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Crossroad for Car Makers

Posted By: Sarah Xiruo Xu, Oct. 1, 2017

Paris Agreement on Climate Change, which entered into effect on November 4, 2016, facilitates a more environmental ethical world toward intergenerational fairness and intra-generational fairness. This drives a fundamental change for global car business with sales of passenger cars are forecasted to hit 77.7 million vehicles worldwide in 2017 according to Statista.com. In early September, a deputy industry minister of China said that the government is planning to eliminate the selling of traditional fuel vehicles. He didn’t gave a definite date but claimed that China would join France and United Kingdom planning to stop selling gasoline and diesel cars before 2040 to help curtail the pollution and carbon emissions that cause global warming.

To respond with this decision, a bunch of car industry leaders such as “General Motors Co., Volkswagen AG and Nissan Motor Co. have announced they are launching or looking at joint ventures with Chinese partners to develop and manufacture electric vehicles”. Furthermore, Volvo Cars, owned by China’s Geely Holding Group, announced ambitiously that they had plans to make electric cars in China for global sale starting in 2019.  Environmental ethics is increasingly one of the core criteria for business leaders to make decisions in the context of globalization. This fundamental change will bring about deep restructuring for vehicle industry, which is formerly led by car-makers from the Western Worlds. However, this landscape will be reshaped by environmental policy by the governments relating to traditional fossil fuel based vehicle. This gives China second-mover advantage in car industry. Actually, Chinese automaker BYD Auto, the world’s biggest electric vehicle maker by number of units sold, sells all-electric taxis and buses in the United States, Europe and Latin America, as well as in China. Experts predict that the demand of global electric vehicle market would keep increasing after the 50% rising in 2015.

The public awareness, scientific progress on environmental impacts, and determination of political leaders are greatly changing external environment for car business leaders to do business.

Washington Post, 29, 9, 2017

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