The Major Hurdles Auto Makers Will Tackle in 2024
Introduction:
This close-up at the automotive industry in 2024 will be seen as going through a lot of challenges that have shaped the vehicle manufacturing and selling landscapes, such as consumer preferences. Going deeper into the challenges, it is penned that it stands saturated that to withstand this big wave of change, commitment and implementation of major innovation should hold the key to survival in such a swirling sector. Market Research Insights reveal that automakers need to navigate a complex terrain, from technological disruptions to shifting regulatory environments and changing consumer expectations.
1. Electric Vehicle Adoption Rate BECOMING ACCELERATED
The automotive scene is dominated by more advances in moving to electricity among new born with improvements in the wake of the two – challenges and opportunities – facing the automobile makers.
a) Building the infrastructure
Perhaps the largest challenge to electric vehicle adoption is the infrastructure needed for large-scale charging.
Only 35 percent of prospective EV buyers, according to Market Research Insights, are convinced that a suitable public charging infrastructure is going to be available in their vicinity.
Automakers are uniquely positioned to partner with governments and energy companies to expand charging networks, with spending projected to rise to as high as $95 billion worldwide by 2025.
b) Innovations in Battery Technology and Range Anxiety:
Battery technology/battery innovations are key for diluting consumer fears on range and long recharging times.
Recent innovations have made it possible for some electric vehicles to cover ranges of over 400 miles on a single battery charge.
Market research indicates that 70% of consumers consider range to be one of the most critical factors in consideration for the purchase of an EV.
c) EV Price Parity with ICE Vehicles:
It is considered one of the key surviving challenges that electric vehicles need to cost as much as ICE vehicles.
It is forecast that Electric Vehicles can be price-parity to ICE on or even before 2026 due to falling battery costs and economies of scale.
Government support continues to be a critical factor in enabling EVs to be offered to more customers over time.
2. Coping With Global Supply Chain Disruption
The global supply chain continues to be stressed and is one of the key influencers of supplier timing and fiscal viability for OEMs.
a) Shortages of Semiconductors:
Still a significant concern, the shortfall for this vital component is expected by Market Research Insights to be trending to lead to an estimated loss of $210 billion in global automotive revenues by 2024.
Automakers are exploring methods for chip procurement through strategies such as vertical integration and long-term agreements with the semiconductor companies.
Some of them are also reengineering the electronics in vehicles so that they can be de-emphasized on the relatively scarce genres of chips.
b) Strategic Sourcing of Raw Materials
The adoption towards EV from IC is further surging the demand for key raw material inputs like lithium, cobalt, and rare earth elements.
Difficulty in strategic sourcing of such materials is due to price volatility and geopolitical risks.
Market research suggests that 60% of automotive executives believe sourcing raw materials is one of the most critical issues facing their companies.
c) Reshoring and Nearshoring:
After massive disruptions as a result of recent events, many automakers are reevaluating their sourcing strategy.
A trend to re-shore or nearshore production to be less exposed to global interruptions is gathering pace.
Survey results say 45% of companies in the automotive sector plan to increase their nearshoring efforts over the next three years.
3. Keeping Pace with Evolving Consumer Behaviors
Consumer preferences and purchase behaviors are changing fast, driving OEMs to rethink their product portfolios and sales strategies.
a) The Movement to Selling through Digital Channels:
The COVID-19 pandemic increased the rate of car buyers going online, while Market Research Insights holds that 64% of all car buyers would be open to buying the whole process, including a vehicle, totally online.
Both vehicle manufacturers and dealers alike are investing heavily in digital sales platforms and virtual showroom experiences.
The challenge is how do you bring easy online to marry with the tradition of taking a car for a test drive and other social experiences connected with buying one.
b) Subscription and Mobility Services:
Younger customers have an interest in new ownership models, subscription services, or short-term rentals of a car.
Market research suggests that the car subscription market worldwide is to grow at a CAGR of 23% from 2023 to 2028.
Automakers are testing the use of flexible ownership models to consumers.
c) Sustainability and Ethical Concerns:
Environmental consciousness is now one of the major determining factors behind purchasing a product or service.
72% of consumers stated that they make a purchase from a brand where they feel less guilty for the environment.
Not just on EVs, but also on sustainable manufacturing and circular economy initiatives.
4. REGULATORY AND TECHNOLOGICAL
The regulations for the automotive industry are stringent and overly complex and, at the same time, should best go on the most advanced technologies.
a) EMISSION REGULATIONS
The strict standards in emission encourage further innovations in powertrain technologies.
Market Research Insights state that compliance with evolving emissions regulations may cost the industry at least $150 billion globally between 2024 and 2030.
Automakers are clearly diversifying their powertrain portfolios, including EVs, hybrids, and hydrogen fuel cell vehicles, depending on different market needs and regulatory requirements.
b) Autonomous Driving Technology:
The race to develop and deploy autonomous vehicles continues full throttle, subject to significant technical and regulatory hurdles.
It's being estimated that the expense on autonomous driving technology may surpass $75 bn every year by the year 2025.
The challenges here lie from testing for safety and securing the trust of consumers to understanding diverse regulation frameworks.
c) Cybersecurity and Data Protection:
Impact: Cybersecurity is one of the prime concerns with rising vehicle connectivity.
Market Research: 85% of automotive executives confirm that cybersecurity is actually a problem for the industry.
Automotive companies are significantly investing in robust cybersecurity, and partnering with technology companies for protecting vehicle systems and consumer data.
Conclusion
The challenges for the automotive industry in 2024 are growingly complex and offer several innovative solution making and strategic thinking opportunities. From scaling up EVs and supply chain turbulence to change in consumer behavior and regulatory demands, the carmakers will have to be agile and forward-looking.
And here is the really helpful news: Knowing about Market Research and Consultancy Insights on the go will be important to decide and plan strategies. More about these and custom-solutions to fill the gaps of needs for businesses, we are inviting you to reach out to Kaizen Market Research and Consultancy. Let our well-trained, experienced team provide intensive analysis with insights that are actionable for your business to thrive in a revised auto setting.
Only through data-driven decision-making and while facing those challenges will it be possible for the automotive sector to drive such major changes. The road ahead might be full of hurdles, yet the other side of it brings an opportunity for innovation and growth like never seen before, marking an unprecedented course for the future of the automotive industry: more sustainable, more technologically advanced, more attuned to the needs and wants of customers.