Hot Topics From CARla At CAR

From Carla Bailo, President and CEO, Center for Automotive Research

The Senate's passing of the Inflation Reduction Act was a significant item in the news this week, with the proposed EV tax credits being a focus for the auto industry. There were also some interesting developments in the sustainability space as efforts continue on various fronts. Lastly, we review noteworthy news from last week's 57^th Annual CAR Management Briefing Seminars (MBS) in Traverse City, MI.

As microchip shortages and other supply chain struggles continue to plague the automotive industry, we have migrated all news updates related to supply chain disruptions to our website. You can stay informed on the various supply chain crises affecting the global auto industry here.

If you missed my previous Hot Topics email, you can read it here.

We would love to hear from you and welcome your questions at any time. If you're interested in sharing your thoughts with us on hot topics, or if you would like to ask us a research question, please reach out to Sara Bozer.
 

Hot Topics of 8/8/2022 - 8/12/2022

Inflation Reduction Act and EV Tax Credit What the Inflation Reduction Act does and doesn't do about rising prices Buying a car and want to go electric? Inflation Reduction Act extends $7,500 tax credit — but with price, income caps Electric Vehicles Or Hydrogen Fuel Cell Cars? The Inflation Reduction Act Will Fuel Both EV tax credit proposal less about consumers, more about sourcing, industry exec says How the EV tax credits in Democrats' climate bill could hurt electric vehicle sales My thoughts: The famous questions being asked to the CAR team this week is, "Will this really help propel EV sales, and will it help to achieve 50% EV sales by 2030?" These questions are really too simplistic considering all the elements in this act, but let me give you my reasoning. The 200,000 vehicle cap removal is a good thing as too many manufacturers have already achieved this level, and it is essentially meaningless for achieving the EV and environmental goals. The household income and vehicle price bands are good, but we must notice that very few EVs on the market today are below the established prices. Some are coming out within the new year, but very few exist today. When we reach the lower price, it is the same time as the NA content, OR free trade agreement content percentages kick in (starting in 2024).  This content percentage is the devil in this deal. There isn't a single car that can meet the levels required today, and considering where the raw materials come from and where they are refined, 2024 is a huge stretch. Then, each year, the content increases by 10%. The comment from Senator Manchin is, "let's just build mines." If only it were that easy – we don't have Dorothy slippers to magically build a mine, a refinery, or a recycling center. Not to mention that we must make these centers sustainable, safe, and environmentally friendly. Additionally, States/Municipalities need to figure out where to put them as most people don't want them in "their backyard."   BUT, most vehicles can still obtain the smaller $3750 tax incentive, and another good point is that used vehicles can receive this tax incentive. We don't have enough used vehicles, but this will change over the years. Another key point is that we need to conduct much more research here in the US for mining, batteries, and battery recycling – we aren't anywhere close to the amount of money China is putting into this research. This research must happen to achieve and maintain our leadership position in electrification…we have much more work to do!   Sustainability 5 ways the Inflation Reduction Act would fight climate change Industry's Need to Woo Millennials, Gen Z Part of ESG Embrace Ford, DTE strike solar deal that will help automaker's plants go carbon-free in Michigan Automaker, Supplier Sustainability Gains Recognized at MBS Nissan commits to sustainability as core to achieving long-term Ambition 2030 vision BMW Group backs sustainable packaging in its logistics My thoughts: This year, sustainability was a key theme at MBS – mostly related to environmental and social (diversity and inclusion). The pressure on companies to achieve their goals according to ISS, SASB, and potentially SEC is immense, and shareholders are watching the goals and the achievement. Beyond this, employees wish to work for a company they can be proud to say has high sustainability goals and achievements. Suppliers are told that they must adhere to their customer's sustainability goals, which is a big ask as each company's goals differ. They need to figure out the most severe and achieve those. This challenge is where CAR is ready to support, with the database mentioned below and our Affiliate roundtables that have started. Let us know if you'd like to learn more! CAR will launch new subscription services next week, including access to the CAR Sustainability Database. This searchable and sortable tool compiles key information from 11 automaker and 9 supplier sustainability targets and reports; stay tuned for the launch announcement.   News Out of CAR MBS 2022 Half of U.S. Market by 2030 Tough Challenge for BEVs Auto industry forecasting is suddenly really tough Dealers Are Key to Hyundai's Success Michigan Vies to Stay in Automotive Driver's Seat Inventory, microchips impacting 2022 auto sales, EV rollouts Faurecia and Hella Merger Due to software engineer demand My thoughts: First of all, a huge thank-you to our sponsors, exhibitors, and attendees. The entire CAR team values your support and participation. We are extremely happy with the MBS 2022 conference and have received a lot of good feedback (positive and negative), and we appreciate hearing it all. We know we can make it even better in 2023 and beyond. We focused on several topics, mainly EVs, sustainability, supply chain, and D&I. Even sessions on other topics touched upon these themes at some point. For those not there, I created a playlist each day that summed up the mobility/automotive world since the pandemic. Here it is: What doesn't kill you makes you stronger Tubthumpin (I get knocked down, but I get up again) Happy Days are Here Again We Didn't Start the Fire I'm in Love with My Car (lyrics revised for an electric vehicle) Electric Avenue One Love Supply Chain Rhapsody (sung to Bohemian Rhapsody) Again, thank you all for your continued support of CAR!! All session recordings from CAR MBS 2022 are now available with the purchase of a virtual registration. If you’d like to purchase access to session recordings, register HERE.

Best Regards, Carla Bailo President and CEO Center for Automotive Research

Upcoming Webinar: Exploring the Future of Innovation with Toyota Ventures Monday, August 29, 2022  |  1:00 PM ET

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As the mobility landscape continues to evolve, automakers are seeking new technologies to improve their product portfolios and manufacturing processes, as well as achieve carbon neutrality. Corporate venture capital has emerged as a critical tool to find new innovations. Toyota Ventures, Toyota’s first standalone venture capital firm, launched in 2017 to invest in early-stage startups focused on artificial intelligence, robotics, mobility, and autonomy. In 2021, the firm expanded its investment thesis to also include smart cities, digital health, fintech, materials, energy, and carbon neutrality solutions with the launch of two additional $150M funds: the Toyota Ventures Frontier Fund and the Toyota Ventures Climate Fund. Join CAR and Toyota Ventures on August 29 for an in-depth look at Toyota Ventures with the firm’s founding managing director Jim Adler and Climate Fund partner Lisa Coca. Hear about the firm’s founding, how the Frontier Fund and Climate Fund came to fruition, what technologies have been invested in thus far, and how Toyota Ventures plans to continue to grow its portfolio in the coming years.

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