How do we create a ‘triple win’ that lifts the German automobile sector out of the Covid crisis and directs it towards a viable future – while giving people the cleaner, smarter mobility they need?
SYSTEMIQ co-founder Martin Stuchtey and Professor Andreas Herrmann, two leading analysts of industrial economics, start from a striking new insight: that the mobility industry can generate more revenue, per mile and per minute of travel, than the current automobile industry.
This rethink has huge implications for how companies meet consumer needs. It suggests that the product of the future is not a car, but the provision of information, entertainment, navigation, intermodal linking and security. The industry’s ability to offer modern, cheap and safe mobility could depend on how well it applies some new truths.
Embracing SEAM: shared electric and automated mobility
It’s already here in autonomous vehicles, electric vehicles and car sharing. SEAM also encompasses next-generation engine technology, a move towards fewer cars on the road, and seeing the vehicle as one part of a digital, continuously optimized mobility system.
Mobility has a new relationship with energy…
The agenda for integrating mobility into other energy systems should include the upscaling of hydrogen and synthetic fuels, and intelligent charging for electric vehicles. Promising technologies could allow electric vehicle fleets to become a power storage system for the energy grid.
…and with the transport sector
Cities, towns and rural areas have different mobility needs. The automotive industry must take a greater role in integrating the system’s components: including cars, micro-mobility and public transport.
New industrial ecosystems need circular principles
By creating a circular system, the industry can provide greater longevity and reusability, through design and resource-efficient production.
New business models can create more value
Most cars are unused 90% of the time. A business model that uses them more intensively can create more value, for the industry as well as society.
But automobile manufacturers aren’t alone in re-evaluating their priorities right now – governments and consumers are doing the same. So how can the automotive industry and society strike a new deal?
Reducing climate impact means focusing on more than the pollutants in exhaust emissions. There are additional steps the industry can take to protect the climate and clean up its reputation: refuelling with renewable electricity, manufacturing with low-carbon ‘green’ steel, improving recycling, or even investing in negative emissions.
But the industry cannot drive change on its own. It needs the state to help build renewable energy and charging infrastructure, and to facilitate partnerships between industry and cities.
The state can also encourage investment in digital and drivetrain technology, and support financing models that underpin “mobility as a service” – where manufacturers retain ownership of vehicles, and recondition them at end-of-life. Setting the requirements for how components are recycled, repaired or repurposed is an essential element of a circular economy, with big employment potential.
The success stories of German industry have always been about mastering complex systems, innovative products, and a balance of interests. But unless we unite around the challenge, there will soon be a new Rust Belt running through the country’s industrial heartland.
Martin Stuchtey is SYSTEMIQ’s co-founder, and central to its strategic thinking on the circular economy. He is also the Professor of Resource Strategy and Management at the University of Innsbruck.
Andreas Herrmann is the Professor of Managerial Economics and the Director of the Institute of Customer Insight at the University of St Gallen.
