Britain’s ban on the sale of non-electric vehicles by 2030 is just one of a string of policy decisions that are reshaping the industry as governments battle to reduce emissions.
Until recently, however, the big focus has been on how established players like Volkswagen, Ford and Toyota can manage the transition and retool their factories for an era of EVs, under mounting pressure from pure electric upstarts like Tesla. It’s a valid question but one that may be missing the point.
Foxconn’s entry into carmaking illustrates how flawed that narrative may turn out to be – and how completely unrecognisable the global car industry may be within just a few years as the shift to EVs turns decades-old supply chains upside down and opens the door to new entrants.
With bags of experience in precision manufacturing of technology products at scale and no legacy costs linked to the need to continue building conventional vehicles, players like Foxconn have spotted a potentially colossal market opportunity.
The truth is that conventional carmakers are now in mortal danger as the industry spins rapidly out of their control – potentially merging with the electronics industry and into the lap of companies with no background in carmaking at all.
Foxconn is not alone, after all. China’s Huawei, Apple, Amazon and a string of other tech companies are eyeing up the prizes presented by the twin shift to EV and autonomous or semi-autonomous driving systems – where their expertise in software engineering and managing data flows puts them at a big advantage.
Apart from the superficial appearance of the shiny end product that rolls off the assembly line and a few of the cheaper components, it’s hard to overstate just how few similarities exist between building electric cars and those powered by old-fashioned internal combustion engines.
Traditional car companies believe, rightly, that their core expertise lies in the manufacturing process itself: their ability to conduct an elaborate symphony of thousands of components, which must be assembled in just the right way at just the right time on moving assembly lines.
It is indeed an art form which companies like Toyota and VW have perfected over decades, but it is also one that is rapidly becoming redundant as the industry moves towards EVs.
The risk is these companies become dinosaurs as they are outmanoeuvred by a whole new class of competitor. The crisis in the car industry this year caused by a shortage of microchips is merely an early warning sign of what is coming down the road, at an alarming pace.