By Helen Wiggs, Head of Climate Change, ShareAction
The meaning of a Kodak moment has changed over the decades. At its height, as a successful camera manufacturer, the company used it to convey the sense of photography capturing a moment in time.
Nowadays, the term describes industries which, like Kodak, threaten to become obsolete if they do not keep up with technology and the needs of their customers.
The global auto sector is facing its own Kodak moment.
The climate crisis has both accelerated and necessitated innovation in the sector. Transport is an obvious industry to focus on. Over 24 per cent of global CO2 emissions from fossil fuel combustion comes from the sector and light duty vehicles account for 36 per cent of crude oil demand.
A switch to electric now offers a competing source that is much cleaner environmentally, easier to transport, and - at scale - could potential replace up to 40 per cent of global oil demand.
Investor money is backing new entrants driving change
Industry and investors are responding. This summer, Daimler announced Mercedes-Benz would be all electric by the end of the decade, “where market conditions allow”. And in the last few weeks, “market conditions” have allowed the creation of a trillion-dollar behemoth in Tesla.
New entrant, Rivian, jumped 30 per cent on its Nasdaq debut earlier this month. Its market valuation is already higher than that of traditional incumbents, Ford, and General Motors. Volvo has also recently enjoyed a promising return as a listed company, no doubt aided by its pledge to be fully electric by 2030.
Investor money is most assuredly behind an electric future.
But long-established auto makers are still off the pace
Mindful of the mistake of too long ignoring innovative technology, European auto manufacturers are taking steps to catch up. But are they moving fast enough?
Our March report, European Auto Makers: Still in the slow lane? suggested they were still well off the pace. VW claimed a 90 per cent share price gain in the same month - post the launch of their ACCELERATE EV strategy which offered a clearer pathway to electrification. But eight months later that strategy seems to have already shifted down a gear.
VW were among four of the world's biggest carmakers to fail to sign a COP26 summit pledge to only sell zero emissions cars and vans by 2035.
European companies must continue to send a demand signal to speed up transition
As we set out in our recent research report Decarbonising Corporate Fleets, A Win-Win for Investors the opportunity of scale is already emerging through industry adoption and commitments such as EV100.
Investors can help reinforce the corporate demand signal for EVs by asking companies about the composition of - and plans for - their own fleets.
Stranded asset risk is increasing.
Corporates with huge fleets, need to avoid holding petrol-fuelled cars by 2030, the year which heralds a UK internal combustion engine phase out and the planned EU zero-emission standard.
A combination of urgency, innovation and choice are transforming the auto industry.
The a-ha moment of opportunity for automakers and corporate adoption is speeding past.
It is time to leave the slow lane of adoption and accelerate into an electric future.
