Key Developments

• AlixPartners forecasts U.S. new light-vehicle sales of 16.4 million units in 2021, and 17.2 million in 2022; the consultancy also estimates raw-materials prices at $3,636 per vehicle in North America, compared to an average of $1,875 in 2020.

• GM expects up to $3 billion in expenses for the second half of the year due to the ongoing semiconductor shortage and rising inflation.  

• The average new-vehicle transaction price reached $41,263 in May, representing a 5.4% increase year over year and the third highest on record after December 2020 and February 2021.

• Stellantis and the National Business League announced a Black Supplier Development Program to qualify, train and develop Black businesses for future contracting opportunities within the federal government, and in the public and private sectors.

• The last-mile delivery market is forecast to achieve significant growth over the next five years, resulting in a potential opportunity for predictive maintenance technologies such as “smart tires.”

• A bipartisan group of senators introduced legislation intended to create a 25% investment tax credit for domestic semiconductor manufacturing facilities or equipment.

• Electric vehicles and low emissions technology:

  • GM will increase its planned investment in electric and autonomous technology to $35 billion through 2025, representing a 75% increase from pre-pandemic targets. The investment includes two new U.S. battery plants by mid-decade.

  • While numerous automakers are emphasizing a transition to battery-electric vehicles, Toyota plans to have a variety of engine options in its vehicle portfolio over the next three decades, stating that “it’s too early to concentrate on one option.”

  • Ford will acquire fleet charging service provider Electriphi to strengthen its energy management capabilities for Ford Pro commercial vehicle customers.

  • Sen. Joe Manchin (D-WV) stated that he has “grave concerns” about the industry’s transition to EVs because the nation is “totally dependent on foreign supply chains.” By some estimates, China directly or indirectly controls 70% of the world’s lithium supply, and 80% of the rare earths supply needed for EVs.

Market Trends and Regulatory

• A recent analysis from AlixPartners indicates the auto industry is susceptible to supply chain disruption for many materials due to “short-term industry ordering habits, low visibility into supply chains, and design and engineering approaches that don’t allow flexibility.”  The consultancy forecasts global light-vehicle sales of 83 million in 2021, and 88 million in 2022, with a continued impact of low inventory and supply shortages leading to sales below 2019’s pre-pandemic total of 90 million. [Full report is not publicly available]

• The National Highway Traffic Safety Administration has opened 30 investigations into Tesla crashes since 2016 where advanced driver assistance systems were potentially in use; the crashes involved 10 fatalities. Within the list provided to Reuters, eight of the investigations have been opened since March.

• A bipartisan group of senators continue to negotiate over a new $1.2 trillion infrastructure proposal that may include fees on electric vehicles and raising the gas tax among measures to fund the plan.

OEMs/Suppliers

• Production impact of the semiconductor shortage –  GM’s CFO Paul Jacobson said the automaker will consider partnerships or longer-term supply contracts with semiconductor manufacturers as possible approaches to avoid future chip shortages. Hyundai is reported to be considering options to diversify its semiconductor supply chains by shifting some production to South Korean chip companies. Unnamed sources in Reuters indicated potential challenges for smaller chip companies to fulfill the capacity required by automakers in the near term.

  • Daimler and Volkswagen will reduce hours at several German plants in the coming weeks as a result of the chip shortage. Impacted sites are Daimler’s plants in Bremen and Rastatt, and Volkswagen’s plant in Wolfsburg.

  • Subaru will idle two plants in Japan on July 16, impacting a number of models exported to the U.S., including the Forester, Crosstrek, BRZ and WRX; the automaker did not indicate when production would resume.

• GM announced it will invest $35 billion in electric and autonomous technology through 2025, up from a November 2020 target of $27 billion and a March 2020 target of $20 billion. The automaker plans to build two new battery cell manufacturing plants in the U.S. by mid-decade, adding to the previously announced plants under construction in Ohio and Tennessee. GM also announced its first-half earnings before interest and taxes will be $3 billion to $4 billion higher than previous guidance.

• Flex-N-Gate will invest $52 million to build out a new 205,000-square-foot plant in Troy, Michigan, at the former AxleTech plant. The supplier will add 245 jobs at this site, and will receive a $1 million Michigan Business Development Program performance-based grant.

• Goodyear Tire & Rubber Co. announced its first tire intelligence solution intended for cargo vans in field service, construction and last-mile delivery in North America and Europe. Goodyear SightLine uses embedded sensors and artificial intelligence to communicate with fleet operators in real-time on issues such as monitoring tire pressure and predicting breakdowns, resulting in enhanced safety and efficiency.

Connected/Autonomous Vehicles and Mobility Services

• Waymo raised $2.5 billion of venture funding from Magna International, AutoNation and Silver Lake on June 16, 2021. Perry Creek Capital, Mubadala Investment Company, Andreessen Horowitz, Fidelity Management & Research, Canada Pension Plan Investment Board and Alphabet also participated in the round.

• Autonomous delivery startup Nuro and FedEx will partner in a multiyear agreement to test package deliveries. This marks Nuro’s first initiative in parcel logistics; a pilot program has already begun in Houston.

• GM’s automotive financing arm will provide a $5 billion line of credit to its majority-owned subsidiary, Cruise LLC, to use for the purchase of self-driving Origin shuttles. The Origin will be the company’s first vehicle designed to operate without a driver on board; it’s scheduled to go into production in 2023.

Electric Vehicles and Low Emissions Technology

• The Wall Street Journal reports that several EV startups have demonstrated resilient share prices in spite of experiencing strategic challenges and executive departures since listing as public companies.

• Electrification plans and model launches -Ford’s Lincoln brand will have four new battery-electric vehicles by 2030, with the first due in 2022.Lincoln makes the Corsair, Nautilus, Aviator and Navigator SUVs, and the majority of the brand’s global sales are intended to be electric by 2026.Volkswagen indicated it will increase its strategic focus on electrification in the U.S. as a result of the Biden administration’s support of EVs. Volkswagen plans to launch roughly 70 EV models by 2030, but the ID4 is currently the only EV it manufactures in North America. Volvo will invest $118 million in its Ridgeville, South Carolina, plant to build electric vehicles with its affiliate Polestar Cars next year. The Polestar 3 is a midsize SUV that will use an electrified version of Volvo’s upcoming Scalable Product Architecture 2 (SPA 2) platform. Mazda announced that all-electric vehicles will represent 25% of its vehicle lineup, and all of its products will have “some level of electrification” by the end of the decade. The automaker will introduce three hybrids, five plug-in hybrids and three full-electric vehicles by mid-decade.

• GM’s hydrogen business recently announced partnerships with rail and aerospace companies: the automaker and Wabtec Corp. signed a nonbinding agreement to build locomotive engines using the automaker’s Ultium electric battery and Hydrotec hydrogen fuel cell system. The companies did not provide a timetable for when the technology will be available.GM and Liebherr-Aerospace will jointly develop a hydrogen fuel cell-based electrical power generation system for aircraft.

• Volvo announced a joint venture with Swedish battery maker Northvolt that will begin with R&D operation in 2022, followed by the establishment of a new gigafactory in Europe to begin production in 2026.Porsche and German battery company Customcells will jointly develop high-performance batteries intended to reduce charging times.

• Solid-state battery maker Solid Power Inc. will go public through a reverse merger with Decarbonization Plus Acquisition Corp III; the combined entity will be valued at approximately $1.2 billion. Solid Power makes rechargeable batteries for vehicles and mobile power markets, and its key investors include Ford and BMW.

• EV startup Canoo will build a plant in Oklahoma that is scheduled to open in 2023; the company did not disclose the expected plant capacity or the size of the investment. Canoo intends to begin production of its seven-seat lifestyle vehicle in the fourth quarter of 2022 through contract manufacturer VDL Nedcar in the Netherlands.

Prepared by Julie Dautermann, Competitive Intelligence Analyst