HOT TOPICS WITH CENTER FOR AUTOMOTIVE RESEARCH CEO 02/03/2023

On a bi-weekly basis, 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.

Large Investments in US Plants: 

• GM invests $20.5 million in customer care and aftersales plants 
• Tesla plans to spend $3.6 billion more on battery and truck manufacturing in Nevada 
• GM, LG end plans for fourth U.S. battery cell plant as automaker seeks new partner
• GM to invest $918 million in new V-8 gas engines and EV components
• Mercedes-Benz Plans to Build U.S. Electric Car Charging Network   

Alan’s thoughts:

Investment continues to ramp up in EV and battery production capacity, but ICE vehicles still have a role to play. The forecast for EV sales in the US is expected to reach 30-40% by 2030, which means ICE sales will still command the lion’s share of the market. For legacy automakers, ICE sales fund EV investment and remain an essential part of the portfolio. Large SUVs and pick-up trucks continue to provide substantial profits while EV profitability is tenuous. The transition from ICE to EV requires diligent management of costs and innovative solutions to make EVs more affordable and profitable. In the meantime, legacy OEMs must maintain profitable ICE portfolios while improving the economics of EVs. 

Recently, Tesla announced a price reduction of up to 20% for certain models. Ford followed this move by reducing the cost of its Mach-E by up to $5900 for the extended-range version. Ford expects an increase in production to partially offset the price reduction. Stay tuned for pricing moves by other OEMs. 

Self-Driving Vehicles: 

• Supermarket Asda, startup HVS receive UK hydrogen self-driving lorry grant 
• U.S. Justice Department seeks Tesla driver-assist documents 
• Investors go back to basics with simpler self-driving vehicles 
• Self-Driving Car Services Want to Expand in San Francisco Despite Recent Hiccups

Alan’s thoughts:

OEMs have been tapping the brakes on robotaxi investment and deployment as the self-driving solution has been far more difficult than expected. Waymo and Cruise are the most prominent companies still developing robotaxis. Ford and VW recently shuttered Argo.AI, instead deploying engineers to Advanced Driver Assistance Systems (ADAS) programs. However, investors have not completely abandoned AVs, but are focusing on specific applications such as construction, agriculture, or long-range trucking. While this may be disappointing to AV enthusiasts, the technology will continue to be developed and refined. This means further development of sensor fusion, lights-off simulation, and hopefully, data sharing among developers. While passenger car AVs will not be available at dealerships anytime soon for consumer purchase, we can expect the technology to be refined in off-road applications. 

EV Tax Credit:

• Why the $7,500 EV tax credit may be tougher to get starting in March 
• U.S. Senator blocks bid to close EV tax window 
• Electric car-makers have found a legal loophole to get their customers an extra $7,500 tax credit 

Alan’s thoughts:

Obtaining an IRA tax credit on EV purchases and leases takes a little homework on the consumer’s part. Rules on eligible vehicles will be clarified in March as the IRS issues further guidance on battery content. One must also consider income limits for tax credit eligibility. Lease/buy decisions just got a little more complicated. Stay tuned!