Innovate or Die: How Cities Force Car Industry to Change

Cars have shaped modern cities the way we know them today – vibrant, dynamic, and cosmopolitan. Cars were the energy that boosted their growth. But alongside their massive impact on urban life, cars also caused numerous strains on the very fabric of our society, that have been stitched up with over-development of roads and highways in an attempt to keep up with the massive growth in the production of the automotive sector. Before we knew it, our cities have become overcrowded with hundreds of thousands of vehicles, nervously navigating our everyday city traffic.

But beyond the chaos of traffic, we didn’t notice how cars took up way too much space in cities, space that could be used for pedestrian zones, parks and other amenities. For example, in Los Angeles overall car parking equal to approximately 1,400 soccer fields. But the price goes beyond space, since cars are also taking up a significant share of the city budget – according to experts, in Vancouver every dollar spent for driving a car costs society as much as $9.2 (compared to $1.5 for using a public transit). Not to mention the effects of environmental degradation on human health and tragic car accident statistics – in 2016 37,461 people died on American roads.

However, a tipping point is being reached and many cities around the world are developing programs aimed to solve car-related issues. For instance, Barcelona plans to restrict car, scooter, lorry and bus traffic, allowing it only along the perimeters of so called “superblocks” which consist of nine existing blocks of the grid. To decrease the number of cars in the city center, Oslo is implementing an interesting car-limiting strategy: instead of banning vehicles themselves, it’s going to get rid of parking spaces to force drivers to leave their cars at home. In Paris vehicles are forbidden from the city’s historic center during the car-free days, officially held by the local government for the 3rd time already, and this measure helps to decrease exhaust emissions by 40%. Particularly strict regulation is aimed at petrol and diesel cars, and in some cases this issue is subject not only to the local authorities but to the national level, too. Such countries as France and Great Britain are promising to ban gas and diesel vehicles entirely by 2040. China went even further and now is planning to also prohibit the production and sale of fossil fuel cars, intending to completely switch to electric transportation in the near future. As a result, such measures have a serious impact on carmakers, that requires them to respond immediately to the new challenges. There's an active discussion going on among experts about the future of the global automotive industry. Some skeptics call these car ban plans unfeasible, and their opinion to some extent is justified as most countries at the moment are not ready for a full transition to electric cars. The creation of the necessary infrastructure alone can cost a pretty penny, not to mention the training of new specialists for electric vehicle maintenance, and possible economic losses related to the closure of factories and the dismissal of hundreds of thousands of workers around the world. Nevertheless, major automakers understand that the only way to survive in changing conditions is to innovate and seek new business opportunities. GM, Ford, Toyota, Daimler, Volkswagen and others invest billions in EV development, planning to electrify their vehicle line in the coming years. They are also actively experimenting with their new services in case car ownership is no longer as appealing as it is now, seeing a great potential in car-sharing market. For example, last year General Motors launched a car-sharing service called Maven; Daimler and BMW consider to combine their car-sharing services Car2Go and DriveNow, etc. Today we’re witnessing the beginning of a new age of the automotive industry, an industry that is finding its way in a changing reality. As cities become less and less favorable towards cars, automakers may be required to re-consider the very foundation of their business model and supply chain. They might need to adopt electric or autonomous solutions, new types of public transport models or other services that will slowly replace the use of the private vehicle as it is used today or alternatively push them to producing micro vehicles that fit better in the context of modern cities. What is clear today, is that we are heading for a major automotive disruption as the old model of internal combustion vehicles comes to an end.