Auto Industry Challenged by ESG Goals and New Competitors

The Big Idea

International commitments to reach "net-zero" and increased consumer interest in corporate sustainability have driven electric vehicle (EV) demand. Amazon recently partnered with European manufacturers Stellantis and Daimler and Indian automaker Mahindra to reach its carbon-neutral goals of having 10,000 EVs by 2025. Non-auto companies are also exploring the market; Sony announced plans to create a mobility subsector to build EVs, while companies like Apple and Dyson have flirted with the idea. In 2022, the auto industry faces a complex environment of increased expectations on EV production and potential new competitors entering the field.

RepTrak Perspective

Reputationally, the auto industry is in a strong position, particularly across Products. With strong to excellent Product Driver scores (70-80) in each global region, companies can focus on ESG issues. These issues include EV manufacturing, reducing industrial carbon emissions, and partnering cross-industry to achieve overall ESG goals. This new focus can take the industry's overall reputation another step further in 2022.

Reputation Context

Why is this important?

The proliferation of businesses' attention to electric vehicles comes from the global push driven by investors, consumers, and regulators to transition towards renewable energy. Most recently, BlackRock's CEO Larry Fink wrote, "Every company and every industry will be transformed by the transition to a net-zero world… The auto industry is merely on the leading edge." For car manufacturing companies, perceptions of ESG commitments influence product success as the global audience watches the industry as a guiding example for decarbonization.

What must Auto companies do?

While meeting net-zero expectations, Automotive companies cannot discount the importance of consumer accessibility. Toyota and BMW have pushed back on the rush towards battery-powered models, stating it is essential to be still able to offer "internal combustion engines" to meet customers' needs where charging infrastructure is less abundant.

From a reputation standpoint, the global public prioritizes Products and Services, as it is consistently the most influential Driver for the Auto industry among the global public. Auto companies must stay mindful of specific public priorities at the country level while maintaining a consistent worldwide message.

• In the United Kingdom and France, the public highly regarded environmental and social impact; Citizenship was the second most influential Factor in Q3 2021. 

• In Japan and Australia, the public prioritizes Innovation and Performance for the Auto industry, where Citizenship ranked fourth and fifth among the Drivers.

Convo Starters

Where can you increase global exposure on initiatives to tackle carbon neutrality?

As regulations in favor of EVs tighten and consumer demand increases, how will your company ensure EV production remains "green"?

How was your company targeted the reduction of environmental risk for automotive production?