28/02/2020

Responsibility is the new premium in motoring

The electrification of transport is increasing the importance of responsibility as a means of differentiation for car brands, writes Matti Hietanen in our blog.

Matti Hietanen, CEO, Finnish Minerals Group

There is a lot of emotion and subjective opinions attached to cars and motoring. For some people, a car is a sensible purchase that takes you from point A to point B in an affordable and reliable way. For others, their car is part of their identity and a means of self-expression. 

Practically throughout the history of motoring, car brands have sought to provide the features desired by different customer groups, instead of just offering a means of transport. These features can relate to conceived technical quality, sportiness, luxury and practicality alike. ‘Premium’ is ultimately about status and perceived individuality – and people are often prepared to pay more for it than for a basic product.

Car brand images have a long history

In the automotive industry, the dividing lines between the brand images of different brands have been relatively well-established for a long time. 

Certain German premium brands have emphasised their technical edge (Audi), sportiness (BMW), and reliability and quality (Mercedes-Benz). European manufacturers have also distinguished themselves by their design (Alfa Romeo), unique technical solutions (Citroën), safety (Volvo) and even their accentuated trendiness (Mini). Japanese (e.g. Toyota and Nissan) and subsequently South Korean car brands (KIA and Hyundai) have garnered a reputation for their sensible approach.

In motoring, part of the brand relates to the features offered by the make and model of the car, such as whether its engine is four-in-line or V8 and whether it has a front-, rear- or four-wheel drive. These and other technical characteristics have determined the feel and driving experience and how the car brand differs from its competitors.

Electrification of transport changes the means of standing out

The powertrain of a traditional combustion engine vehicle has more than 2,000 moving parts. The powertrain of an electric car has about 20 moving parts. There are also differences in battery technologies, but it can be difficult to build a brand around whether you use an NMC811, NCA or LFP battery. 

Technologies also change and evolve rapidly. Instead of the technological intricacies of how the vehicle moves, car brands will have to emphasise new ways of differentiating themselves in order to patiently build a brand for which consumers are prepared to pay extra.

In the future, design, technical features and, for example, the functionality of user interfaces are things that will continue to support the image of quality and premium position. At the same time, responsibility factors are emerging as an important means to stand out. 

The electrification of transport is strongly about responsibility and mitigating climate change. When consumers buy an electric car, they also want to know how and from what raw materials the car has been produced. 

Virtually all major Western car manufacturers have recognised this development and are responding to it in their own ways. BMW has announced that it will stop using Congolese cobalt, Mercedes-Benz emphasises transparency in the carbon footprint of the supply chain, and Volkswagen has declared that its new ID model will be CO2 neutral its entire lifetime if it’s charged with green electricity. 

Would you ask a car dealer about raw materials?

The emphasis on responsibility provides good opportunities for building a Finnish battery value chain. 
In Finland, we can manufacture all products of the battery value chain with a low carbon footprint while emphasising a high level of responsibility. This is one of our absolute competitive advantages when seeking investments serving the European automobile industry in Finland. 

It is also possible for responsibly produced products to fetch a better price already at the upstream end of the production chain. This ultimately depends on the consumer, car brands and what consumers are prepared to pay a premium price for. 

Next time you are planning to buy a car, you should ask the seller where the car’s raw materials come from and how the responsibility of the value chain has been ensured. 

Hietanen Matti

CEO