Abstract
The automotive industry is undergoing a radical transformation. New social, technological, environmental and geopolitical challenges are redefining the characteristics of a saturated market, opening new scenarios while offering opportunities for the entry of new players. These challenges are bound to trigger reorganization of the global value chain between old and new suppliers and car makers and their suppliers, affecting the distribution of employ-ment, the regionalization of production and the dynamic evolution of the comparative ad-vantage of nations. In this paper we address the issue of the reorganization of global value chains in the face of these challenges. The analysis will compare the relative position of core and peripheries in the North-American and European macro-regions, focusing on Mexico, which represents a significant case study for analysis of the impact of the digital transformation on the domestic value chain in an “integrated periphery”, and of trade agreements on the location policies of big multinationals. The dependency of the Mexican automotive industry on the strategic decisions of global players is considered a factor of great vulnerability, especially in a context of rapid change in the patterns of consumption, technologies and international trade agreements. For Mexico, as for European producers in the integrated and semi-peripheries, the main challenge in the near future will be posed by the radical transformation the industry is going through in electrical and autonomous-driving vehicles, which sees regions and players outside the traditional automotive clusters in the lead. The transformations taking place are bound to change the global structure of automotive production. The rise of new competitors from the emerging economies and would-be entrants from other sectors, competing in mastering the new digital and software technologies, threatens the established structure of the industry. The pandemic has led to a spectacular acceleration in the process of change, while heightening uncertainty about future developments. This is why the governments of leading countries are joining in the race, wielding carrots and sticks in support of their industries and in the endeavor to encourage risk-taking and investment in research and innovation, step up e-vehicle production while providing for the necessary infrastructures, and guarantee their companies a place in the new industry.
Highlights
The automotive industry is confronting deep uncertainty in a complex and ambiguous environment (Teece, 2018)
In this paper we address the issue of the reorganization of global value chains in the face of these challenges
Governments have enacted policies aimed at enhancing the competitive advantage of their industries, in an effort to affect the geographical distribution of production
Summary
The automotive industry is confronting deep uncertainty in a complex and ambiguous environment (Teece, 2018). The established structure of the world industry is defined by trade wars, the rise of new competitors from emerging economies and would-be entrants from other sectors that compete to master ongoing paradigm shifts: connectivity, autonomy, sharing, and electrification (referred to by the acronym CASE, created by Daimler in 2016) These new challenges – social, environmental, technological, and geopolitical - open new scenarios: while they may entail huge costs in terms of changes in production, they can bring new life to a largely saturated sector. The radical transformation of the industry will affect the current structure of the whole automotive value chain: it will involve different stakeholders, such as new players in battery and software production, and mobility end-users, require securing new key materials and capabilities, and call for new public policies to ensure infrastructures How these upstream, downstream and horizontal partnerships will play out in the future is still highly uncertain. The last section summarizes the further steps in the ongoing research project
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