Auto Industry 4.0. Irreversible changes: the future in electricity and IT

The 3rd Annual Ukrainian Automobile Forum, organized by the Strategy Council, was held in Kiev on November 7. The Federation of the Automotive Industry of Ukraine became an information partner of the event.

It’s not news to anyone that the Ukrainian automotive industry is in stagnation. However, the global transformations that the global auto industry is currently undergoing provide a chance for Ukraine to finally become not an object, but the subject of these changes.

“Cars with an internal combustion engine will go down in history. However, the car industry will change even more - in my opinion, in the future, 50% of the cost structure of cars will have an IT component. Such active changes in the field will open a window of opportunity, including for Ukraine, if the government will be guided not only by slogans, but also by concrete actions, "said Oleg Boyarin, Chairman of the Automotive Industry Federation of Ukraine." Today, the main task is to change the paradigm, there is an opportunity to rethink this strategy. That’s why we are trying to create a cluster initiated by the development of the automobile industry in Transcarpathia, in particular, Transcarpathian automobile cluster is actively being formed in Western Ukraine in order to strengthen the role of the automobile industry at the national level (Transcarpathian Autocluster Initiative). Smuggling and import today are in better conditions than the national manufacturer What can we say about the low demand for new cars in the conditions of total benefits for used cars from Europe. Obviously, the role of the state in the development of Ukrainian industry is key. Indeed, in 2008, the contribution of auto production to Ukraine’s GDP was 4% of GDP, but now it is less than 0.01% (at the level of statistical error), ”Mr. Boyarin emphasized.

The possibilities of Ukraine in terms of existing production capacities and competitive specialists in the labor market allow us to hope for a change for the better. In particular, the cost of producing one car in a full-scale way is 4 times lower than, for example, in Germany. But, unfortunately, there are few basic advantages, powerful support from the government is needed. Indeed, at the same time, other countries are actively fighting for investment, offering favorable conditions to global automobile players.

The forum actively discussed the issue of lithium deposits in Ukraine and the possibility of its extraction and enrichment for the production of electric vehicle batteries. A working group to develop an electric vehicle development strategy has already been created and is working under the Ministry of Infrastructure of Ukraine. However, with regard to lithium mining, this requires significant investment infusion. Thus, it is necessary to look for other possibilities of creating high-tech industries in Ukraine, including with the involvement of Ukrainian IT specialists.

Summarizing the event, it is worth noting that the most effective solution for Ukraine today should be the implementation of an integration strategy that provides for the development of the industry by attracting productive, technological innovations from more developed countries and companies, attracting local IT specialists. First of all, the state should create a regime of maximum favorable conditions for external investors by providing special conditions and preferences for their work, applying financial and other incentives. In this case, a mutually beneficial symbiosis is possible: the producer receives the maximum benefit and a favorable environment, and the state - the opportunity to develop a strategically significant industry. Almost all of our neighbors who had difficulties in conducting their own innovative activities and the development of automobile production went on this path.

Leading countries are in dire need of new capacities and are interested in expanding their markets. This is the very chance that Ukraine is simply obliged to use it. You need to act right now. There may be a lot of options: investor participation on a joint venture or a 100% buyout of assets, use of existing material and technical bases and capacities, or coming to the green area (preferential zones, technology parks), fiscal preferences or cost compensation, production for the domestic market or work for export. Be that as it may, an important principle here is political will and long-term strategic planning of the state of Ukraine.