On a bi-weekly basis, the Center for Automotive Research (CAR) welcomes our audience to decompress with our President and CEO, Alan Amici, as he covers and shares his thoughts on the latest Hot Topics happening in the automotive industry. If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

The Pause on Lithium Investments & Loans: 

• GM delays lithium investment amid falling prices and election uncertainty 

• Piedmont Lithium pulls US government loan application as prices slump 

• Wary of Trump, US minerals projects rush to close government loans 

Alan’s thoughts:

Investment in lithium mining has paused as the underlying financial conditions have shifted. EV demand has softened, and China’s overcapacity has created downward pressure on lithium prices. Investment assumptions such as commodity prices and mining company stock prices have decreased, causing investors such as GM to reconsider timing and investment terms. 

At the same time, government funding through the Loan Program Office (LPO) requires due diligence from subject matter experts and regulators that may not be completed until Q1 2025. A change in the political administration may alter clean energy loan policy and availability of loans. 

Unions Negotiate Against VW German Plant Closures: 

• Unions pledge to leave ‘no idea unexplored’ in tackling VW crisis 
• ‘A declaration of bankruptcy’: Unions lash out as Volkswagen weighs possible German plant closures 
• Volkswagen considers historic German plant closures in cost drive 

Alan’s thoughts:

Volkswagen employs 680,00 people globally, with 290,000 based in Germany, and has maintained an employment agreement with German unions since 1994. In the wake of Asian competition and EV market uncertainty, VW has embarked on a $11 billion cost-cutting initiative. VW management has indicated that this may drive the closure of one assembly plant and one component plant in Germany. Union officials are vehemently opposed to such a move and are working to have all options on the table, including 4-day work weeks, previously implemented during earlier crises. 

The industry will be watching as one of the world’s top vehicle producers faces what could be an existential challenge. Will global automakers be able to get their cost structure competitive with Asian competition? Can automakers adapt their portfolios enough to meet shifting consumer demands? And can unions and management find common ground to preserve jobs while improving productivity? These are critical questions that everyone will be eager to see unfold. 

The Future of Hydrogen: 

• BMW plans to bring its first hydrogen car onto the market from 2028 
• Abu Dhabi to invest billions in Exxon’s Texas hydrogen project 
• ‘Transformational’: how a California city launched America’s first hydrogen-powered passenger train 
• Feds grant $4.8M for hydrogen fuel research, fueling station at WSU 

Alan’s thoughts:

BMW has partnered with Toyota to develop a hydrogen-based passenger drive unit to power an existing model scheduled for release in 2028. Co-developing with Toyota allows for both cost and knowledge sharing between the two companies. The drive unit could also be adapted for commercial truck usage, long identified as the primary market for hydrogen fuel cell applications. Is this a repeat of the EV transition which is experiencing the confluence of propulsion technology migration, infrastructure deployment, and federal regulations? I think there will be consideration of a nascent hydrogen infrastructure and a practical timeline before the industry jumps headfirst into mass marketed passenger cars powered by hydrogen fuel stacks. This won’t discourage innovators like BMW, Toyota, and others from laying the groundwork for future propulsion technology. However, a practical infrastructure plan is necessary to make the transition efficient. 

On a bi-weekly basis, the Center for Automotive Research (CAR) welcomes our audience to decompress with our President and CEO, Alan Amici, as he covers and shares his thoughts on the latest Hot Topics happening in the automotive industry. This week we are joined by special guest Ravi Puvvala, General Manager, SBU at CAR. We are taking a deep dive into the hot topic of V2X following the insightful CAR roundtable on V2X at MBS2024.

If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

Hot Topics Special Edition: V2X 

• MBS 2024 – (Video) Keynote – Shailen Bhatt, Federal Highway Administration, USDOT
• Saving Lives with Connectivity: A Plan to Accelerate V2X Deployment
• USDOT Awards Nearly $60 Million in Advanced Vehicle Technology Grants to Arizona, Texas and Utah to Serve as National Models and Help Save Lives on Our Nation’s Roadways
• U.S. DOT issues a new plan and a rallying cry around V2X safety technology
• V2X Secures $3.7 Billion Task Order to Spearhead Next-Generation Readiness and Training Capabilities for U.S. Army Worldwide

Ravi’s thoughts:

The U.S. Department of Transportation (USDOT) has taken a major step forward in its efforts to enhance road safety and connectivity by unveiling the “Saving Lives with Connectivity: A Plan to Accelerate V2X Deployment” initiative. This comprehensive plan outlines the strategy for deploying Vehicle-to-Everything (V2X) technologies across America’s roadways, promising to revolutionize the automotive industry and significantly improve public safety.

The Core of the Plan: Enhancing Safety and Connectivity: 

V2X technology is designed to enable vehicles to communicate with each other, as well as with surrounding infrastructure, pedestrians, and other road users. This technology is critical for reducing traffic accidents, improving traffic flow, and supporting the development of automated driving systems. According to the USDOT, V2X has the potential to prevent or mitigate up to 80% of non-impaired crashes, making it a vital tool in the effort to save lives on the road.

The USDOT’s deployment plan highlights the importance of both direct and networked V2X communications. Direct V2X involves vehicles exchanging real-time information—such as speed, location, and direction—directly with one another, which is essential for avoiding collisions. Meanwhile, networked V2X leverages existing mobile networks to transmit safety messages over a broader area, complementing direct V2X and facilitating faster and more widespread deployment.

Impact on the Automotive Industry

The automotive industry is poised to undergo significant changes because of this deployment plan. Automakers like Ford and General Motors are closely monitoring the USDOT’s initiative, as it will likely influence the development of future vehicle models. According to recent reports, Ford is expected to integrate V2X technologies into its lineup, enhancing the safety features of its vehicles and aligning with USDOT’s vision of a connected transportation ecosystem.

General Motors has also shown interest in the deployment of V2X technology, recognizing its potential to improve vehicle safety and efficiency. By embracing V2X, automakers can offer customers advanced safety features that not only protect drivers and passengers but also contribute to the overall safety of the roadways.

We expect more Auto OEMs to follow the course & announce their roadmaps for V2X integration.

Collaboration and Implementation

A key aspect of the USDOT’s plan is the emphasis on collaboration between public and private sectors. The agency is working with automakers, technology providers, and local governments to create a unified ecosystem that supports the deployment of V2X technologies. This collaboration includes efforts to standardize V2X communications, secure the necessary spectrum for V2X operations, and promote the integration of V2X with other advanced vehicle technologies.

The 5G Automotive Association (5GAA), Alliance for Automotive Innovation, ITS America have welcomed the release of the USDOT’s updated deployment plan, praising its potential to accelerate the adoption of lifesaving V2X technologies. They all have been a strong advocate for the use of cellular networks in V2X communication, and the USDOT’s recognition of networked V2X as a critical component of its plan is a significant endorsement of this approach.

Immediate and Long-Term Benefits

The USDOT’s plan is not just about long-term goals; it also focuses on immediate action. The agency is prioritizing the deployment of V2X in areas where it can have the most significant impact, such as urban environments with heavy traffic and regions prone to severe weather. By targeting these high-impact areas first, USDOT aims to quickly demonstrate the life-saving potential of V2X technology and build momentum for its broader adoption.

In the long term, the plan envisions a fully integrated transportation system where V2X technology is standard in vehicles and infrastructure across the country. This vision includes ongoing advancements in direct V2X communications and the continued expansion of networked V2X capabilities.

Conclusion

The USDOT’s “Saving Lives with Connectivity” plan marks a pivotal moment in the evolution of vehicle safety and connectivity in the United States. By accelerating the deployment of V2X technologies, the plan promises to reduce crashes, save lives, and support the growth of a smarter, more connected transportation system. For automakers like Ford and General Motors, this plan offers a clear pathway to integrating V2X into their vehicles, ensuring that they remain at the forefront of automotive innovation. The collaboration between public and private sectors, along with the recognition of networked V2X, underscores the importance of this initiative in shaping the future of road safety and connectivity.

On a bi-weekly basis, the Center for Automotive Research (CAR) welcomes our audience to decompress with our President and CEO, Alan Amici, as he covers and shares his thoughts on the latest Hot Topics happening in the automotive industry. If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

2nd Quarter Auto Sales: 

• Ford sales edge 1% higher in the second quarter, led by trucks 

• GM reports best U.S. quarterly sales since 2020 

• Tesla sales fall for second straight quarter despite price cuts, but beat analyst expectations 
• Stellantis sales drop sharply in second quarter amid dealer discontent 

Alan’s thoughts:

Positive Q2 sales results for Ford and GM with disappointing returns for Tesla and Stellantis.  Demand for hybrids is growing and while EV sales continue to increase, the rate of growth is slowing. What I find surprising is that non-ICE propulsion continues to be the growth area.  Savvy dealers will recognize this and will be prepared to showcase, describe, and inform potential buyers of the propulsion offerings. The purchase decision can often come down to a buyer’s confidence in the ability to navigate the transition from ICE to EVs (or hybrids). The dealer is the final and most crucial point of contact with the buyer, which can make all the difference in the world. 

Electric Sports Cars: 

• Porsche sticks with plans to stop some combustion model production 
• As the E.V. Revolution Slows, Ferrari Enters the Race 
• The 2026 Chevrolet Camaro: A Look at the Electric Future 

Alan’s thoughts:

Is performance only the domain of ICE vehicles? From the recent announcements and press releases, traditional performance car makers see an electric-powered future. Porsche, Chevy, and even Ferrari will offer EVs to entice a broad range of enthusiasts. Will drivers miss the throaty (or high pitched) roar of gas-powered engines? Apparently, not all EVs will be silent runners as Ferrari hints at acoustics being part of the experience. Harley Davidson grappled with this a few years back with their e-bike offering. 

The auto industry continues to be a font of innovation whether in propulsion, safety, affordability, convenience, or overall experience. Give the planners, designers, and engineers a problem and they will figure out a good solution. Let’s see how they tackle acoustics! 

In honor of Independence Day this week, we are bringing you a special edition of What CAR is Checking Out! This week we are focusing on current American events, news, and companies that are captivating our research team.

What Tyler is Checking Out: 

• Home (selectusasummit.us)

Tyler’s Thoughts:

The SelectUSA Investment Summit is the premier conference for companies and investors looking to do business in the United States. Hosted by the US Department of Commerce, the SelectUSA Investment Summit is designed to facilitate business investment and deals providing access to representatives from Economic Development Organizations (EDO’s) from US states, territories, and communities. This year’s 10th annual conference was the largest to date – over 5,000 attendees, 96 international markets, and over 1,000 EDO representatives encompassing all 56 US states and territories. On top of this ecosystem curated for dealmaking in the exhibition hall, there are panels, armchair discussions, pitching sessions, and more, providing opportunities for investors, companies, and EDO’s to learn from industry experts.

This year, CAR had the privilege to attend the conference. We were amazed by the unparalleled access to so many EDO’s, covering the entire US, all in one location – not to mention the innovators and startups as well as established leaders across multiple sectors. As an analyst at CAR and contributor to the CAR Book of Deals, I relished the opportunity to learn from industry experts covering all topics relating to foreign direct investment (FDI) into the US. I particularly enjoyed the panel discussions on the energy industry, the CHIPS Act and the development of a semi conductor ecosystem, and clean energy and advanced manufacturing opportunities through the Inflation Reduction Act. Outside of the exhibition floor networking and the thought-provoking panels, the plenary sessions were also impressive – including a speech from the Honorable Anthony J. Blinken, the Secretary of the US Department of State.

Throughout this conference, there was one recurring message: “The US is open for business.” It truly highlighted the opportunity for growth and investment in the US, but also the importance of foreign investment. FDI creates jobs and brings manufacturing back to the US. Looking at the CAR Book of Deals data for 2023, FDI from automakers totaled over $19 billion in the US and is expected to create over 12,000 new jobs. Suppliers made big announcements too – and as companies establish new vehicle assembly and battery plants in the US, more investment will follow as the suppliers co-locate. This was a key point discussed at the SelectUSA Investment Summit, especially regarding the battery and semiconductor industries. As new gigafactories and fabs come online, their respective supply chains are expected to be onshore and nearshore. This presents opportunities for US communities to capture investment leading to advanced manufacturing and future mobility job growth. This is of particular importance in the EV transition. FDI will play a key role in helping communities not just survive but thrive in the transition to an electrified future.

What Prasad is Checking Out: 

• DK update: Dealers should have full DMS service by July 4 | Automotive News (autonews.com)
• Volkswagen-Rivian deal:How VW’s $5 billion bet on EV maker came about | Reuters
• MCCC to host first Electric Vehicle Summit Thursday (monroenews.com)

Prasad’s Thoughts:

Back in 2022, CDK, the cybersecurity firm said “When It Comes to Cybersecurity, Everyone Is a Target | CDK Global,” and on June 19, 2024,CDK itself got attacked. This news made for a lot of reading at CAR, as CDK serves about 15,000 automotive dealers with its dealership management systems (DMS) in the United States. The numbers add up quickly – whether in the resultant economic impacts from lost or deferred auto sales or the long-term impacts of what happened behind the scenes with CDK and the cyberhackers.

Much is still to be discovered here but cybersecurity and its ramifications in physical systems (referred to as cyberphysical systems) is a rapidly growing risk factor that needs to be factored into any investment or economic development work we undertake in the industry. The market is still relatively “young” for all this, so there will be certainly more to come on this topic. Yes: when it comes to cybersecurity, everyone is a target.

The Rivian – VW news emerged early in CAR’s internal hot topics discussions. We sliced and diced this a bit. It fits the textbook models of build-buy-partner options that firms use to quickly build capabilities. Rivian needs cash, and VW needs “software.” How this will play out, only time will tell. Some of this might seem like a “replay,” but the third time could be a charm. Ultimately, a product that is both appealing and affordable is key – VW’s strong track record in this area and Rivian’s appeal make this deal worth closely monitoring.

Finally, a bit of hyper-local reading where the headlines at the Monroe Daily News (in Monroe County, Michigan) read “’May be controversial’ but Monroe summit seeks fact-based discussion of EVs.” The point here is the importance of engaging with those who market shifts or business transformations differently. Is the internal combustion engine going away? Are electric vehicles here to stay – no, yes, maybe so – it all depends. The key insight or affirmation (perhaps not new to anyone) was that a policy made without ears on the ground is a policy that is hard to execute. We see a deep and committed set of investors and local economic developers on the ground wherever we go and when we listen to both sides we always come away with a better, more inclusive design.

What Lisa is Checking Out:

• Nearly 71 Million People Expected to Travel overJuly 4th Week
• Week 2 of CDK outage changes dealers’ way of doing business
• Vehicle Ownership
• Car Ownership Statistics 2024
•  

Lisa’s Thoughts:

4th of July Travel

Embracing the American tradition of road trips, many people continue to choose this popular getaway during the Independence Day holiday season.

This year’s Independence Day travel period is expected to exceed 70M travelers, showing nearly a 5% increase in the number of drivers forecasted for 2024 compared to the previous year (over 2.8 M additional travelers). This forecast also exceeds the total number of drivers during the 2019 Independence Day holiday week. AAA estimates that 85% of travel is by vehicle in comparison to other modes of transportation.

Increased work flexibility has extended Independence Day travel patterns, reflected by holiday travel estimates that are calculated over a 9-day period spanning two weekends. As in-vehicle conveniences and services are more widely available, road trips can offer amore enhanced and safer experience during busy travel seasons.

CDK Global Outage

In addition to enjoying the American tradition of road trips, consumers are using the Independence Day holiday to shop for vehicles amid the availability of new and current-year options. The recent CDK Global outage has impacted dealer management systems and vehicle registration applications, potentially resulting in dealer losses of nearly $1 billion should outages last through the holiday. To prevent any inconvenience for consumers, dealers have opted to use alternative methods for sales and scheduling.

Automotive Ownership and Independence

With the rising availability of ride sharing, car-sharing, and questions about vehicle affordability, questions have emerged about whether independent vehicle ownership remains an American pastime. Two initial metrics to answer this question include tracking vehicle sales trends and differential rates of ownership among younger drivers. Despite the assumption that individual vehicle ownership might be decreasing due to factors like slowed EV adoption, recent reports suggest that car ownership has continued to rise (2018-2022). Notably, most US households report owning at least one vehicle.

Even with assertions that younger consumers might forgo purchasing their own cars, several factors, such as valuing personal independence, a wide range of vehicle choices, and extended vehicle longevity suggest that individual vehicle ownership is unlikely to decline abruptly.

On a bi-weekly basis, the Center for Automotive Research (CAR) welcomes our audience to decompress with our President and CEO, Alan Amici, as he covers and shares his thoughts on the latest Hot Topics happening in the automotive industry. If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

Tariffs on Chinese EVs

• Germany seeks to prevent or soften EU tariffs on Chinese EVs

• EU moves to hike tariffs on Chinese electric vehicles

• India says high tariffs on EVs to protect from Chinese imports 

• Chinese EV stocks surge after EU slaps up to 38% additional import tariffs 

• Stellantis Moves Some EV Production Out of China Due to EU Tariffs 

• Canada considers imposing import tariffs on Chinese EVs 

• China wants EU to scrap EV tariff plans as talks start

Alan’s thoughts:

The EU plans to raise the duty on Chinese-manufactured EVs by 38%, despite European automakers opposing the tariff to prevent a potential trade war escalation. Many European manufacturers import parts from China and run the risk of facing retaliatory duties. The tariff is relatively benign when compared to the 100% duty imposed by the U.S. Still, it sends a message that “unfair subsidization” of Chinese imports will not be tolerated. Canada is considering similar measures to protect its robust automaking industry. The industry needs a level playing field and an appropriate capacity to meet demand. Excess capacity, dumping, and subsidized products create labor, supply, profitability, and sustainability issues in the long term, which is not a good outlook for the auto industry. 

EV Demand Decrease:

• EV adoption falls to its lowest point since 2021: JD Power 

• GM trims 2024 EV forecast amid slower-than-expected demand 

• Almost 40% of U.S. EV buyers want to go back to combustion engine cars, survey says 
• EV maker Fisker’s bankruptcy heads toward liquidation as creditors fight over assets 
•  

Alan’s thoughts:

GM is reducing its forecast for EV sales in 2024 by approximately 50,000 units, citing a slowing rate of sales growth. GM still expects EVs built off their Ultium Platform to be profitable, even at 200-250,000 units, suggesting GM has a good command of its variable costs and productivity improvements. Matching supply to demand is the hallmark of any good company and we’re simply seeing adjustments being made to match the market demands. Fortunately, companies such as GM, Ford, Toyota, and others have sufficient alternative powertrains to offer to customers with little or no disruption.

Meanwhile, Fisker files for bankruptcy, highlighting the cash-hungry nature of automotive design, development, and production. It takes more than a good idea and talent to make it as an OEM.

What Alan is Checking Out: 

• General Motors Accelerates Into Silicon Valley With New Mountain View Tech Hub
• General Motors opens Silicon Valley office
• Michigan Central Station Reopens as Heart of a Culture & Tech Hub
• Ford Opens Mobility Tech Hub in a Detroit Landmark
• The Software-Defined Vehicle

Alan’s Thoughts:

GM recently announced a technical center in Mountain View, CA. GM hopes to attract new software talent from the Bay area to join their team. This move is consistent with GM’s effort to expand software and services, targeting future revenue streams from non-traditional consumer services.

On the other hand, Ford is placing their bets on the Detroit area, having recently re-opened Michigan Central Station and the nearby Newlab, a startup accelerator. Ford’s strategy is to offer interesting projects and outstanding facilities to entice talent to either remain in the area or move to Detroit.

Nearly all automakers are working on the so-called Software Defined Vehicle (SDV), a concept that places software as the primary driver of the vehicle’s characteristics. Prior designs have been hardware-centric with software supporting the mission of the hardware.

This new approach offers flexibility and the ability to keep consumer’s vehicles up to date with the latest features and upgrades, much like cell phone technology. The task in front of automakers is daunting as OEMs are bringing software development in-house while defining and designing the architecture, infrastructure, and specifications to make SDV a reality.

What John is Checking Out: 

• How Volvo landed a cheap Chinese EV on U.S. shores in a trade war
• Europe wants affordable electric vehicles from China. But not at the cost of its own auto industry
• China’s Auto Export Wave Echoes Japan’s in the ’70s
• Will the U.S. Tariff on Chinese EVs Hurt EV Adoption?

John’s Thoughts:

The prospects of the entry of inexpensive Chinese-made electric vehicle imports into major motor vehicle markets such as North America and the European Union calls to mind the early phase of Japanese vehicle imports into these markets in the 1970s-80s. Auto industry executives and policymakers once again find themselves navigating the complexities of major socioeconomic and geopolitical developments all occurring within the context of the seismic, often confounding transition to new forms of vehicle propulsion and the required infrastructure to support the transition. As my principal mentor in the automotive industry Dr. David Cole, was fond of observing during his tenure at the Center for Automotive Research, “The automotive industry is not yet in its final form.” Indeed, rarely has the automotive sector seen turbulence of this magnitude.

Just as the current situation for industry executives is fraught with risk and uncertainty, economic development practitioners across North America are grappling with how to most effectively attract, retain, and support investments in the new mobility sector, noted for its industry-leading job creation multiplier impact. Identifying which vehicle producers, suppliers, and technology developers are best positioned for future growth challenges even the most sophisticated, well-resourced economic development organizations. The stakes are high, with data and objective trend analyses as the key to success.

CAR’s research team is tracking a broad range of key drivers of investment in the mobility sector, from technology trends, raw material supply/accessibility, workforce requirements, regulatory/trade policies, consumer behavior, infrastructure development, and others. Rely on the Center for Automotive Research to deliver scrupulously objective, data-driven analyses to support decision makers in the automotive industry, government policymakers, and economic development organizations.

What the Center for Automotive Research Team is Checking Out:

• Auto Tech Showcase 2024

CAR’s Thoughts:

Center for Automotive Research was an exhibitor this week at the Alliance for Automotive Innovation’s Auto Tech Showcase in Washington, D.C. President & CEO Alan Amici had a chance to speak with automakers and federal policymakers and regulators about some of the research projects that CAR has been working on. We had the opportunity to check out some of the transformative automotive technologies that are delivering on cleaner, safer, and smarter vehicles. In addition to the physical demonstrations, they had great thought leadership presenters on Vehicle Safety, Digital Safety, and Reimaging Automotive Safety.

This week we are joined by a special guest, Lisa Krusemark, Industry Analyst at CAR. Lisa covers and shares her thoughts on the latest Hot Topics happening in the automotive industry.  If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list  here  to get Hot Topics sent directly to your inbox.  

Nissan & Tesla Safety Recalls: 

• Nissan warns owners of older vehicles not to drive them due to risk of exploding air bag inflators 
• U.S. tells owners to stop driving older Nissan vehicles over air bag concerns 
• Nissan issues ‘do not drive’ alert for nearly 84,000 older models with recalled airbags 
• Tesla recalls more than 125,000 vehicles for seat belt notification failure 
• Tesla recalls 125K vehicles to fix issue with seat belt warning system 

Lisa’s thoughts:

Recall warnings are being issued for owners of older vehicles due to Takata airbag inflator malfunction risk. The recent recalls for Nissan are tied to another fatality linked to an exploding inflator on the front-passenger side. The Takata airbag inflator malfunctions have led to 27 fatalities and over 400 injuries in the United States, dating back to initial reports from 2018 and injuries beginning in 2015. The Nissan do not drive warnings are linked to models spanning from 2002 to 2006. Overall, there are tens of millions of Takata air bags under recall, and explosions are thought to be associated with long-term exposure to heat and humidity.

As vehicle recalls place the responsibility for bringing in vehicles on the consumer, data shows that only 50-70% of recalled vehicles are repaired (e.g., the recall completion rate). Additionally, it is estimated that up to 25% of all US vehicles in operation have one or more open recalls. Many factors contribute to the low recall completion rate, including ambiguity for consumers about the repair process, severity of the recall issue, and costs. Manufacturers, dealerships, and federal agencies are tasked with reaching consumers for recalls, however, the increasing age of the average vehicle on the road creates additional challenges for automakers to reach owners of pre-owned vehicles.

The number of recalls for electric vehicles, ADAS, and OTA updates has nearly doubled in the last couple of years. As vehicle recalls become increasingly diverse and complex, it is even more important to provide consumers with clarity about the methods used to complete recall repairs. A specific example of the growing recall complexity includes the recent recalls for Tesla 2021-2023 Model S and Model X issues for front seat belt detachments (that require repairs and replacements to front row seat belts). In addition to this recall, Tesla issued a recall for seat belt warning system failures that apply to three different models. Telsa reported that the seat belt alert will be addressed using over the air (OTA) updates which will be deployed this month. The Tesla seat belt recalls highlight how recalls may be either completed by traditional repairs at the dealership or via OTA updates, confirming the importance of educating consumers about how to understand the recalls and initiate repair completion.

Automakers Unveil New EV’s:

• Chevy Equinox EV first drive: GM may have cracked the code in delivering a quality SUV that’s affordable [Video] 
• VW to build low-priced EVs on its own, forgoing partnerships 
• Jeep reveals all-electric Wagoneer S in EV offensive, starting at $72,000 
• Cadillac’s new entry-level Optiq EV to start at $54,000 
•  

Lisa’s thoughts:

New EV model announcements reflect a prominent issue for the automotive industry and the consumer: vehicle affordability. This issue proves critical for EV adoption and the broader new vehicle market, particularly given the average new vehicle price is roughly $47K (as of May). Automakers are moved to produce EVs that are priced in a range comparable to lower-priced models produced in China, but this will likely be limited to specific market segments in the near term.  

Following the announcement that the Bolt was discontinued in mid-2023, Chevrolet announced the Equinox EV as a potentially affordable option within the popular crossover market (with a base price around $35K). European automakers are also motivated to offer affordable EV models with direct competition from Chinese automakers (such as BYD which offers the Seagull hatchback below $22K USD). Volkswagen announced plans for a new lineup of BEVs under $27K by the end of 2025 including a lower-priced compact model. The Stellantis EV lineup promises to introduce 6 to 8 electric vehicles this year, including an unnamed $25K model available later this year. Stellantis also announced their global all-electric SUV Wagoneer S with a starting price of $72K, noting that less expensive models will be released at a later time. GM recently announced a fourth EV in their Cadillac lineup starting at $54K, the Optiq, as a compact and more affordable CUV option alongside their premium counterparts. 

The diversified lineups announced by automakers reflect more affordable EV options that accommodate a variety of consumer interests. These recent announcements appear to demonstrate that lower-price trim lines will become more readily available following an initial model release. The ongoing focus on vehicle affordability as more EVs enter the market is notable to observe, whether you are a member of the industry or a consumer, so stay tuned. 

This week we are joined by a special guest, Yen Chen, Principal Economist at CAR. Yen covers and shares his thoughts on the latest Hot Topics happening in the automotive industry.  If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

UAW Lost Vote to Unionize Mercedes-Benz Tuscaloosa Plant: 

• What’s at stake in the union election at a Mercedes-Benz plant in Alabama

• Mercedes workers turn down UAW
• Mercedes-Benz workers in Alabama vote against UAW union membership
• Mercedes-Benz workers in Alabama vote against unionizing in blow to big UAW push
• Mercedes-Benz workers in Alabama vote against joining UAW, a blow to union’s expansion in the South

Yen’s thoughts:

The workers at Mercedes-Benz Plant Tuscaloosa are already receiving a top-tier wage of $34 per hour, one of the highest in the manufacturing sector in Tuscaloosa, Alabama. Before the vote, Mercedes-Benz announced an increase in the starting wage for its production workers to $23.50 per hour, nearly matching the UAW-D3’s rate of $25.20 per hour. From an economic perspective, the union’s offers appear marginal to the workers. Non-economically, it is likely that the company has promised improvements in working conditions, and workers value the current company culture and employer-employee relationships more than union representation. The 44/56 vote split indicates a clear decision against unionizing at the Mercedes-Benz Plant Tuscaloosa. Still, it will not deter the union from targeting the next non-union automakers in the region. We can expect the UAW to reorganize and focus on its next objective in the near future.

New Tariffs on Chinese Imports:

• How stiff new U.S. tariffs against China may impact auto industry
• Xpeng says US tariffs on Chinese EVs detrimental to meeting carbon neutrality
• Biden hiking tariffs on Chinese EVs, solar cells, steel, aluminum — adding to tensions with Beijing
• What Biden’s tariffs on Chinese imports may mean for American jobs, the economy and inflation
• Biden sets huge new tariffs on electric vehicles, chips and other goods from China
•  

Yen’s thoughts:

On May 14, 2024, the Office of the United States Trade Representative (USTR) released a review of the statutory report on Section 301 investigation of China’s unfair trade practices. The Biden administration directed the USTR to take further action and increase tariff for certain products imported from China. On the list of the proposed tariff modification, battery electric vehicles’ tariff will increase to 100%, from the current 25%. Lithium-ion batteries for EVs and battery parts’ tariff will increase to 25% from the current 7.5%.

These additional tariffs will effectively prevent cheap Chinese EVs from entering the U.S. market in the future, and significantly hamper the imports of Chinese EV batteries and battery parts. In 2023, the U.S. imported a total of $19 billion worth of BEVs, of which Chinese BEVs accounted for merely 1.8%. The majority of imported BEVs came from Germany (29.2%), South Korea (23.2%), and Mexico (19.9%).

However, the imports of EV lithium-ion batteries and battery parts present a different picture. Last year, the United States imported 3.5 billion USD worth of lithium-ion batteries for EVs and 15.0 billion USD worth of other lithium batteries and parts, with imports from China accounting for 65.1% and 71.7%, respectively.

The new tariffs on Chinese BEVs and batteries will provide U.S. automakers and EV battery suppliers more time to catch up with their Chinese competitors. On the other hand, these tariffs are also likely to limit the source of batteries and battery parts for U.S. automakers, potentially leading to higher prices of BEVs available for U.S. customers. This tariff approach might not be the optimal solution to counteract the Chinese competition, but considering the U.S. manufacturing jobs and employment, it is currently the only available strategy for the United States.

Auto Parts Made by China’s Forced Labor are in Imported Vehicles by BMW, Jaguar Land Rover, and VW: 

• Senate report finds parts made with China’s forced labor in cars by BMW, Jaguar Land Rover and VW
• Senate Inquiry Finds BMW Imported Cars Tied to Forced Labor in China
• BMW imported 8,000 vehicles into US with parts from banned Chinese supplier, Senate report says

Yen’s thoughts:

The issue of dubious parts in the vehicles sold in the United States is not news. In 2022, Hyundai and Kia were reported to have purchased lights and mirrors from several suppliers in Alabama who illegally hired child labor in the factory. In 2023, The New York Times reported that several automotive suppliers in West Michigan illegally hired migrant child labor to produce automotive parts for General Motors and Ford.

Automakers are generally diligent in ensuring their suppliers conduct their business legally. However, there are more than 5,000 automotive suppliers in the United States alone, and a typical modern vehicle contains more than 30,000 parts. It is impractical for automakers to trace the legitimacy of every part and inspect every sub-tier supplier regularly. This case happened in BMW, JLR, and VW is not isolated, and likely will not be the last. Suppliers who violate the supplier code of conduct will face severe consequences, including criminal charges and the termination of business relationships.

What Yen is Checking Out: 

• What will high vehicle prices and interest rates mean for the auto finance market in 2024?
• New-Vehicle Retail Sales Increase in April but Fleet Sales Decline
• Consumer demand shifts towards smaller vehicles due to affordability concerns

Yen’s Thoughts:

The soaring new vehicle prices coupled with high interest rates create an affordability challenge for U.S. consumers. In April 2024, the average new vehicle transaction price stood at $45,093, a decrease from its peak in December 2022 but still over 20 percent higher than pre-pandemic levels. In addition, escalated auto loan interest rates exacerbate the problem, with the average 60-month new car loan rate reaching 8.22 percent compared to 5.31 percent in 2019.

As a result, the monthly auto loan payment for a standard 60-month loan has ballooned to $917, marking a staggering 34 percent jump from $684 in 2019. The sharp increase in auto loan payments has forced many consumers out of the new motor vehicle market.

The issue of vehicle affordability not only impacts consumers but also has long-term consequences for the automotive industry and the environment. Automakers are forced to scale back production and workforce, and more consumers are turning to the used vehicle market, which often offers less fuel-efficient vehicles with higher greenhouse gas emissions. This trend undermines both economic growth and environmental sustainability in the long run.

What Prasad is Checking Out: 

• Moving 12-Month Total Vehicle Miles Traveled (M12MTVUSM227NFWA) |FRED | St. Louis Fed (stlouisfed.org)
• 2024 Progress Report on the National Roadway Safety Strategy (transportation.gov)
• NHTSA Finalizes Rule on Automatic Emergency Braking | NHTSA

Prasad’s Thoughts:

In February 2024, the St. Louis Fed recorded a 12-month moving average of about 3.268 trillion vehicle miles traveled (VMT) in the United States bringing this measure close to the pre-pandemic high of 3.285 trillion VMT noted in Feb. 2020 and up from a pandemic period low of 2.832 trillion VMT in Feb. 2021. The St. Louis Fed chart illustrates data obtained from the U.S. Federal Highway Administration and offers a rich background against which we can overlay other data to draw inferences on the work ahead for us all — for public policy making, private investments or for the role of technology, and for transportation research, more generally.  A case in point is the U. S. National Highway Transportation & Safety Administration (NHTSA) data on highway fatalities. NHTSA numbers point to highway fatalities remaining stoically above 40,000 per year.  The pandemic period saw an increase in annual highway fatalities (42,939) a level not seen since 2005.  This was counterintuitive as VMT in 2021 was lower than the bracketing years (as mentioned above).

All this then brings us to what are we, as a nation, doing about this loss of lives? The 2024 Progress Report from the U.S. Department of Transportation (U.S. DOT) outlines this well.

Technology will need to come to the rescue of technology, powered by human ingenuity and the recent rule making by NHTSA on automatic emergency braking or AEB is an example of this expectation.  AEB is just the beginning on the much needed focus and investments needed to drive towards “zero” highway fatalities.

What Snehasis is Checking Out:

• U.S. will require automatic emergency braking in cars; it could improve the unreliable technology | Morningstar

Snehasis’ Thoughts:

“NHTSA’s data says that the rule will save at least 360 lives a year and at least 24,000 injuries annually “. Although most new cars have made the automated emergency braking standard, regulators want to mandate it to make it more effective and reliable.

This poses a new challenge for the technology on a couple of fronts: the first front is detection including all the sensors in the vehicles and all kinds of weather conditions. The second front is the faster and more reliable response from the braking system. The industry should transition quickly towards electric brakes and use the latest breakthroughs.

On a bi-weekly basis, the Center for Automotive Research (CAR) welcomes our audience to decompress with our President and CEO, Alan Amici, as he covers and shares his thoughts on the latest Hot Topics happening in the automotive industry. If you would like to receive this bi-weekly insight into critical industry issues you and your organization are facing, sign up for our mailing list here to get Hot Topics sent directly to your inbox.  

CAR UAW-MBUSI White Paper

• UAW’s Next Frontier: Mercedes-Benz in Alabama – White Paper

Alan’s thoughts:

We’re approaching the next union organizing vote at the Mercedes-Benz plant in Tuscaloosa, Alabama and the UAW is riding a wave of momentum. Just last month, the UAW secured 73% of the votes to organize. The UAW is hoping to continue the winning streak beginning in Detroit and Chattanooga and onto Tuscaloosa. 

Read a fascinating briefing of Shawn Fain’s rise and gain insight into what may occur after the vote and the potential impacts on labor relations in the South. The briefing is co-authored by Dr Marick Masters of Wayne State University and CAR’s own principal economist, Yen Chen.  

U.S. Loosens EV Battery Rules:

• Biden administration grants flexibility for automakers in EV tax credit rule 
• Final U.S. rules extend timetable for critical mineral sourcing in EV tax credit eligibility 
• US loosens some electric vehicle battery rules, potentially making more EVs eligible for tax credits 
• Biden exempts EV metal from climate law sourcing rule 
•  

Alan’s thoughts:

The newly imposed 2–year exemption on graphite as a critical mineral will enable more EVs to qualify for a tax credit. This exemption will provide more time for the battery critical minerals supply chain to bring local sources of graphite to market while incentivizing consumers to purchase an EV. Supply chains are complex, especially when considering raw materials that are mined or processed outside of North America. Changing suppliers or switching processing facilities increases risk for automakers. As learned during the semiconductor shortage during the pandemic, alternative sources are not always readily available, which can lead to long-term ramifications for production. Automakers will make good use of the additional time to establish domestic sources of graphite. 

New U.S. Vehicle Safety Requirements:

• U.S. imposes emergency-braking rule in 2029 for cars to cut roadway deaths, injuries 
• U.S. requiring automatic emergency braking, but current tech does little for pedestrians 
• Feds’ new emergency braking rule to test auto industry 
• US to require automatic emergency braking on new vehicles in 5 years and performance standards 
• Biden administration to require advanced safety tech on all new cars and trucks 

Alan’s thoughts:

The US will require passenger cars to be equipped with automatic emergency braking (AEB) by 2029. This technology is found today on many high-line and premium luxury vehicles so consumers may have some experience with the technology. The DOT has provided 5 years to further refine the technology prior to full deployment.

There are many demands competing for driver’s attention and the situation can become critical if distraction occurs during high cognitive loading – lane changes, merging, exit ramps, etc. AEB aims to assist the driver to automatically act should a critical situation arise. For example, if a pedestrian is detected in the vehicle’s path, the brakes will automatically be applied at a rate intended to safely stop the car short of the pedestrian. To increase public awareness and acceptance of such a feature, the industry should work to standardize the indication, method of activation, and performance of the systems to educate consumers about the operation and benefits of such an important safety system.