Top 5 Critical Challenges that the Auto Industry is Going to Face in 2021

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2020 has been the year of challenges and disruption and its effects may last for upcoming years as well. All the industries have faced a lot of challenges including the automobile industry. From the manufacturing to the sales everything is interrupted. It is because the manufacturing at china was interrupted and the demand was also declined by customers affecting sales.

For now, the industry has sat at a crossroad and COVID precautions like social distancing are accelerating the already underway changes. Industries are trying to accommodate changes in customer expectations and behavior. Still, creating the new streams of revenue will be critical to success beyond 2021.

The recovery strategy of the automobile industry may include the long term solutions to face the exciting and new challenges. In this article, we are going to discuss the main challenges the automotive industry is going to face in 2021.

Challenges automotive industry will face in 2021

Following are the challenges that the automotive industry is going to face in 2021.

  1. Overabundance production and costs

  2. Evolution of autonomous cars

  3. Connected technologies

  4. Choosing correct technology for powertrain

  5. Ownership access and shifting

Overabundance production and costs

One of the topmost challenges the automotive industry is facing today is excess production. According to the OICA, more than 11 million cars were manufactured in 2018, while at the same time 27 million units were recorded in China and almost 9.7 million units were recorded in Japan. This count shows how the sales have been very disappointing as compared to the past years.

The excess amount of production is the result of an unpredictable demand graph. The auto manufacturers invested many resources to design and develop the vehicles that were not actually needed. And, when the manufacturers realized this, they had already spent a lot on the labor and buying production material.

Moreover, the demands of the new vehicles have been reduced even though the affordability is increased. That is also one of the daunting challenges for the automotive industry.

Evolution of autonomous cars

One of the most revolutionizing technologies in the automobile industry is autonomous cars. It was introduced at the start of the 21st century and it has surprisingly become a challenge for this industry. We all know that this concept just reached level 4 and it may need a couple more years till it will be successful completely. Many companies like Tesla and Ford have launched their initial level 4 autonomous cars.

The concept of AI along with deep learning and data science are used for self-driving cars but it is still midway. Carmakers are trying to get a hold of these technologies to be in the competition. The automakers are facing different challenges to deliver fully functional autonomous cars. The technical limitations are also playing a huge part to restrain the whole progress and all this process needs huge investments as well.

The other major challenge is that automakers are trying to create electric cars that are more environmentally friendly. But, the customers are not yet ready to accept these cars. The installment of EVs to charging these cars is also a difficult thing to start for different governments. Furthermore, there is a quite limited number of electric car companies.

Connected technologies

Connected technologies are also one of the huge challenges the automotive industry is facing recently. Each and everything is becoming digital and data-driven for now. All this is leading to more accurate data to be stored and monitored.

Modern cars are equipped with automotive electronics to collect a huge amount of data daily. The data includes speed, components, performance, and behavior. It also enables real-time data insights.

Moreover, the demand for connected technologies has also increased recently. It has also brought a transformation in the whole automobile industry. It also increases the competition and the requirement of proper planning. Auto manufacturers are trying to leverage the customer demand as far as the connected vehicles are concerned.

The involvement of technology in the automotive industry has also increased the complexities like protection of data and customer safety. And, that’s the important thing that manufacturers need to consider. The connected technologies are not directly challenging the automobile industry but their implication in the vehicles do.

Choosing correct technology for powertrain

The powertrain and regulations development need to balance and corporate with one another. It is also one of the huge challenges that the automobile industry is facing today. The world is trying to implement regulations to control exhaust emissions. Right now, Europe is working fine to transform the whole direction of the car industry with its unpredictable emission. The diesel engine companies are also collaborating to produce less toxic nitrous oxide.

If the automakers will be able to make the right powertrain technology it will lead the automotive trade to another level. Also, the customer prefers the new changes and they accept it quite often. Manufacturers are also trying to find the technology combinations that are going to work best for them.

Ownership access and shifting

It is also one of the most difficult challenges the automotive industry is facing. Although, people can afford the vehicle as they have a better living standard. The people are also quite open to the idea to use their vehicle to make more and more money.

Customers are ok to subscribe to the different monthly services of auto insurance, maintenance, and other necessary things. But, the other difficulties like car parking, the maintenance cost, etc are creating a decrease in the demand. People prefer to use Uber or Lyft services to travel around.


Here we wrap up our list of critical challenges the automotive industry is facing. We hope that car manufacturers work on these issues and keep providing the best and technology-oriented cars.

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