CAR MBS 2024 Spotlights Electrification Pain Points, SDVs and Capital Needs

TRAVERSE CITY, MI – The auto industry assembled, as it does every August, here for the Center for Automotive Research’s (CAR) Management Briefing Seminars (MBS), a gathering that saw Michigan Gov. Gretchen Whitmer, representatives from the White House, General Motors President Mark Reuss, Alliance for Automotive Innovation CEO John Bozzella and a roster of innovators and leaders in software-defined vehicles, battery-electric vehicles, battery technology, connectivity, cybersecurity and, yes, internal-combustion engines.

White House Says Cybersecurity is Paramount, But So Is Allowing Tech Advances

White House official Harry Krejsa, Assistant National Cyber Director for Strategy and Research, said current efforts to regulate and partner with the auto industry are driven by both “concern about threats to cybersecurity…and ambition about what these technological advancements can bring” to improve the lives and mobility of citizens.

Krejsa spoke to the investments in EVs, software and cybersecurity that have come out of the Biden Admin. and Congress including the Inflation Reduction Act, the Chips and Science Act of 2022 and the Bipartisan Infrastructure Act. But his presence at the MBS, says Krejsa, was about listening and networking over “what has been harder than expected, and what has been easy (about this transformation) and when government has been a supportive partner and when we have been less than that.”

In expressing concern about relatively small security breaches that have led to massive impacts on industries and consumers, like the recent ransomware cyberattack on dealership software supplier CDK that stopped sales operations at auto retailers across the country, Krejsa said, “Our digital ecosystem is still more brittle than it needs to be.”

Alliance CEO John Bozzella Says Politics Has Changed Everything

John Bozzella, CEO and president of the Alliance for Automotive Innovation, told attendees he has no idea what will happen in the presidential election this November, but one thing is for sure is that “politics has changed everything.”

Bozzella says the industry, faced with mandates for electrification, can look at political affiliation for perhaps the greatest determinant of consumer willingness to buy an electric vehicle. The auto industry’s chief lobbyist showed headlines from news organizations covering former President Donald Trump’s vow to reverse President Biden’s EV policies if he is elected this November and returns to the White House.

Using a football analogy, Bozzella said: “It used to be that regulation was decided between the 40-yard lines. Today, each party seems to be at opposite goal lines. But I think the consumer is somewhere closer to the 50-yard line.”

Listen to our podcast with John Bozzella.

CAR Says Workforce Development Critical to EV and SDV Future

Lisa Krusemark, industry analyst at the Center for Automotive Research, gave attendees at MBS some initial results from the group’s new Battery Industry Education and Training Needs Assessment (BIETNA), emphasizing the need for industry and higher education institutions to develop more professionals in the fields of Electrochemistry/Battery Chemistry, battery manufacturing and battery management systems.

According to CAR’s research, which is in part based on surveys of companies, 60% of respondents report that at least one-quarter of employees have outdated skills for the jobs they are doing.

The need for more and better trained workers is not just in the upstream parts of the EV supply chain, but in downstream jobs as well, all the way to recycling and second-use applications for batteries.

The entire report is available on CAR’s website.

GM’s Mark Reuss: ICE Is Powering EV Growth

General Motors, like every other U.S. automaker but Tesla, is losing money on every battery-electric vehicle it sells, and current margins are substantially negative. But GM expects that as its SUV and crossover BEVs gain awareness in the market, it could start making money on BEVs by the end of 2025.

It’s a slog through the transformation to electrification, but GM President Mark Reuss is enthusiastic about the automaker’s electric future. “The mass market has been largely left out of the EV market so far, but vehicles like the new Chevy Equinox EV, which I drove all winter, are priced in the heart of the market of what people want. We’ve got to offer people what they want in a car,” whether it is an ICE or EV, says Reuss.

Meanwhile, the company is also launching new ICE vehicles and even has a new V-8 engine. “We’ve got to keep investing in ICE vehicles to help fund the investments in electrification,” says Reuss.

J.D. Power: EV Cost to Own Reaching Parity With ICE Vehicles

EVs’ share of new-car sales rose through the first half of this year to 8.3%, according to J.D. Power, a slower rate of growth than the industry saw last year. But Elizabeth Krear, vice president of EV Practice, said consumer interest and willingness to buy EVs are rising as product choices in the most popular segments expand, namely SUVs and CUVs, and more products are offered below $50,000.

Key models to affect consideration this year and into next, says Krear, are the Honda Prologue, Chevrolet Equinox EV, Chevrolet Blazer EV (lower trim), Jeep Wagoneer S and Ram 1500 S.

Krear also noted that as prices continue to come down on some models, like EV pickups (falling transaction prices and discounting are moving excess inventory), “We are reaching a cost parity with ICE vehicles when the purchase price and operating costs are factored in along with the cost of charging overnight (as most EV owners do), versus the cost of gasoline.

Power’s research shows that Tesla Model Y reached cost parity over a year ago, in May 2023. The Ford F-Series Lightning reached cost parity last November and became cheaper to own than a comparable ICE F-Series in June of this year as transaction prices dropped after discounts.

Access to Capital, Not Tech, Will Separate Winners and Losers

Financial analysts and investment bankers watching the auto industry’s transformation to the era of electrification say access to capital will be the biggest determinant of success and staying power for EV startups, as well as legacy automakers trying to fend off dominance of the market by Tesla and Chinese automakers.

“One of the biggest advantages that Chinese automakers have in this era is essentially free access to capital provided by the Chinese government,” says John Murphy, auto industry analyst at Bank of America.

“The motivation of China’s investments in EVs is not environmental. It’s dominance,” says Murphy. The analyst says he believes that GM, Ford and Stellantis should pull up stakes in China because of the government’s intention to dominate EV sales globally, adding that for European automakers BMW, Volkswagen and Mercedes-Benz, it is more complicated because they are making most of their profits in China.