Tracking the 'New Normal' in Automotive

Tracking the 'New Normal' in Automotive

July 23, 2020

Our New Normal Tracker provides regular updates on key industry trends.

March edition: Business models, supply chains and connected vehicle developments will be optimized and refined

The post-crisis landscape for the automotive industry has been constantly evolving since our initial publication on the 'new normal' in early May 2020. In this update, we track the course of economic recovery and government policy across the United States, Europe and China, as well key developments within the industry. Furthermore, in parsing out the news from the noise, we identify several emerging trends and core themes of development, which include some of the highlights listed below:

  • Light vehicle sales in China remain strong, while the US and Europe continue to struggle with sales down YoY in early 2021
  • Widespread vaccine administration and reduced virus transmission bode well for the future of light vehicle sales recovery
  • Chip supply crisis forces global plant closures across the automotive value chain
  • Biden administration begins to reverse Trump era emissions policy with a series of executive orders directed at the US Environmental Protection Agency (EPA) and the Department of Transportation (DOT)
  • European Commission announces new EU trade strategy, expected to put pressure on the US and China
  • China foreign minister urges Biden to ease Trump era restrictions
  • SPAC frenzy continues to accelerate with several electric vehicle OEMs, electric vehicle suppliers and LiDaR suppliers going public
  • OEMs optimize their global footprints as Honda exits Russia and VW establishes a majority position in China joint venture, JAC Volkswagen
  • OEMs including GM, Jaguar, Nissan and Ford announce plans to phase out internal combustion engine vehicles for electric vehicles in various markets
  • Electric vehicle platform consolidation increases as Geely and Foxconn partner to build electric vehicles for other automakers, and Foxconn plans to build upcoming Fisker electric vehicle in new partnerhsip
  • Volvo and Daimler, and separately GM and Navistar each partner to share fuel cell technology for semi trucks
  • Consolidation trends solidify as PSA and FCA merger completes to create Stellantis and Goodyear agrees to buy Cooper Tire, though Volvo and Geely scale back their intended merger to focus on powertrain collaboration
  • Apple struggles to find a manufacturing partner for upcoming electric vehicles after failed talks with Hyundai and Nissan

Previous editions

November edition

  • Political developments in November were highlighted by the election of Joe Biden, which is being challenged by the Trump administration
  • Germany aims to provide $2.4 bn in aid for auto industry and extends EV subsidies through 2025
  • China formally issues planning for 2021-2035 NEV industry development to encourage the NEV development across the value chain
  • China enters RCEP, a large-scale trade agreement with 14 other Asia-Pacific countries intended to facilitate free trade and reduce tariffs
  • The EU imposes tariffs on the US on up to $4 bn of products
  • Consolidation trends continue as VW's Traton purchases the rest of Navistar for $3.7 bn
  • The importance of last-mile delivery is highlighted by Lyft's intention to offer food delivery fulfilment and Walmart's pilot with Cruise
  • Connected vehicle developments are highlighted by a collaboration between Honda, Hyundai and Toyota as well as the launch of HI, Huawei's new brand for full stack intelligent connective vehicle solutions
  • Automotive business models continue to evolve with Alibaba signing cooperation agreements with each of BMW and SAIC, and Volvo relaxing subscription requirements
  • Tesla's footprint continues to globalize as it starts to export China-made Model 3s to Europe

October edition

  • The United States and Europe are still 20-30% below previous year LV sales respectively despite positive sales performance in September
  • California Governor Newsom signs executive order to ban gas-powered LV sales by 2035
  • ECB President Lagarde indicates potential for follow-on stimulus as coronavirus cases resurge in Europe
  • Candidate Biden expresses hard-line stance on China trade policy, and is expected to keep America on path of protectionism if elected in November
  • The UK is unable to reach a Brexit deal with the EU before self-imposed October 15 deadline
  • China pledges to achieve net zero emissions by 2060 and criticizes the US's climate policy efforts
  • Social distancing highlights the potential of air mobility, with Uber and GE creating a partnership for aerial ride-sharing and GM expressing interest in the market
  • Robo-taxis gain momentum as Waymo offers AV ride-hailing to the public in Phoenix and Baidu launches a free robo-taxi service in Beijing; additionally, Cruise Automation gets permission to test driverless AVs in San Francisco and Zoox becomes the fourth company to receive a driverless testing permit from the state of California
  • Investor interest in EV startups continues as WM Motor and Northvolt raise $1.5 bn and $600 m respectively and Romeo Systems and ChargePoint plan to go public
  • EV platform consolidation accelerates with GM announcing Ultium family of interchangeable drive units and motors and Geely and Foxconn announcing open EV platforms
  • Several OEMs in China unveil new vehicle models with smart air purification systems

September edition

  • The United States and eurozone saw a second quarter year-over-year GDP contraction of 9.1% and 12.1% respectively while China grew by 3.2%, reversing China's first quarter loses
  • EU and US agree to tariff reductions, while relations tense up between EU member states and China
  • As the light vehicle market in China stabilizes, the United States and Europe continue on a subdued recovery path
  • Although financial pressures accelerated in Q2, OEMs and suppliers largely beat consensus analyst estimates
  • The European EV market heats up as purchase incentives become available in 20 of the 27 EU member states
  • Even with the recent 21% decline, Tesla shares have nearly quadrupled in value this year, making Tesla the worlds most valuable automotive company
  • Investor interest in EV technology drives several startups to go public via SPAC's and IPOs - Fisker, Lordstown, Hyliion, Canoo and Nikola to name a few
  • FCA and PSA consolidate to three EV platforms under the Stellantis brand
  • GM strengthens EV partnership with Honda and takes a 11% stake in new EV startup Nikola
  • Lyft says ride hailing services continue to improve although are down 53% year-over-year in August

July edition

  • China registers a complete rebound of light vehicle sales due to early containment, while Europe and the United States experience milder recoveries
  • Recent epidemiological developments, especially in the United States, cast uncertainty over future recovery prospects
  • The United States and China continue on an apparent path towards protectionism, evidenced by an escalating trade war
  • The debate between progressive and conservative policymakers in Europe continues, as France and Germany boost EV incentives
  • OEMs institute broad cost saving programs in response to significant cash drain
  • Financial advantages allow tech companies to participate more actively in the AV space
  • As expectations for Level 4/5 robo-taxis wane, the crisis highlights the potential for logistics in commercializing AVs
  • The pre-crisis trend of EV platform consolidation accelerates due to new capital constraints
  • Health concerns over shared mobility options draw in first time buyers of personal vehicles

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