineering enabled people to drive ever more fuel-efficient cars. As fuel efficiency improved, consumption of oil resources declined and air quality improved as well. Advances in soot collection technology also greatly reduced automobile emissions. Indeed, if one looks at the urban environment in advanced countries, pollution caused by automobiles is not all that serious.

In the 2000s, oil prices rose to around $100 per barrel. As the burden of vehicle maintenance costs increased, cars that lowered the cost of ownership sold well. Consumer preferences shifted toward lighter cars and more fuel-efficient cars. During this period, the practical need for alternative energy also came to the forefront. Various investments were made, and shale gas was the fruit of those efforts. With the emergence of shale gas—something no one had predicted—wind, solar, and tidal power, which had attracted attention as alternative energy sources, came to be seen as merely alternatives after all. Oil prices fell, and the cost of maintaining a car also declined.

Although maintenance costs fell again, once consumer preferences had changed, they continued to generate demand for new kinds of automobiles. Hybrid cars can be said to be the best-selling vehicles reflecting that demand. They are not a fundamental transformation, but by improving economic efficiency while also taking environmental factors into account, they won consumer choice. As this preference for energy-saving vehicles continues, interest in oil-substitute vehicles is also coming into focus.

Representative oil-substitute vehicles include electric cars and hydrogen cars. Electric vehicles, which run on stored electricity, and hydrogen-powered cars carry an image of being environmentally friendly. But are such cars really the protagonists of the future? In people’s preferences, the most important considerations are economic efficiency, energy costs, and environmental factors, in that order. In other words, alternative energy and the environment are only secondary factors in consumer choice. People still want cars of better quality that cost less.

In fact, if one looks at the history of industry, there are many cases in which qualitatively superior new products emerge, rather than people changing their choices simply because resources have become scarcer. Innovation that satisfies demand on a new level is the fundamental driver of industrial development. Conserving and saving resources is, of course, natural and desirable, but that alone is not enough to play the central role in paradigm-shifting change.

Around the world, support for electric vehicles is booming. Governments are setting budgets, making plans, and implementing them in order to promote the spread of electric cars. But this is an outdated way of thinking. Automobiles are everyday necessities used by everyone, so they are not goods for the government to distribute. If a government goes so far as to threaten to ban the sale of anything other than electric vehicles, that is nothing less than an attempt to control consumer choice.

Change must be driven by consumer choice in order to be sustainable and efficient, and only then can it protect the environment as well. For the long-term establishment of a sustainable business, the kind of car that will be the car of the future must be decided at consumers’ fingertips, not by the government.

Companies must be able to respond flexibly to such consumer choices. The government’s role is to help firms maintain the flexibility to transform themselves anew. If that happens, the future of our automobile industry remains bright. The automobile of the future is highly likely to be reinterpreted from the perspective of mobility. No one knows when the tipping point that explosively reflects that change will arrive. Nor do we know its direction yet. But one thing is clear: for the government to try to present that direction in place of consumers is nothing more than intellectual arrogance.

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Original title: 자동차의 미래는 여전히 밝다

Author: Sung-no Choi

Date: 2021-02-15

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=23504