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Electrification jolts vehicle industry towards revolution

A shift from petrol or diesel powered to electric vehicles is at the heart of a rapid and radical revolution in personal transport that will have significant effects on New Zealand society.

Like the rest of the world, Kiwis have grown attached to their cars during the 20th century and into the early part of this century, but the world is changing fast and this country is no exception.

The way cars are powered, driven, used and even bought and sold is changing. The changes are real and tangible. It’s already happening. The vehicle industry as we know it is being turned on its head.

So how will the changes play out, when can we expect them to take hold and what are the potential impacts for New Zealand?

Electrification

Vehicles have always been powered by an internal combustion engine, either petrol or diesel. Climate change and regulations to counter its effects, requiring fewer or zero emissions, are effectively driving the electrification of the motor industry. In line with New Zealand’s commitments, against a 2005 baseline, Toyota New Zealand has set a goal of 30% reduction in emissions by 2030; Toyota globally is aiming for a 90% reduction by 2050. A core strategy to achieve these goals is electrification.

As an example, Toyota and Lexus’ self-charging electric hybrid vehicles, which started with the Prius, have been around for 20 years and now include Camry, Corolla and the majority of the Lexus model range. Those options reduce fuel costs and carbon footprint by as much as 30 per cent. The newly released plug in electric Prius Prime saves a further 30-50 per cent. Every Toyota and Lexus model will have a plug in or hybrid version by around 2025.

With other manufacturers on the electrification journey too, oil will eventually become less valuable as the demand for it reduces, leaving stranded assets for some economies. But then there is the potential problem of how to produce electricity cleanly. Hydro, wind and solar production are all expected to grow as the demand for electricity to meet motoring needs hits national grids.

While we can’t calculate the exact impact on national grids and charging infrastructure, we can say that pipes and surge demand may be challenging and investment of infrastructure is a must.

New Zealand, is well served with renewable electricity capacity, but much of the rest of the world is not. Toyota and some other companies are exploring producing electricity from hydrogen, which may be the best long term outcome.

Self-driving vehicles

If you think self-driving vehicles are a long way off, think again. Much of the technology is in existing models and trials and some use of these vehicles is already underway.

Predictions are that autonomous vehicles will deliver a massive reduction in accidents. It won’t be perfect but it will be a thousand-fold improvement over the human drivers who cause most accidents. There will be resulting changes in the insurance and health industries.

These vehicles will also transform the lives of many, such as those who can’t self-drive and workers who will suddenly find their commuting time becomes productive and commuting from suburbs less stressful.

Much of the autonomous technology that will feature in these vehicles, like active radar cruise control, lane departure warning, blind spot monitors, pre-crash safety systems and autonomous braking, are already in many Toyota and Lexus models.

The next steps are joining these technologies together to provide a seamless driving experience where drivers can choose to enjoy driving themselves (with guardian angel technologies to help when necessary) or sit back and let the vehicle do much of the work (almost like a chauffeur). As these technologies evolve, we’ll see increasingly sophisticated autonomous vehicles on our roads.

Mobility as a service

Kiwis have always seen cars as assets to buy – albeit depreciating ones – but the world is waking up to the need to reduce congestion. Also, changing habits in large cities are seeing fewer young people owning vehicles and more dependence on “mobility as a service” options, like Uber.

Uber is just one example of car sharing which will become more sophisticated as technology develops and numerous business models are launched. This industry will only grow – and fast.

Mobility as a service is even now developing constantly with tie ups between manufacturers and rental companies/Uber and other similar operations. Toyota has just inked an arrangement with the Avis/Budget Group in North America as an example.

In New Zealand we have invested through Toyota Financial Services in a Wellington-based car sharing software company Mindkin and trials are already underway in Auckland, Wellington and Palmerston North.

The combination of mobility as a service and autonomous vehicles could change urban planning with less requirement for car parking and potentially less road investment. Having more vehicle sharing will mean fewer cars on the roads and therefore have an impact on climate change as well. Toyota is investing in mobility for all with robot and AI technologies for helping the disabled get mobile.

Buying and selling

And finally, the traditional car dealer, with its stereotypical salespeople, will become a thing of the past as the disruption of the vehicle retail industry begins.

Just as the internet is transforming the wider retail landscape, the motor vehicle industry too must move with the times. New vehicles will be increasingly sold online and dealers will evolve into service centres and used vehicle hubs.

The first steps in this process are already happening with changes such as Toyota’s Drive Happy Project, which will see all our dealerships become stores designed to meet the needs of our 21st century customers.

The customer is king in this era and we are looking at removing their concerns that are unique to vehicle purchasing, such as price haggling, short test drives, on road and service costs, lack of online detail for decision making and even ‘buyer’s remorse’.

From electrification to how vehicles are bought and sold, these are all changes that will impact on the next 100 years just as the development of the automobile itself has done over the last 100 years.

Granted, some of these changes will take time to transform the entire vehicle fleet – a new Toyota sold today is likely to be around for at least 20 years – but the revolution has begun.


ends

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