When you get behind the wheel of a car, you hardly think about what gigantic mechanism is behind its creation. Automotive industry - these are not just factories where cars are assembled. This is a complex ecosystem that brings together thousands of enterprises, millions of jobs and trillions of dollars in turnover. From extracting raw materials to selling your used car on the secondary market, each step affects what kind of car you drive and how much you pay for it.
Today, the industry is undergoing one of the largest transformations in history: the transition to electric vehicles, automation of production and new business models like carsharing. But how does it all work from the inside? Why do car prices rise despite competition, and why do some brands suddenly disappear from the market? In this article we will look at structure of the automotive industry, its key segments, current challenges and how it shapes the future of transport.
Spoiler: it's not just about cars. This is about the economies of countries, the ecology of the planet and even geopolitics. For example, did you know that More than 80% of the world production of rare earth metals (critical for electric cars) is controlled by China? Or that the average car consists of ~30,000 parts produced in different parts of the world? Let's dig deeper.
1. What is the automobile industry: definition and scope
Automotive industry is a set of enterprises and organizations involved in the development, production, sale and maintenance of automotive equipment, as well as related components. It includes:
- π Automakers (OEM β Original Equipment Manufacturers): Toyota, Volkswagen, Tesla etc.
- βοΈ Component suppliers (Tier 1, Tier 2): Bosch, Continental, Magna.
- π§ Service centers and service stations: official dealers, independent workshops.
- π Logistics and distribution: transport companies, ports, railways.
- β»οΈ Disposal and recycling: enterprises for dismantling and recycling of materials.
According to OICA (International Organization of Automobile Manufacturers), in 2023 the global market produced 95.6 million cars - this is 10% more than in 2020, but still below pre-Covid levels. At the same time, the industry provides about 5% of global GDP and more than 50 million jobs (both direct and indirect). For comparison: this is more than the population of Spain or Argentina!
Interesting fact: if we considered the automobile industry as a separate "country", it would be fifth largest economy in the world after the USA, China, Japan and Germany. Now imagine how changes in this industry - such as the transition to electric vehicles - could shake up the entire global economy.
2. Industry structure: who produces what
The automotive industry is divided into three levels:
- Level 1 (OEM): Large automakers that produce finished cars under their own brands. Examples: General Motors, Stellantis (uniting Fiat-Chrysler and Peugeot-CitroΓ«n), Hyundai-Kia.
- Tier 2: Suppliers who work directly with OEMs. They supply ready-made components: engines, transmissions, electronics. For example, ZF Friedrichshafen (gearboxes) or Denso (climate control systems).
- Tier 3 (Tier 2/3): Manufacturers of individual components - from bolts to microcircuits. These are thousands of small and medium-sized enterprises around the world.
An example of a chain for creating one part - say, lithium battery for electric vehicle:
| Level | Company/process | Country | Cost share |
|---|---|---|---|
| Raw materials | Lithium mining (SQM, Albemarle) | Chile, Australia | 15% |
| Tier 3 | Production of cathodes (UMICORE) | Belgium, China | 25% |
| Tier 2 | Cell assembly (CATL, LG Energy Solution) | China, South Korea | 30% |
| Tier 1 | Assembling the battery pack (Panasonic for Tesla) | USA, Japan | 20% |
| OEM | Installation in a car (Tesla, BYD) | USA, China | 10% |
As you can see, even one battery involves companies from 5-6 countries. Now multiply that by all the other parts of the car! That's why globalization and logistics so critical for the industry. For example, a shortage of chips in 2021β2022 led to plant shutdowns Ford and Toyota - simply because one plant in Taiwan did not have time to supply chips.
If you are buying a used car, check the country of origin in the title. Cars assembled in Europe or Japan often have better quality welding and anti-corrosion treatments than the same models assembled in Russia or Latin America.
3. Key trends: what is changing the industry today
The automotive industry has never stood still, but the last 10 years have seen changes occur at an unprecedented rate. Here are the main trends that shape its future:
3.1. Electrification
By 2030, the market share of electric vehicles could reach 40β50% (according to forecasts BloombergNEF). The leaders are:
- π Tesla β 18% of the global electric car market (2023).
- π¨π³ BYD - overtook Tesla in sales in China thanks to cheap models.
- π Traditional brands: Volkswagen (ruler ID.), Ford (Mustang Mach-E), Hyundai (Ioniq 5).
But the transition to electric vehicles poses new challenges:
β οΈ Attention: Lithium and cobalt shortages could cause battery prices to rise by 20β30% by 2026. Already today, the cost of raw materials accounts for up to 80% of the price of a battery.
3.2. Autonomous driving
Companies like Waymo (daughter Alphabet) and Cruise (General Motors) are testing driverless robotaxis in San Francisco and Phoenix. However, mass implementation is slowing down:
- π¦ Regulatory barriers (in Europe, autonomous cars are allowed only up to level 3 according to the standard SAE).
- π₯ Ethical dilemmas (for example, a choice algorithm in the event of an inevitable accident).
- π‘οΈ Cyber threats: hackers can hack the car control system.
3.3. Sustainable production
The European Union bans the sale of new petrol and diesel cars with 2035. Manufacturers react:
- β»οΈ Volvo plans to become a climate-neutral company by 2040.
- π± BMW uses recycled aluminum and steel in its bodies.
- π Renault opens factories for recycling old batteries.
What is a car's carbon footprint?
The carbon footprint is the total amount of greenhouse gases emitted during all stages of a machine's life cycle: from raw material extraction to disposal. For example, electric car production Tesla Model 3 produces ~8 tons of COβ (mainly due to the battery), but after 5 years of operation it βbeats offβ this footprint due to zero emissions when driving (if charged from RES).
4. Economic significance: why the industry is called a βlocomotiveβ
The automotive industry is more than just factories and cars. This engine of the economy many countries. Let's take a few examples:
- π©πͺ Germany: The automobile industry accounts for 20% of industrial production and 5% of GDP. Brands Mercedes-Benz, BMW, Volkswagen - national pride.
- πΊπΈ USA: General Motors, Ford and Stellantis provide 3.5 million jobs (including dealers and suppliers).
- π―π΅ Japan: Toyota is the countryβs largest employer, and auto exports bring in ~$100 billion a year.
- π¨π³ China: Since 2009 - the largest car market in the world. In 2023, 30 million cars were sold (of which 8 million were electric cars).
But there is also a downside: dependence on the industry makes the economy vulnerable. For example, Brexit hit British car factories (Nissan, Jaguar Land Rover), and the COVID-19 pandemic led to a 15β20% drop in sales in 2020.
In addition, the automotive industry is closely linked to other sectors:
- π’οΈ Oil and gas industry: 60% of oil is used to produce fuel for transport.
- π» Electronics: A modern machine contains up to 100 microprocessors (in Tesla Model S - more than 150!).
- π Logistics: Trucks transport 70% of all goods in the world.
The automotive industry is not just about factories. This is an entire ecosystem that supports millions of jobs in related industries: from metal mining to software development.
5. Problems and challenges: what hinders development
Despite innovation, the industry faces serious challenges:
5.1. Geopolitical risks
The war in Ukraine and sanctions against Russia led to:
- π Stopping factories Volkswagen, Toyota and Renault in Russia (losses ~$5 billion per year).
- π’οΈ Increase in nickel prices (critical for batteries) by 250% in March 2022.
- π Neon shortage (used in chip production), 50% of which was supplied by Ukraine.
5.2. Competition with China
Chinese brands (BYD, NIO, Geely) aggressively capture markets:
- π° Price BYD Seal in Europe 30% lower than similar models Tesla.
- π China owns 75% of the world's battery production capacity.
- π Geely owns Volvo, Polestar, Lotus and has shares in Mercedes-Benz.
β οΈ Attention: If Chinese manufacturers enter the US market (currently there are 27.5% tariffs on Chinese cars), prices for electric vehicles could fall by 20-40%. This threatens traditional brands.
5.3. Changing consumer habits
Young people are buying cars less and less:
- π± 60% of millennials in the US prefer to use car sharing (Zipcar, Getaround).
- π² The popularity of bicycles and electric scooters is growing in Europe (sales have increased by 40% since 2019).
- ποΈ In megacities, owning a car becomes unprofitable due to traffic jams, paid parking and low-emission zones (for example, ULEZ in London).
6. The future of the automotive industry: what awaits us
Experts agree: by 2030, the industry will change dramatically. Here are the key predictions:
6.1. Changing business models
Manufacturers are moving from selling cars to selling mobility as a service:
- π Volvo offers a car subscription with a monthly payment (includes insurance and maintenance).
- π€ Waymo and Cruise plan to launch robotaxi networks without personal drivers.
- π Tesla tests the program Full Self-Driving (FSD) as a separate service for $99/month.
6.2. New materials
Engineers are looking for alternatives to steel and aluminum:
- πΈοΈ Carbon fiber: 50% lighter than steel, but expensive (used in BMW i3 and McLaren).
- π Mycelium (mushroom material): Ford experimenting with it for soundproofing.
- β»οΈ Recycled plastics: Nissan uses bottles to make seats.
6.3. Hydrogen technologies
Battery electric vehicles are not the only solution. Hydrogen fuel cells (FCEVs) are developing:
- π―π΅ Toyota Mirai β a hydrogen-powered sedan with a power reserve of 650 km.
- π°π· Hyundai Nexo - a crossover that can be refueled in 5 minutes.
- π©πͺ BMW plans to release hydrogen X5 by 2026.
Problem: infrastructure. There are only ~900 hydrogen filling stations in the world (versus 1.3 million electric charging stations).
βοΈ How to prepare for buying an electric car
7. How the Automotive Industry Affects Your Life
Even if you don't work in the auto industry and don't follow news about Tesla or Toyota, the industry directly affects you:
7.1. Fuel and car prices
Rising oil prices (for example, due to conflicts in the Middle East) instantly hit the wallet:
- π’οΈ In 2022, gasoline prices in Russia increased by 30% due to sanctions.
- πΈ Used cars have risen in price by 40% since 2020 due to a shortage of new cars.
7.2. Ecology and health
Transport gives 27% of all COβ emissions in the EU. This affects:
- π«οΈ Air quality: In Moscow, 60% of pollution comes from motor vehicles.
- π₯ Health: According to WHO, air pollution kills 7 million people a year.
- π Climate: If emissions are not reduced, temperatures will rise by 1.5Β°C by 2050 (the threshold for catastrophic consequences).
7.3. City infrastructure
Cars shape the appearance of cities:
- π¦ Traffic jams: In Moscow, drivers lose ~200 hours a year in traffic jams (data TomTom).
- π ΏοΈ Parking: In New York, 30% of the city's area is occupied by parking spaces.
- π Alternatives: In Amsterdam, 32% of trips are made by bicycle (versus 2% in Moscow).
This is why many cities are introducing restrictions:
- π« B Paris Diesel cars older than 2011 will be banned from 2026.
- π° B London entrance fee to the center (ULEZ) is Β£12.5 per day.
- πΏ B Oslo 70% of new sales are electric vehicles (thanks to incentives).
FAQ: Frequently asked questions about the automotive industry
How many cars are produced in the world per year?
In 2023 it was produced 95.6 million cars (data OICA). Leaders:
- π¨π³ China - 30 million (31% of world production).
- πΊπΈ USA - 10 million.
- π―π΅ Japan - 8 million.
For comparison: in 2017, 97 million cars were produced - the peak figure for the last 10 years.
Which countries are most dependent on the automobile industry?
Top 5 countries where the auto industry makes the largest contribution to GDP:
- πΈπ° Slovakia - 13% of GDP (factories Volkswagen, Kia, Jaguar Land Rover).
- ππΊ Hungary - 10% of GDP (Mercedes-Benz, Audi).
- π¨πΏ Czech Republic - 9% of GDP (Ε koda, Hyundai).
- π©πͺ Germany - 5% of GDP.
- π²π½ Mexico - 4% of GDP (export to the USA).
In Russia, the share of the auto industry in GDP is about 1.5%, but taking into account related industries (metallurgy, chemistry) - up to 3%.
Why are electric cars so expensive?
Main price factors:
- π Battery - up to 40% of the cost of the car (the price of lithium has increased by 500% since 2020).
- π οΈ New technologies: Autopilot, digital dashboards, OTA updates.
- π Small production volumes: Electric cars still make up ~10% of the market.
- π° Tax benefits: Manufacturers include future discounts in the price (for example, in the USA, a credit of up to $7,500).
However, prices are gradually falling: according to forecasts BloombergNEF, by 2027, electric cars will be equal in cost to gasoline ones.
What professions are in demand in the automotive industry?
Demand is growing for specialists in the following areas:
- π€ Robotics and automation: Setting up production lines.
- π» Programming: Software development for autopilot and infotainment.
- π Electrochemistry: Creation of new types of batteries (solid-state, sodium-ion).
- β»οΈ Sustainable production: Recycling materials, carbon neutral.
- π Data Science: Big data analysis for demand forecasting.
Salaries in the industry are above average: for example, autonomous driving engineers in Waymo receive $150β250k per year.
What will happen to gasoline cars after 2035?
The European Union will ban the sale of new petrol and diesel cars from 2035, but:
- π Used market will remain - it will be possible to buy/sell used cars.
- β½ Hybrids (for example, Toyota Prius) will be allowed until 2040.
- π§ Service petrol cars will not be banned - service stations and gas stations will remain open.
- π Exceptions possible for low-income countries.
However, manufacturers are already reducing investments in internal combustion engines: Volkswagen The last new platform for gasoline engines will be released in 2026.