LETTERS: The automotive industry is a major industrial and economic force worldwide, producing 60 million cars and trucks a year.
It is a pillar of the global economy, the main driver of macroeconomic growth and stability, and technological advancement in developed and developing countries. It also spans many adjacent industries.
The automotive sector contributes to several important dimensions of nation building: generating government revenue, creating economic development, encouraging personal development, and fostering research and development and innovation.
Additionally, as motor vehicle manufacturers reap the benefits of globalisation through exports, they also generate foreign exchange earnings.
The motor vehicle industry is a spark for regional development. Industrial clusters, formed as original equipment manufacturer plants, are surrounded by component manufacturing facilities, including steel plants, glass manufacturers, used-car dealerships, aftermarket shops and transportation service providers.
The industry also contributes to job creation and skills development.
Given the complex nature of the industry, employees develop valuable skills in R&D, design, sourcing, manufacturing, supply chain, sales and marketing.
Therefore, the sector is a training ground for developing technical and managerial expertise valuable in many industries and for the entire economy.
The automotive industry remains at the forefront of cutting-edge manufacturing technology, which has spread to other industries.
Production processes that germinated in the automotive industry are now common in many industries.
The motor vehicle industry pioneered the use of robots as an automation solution. Robotics is a US$25-billion industry today, with food and beverage, pharmaceuticals and communications among the industries using this technology extensively.
Vehicle manufacturers were among the first companies to transfer direct task responsibilities such as design, engineering, R&D and purchasing to suppliers.
The government plays an important role in shaping the automotive industry in a country. Many countries provide funding and introduce policies that influence the evolution and momentum of the motor vehicle industry.
After a century of industry domination by Japan, South Korea, the United States and Western Europe, the introduction and fast growth of electric vehicles (EV) that spearheaded the IR 4.0 have seen a major shift in the growth of the automotive manufacturing industry globally.
China is now the world's largest manufacturer of electric passenger vehicles, buses and trucks, and Tesla is the largest motor vehicle manufacturer by market capitalisation, double that of the long-time world's largest motor vehicle manufacturer, Toyota.
EV manufacturing has made it possible for developing countries to participate in the mega automotive industry and reap the benefits that come with having their own EV manufacturing industry, which was once monopolised by industrial nations.
The United Arab Emirates and Qatar, which lack workforce resources, have invested heavily in China's EV manufacturer, Nio.
Their investments are worth 500 per cent of their overall investment based on the Nio market valuation on the New York Stock Exchange.
Saudi Arabia is interested in EV manufacturing and invested US$2.3 billion in 2018 to acquire 68 per cent of Lucid Motors, a US EV start-up.
When Lucid Motors was listed on Nasdaq in July last year, six months before it began production, the equity in Lucid Motors' shares was worth approximately US$46 billion.
Saudi Arabia's Lucid Motors' stake is more valuable than the rest of Saudi Arabia's US stocks combined. Now that Lucid Motors has started EV production in the US, its next EV manufacturing plant will be located in Saudi Arabia.
The Malaysian government, through MoF Inc or government- linked companies, should invest in the EV manufacturing industry as the auto sector has many benefits that could help the country reach a higher income per capita nation after 20 years of stagnation in middle-income country status.
We do not need to start from scratch to carry out this project as there is already a Malaysian company that has designed and engineered an EV that is ready to go into prototyping.
And the vehicles are compliant with Euro NCAP 5 stars, which means that they can be exported globally, similar to Vietnam's VinFast EV, which is being exported to the US.
Hopefully, the government will invest in a big way in EV manufacturing because it will create a large economic activity and thousands of jobs for Malaysians.
DR AMALINA AMIR
Head, Innovative Electromobility Research Lab, Faculty of Mechanical Engineering, Universiti Teknologi Mara
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times