The cost of developing autonomous vehicle technology will drive some of the biggest car companies to merge says Aston Martin’s CEO Andy Palmer.
As one of the leading executive’s in the luxury car industry, Palmer knows more than most the finances required to lead a technological charge towards autonomous cars, and speaking at the Society of Motor Manufacturers and Traders conference this week, he underlined the need for the industry to streamline.
“We’re all developing similar technology costing billions and that’s nonsense,” said Palmer. “I think it is inevitable car companies will come together through mergers and acquisitions. The requirements will be too much for many of the firms involved. The business model of spending $1bn to develop a car and then have to pile it high and sell it cheap - discounting - in order to keep factories turning and maintain economies of scale is broken.”
Though there are currently approximately 200 car companies globally, the real economics show that in reality there are 14 conglomerates and Palmer expects the industry to shrink to accommodate the rush for success in an ever-changing market.
Palmer said: “Yes, enlightened mega-companies like Toyota can develop technology alone and survive, but I feel many more companies will fall under the wing of such firms to the point that we have just two or three mega-companies dominating, in the way Boeing and Airbus do in the airline industry.
“Along the way I’m sure we’ll see newcomers, some who will succeed, some who will be bought and some who will fail. But the inevitability is that there will be mergers and acquisitions.”