AFV- alternative fuel vehicles

Following on from that, the automotive industry has been controlled by petrol heads, where the
main focus lies on big and powerful petrol engines, monstrous SUV’s and yet more horse power, an
idea further emphasized in last year’s NAIAS conference, one of the most prestigious auto shows in
America.

However, the industry has realized that it has been left behind in the electric and low co2 emission
car race, and is set to spend up to $90 billion, according to Reuters to catch up. The industry is
changing due to government, consumer and investors pressure because of an ever-growing concern
towards environmental sustainability and sustainable growth.

Governments were the first source of pressure with the signing of the Paris agreement starting in
2020. Its central aim is to keep global temperatures rise this century well below 2 degrees Celsius.
Additionally, the agreement aims to strengthen the ability of countries to deal with the impacts of
climate change and to reach these ambitious goals, appropriate financial flows and new technology
framework will be put in place.

The new technology framework is very focused and intended towards the auto industry as its one of
the most significant emitters of greenhouse gases, promoting the rise of AFV(alternative fuel
vehicles) and forcing manufactures, customers and investors to change their mindset.

Moreover, the Paris agreement is one of the many policies the government has introduced to put
pressure on manufactures. Laws like drivers will have to pay 3,650 pounds extra a year for using
diesel cars in certain zones are already in place which are quickly affecting customers preferences.
The government has even created the SMMT(Society of Motor Manufactures and Traders), a society
committed to achieve environmental global quality standard ISO 14001,through:

1. The progressive reduction and prevention of pollution

2. Environmental best practice in the working environment through a documented system

3. Continuous improvement in the environmental performance by regular benchmarking and

review against measurable objectives and targets.

4. Compliance with associated environmental legislations and other requirements.

Pressure from investors is also very present as major investors have warned the automotive industry
it needs to accelerate its readiness for a low-carbon world if it is to retain their support and prosper.
They are now demanding vehicle makers to put climate change specialists on their boards, engage
better with policy-makers, and invest more heavily in low-emission cars, says a network of 250
global investors in a new report “Investor Expectations of Automotive Companies” with assets worth
more than $24trillion

Investors want to ensure companies are prepared to thrive in a carbon-constrained environment,

shifts in demand caused by global trends and support robust policy action sufficient to drive the
transition to clean vehicles
Manufactures also face internal pressure on profit margins and cash flows problems and with
changing consumer preferences. The increasing demand for AFV’s is likely to become an important
sales driver. Customers expect demand to grow amid technological improvements, incentives created
under government policies and growing concerns over climate change. This will bring many financial
risks as the manufacturers' R&D and capital spending will have to increase dramatically.

Therefore, the main factors of why Aston Martin should change are stakeholder interest, potential
huge market and brand competitiveness

The global alternative fuel vehicles market was projected by Visiongain(market intelligence across 16
industries)to reach a value of $313bn by the end of 2018. This value that will only drastically increase
over the years as AFV’s will dominate the market since by 2040 the UK government will ban the sale
of diesel and petrol cars. If Aston martin doesn’t get into the AFV technology very soon it will be
forced out of the markets by its competitors losing out on millions of profits, as many of its
competitors are already into electric and some even hydrogen car manufacturing.

Stakeholder interest will also be a very important factor for Aston Martins change. As seen before,
external stakeholders like the Government were the first driving force to his change with the Paris
agreement and by banning the sale of diesel cars by 2040 which forces Aston Martin to enter the
AFV market. Furthermore, with customer preferences changing due to an increased awareness of
environmental degradation and investors wanting a safer and profitable future, both internal and
external stakeholder interest force Aston martin to change in order to remain competitive

Lastly brand competitiveness is crucial of why Aston Martin should change into the AFV market.
After a less lucrative year, Aston martin must make sure they remain competitive to satisfy their
shareholders. Thus, investing in clean sources of fuel like hydrogen will improve their brand image. A
better brand image will make more customers buy Aston Martins cars, as customers are clearly
evolving and prioritizing the environment which could give them a competitive advantage over their
competitors allowing to strive.