The Changing Landscape of the Automotive Industry · Yearly data represents July numbers, unless...

The Changing Landscape of the Automotive IndustryConcordant Crossroads: Regulation and Innovation in the Automotive Industry

October 4, 2018

Carla Bailo, President & CEO, Center for Automotive Research

2CENTER FOR AUTOMOTIVE RESEARCH

THE CENTER FOR AUTOMOTIVE RESEARCH (CAR)

Automotive industry contract research and service organization (non-profit) with more than 30 years experience forecasting industry trends, advising on public

policy, and sponsoring multi-stakeholder communication forums.

Consortia that bring together industry stakeholders in working groups and offer networking opportunities and access to CAR staff.

RESEARCH EVENTS CONNECTIONSIndustry-driven events and conferences that deliver content, context, and connections.

Independent research and analysis on critical issues facing the industry.

CENTER FOR AUTOMOTIVE RESEARCH

Health of the Automotive Industry and Outlook


Corporate Net Income (Loss)2012-2018 Est. (in billions)

6.2

1.9

1.7

9.6

4.55

.3

12

.0

2.8

18

.8

4.8

3.9

1.2

1.2

19

.1

5.5

9.7

7.4

0.1

19

.3

5.3

9.3

4.6

2.0

17

.1

5.8

-3.9

7.6

4.0

21

.5

10

.1

GM FORD FCA TOYOTA HONDA

$ B

illio

ns

2012 2013 2014 2015 2016 2017

GM 2017 earnings suffered $4.2 billion losses from the discontinued operations in Europe.

Source: SEC Filings and Annual Financial Reports; Google Finance


Corporate North American Automotive Revenue2007 – 2017 (in millions)

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Au

tom

oti

ve R

even

ue

($U

SD)

GM Ford FCA Toyota Honda

*Former Chrysler Group LLC. FCA Group data after 2014.**EBIT or automotive operating income per vehicle sold. Source: CAR Research based on companies’ SEC Filings and Annual Financial Reports


North American Operating Profit Per Vehicle2007 – 2017

$(6,000)

$(5,000)

$(4,000)

$(3,000)

$(2,000)

$(1,000)

$-

$1,000

$2,000

$3,000

$4,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Op

erat

ing

Pro

fit

per

Veh

icle

($

USD

)

GM Ford FCA Toyota Honda

*Former Chrysler Group LLC. FCA Group data after 2014.**EBIT or automotive operating income per vehicle sold.

Source: CAR Research based on companies’ SEC Filings and Annual Financial Reports


U.S. Market ShareYTD June 2018

Units: 628,611

Units: 787,824

Units: 848,022

Units: 1,107,864

Units: 1,189,312

Units: 1,239,302

Units: 1,473,237

7.3%

9.2%

9.9%

12.9%

13.9%

14.5%

17.2%

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000

Hyundai- Kia

Honda

Nissan/Mitsubishi

FCA

Toyota

Ford

GM

Source: Wards Auto; CAR Research


Percent Change in Sales of Light Vehicles Per OEM:YTD Through July: 2018 vs. 2017

-4.3%

-2.5%

-2.2%

-1.7%

1.5%

3.2%

4.8%

1.3%

-6% -4% -2% 0% 2% 4% 6%

Nissan/Mitsubishi

Hyundai- Kia

Ford

Honda

Toyota

GM

FCA

TOTAL LV Sales

Source: Wards Auto; CAR Research

123,405

59,045

52,395

20,860

-16,407

-32,531

-19,087

-43,820

9,934,423

1,398,082

1,277,577

926,426

1,427,0109.3%

12.9%

14.1%

100%

966,764

9.7%

17.0%

14.4%

1,691,790

733,475

7.4%

Hyundai- Kia

Nissan/Mitsubishi

GM

TOTAL LV Sales

Toyota

FCA

Ford

Honda


Electric Vehicles U.S. Light Vehicle Sales 2018 YTD Through July - Segment Breakdown

1.3%

3.4%

4.9%

5.5%

8.4%

9.9%

13.4%

16.1%

37.1%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Large Car

Electrified

Luxury Car

Van

SUV

Middle Car

Small Car

Pickup

CUV

Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models

Source: Ward’s Automotive Reports and CAR Research


Electric Vehicles U.S. Light Vehicles Sales 2018 YTD vs. 2017 YTD Through July - Percent Change

-14.7%

-13.7%

-10.5%

-9.0%

-1.9%

4.9%

5.3%

8.6%

13.6%

1.3%

-20% -15% -10% -5% 0% 5% 10% 15%

Middle Car

Small Car

Luxury Car

Large Car

Van

Pickup

SUV

Electrified

CUV

Total

Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models

Source: Ward’s Automotive Reports and CAR Research


CAR’s U.S. Light Vehicle Sales Forecast 2018-2025

16.5

17.4 17.5 17.2 16.9 17.0 16.8 17.0 17.3 17.5 17.6 17.7

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

U.S

. LV

Sal

es

in M

illio

ns

U.S. Sales

Source: CAR Research, July 2018


Headwinds: Tariffs and Emissions


Trade Tariffs Globalization: The United States Cannot Self-Supply Vehicles

U.S. Production less U.S. Exports

plus U.S. Imports

U.S. Sales

11.0 million- 2.4 million+ 8.7 million

= 17.3 million

Sourcing of U.S. Light Vehicle Sales in 2017


Trade Tariffs A 25% Tariff on U.S. Imports of Light Vehicles & Parts Would:

• Raise the average price of a new light vehicle $4,400 (+13%)

• Drop U.S. light vehicle sales volume by more than 2 million units (-12% or a 14.8 million unit market)

• Reduce U.S. light vehicle exports by 357,000 units (-18%)

• Increase U.S. motor vehicle manufacturing output by $62.4 billion (+18%)

• Decrease U.S. motor vehicle parts output by $15.8 billion (-6% for parts that would have been exported to Canada and Mexico)

• Result in 714,670 fewer U.S. jobs

• Lead to increased used light vehicle prices (+10% or more)

• Result in less choice for consumers


Trade Tariffs Which Trading Partners Will Be Affected?

Eight countries constitute 92 percent of U.S. auto and parts imports

Share of U.S. Auto &Parts Imports

Mexico 30.7

Canada 19.0

Japan 16.2

Germany 10.3

South Korea 7.2

China 4.5

United Kingdom 2.8

Italy 1.4

Others 7.8

Source: U.S. Department of Commerce

The top four countries account for 76 percent of all U.S. auto and parts imports


Trade Tariffs How Will U.S. Automotive and Parts Industries React?

• Investment scale is large, and lead time is long• Short-term:

• Very little will change

• OT can be used to stretch existing capacity without much additional investment, but roughly half of the capacity “headroom” is tied up in sedan production that consumers don’t want

• Auto sales are already weakening (peak year was 2016); economic growth not robust

• Medium term:• U.S. export producers will move some production outside the United States (BMW, Tesla, Volvo have

already announced)

• U.S. profits will fall—which will lead to lower investments in plants, equipment, new models, & new technologies

• Longer term:• New U.S. plant investment is risky and unlikely—overcapacity was a problem in the 2000s; automakers

and suppliers will be cautious

• Smaller U.S. market—lower output, imports, & exports—and fewer choices


CAFE/GHG Policy Potential Impacts on BEV Market

• The proposed NPRM “SAFE” vehicle rule freezes 2020 fuel economy standards and extends it to 2026. It removes credits, and leads to significantly less electrification.

• Comments are due 10/23 followed by technical and legal negotiations.

• EPA is challenging California’s autonomy to make unique GHG standards for the state.

• Automakers say plans are already in place to advance electric powertrain technology because rest of the world is moving forward. There may be some revisions, but unclear.


New Business Models and Disruption Vectors


New services

New vehicle concepts

New functionalities

New ownership

models

New business

partnerships

Shared Mobility Services Opportunities for the Auto Industry

The rise of shared mobility services is part of a mobility evolution that brings many opportunities for the auto industry.


Major Automakers’ Partnerships Related to Mobility, Connectivity, and Driving Automation

Acquisition

Investment

Subsidiary / Brand

Partnership

TRI-AD


Shared Mobility Services Growth of North American Carsharing Programs

2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017(Jan)

Members North America 211,170 318,898 377,597 516,100 639,428 908,584 1,146,37 1,625,65 1,526,53 1,837,85 1,927,22

Vehicles North America 6,492 7,507 9,768 10,405 10,381 15,795 20,784 24,210 25,224 26,691 24,629

-

5,000

10,000

15,000

20,000

25,000

30,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Yearly data represents July numbers, unless otherwise specified. Totals include one-way and round-trip carsharing and exclude P2P programs. Proxies were used for five of the 32 round-trip operators.

Source: Shaheen, S., Cohen, A., Jaffee, M (2018). Innovative Mobility: Carsharing Outlook, Transportation Sustainability Research Center, University of California, Berkeley.


Waymo

Drive.ai

Robo-Taxis

Navya Arma

May Mobility

Low-Speed Shuttles Urban Delivery

Nuro

Ford

Long-Haul Freight

Daimler

Connected and Automated Vehicles Deployment Models


Connected and Automated VehiclesDeployment Timeline for Automated Driving Systems (SAE J3016 Levels 3-5)

Audi L4 – “Highway Pilot” –

Commercial Deployment

BoschL3 – Platform – Commercial

Deployment

comma.aiL4 – Commercial Deployment

HondaL3? – “Automated HW Driving” –


Lyft (with GM) L4 –Taxi – Commercial

Deployment

Nissan L4 – “Autonomous Drive” –


2getthereL4 – Fixed Route Shuttle –Commercial Deployment

BMW (with Mobileye)L4/5 – “Highly/Fully –


Continental (with Nvidia)L2-5 – Platform – Commercial

Deployment

Daimler (with Bosch and Nvidia)

L4 – Taxi – Commercial Deployment

Ford (with Argo.AI)L4 – Taxi, Delivery Vehicle –

Production Ready

UberL4 – Taxi – Commercial

Deployment

VolvoL4 – Commercial Deployment

Aptiv (with Mobileye)L4/5 – “Turnkey Solution”

Daimler (with Bosch and Nvidia)

L4 – Taxi – Pilot

GM (with Cruise)L4 – Taxi – “Commercial

Launch at Scale”

TeslaL4 – Personal Vehicle/Taxi –


Nissan – 2022 – L4/5 – Taxi – Commercial Deployment

Honda – 2025 – L4 – Commercial Deployment

Toyota – L4 – “Chauffeur” – Commercial Deployment

Volkswagen – L4 – Commercial Deployment

AptivL4 – Taxi – Pilot

EasymileL4 – Fixed Route Shuttle – Pilot

GM (with Cruise)L4 – Taxi – Pilot

Voyage L4 – Taxi – Pilot

Waymo L4 – Taxi – Pilot

Aptiv (with Lyft)L4 – Taxi – Pilot

drive.aiL4 - Taxi – Pilot

Ford (with Argo.AI)L4 – Taxi, Delivery Vehicle –

Pilot

May Mobility L4 – Fixed Route Shuttle –

Pilot

NuroL4 – Delivery Vehicle – Pilot

nuTonomy (with Lyft)L4 – Taxi – Pilot

2getthere – 2006 – L4 – Shuttle on Dedicated Lane – Commercial

Deployment

Navya – 2016 – L4 – Shuttle on Dedicated Lane – Pilot

Uber – 2016 – L4 –Taxi – Pilot (suspended)


Connected and Automated VehiclesPotential Impacts on Liability

Impact of vehicle connectivity and automation:

• Improvements in vehicle safety

• Abundance of real-world data

• More predictability, less fraud

Paradigm shifts:

• Apportioning blame to driver and manufacturer/suppliers

• Greater reliance on product liability

• Significant shifts in liability and insurance coverage only at L4-L5

• New risks: cyber threats at the individual, vehicle, fleet, infrastructure level


Connected and Automated VehiclesChallenges and Opportunities Regarding Liability

Challenges:

• Assigning liability for SAE L1 to L3 between the human operator and the vehicle

• Lengthy litigation between manufacturers, suppliers, and vehicle

operator/driver

• Shifting from driver-focused insurance laws to vehicle-focused laws

Opportunities:

• Establish advanced analytics capabilities

• Plan for product and business-line shifts


Adoption and Utilization of Ridesourcing in Major U.S. Metropolitan Areas

Source: Clewlow, Regina R. and Gouri Shankar Mishra (2017). Disruptive Transportation: The Adoption, Utilization, and Impacts of Ride-Hailing in the United States, UC Davis

Shared Mobility Services Ridesourcing Adoption


Shared Mobility Services Threats and Opportunities for Dealers

Threats

• Vehicle ownership decreases and the use of shared mobility services increases

• Automakers bypass dealers with subscription services and in-house mobility services

• Automated vehicles act as a catalyzer for these trends

Opportunities

• Create carsharing programs run by dealerships

• Provide special lease programs for ridesourcing drivers

• Provide service, maintenance and fleet operations to carsharing, ridesourcing, or future automated taxis

• Fractional ownership

• Add new lease options: bundle insurance, maintenance, limited car swap


Convergence of Automated, Connected, Electrified, and Shared Vehicle TechnologyImpact on Vehicle Design

• Largest structural impact will come due to change of powertrain

• Exterior design might not be an important differentiator for consumers anymore (especially for shared, automated)

• Integration of sensors will be a priority for designers

• New challenges and innovations (e.g., biometrics, flexible seating, scratch and bacteria resistance) will emerge

• The end of driver-centric design?


Source: Shared Use Mobility Center

Shared Mobility Services Services Available in in North America

600+ cities with ridesourcing

20+ cities with pooled rides

10+ cities with microtransit

400+ cities with carshare (round trip, free floating, P2P)

400+ cities with bikeshare (stationed, dockless) & scooters

THANK YOU

The Changing Landscape of the Automotive Industry · Yearly data represents July numbers, unless...

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