Automobile Industry: Factors, issues & Electric vehicle industry
FACTORS RESPONSIBLE FOR THEIR LOCATION
- Raw materials – steel is the basic raw material thus proximity to iron & steel plants. E.g. – Detroit, Chicago, Stuttgart, Jamshedpur etc.
- Existing industrial regions to have effective inter – industrial linkages and uninterrupted power supply.
- Capital for continuous R&D as the industry is highly competitive.
- Demography – areas having high youth population will have higher demand of two wheelers and four wheelers. E.g. – Delhi-Gurgaon region.
- Economic setup of region – E.g. – agrarian economies will be having higher demand for machines like tractors, thrashers and harvesters.
- Ancelirisation: OEMs typically use ancillary parts in manufacturing end products. Thus, development of extensive ancillary network attracts other automobile manufacturers.
ISSUES IN AUTOMOBILE INDUSTRY
- Slump in domestic demand due to Covid induced lockdown.
- Complex migration and digitized transportation (OLA, UBER) discourages the permanent purchase of vehicles and affects demand.
- Bend towards electric & hybrid vehicles for which smaller companies do not have resources to invest.
FACTORS AFFECTING LOCATION OF ELECTRIC VEHICLES INDUSTRIES
Availability and price of raw material: Lithium, cobalt, manganese, nickel and palladium are the main raw materials. Location which offers their availability at low prices are the most favoured ones.
Existing industrial region: to provide streamlined forward – backward linkages.
Labour & Entrepreneurs: Skilled technology friendly labour and innovative entrepreneurs.
Government policies: Subsidies offered on purchases, higher focus towards climate friendly policies, better public transportation and tax incentives.
Market and demand: Urban areas where average daily driving distance is smaller.
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