The auto industry is building for a past that's never coming back

Editor’s note: John McElroy is the president of BlueSky Productions, which produces Autoline Daily, and a longtime sentiment columnist for WardsAuto. Views expressed present are his own.

Take a look astir the American automotive landscape, and you’ll spot an manufacture acting arsenic if new-car income will turn forever.

Before the decade is out, 7 brand-new assembly plants are scheduled to travel online successful the United States alone. Cumulatively, each the large bets Toyota, Ford, Hyundai, Scout, Slate, VinFast, Lucid and Rivian are making connected caller assembly plants whitethorn beryllium tooled to perchance make 1.8 cardinal much cars and trucks.

On paper, the logic seems sound: build localized capacity to offset imports, unafraid home proviso chains, and hole for a caller era of propulsion. But if you assistance up the hood and look astatine the existent data, you person to inquire yourself a very uncomfortable question: Who is going to bargain each these cars?

According to the latest information from the Federal Reserve, existing automotive assembly plants successful the U.S. are presently running astatine little than 70% of capacity. That intends we already person astir 4 cardinal units of manufacturing capacity sitting wholly idle, gathering dust. And yet, we’re astir to aggressively adhd much proviso to a marketplace that is already struggling pinch excess capacity.

This superior expenditure spree is being driven by ten-year merchandise cycles and five-year firm strategies. But the car manufacture is failing to look 20 years out, wherever a convergence of demographic shifts and replacement mobility trends is astir to fundamentally alteration the conception of conveyance ownership.

Look astatine the tech. Robotaxis are nary longer a sci-fi experiment; they are actively picking up passengers successful cities crossed the country. Autonomous "robocars" will modulation from commercialized fleets to user showrooms earlier this decade is out, according to Mercedes, Tesla and Lucid. Because a azygous autonomous conveyance operating successful a shared fleet tin switch aggregate privately owned cars, the wide take of this exertion can’t thief but trim new-car income volumes.

At the aforesaid time, the meaning of "mobility" is changing. Vertical Takeoff and Landing craft are connected way to supply municipality aerial transit wrong the adjacent fewer years, targeting the high-margin commuters who traditionally bargain premium vehicles. On the ground, micromobility options for illustration electrical scooters and e-bikes are absorbing short-trip municipality transit demand. Every personification who decides they don't request a 2nd aliases 3rd car successful their family represents a portion mislaid from the industry's income forecasts.

But the absolute hammer rustle to the car industry’s accepted maturation exemplary isn't technological — it’s demographic.

We are opinionated connected the separator of a demographic cliff. US organization maturation has slowed significantly, the Census Bureau reported successful January, and it’s anticipated to grow moreover much slow done 2050. In galore different countries, notably China, Japan, and South Korea the organization is already declining. The aforesaid is existent successful Italy, Greece, Portugal and astir of eastbound Europe. The traditional, reliable rhythm of a caller activity of teenagers getting their driver's licenses and buying cars is shrinking.

If caller car income are struggling to support a beardown maturation trajectory correct now — moreover pinch a robust system — what happens successful 20 years erstwhile the organization of buyers physically contracts?

The automotive manufacture is structurally addicted to volume. The full business exemplary relies connected scale, and that intends keeping assembly lines moving astatine 80% capacity aliases higher conscionable to break moreover connected the immense fixed costs of a factory. Adding 7 caller plants to a US marketplace that is not increasing is an economical trainwreck waiting to happen.

Automakers request to extremity readying for the adjacent quarter, aliases moreover the adjacent conveyance platform, and commencement readying for 2046 today.

I don’t expect today’s C-suite to reside the problem. They’ll beryllium agelong gone earlier this hits. But it is simply a matter for the boards of board to commencement addressing. They person a fiduciary work to look retired for the semipermanent wellness of their companies.

And if they don’t commencement looking 20 years down the road, automakers are going to find themselves pinch the astir advanced, highly efficient, multi-billion-dollar manufacturing footprints successful quality history — and not astir capable customers to bargain the cars they tin make.