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Automotive Industry Consolidation

Dr Vijay Sangam, 10:37, 21 Jun 2020

The automotive industry is undergoing a merger-mania. Recently, Daimler and Geely announced their joint venture in China, manufacturing Smart electric cars for the global market. It is now reported that Renault merged with Nissan and then acquired another carmaker, with Fiat acquiring Chrysler. Earlier, Volkswagen and Ford announced a global alliance. But all these consolidations will challenge the Tesla model in the US?

“Scheduled to make a decision on the proposed automobile mega-merger between Fiat Chrysler Automobiles (FCA) and Peugeot (PSA) on Wednesday, the European Commission launched an in-depth investigation into the deal. According to the official announcement, the Commission is concerned that the proposed transaction may reduce competition in the light commercial vehicle segment in several European markets. “Fiat Chrysler and Peugeot SA, with their large portfolio of brands and models, have a strong position in commercial vans in many European countries,” Commission Vice President Margrethe Vestager said. “We will carefully assess whether the proposed transaction would negatively affect competition in these markets and ensure that a healthy competitive landscape remains for all the individuals and businesses relying on commercial vans for their activities.” Source: Felix Richter Data Journalist

Tesla made history last week by overtaking Toyota to become the most valuable automaker in the world. After a brief comeback from Toyota, Tesla re-took the top spot this week, closing at a market capitalization of $184 billion on Wednesday, $4.3 billion above Toyota.

When we compare both graphics, what is unique is that Tesla dominates the US car market, and Globally, VW is the leader. The VW to lead in the US market is only by introducing a competitive electronic car that can compete with TESLA. If the current situation continues, it will lead to a monopoly by TESLA. Big brands such as VW, BMW, and Toyota have to come with alternative solutions to what TESLA is offering in the US. Owning a TESLA is a pride moment for many not only in the US but worldwide; the price tag is the only factor that is keeping commoners away from TESLA; if that barrier is broken, IT would be impossible to overtake TESLA anywhere in the world. In my opinion, it is good and evil. Right because of the benefits that come out of the electric car. Bad because we are encouraging a monopoly. Why can’t other car manufacturers develop an alternative to the TESLA solution?

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