The global automotive industry is facing unprecedented (that word, again) transformation ahead on the back of major technological change. How that restructuring will ultimately look is a very big question. Some new players and disruptors will thrive, some won’t. Same goes for the so-called ‘legacy’ players. Some will successfully adapt, while others will decline or be swallowed up in a wave of corporate M&A deals yet to emerge. It feels a bit like the calm before the storm. Over the past year, many OEMs have posted very positive financial results on the back of a sales rebound – after the chips crisis and supply shortages – with transaction prices still high. But 2024 is shaping up to be a much tougher year as the industry faces the reality of slower demand and slimmer margins. Tesla‘s latest troubles are as good an indicator as any of the potentially bumpy roads ahead in the energy transition. Price wars will hit profits. Unit costs of electric vehicles and their major components have yet to fully feel the natural downward gravity that comes with much higher mass-market volumes. Costs of investment in electrification and other advanced technologies remain stubbornly high at this stage in the diffusion of complex new technologies. Looking further ahead, who will be left standing when we get to 2035? Another question: How will governments address this highly dynamic investment landscape? The US has perhaps been at the forefront with proactive policies to boost domestic investment via the Inflation Reduction Act.

ASEAN slowing

February sees more decline in the ASEAN LV market, according to GlobalData. The ASEAN Light Vehicle (LV) market has witnessed a notable 8% year-on-year (YoY) decline in the first two months of 2024, with a marginal 2% fall in January and a significant 14% drop in February. This downturn is largely due to poor sales performances in Vietnam, Thailand, and Indonesia, while Malaysia and the Philippines have shown mixed results.

Cars driving us nuts?

Could the increasing numbers of screen and infotainment systems in vehicles be driving us to distraction? In response to the increasing concern of distracted drivers many OEMs are beginning to implement more safety software into their vehicles that will enhance driver safety and awareness. To assist with safety and distraction concerns, Danish Tech scale-up, OOONO, says it is committed to creating a safer everyday life for drivers. It recently unveiled two models of their its flagship product; OOONO CO-DRIVER. Taking the form of a small button which is fitted inside a driver’s vehicle, the technology warns drivers of upcoming speed cameras, congestions, and road hazards. The two models vary slightly depending on user preference with CO-DRIVER NO1 provides a simple solution with audio-visual warnings, while CO-DRIVER NO2 enhances the experience with advanced features, including in-app navigation and compatibility with Apple CarPlay and Android Auto. We spoke with Nicklas Sørensen, CMO, OOONO, to discuss the background to the company and its aims.

Honda Canada EV plans

Four big EV related announcements from or for Honda Canada this week. Alongside announcements of a battery separator venture and a new BEV plant, Honda Motor said it planned to build a comprehensive EV value chain in Canada with an approximate investment of C$15bn (US$11bn), including investment by joint venture partners, to strengthen its EV supply system and capability to prepare for a future increase in EV demand in North America. It had begun evaluating the requirements to build an EV plant and a stand alone EV battery plant in Alliston, Ontario. The proposed EV value chain would also include a cathode active material and precursor (CAM/pCAM) processing plant through a joint venture partnership with POSCO Future M Co., Ltd. and a separator plant through a joint venture partnership with Asahi Kasei Corporation.

Posco JV

The automaker has signed a preliminary agreement to establish a new joint venture in Canada with South Korea’s POSCO FUTURE M to produce battery cathode materials for battery electric vehicles (BEVs) to be built in North America. The automaker last night formally announced a C$15bn (US$11bn) investment to build a BEV plant in Alliston, Ontario with capacity for 240,000 units per year, along with a battery plant with capacity of 36 GWh per year, with operations scheduled to begin in 2028. Posco has established itself as a leading supplier of battery materials with battery makers including Samsung SDI, LG Energy Solution and Ultium Cells among its key customers. Honda and Posco began discussions a year ago and the memorandum of understanding (MoU) signed this week allowed for more detailed discussions in coming months with the two companies aiming to sign a formal joint venture agreement before the end of 2024.

New BEV plant

Honda last night finally formally announced it planned to build a battery electric vehicle (BEV) plant in Alliston in Ontario with annual capacity for 240,000 units, along with a battery plant with capacity for 36 GWh per year. The announcement was made at a press conference in Ontario attended by Honda CEO Toshihiro Mibe, Canadian prime minister Justin Trudeau and Ontario premier Doug Ford, along with other company and government officials. The investment, totalling C$15bn (US$11bn), was described as the largest automotive investment in Canadian history. The new factories would be built next to Honda’s existing plant in Alliston, just north of Toronto, which produces Civic and CR-V for North America.

Asahi Kansei separators

Asahi Kasei said it would construct an integrated plant in Ontario, Canada for the base film manufacturing and coating of Hipore wet process lithium ion battery (LIB) separators and had concluded a basic agreement with Honda Motor while the two parties were studying joint investment. Honda Motor was expected to announce plans to build a battery electric vehicle (BEV) factory in Canada’s Ontario province. The automaker was understood to have agreed a deal for state aid with federal and provincial governments for the project which was expected to involve investment of close to US$10bn in new vehicle and battery manufacturing facilities to be built near the company’s existing manufacturing operations in Alliston, just outside Toronto.

But there’s more

Not to be outdone, Toyota is moving ahead to prepare for assembly of a new, three row battery electric SUV in the US. US media reports reckon this will be an all-electric Highlander. It is part of a new $1.4 billion investment in the Toyota Indiana facility, which will see 340 new jobs created. It brings its total investment there to $8 billion. It will add a new battery pack assembly line using lithium-ion batteries supplied by Toyota Battery Manufacturing North Carolina, a $13.9 billion facility slated to begin production in 2025.

Hedging the bets

Meanwhile, Hyundai said its new vehicle assembly plant under construction in Georgia would also produce hybrids in addition to battery electric vehicles (BEVs), according to local reports. Hyundai Motor Group Metaplant America, located just outside the port city of Savannah, was scheduled to begin operations in the fourth quarter of 2024, producing Hyundai, Kia and Genesis vehicles for North America. The plant had been expected to produce only BEVs. Hyundai Motor chief financial officer, Lee Seung Jo, said during an earnings call this week the automaker was “investing in facilities to produce hybrid cars at the Hyundai Motor Group Metaplant America”, reflecting slower than expected growth in the North American BEV market.

UK output down

UK car production declined in March, down 27.1% year on year to 59,467 units, according to figures published by the Society of Motor Manufacturers and Traders (SMMT). It was the first fall since August last year, but the SMMT said the decline was in line with expectations for a variable year, as manufacturers adjust factories to produce the next generation of cars, notably electric, winding down volumes of existing models in the process. An early 2024 Easter bank holiday also played a part, with fewer working days this March than the year before.

VW wooing younger Chinese

VW was showing off new ‘design language’ and new technology for future Chinese models with the ID. Code show car unveiled this week at Auto China 2024. Like other western automakers, VW is struggling in China as domestic rivals unveil a slew of cheaper NEVs across all price points. VW said it planned to “tap into new customer groups” (read; younger, tech-savvy buyers) with its new ID.UX electric sub-brand.

Good blue oval Q1

Ford reported a strong set of first quarter financial results that beat analyst expectations. Revenues in the period were put at $42.8 billion (Q1 2023:$41.5 billion), while net income was $1.3 billion (Q1 2023: $1,3 billion) and adjusted EBIT $2.8 billion ($3.4 billion in Q1 2023). Ford posted quarterly adjusted earnings of 49 cents per share for the quarter, with analysts widely expecting Ford to report an adjusted profit of around 40 cents per share. GlobalData analyst Jeff Schuster told Just Auto that Ford’s results were supported by still-high transaction prices in the US. “It’s still a broadly favourable environment in the US for many OEMs,” he said. “Product mix is positive for Ford and Ford’s results follow strong quarterly results from GM this week, too.”

Tesla plunges

Tesla has reported net income for the first quarter down 55% on last year’s level, at $1.1 billion. The result was broadly expected after Tesla’s recent announcement of a decline in first quarter deliveries and price cuts to Tesla cars, as the company faces sharper competition for EV sales aroiund the world. Tesla also reported first quarter revenue down 13% at $17.4 billion. Tesla chief Elon Musk reportedly told analysts in a conference call that the company is planning ‘more affordable models’ and that they will use new technology that is being developed by the company. Reports have recently said that there could be a shift from Tesla towards autonomous tech and a robotaxi.

GM beats analysts

General Motors has reported a strong set of first quarter financial results that comfortably beat analyst expectations. Company revenue was up by 8% year-over-year to $43 billion. EBIT adjusted earnings were put at $3.9bn (compares with $3.8bn in Q1 last year). GM’s results were boosted by strong profitability in North America where product mix – solid truck sales – and high transaction prices continues to boost margins.

Have a nice weekend.

Graeme Roberts, Deputy Editor, Just Auto

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