May 15, 2020 (IAM Newswire via COMTEX) -- As with every downturn: some companies will emerge stronger but others will not make it through. And the same goes for automakers. Even if they survive plants being idle, there are trends in consumer behaviour which will drastically change in the post-pandemic world such as less commute as both companies and employees now know the benefits of working from home. And what makes it all worse is that the industry was already getting ready for a brutal year even before COVID-19 was in sight.
Pandemics pushed sales in a free fall and is calling upon Darwinism to redefine things
The only way out is to realign the whole industry and whatever these companies end up doing, it will have a profound effect on its workforce: eight million people worldwide to be exact. The problem is that it took nearly a decade for European car manufacturers to recover from the 2008 Big Recession. And despite US taking half the time, sales are flat for about five years now. China's immense size that resulted in explosive growth helped but then even that market has been stagnating for two years now. Although European manufacturers such as Volkswagen /zigman2/quotes/204431732/delayed VWAGY -2.76% , Daimler AG /zigman2/quotes/203566154/delayed DDAIF -0.70% , Fiat Chrysler /zigman2/quotes/204248628/composite FCAU -0.40% are getting ready to slowly restart their plants, unlike their US counterparts, everyone has to be wondering what lies ahead as we all know things will no longer be the same. Besides Tesla /zigman2/quotes/203558040/composite TSLA -3.08% whose flamboyant CEO is fighting with the authorities as it reopened its California plant without consent on Monday, Detroit's automakers whose combined value has been exceeded by Tesla alone are waiting as orders are clear: it is too soon with the US being the new epicentre of the virus. COVID-19 wrecked Tesla's momentum as the company has been on a wild ride this year but its fourth consecutive quarter of profitability is now even more challenging.
And there is the whole debate whether Tesla should be categorized as a tech stock. But traditional combustion-engine automakers have something else than legacy standing behind them, they learned the hard way to cushion such blows from the 2007-2008 financial crash. General Motors /zigman2/quotes/205226835/composite GM +1.93% especially as it even managed to make a profit in its latest quarter unlike Ford Motor Company /zigman2/quotes/208911460/composite F -0.66% and Fiat Chrysler Automobiles /zigman2/quotes/204248628/composite FCAU -0.40% . But as sales plummet further, shutting down underused plants may be a matter of survival as when the EU went into lockdown in March, car sales were cut off by more than a half.
EVs are somewhere over the rainbow
Amid all this - Evs have shown supreme resilience and even despite plunging oil and gasoline prices. COVID-19 did eventually catch up to them in April but still far less than the traditional car market as the EU segment dropped 80% with only a 30% hit to EVs. And now that people get to actually witness the benefits that climate change activists are so fiercely fighting for as air has never been cleaner in modern history, it is to be expected that consumers will be willing to invest an extra buck into green purchases. There's no way back after you've tasted something better, and in this case, it is way better in more ways than one.
Partnerships ahead- even between former enemies
To counter attack, traditional automakers will only have the option to unite such as Volkswagen and Ford Motor which are developing autonomous driving software together. But partnerships always bring in the psychological challenges as we know too well from the Renault- Nissan storyline. Yet, even the giant such as Toyota Motor /zigman2/quotes/200537742/composite TM +0.06% is smart enough not to go at it alone while being among the strongest to weather the storm as it perfected its ship to be pretty much sinkless.
Long story short
Plunging sales could force factories to close and lead to takeovers and mergers, but also cause a surge in sales of electric cars as the pace of the electric revolution will only intensify. And regardless what you think of Musk, he also co-founded PayPal /zigman2/quotes/208054269/composite PYPL -3.86% which is another confirmation of his "visionary" capacity and he delivered and surprised the world with Tesla despite the financial concerns and bottlenecks. Tesla's fortune fortunately turned well before COVID-19 took the world hostage. And most certainly has evaporated fears that electric cars will be owned by only a shiver of humanity. Moreover, now that Tesla has shown that traditional auto giants can be challenged, this opens a doorway for many green start-ups. And we didn't even tackle green segment: solar technology, another one of Tesla's segments and used by Worksport Inc /zigman2/quotes/200413469/delayed FNHI -16.26% which will make it even accessible by launching the world's first pickup truck solar powered tonneau covers. But more on that in the post-COVID-19 era!
This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: email@example.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: firstname.lastname@example.org Questions about this release can be send to email@example.com
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