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Home / Business / For the Detroit Auto Show (NAIAS) – Quartz, all signs point to this

For the Detroit Auto Show (NAIAS) – Quartz, all signs point to this

There was not much to show this month at the North American International Auto Show in Detroit. Only 30 new cars started in front of partly empty congress halls, compared to 69 in the previous year. Many brands did not show up. Audi, BMW, Mercedes-Benz, Volvo, Porsche, Jaguar, Land Rover and Mitsubishi were official no-shows and were replaced by pop-up cafes and bored-looking visitors.

There were highlights – Ford's Mustang and Toyota's bright Supra – watchers were not friendly. The Detroit Auto Show is "full of gas," judged Michelle Krebs of Autotrader. Morgan Stanley analysts described it as "incredibly quiet." Velodyne LiDAR, an automotive supplier of self-driving automotive sensors, had banned Detroit from "thinking".

In the US, the auto industry – or better, what is known as the "mobility industry" – moves westward. Analysts generally summarize the future of the auto industry in three categories: electric, autonomous and shared. One day, it is said, fleets of self-driving electric vehicles will patrol our roads to pick up and unload passengers on hail services controlled by our phones, overcoming the need to own cars for millions of people. Of course, this vision is decades away, but almost none of the new technologies needed to make it happen is based in Detroit. That belongs to Silicon Valley. And China. And wherever the digital economy has taken root.

You'll find them at the annual Consumer Electronics Show (CES) in Las Vegas, the new Nexus for technology and cars, and at the LA Auto Show. At this year's CES, which took place earlier this month, Mercedes-Benz unveiled a new tech forward CLA class for 2020 with driver assistance and infotainment systems. Uber spoke flying taxis. Audi came to Disney to design a VR experience, and Hyundai sent an ambulance that runs on moving legs.

The Detroit Motor Show seemed to be stuck in 2010. For one thing, she was not an auto saloon everything. Most of the big announcements this year were for gas-heavy trucks and sport utility vehicles (or high-performance vehicles that are unlikely to be in the garage of people without an existing car collection). This is still the most profitable niche for US automakers, but not many analysts expect a bright future as profits in services, entertainment and electric vehicles increase. That was remarkably close in Detroit this year.

The spectacle was not so intoxicating. Apple has set the new standard for major product launches and none but the Tesla automotive industry has achieved this. Buyers want an event and a stunning digital experience. A conference-based product launch seems almost passé.

Why start in an almost empty convention hall in the winter when you can organize your own party? In 2016, Tesla redefined the car debut with the introduction of the Model 3. It was the most successful event of its kind in history, bringing the automaker around 400,000 customer deposits worth about $ 4 billion. That was still years away from production for a car. Now the model steals 3 market shares from Toyota, BMW and others.

Tesla boss Elon Musk "is creating a whole new segment of vehicles," Toyota World Congress Jim Lentz said this month at the Automotive News World Congress 2019 in Detroit. "Those of us who just separate the world between luxury and non-luxury miss the point. Tesla has created this new category of technology-driven product. Of course, the automakers want some of this magic, but at the North American International Auto Show this is unlikely. This is the last winter version of the event. The 2020 show will take place in June to attract a new audience, but it may not be enough. The car manufacturers are already following Tesla. This week Ford made its own debut for the redesigned "2020 Explorer" in a stadium continuing from the main event in his hometown.

It could be that 2018 is considered the year in which the auto industry has given up the good old days. Last year, sales in the US fell into negative territory after four years of strong sales but no growth. Worldwide, the car industry went into retreat. The Royal Bank of Canada (RBC) says production figures have fallen in two consecutive quarters. This is the first time since 2009. Hopes for a recovery in 2019 are tempered by the US-China trade war, rising credit and input costs, and a weakening demand in China, where annual car sales declined for the first time in 20 years ( paywall).

The internal combustion engine has now begun its long farewell. Merrill Lynch analysts warned that investors would miss out on Detroit: why do they go, they argued, as the combustion engine was condemned to a "fairly predictable obsolescence curve"? If someone predicted a top investment bank a few years ago Detroit's core technology would be irrelevant to investors' future plans.

However, this is the conclusion that many of the world reach. Gasoline cars will carry the Americans around with them for decades to come. The acceptance of electric vehicles in the US (only about 2% of new sales) is mainly driven by enthusiasts and subsidies. In China and Europe, regulators are preparing rules to ban traditional cars from their roads while spending billions of dollars to accelerate this transition.

In China, fossil fuel vehicles may have peaked, RBC analysts said. The sale of new vehicles, China's category for CO2-free vehicles, now accounts for 4% of total sales. All-electric vehicles are expected to reach 66% of world sales by 2050, according to the bank's estimates. Even the diesel enthusiast plans that a quarter of his cars will be electric by 2025.

Detroit is now sandwiched between two worlds. Self-driving cars and electric vehicles are not quite here yet, but there is no turning back. Ford and GM have announced massive investments in every area, as well as massive restructuring plans ($ 11 billion and $ 4 billion, respectively), including redundancies and formwork factories. But it may not be enough.

Technologies are far more expensive than expected, and competition from non-traditional suppliers is heating up. Volvo, owned by China's Geely, aims to absorb more of the US truck fleet of commercial electric vehicles by 2020. Of course, Tesla is in the process of building its own range of Electric Model (Y) crossovers, pickups, and semi-finished products stealing out of Detroit's lucrative segments.

America's Big 3 can not leave their hometown, but they need to prepare for the autonomous electrical future that they know is coming, just not when. Detroit's automakers will spend more and more time in cities like Las Vegas and Los Angeles, making an effort to make sure they're out of cash before the future comes.

In Detroit, Toyota's Lentz described the dilemma faced by American automakers attempting to meet the fuel efficiency requirements currently being discussed by legislators. As California prepares to ban fossil fuel vehicles by 2040, California's Trump government plans to deprive California of its regulatory authority from 2020 and reduce the Obama era regulations that cut motor vehicle CO2 emissions by 5%. Automakers need security to make the massive investments to survive in the market.

"I feel that this is OK. Corral, "said Lentz," and we are the settlers running through the middle. "

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