The Malaysian auto industry is abuzz with talk about the third national car company.
Some say it should be the fifth national car company behind Proton, Perodua, Naza and Inokom, but let us not be distracted by this detail. Instead, let us look at how to ensure that the new car company lives long and prosper.
I want it to succeed because I want it to produce cars that are memorable and classic.
Take a look at Tesla, they were up against tremendous odds, the company almost broke Elon Musk’s vast bank balance, but they soldiered on because they were clear on why they wanted to build the electric car.
Most of the on-ground sentiment revolves around wastage of public money and concerns about new duties and taxes, and other barriers to entry that may push the price of non-national brands higher.
I am going to build my arguments based on the two concerns because, in my view, the concerns, plebeians though they may be, are based on good reasoning, even if the person who says it cannot make the argument.
All concerns about wastage of public money are worries that we are embarking on a venture that is unsustainable.
We live in a time when the nation is stillbruised by financial folly and any whiff of a similar experience is bound to throw people off.
Meanwhile, the concerns about protectionism shows that people do not think that the new car company can compete with the rest of the global field and, is therefore, not likely to be self-sustaining in the long run.
To allay the first concern, the government must promise that it will not use even a single sen of the government’s money to finance the enterprise, on top of that the administration must not, promise to protect the venture against competition, both foreign and domestic.
Any concessions to the company must be based on incentives that are offered for any other normal investment in the industry.
Any and all incentives to be offered to the venture must be based on benefits that the nation will receive as a result of the new car company, such as employment numbers, the reduction of carbon footprint, introduction of new technology and export numbers.
While the first concern is straightforward and can be resolved by closing the public purse from those who want to start the new car company, the second one is the more difficult aspect of the public fear to quell.
We live in a time when most of the big brains in the auto industry are just swimming nearly blind, even those who seem to have really good crystal balls are looking at the medium term and unwilling to commit to technology or roadmaps due to the large number of disruptors affecting the industry.
The biggest disruptor at the moment is the Industry 4.0 or smart manufacturing.
One side of smart manufacturing is its ability to create small batches of products at unseen before cost levels and this allows more custom tailoring for ever smaller segments of the market.
Industry 4.0 has begun to swamp smaller consumer products, which adapts well to the brave new world of customisation and personalisation offered by the latest manufacturing methods.
We can see more people offering customisation services for everything, from cellphones to shoes, clothes and cars.
The other side of Industry 4.0 is the rise of time sharing. With concerns about overuse of resources, many companies are working on how to better use what we produce so that the same product can be shared among many users, increasing its rate of use and, therefore, reducing the need to produce more.
For the automotive industry, the ride hailing service and small package delivery service, together with by-the-hour car rental, are allowing cars, bikes and small goods vehicles to enjoy a higher rate of use.
This will result in a change in people’s behaviour and may lead to less people owning cars.
Google did a survey of Malaysians and confirmed this. In 20 to 30 years, most industry experts see driverless cars as dominant and we can see the technology maturing before our own eyes.
With driverless cars, the need to own cars will drop significantly.
They carry people and goods and the reconfiguration can take place automatically according to the order they receive.
So, our new car company needs to look this far. It is not enough to just say that we want to build an electric car. The platform that is being designed now must take into consideration many things, from battery technology to power transmission technology to reconfiguration needs.
I remember in the 1990s, General Motors began looking at skateboard chassis technology, whichpacks all the battery and drive components into the floor while the top can be interchangeable.
Yes, I know all this is pie in the sky but that pie is about to land so, at the very least, the new car company should know what kind of a pie it is, when it would land and where it would land and plan ahead for it.
If they decide on a conventional car company, then my bet is on them losing the shirt on their back.