Article Type: Podcast

Which economic trends will drive the automotive industry this year?

How will the automotive industry be influenced by wider economic trends in 2024? In this Autovista24 podcast, editor Tom Geggus asks Autovista Group’s chief economist what can be expected this year.

Speaking in a webinar with Assurant’s European business development and commercial director, Damian Tyler, Autovista Group’s chief economist, Dr Christof Engelskirchen, outlined his expectations for 2024.

The pair discussed economic resilience amid uncertainty, supply versus demand and residual values (RVs). In a follow-up podcast, Engelskirchen discussed the COVID-19 pandemic, the export expectations of Chinese carmakers, and the influence of incentives.

Subscribe to the Autovista24 podcast and listen to previous episodes on Apple, Spotify, Google and Amazon Music.

Show notes

Webinar: Optimising the year ahead

EV-volumes.com: Homepage

Shocks and resilience

In recent years, economies around the world have experienced several severe shocks. The COVID-19 pandemic, supply-chain disruptions and major international conflicts have all acted as extreme stress tests.

It appears that economies have managed to overcome these challenges, demonstrating an impressive amount of resilience. Engelskirchen pointed out that global trade has continued to develop side-by-side with economies.

So, what does this mean for new-car markets specifically? According to forecasts from EV-volumes.com (part of Autovista Group), it will take some time before registrations return to pre-pandemic levels.

Chinese car market

One country which has seen its automotive market grow at a rapid rate in recent years is China. ‘The Chinese automotive market is in a situation where there is a lot of supply and necessity to grow and to create economies of scale,’ Engelskirchen explained.

China currently plays host to a lot of brands, all looking to accelerate their growth and cement their market position. However, if these companies want to keep expanding, this goal cannot be achieved by focusing solely on their domestic automotive market.

Carmakers are therefore looking to establish themselves in fresh regions with new models, featuring the latest technology at a competitive price. While North America poses a challenge, Chinese brands have already got to work in Europe.

However, with demand coming under stress in the region, the success of these new entrants will be determined by how the European market reacts to this additional supply of vehicles.

Incentive implications

Certain European countries are now trying to ensure a level playing field through the use of incentives. Some subsidies are now dependent upon where a car and its components originate, meaning several brands from China no longer qualify.

However, European countries should try to avoid over-regulating the market. This could prove detrimental for many European car brands that are dependent on exporting models to China.

‘You have to be quite careful in how to address these topics because otherwise, you are just creating a trade conflict, which in the end would create a situation where we would have less global trade,’ said Engelskirchen. ‘This is from an overall economic wealth perspective, not the better solution to the challenges at hand.’

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Which manufacturer supplied the largest volume of EV batteries in 2023?

Battery suppliers are a crucial part of the electric vehicle (EV) industry. But which company manufactured the greatest volume of EV batteries in 2023? Autovista24 editor Tom Geggus and special content editor Phil Curry explore the numbers.

According to the latest data from EV-volumes.com, global production of EV batteries grew 42% year on year in 2023. This equated to a total output of over 680 gigawatt-hours (GWh) worth of cells made for passenger cars and vans.

Battery suppliers measure their output in GWh rather than the total number of units produced. One GWh is equivalent to one million kilowatt-hours (kWh), the measurement often found in battery-electric vehicle (BEV) specifications. If an average BEV has a capacity of 50kWh, then 1GWh worth of batteries could supply some 20,000 models.

Subscribe to the Autovista24 podcast and listen to previous episodes on Apple, Spotify, Google and Amazon Music.

Show notes

Autovista24: Who makes the most electric vehicle batteries?

Autovista24: CATL drove global EV battery production in first three quarters of 2023

CATL: CATL and JAC reach strategic cooperation to promote e-mobility

CATL: CATL and MHERO signs strategic cooperation agreement on “CATL Inside”

BYD: BYD to build a new energy passenger vehicle factory in Hungary for localised production in Europe

LG: LG Energy Solution to invest in promising US lithium metal battery technology startup, solidifying leadership in next-generation battery technology

CATL far out in front

The clear front-runner in EV battery production during 2023 was CATL, with a cell output of 243.3GWh, up 48% compared with 2022. The company claimed 36% of the market across the year.

EV battery

Chairman and general manager of CATL, Robin Zeng, spoke at the World Economic Forum in Davos at the beginning of 2024. He said that battery innovation is central to transitioning the world towards a clean-energy future.

Zeng outlined how scaling wider battery production will benefit the automotive industry. ‘We are focused on the aviation applications for condensed batteries, and as production scales up, we can reduce the cost and use the battery in cars, too,’ he explained.

The manufacturer also recently confirmed two new strategic collaborations. Jianghuai Automobile Group (JAC) and CATL will cooperate in the supply of EV cells, the introduction of battery-swapping technology, and the joint development of new products.

Meanwhile, the battery maker will also work with MHERO, a subsidiary of Dongfeng Motor Corporation, as part of a three-year cooperation agreement. This will see CATL function as the primary EV-battery partner for the carmaker.

European BEV production

In second place, BYD increased its battery production by 61% year on year, with a cell volume of 117GWh. This meant the manufacturer claimed 17% of the market in 2023.

At the end of the year, the company confirmed it would open a new passenger car factory in Hungary, its first facility in Europe. BYD was keen to point out its vertical supply chain integration, which it claims will help create a local green ecosystem.

While localised vehicle assembly will help keep shipping emissions down, the company has yet to confirm whether batteries will also be made locally.

EV battery supplier

In third, with a volume of 106.8GWh of cell production, was LG Energy Solution. This marked a 16% increase from its 2022 output. In total, the manufacturer claimed 16% of the EV-battery market in 2023.

The company confirmed in late January that it had invested in Sion Power, a startup holding patents in lithium-metal battery technology. A lithium-metal anode can enable greater energy efficiency compared to existing lithium-ion batteries.

A close race

Towards the middle of the table, Panasonic claimed an 8% market share with a cell production volume of 55.8GWh. This was made for growth of 23% compared with 2022.

automotive cell

Next, SK On manufactured 40.8GWh worth of EV battery cells in 2023. This equated to an increase of 31% and a share of 6%. Next, Samsung SDI claimed 5% of the market, with a volume of 35.4GWh, up 41% year on year.

Huge growth

In seventh, CALB produced 24.1GWh worth of batteries, an increase of 21% on 2022. This output allowed the manufacturer to take 4% of the market. Farasis Energy achieved one of the largest rates of growth, up 143% year on year, with a volume of 18GWh and a market share of 3%.

EV cell
Envision AESC was responsible for 1% of production, supplying 8.4GWh of batteries, up 71% on 2022. Finally, Sunwoda produced 7.6GWh worth of EV cells, making for growth of 69% and a market share of 1%.
The unspecified manufacturer category accounted for 3% of the market in 2023, equating to roughly 23.6GWh worth of cells, a total that is up by 38% year on year.

This content is brought to you by Autovista24.

Autovista24

How lowering prices affects automotive electrification, brand image and residual values

When Tesla announced it would lower the list price of its models across the world, it caused a significant industry reaction. Autovista24 deputy editor Tom Geggus examines the potential effects with Dr Christof Engelskirchen, chief economist at Autovista Group, and Andreas Geilenbruegge, head of valuations and insights at Schwacke (part of Autovista Group).

Autovista24 · How lowering prices affects automotive electrification, brand image and residual values

Subscribe to the Autovista24 podcast and listen to previous episodes on Apple, Spotify, Google Podcasts and Amazon Music.

Show notes

Tesla turns up heat on rivals with global price cuts

Tesla to raise Shanghai output after price cuts stoke demand – memo

Ford to significantly increase production of Mustang Mach-E in 2023, reduces prices across the board

VW will not match Tesla price cuts for its EVs, CEO Blume says

Is now the time for cautious economic optimism?

Will phase-out of incentives threaten EV uptake in Germany?

How fast will Asian carmakers become part of Europe’s automotive landscape?

Synopsis

There are numerous reasons why manufacturers might lower the prices of battery-electric vehicles (BEVs). Firstly, their market share continues to rise. In 2022, registrations of BEVs closed in on those of diesel-powered models, with respective European market shares of 14% and 14.5%.

This is thanks in large part to early adopters investing in the technology. However, a tipping point will surely be reached as early adopters are all bought in, and the mass market needs to be satisfied. Alongside rising interest rates, ensuring BEVs appeal to a wider range of consumers with lower price tags makes sense.

Many media outlets signalled the beginning of a price war following Tesla’s announcement. Not long after, Ford lowered the price of the Mustang Mach-E in the US. However, not all carmakers were on board with this. Volkswagen (VW) Group’s CEO Oliver Blume refused to be drawn into battle.

Meanwhile, new brands from Asia are entering European markets, offering up affordable vehicles with advanced technology. This could also lead established brands to adjust list prices. However, these companies will also need to consider their brand image when lowering prices. If carmakers want to shift from the premium segment to the mass-market via new pricing strategies, the public perception will change in parallel.

Adjusted list prices will not only affect new vehicles though, as used models will also see a knock-on effect. Directly comparable models will see the biggest change in absolute residual values (RVs). This could include very-young used models, demonstrators, or rental vehicles. This impact will wash through to older models, just at a slower rate. ‘It is still the better strategy in terms of changing transaction price than offering high discounts,’ Engelskirchen explained.

This content is brought to you by Autovista24.

Is the next automotive reality, virtual, augmented, and metaverse-bound?

Autovista24 editor Phil Curry, deputy editor Tom Geggus, and journalist Rebeka Shaid explore alternative automotive realities. How can cars benefit from virtual reality (VR), augmented reality (AR), and the metaverse? Listen now to find out!

Autovista24 · Is the next automotive reality, virtual, augmented, and metaverse-bound?

Subscribe to the Autovista24 podcast and listen to previous episodes on Apple, Spotify, Google Podcasts and Amazon Music.

Show notes

Abarth launches world’s first virtual-reality test drive delivered to homes

Audi x holoride

Virtual reality in automotive market size, share, and COVID-19 impact analysis

How SEAT applies VR

Porsche and holoride launch in-car virtual-reality attraction in a moving vehicle

Toyota’s new augmented-reality shopping experience: a shift in the car-buying journey?

Basemark helps to deliver augmented-reality experience for one of the world’s leading premium car brands

Basemark debuts augmented-reality development tools for the automotive industry

VW shows off augmented-reality head-up display

CES 2021: Panasonic looks ahead with augmented-reality HUD

Head-up displays: gimmick or godsend?

Volkswagen to bring augmented reality to cars in collaboration with Microsoft

Automotive in the metaverse with Audi and McLaren

CES 2022: Hyundai reveals its ‘Metamobility’ concept

Show synopsis

Virtual reality has become one of the biggest technological trends in the automotive industry. While there is not a clear understanding of the market demand for integrating VR technology into cars, vehicle manufacturers have recognised the potential to monetise VR. In 2019, the global virtual-reality automotive market was valued at $760 million (€720 million) and is expected to reach more than $14 billion by 2027. The technology is poised to gain traction in the automotive world, not only in North America – which is projected to have the highest market share – but also in Europe.

Carmakers can use VR in the design process, to reduce costs, or train employees. But the technology can be more commercially revolutionary. Audi will be the first carmaker to roll out VR from startup holoride in series production this summer, offering motion-synchronised VR content to backseat passengers. Meanwhile, Porsche is piloting a location-based virtual-reality drive at the Porsche Experience Centre in Los Angeles. VR presence is also growing in showrooms. Electric-vehicle (EV) maker Lucid is offering a unique retail experience to shoppers, giving them the opportunity to personalise their cars with a headset.

Augmented reality is effectively the halfway point between virtual reality and the real world. Superimposing digital images over what the user can naturally see opens up a world of information and potential, which carmakers are taking advantage of. Toyota notably used VR in the US to showcase 10 of its cars, allowing customers to get a better understanding of each model’s features and how any particular vehicle might fit into their lives.

Beyond the world of retail, AR is a big party piece for car cockpits. Working as part of the central infotainment system, head-up display (HUD), or within holographic lenses, drivers can gain access to essential information. This might include speed, directions, and the driver-assistance system. But even more impressively, the technology can be dynamic, with images superimposed over the road ahead, enhancing what the driver sees.

The metaverse combines both augmented and virtual realities. It is accessible via many platforms and allows users to interact with each other in a digital world. While it may not seem like a natural platform for carmakers, it offers several benefits, including a fresh marketing opportunity in front of a new audience.

Supercar manufacturer McLaren has teamed up with InfiniteWorld to give customers a ‘deeper digital experience.’ This will include the creation of original non-fungible tokens (NFTs) to represent McLaren’s supercars and hypercars. The plan is to create and offer a range of digital content on the company’s marketplace. The carmaker also unveiled a specially-liveried version of its Formula One car, the MCL36, on the metaverse platform Roblox, allowing users to see and drive the car before the season got underway. The platform also offers virtual tours of McLaren’s Technology Centre in the UK.

One carmaker deeply immersed within the metaverse is Hyundai. The Korean company unveiled its ‘Metamobility’ concept at CES 2022, showcasing the future of transport as an access point to the metaverse from vehicles. This means users could access home, work, or gaming zones while on the move. There is also the possibility of utilising ‘digital twins’, allowing people to conduct real-world activities thousands of miles away through the digital world.

Are tyre particulates the next big environmental problem?

Vehicle particulates do not just come from the emission system. Tyres also create fine particles that can affect the environment, cause air pollution and create health problems. Yet unlike emissions, there is no easy way to manage tyre particulates. Autovista24 editor Phil Curry and deputy editor Tom Geggus discuss the problem with particulates, the role of electric vehicles, and solutions the automotive industry is working on.

Show notes

ADAC: Tyre wear particles in the environment

RAC: RAC moves to set record straight over Eustice’s remarks that the gains from electric cars ‘may be less than some hope’

Hankook: Hankook iON: new global family of tires for electric vehicles promote sustainable mobility

Continental: Continental Launches AllSeasonContact with Best Rolling Resistance Grade

Mercedes-Benz: Mercedes-Benz VISION EQXX demonstrates its world-beating efficiency in real world driving

Fit for 55: European Union to end sale of petrol and diesel models by 2035

Are EVs as green as they seem?

Audi develops filters to trap tyre particulate matter

UK government: Emissions of air pollutants in the UK – Particulate matter (PM10 and PM2.5)

Episode synopsis

The issue of particulate matter is not solely the problem of emission systems. Any parts that create friction are susceptible to producing fine particles that can impact air-pollution levels or harm the environment. In this respect, tyres are a big part of the particulate problem and have been since the inception of the car over 100 years ago. For vehicle sustainability to continue, tyre wear must be a factor in automotive research.

However, unlike the emissions system, there is little that can be done to halt the creation of particulates. Instead, tyre suppliers and car manufacturers are doing their best to slow their creation, while drivers too have an important role to play.

According to German vehicle-testing agency ADAC, around 500,000 tonnes of particulates are created by tyres each year in Europe. These range from 10 microns in size to 2.5 microns – an atmospheric size.

The electric-vehicle problem

Carmakers are shifting their focus away from internal-combustion engine (ICE) cars to electric vehicles (EVs). One reason for this is the issue of air pollution, a matter that increased after the Dieselgate scandal. This saw a lot of attention around the subject of particulates, especially nitrogen oxide (NOx) pollution. The decline in the diesel market meant drivers moved towards petrol models, creating a problem with CO2 emissions that the car industry was trying hard to avoid.

But electric cars have their own part to play in tyre particulate matter creation. They are often heavier than standard ICE counterparts, and this places more pressure on the tyres. This, in turn, creates more friction with the road surface, and therefore more wear. Electric-vehicle sustainability is not, therefore, reliant on its zero-emission capabilities alone.

The UK’s environment secretary George Eustice recently highlighted to MPs that it is unknown how far switching from ICE to EVs will help. ‘There is scepticism,’ he said. ‘Some say that just wear and tear on the roads and the fact that these vehicles are heavier means that the gains may be less than some people hope, but it is slightly unknown at the moment.’

In answer to this, one of the country’s automotive organisations, the RAC, commissioned a report from battery electrochemist Dr Euan McTurk. He used real-world findings to explore the actual impact of electromobility on tyre and brake wear.

RAC EV spokesperson Simon Williams said: ‘George Eustice’s remarks about EVs not being as green as some may think were very unhelpful and could put some drivers off making the switch to zero-emission driving. There are far too many negative myths surrounding electric cars which need to be busted as soon as possible in order to speed up the electric revolution.’

Tyre-particulate filters

One solution to the particulate problem is to filter them away from the environment. For emissions systems on petrol and diesel cars, this is done with a particulate filter fitted in line on the exhaust system. However, it would be difficult to fit a filter to a tyre, while the potential of a suction device behind the wheel is limited due to restricted space and constantly moving objects.

Therefore, fitting filters to areas where particulates can enter the environment, such as around the drainage system to prevent ingression into water supplies, is something that could help reduce the problem. This is the thinking of German carmaker Audi who, together with the Technical University of Berlin, is developing tyre-particulate filters to help protect the ecosystem.

The Urbanfilter can be combined individually depending on the road and traffic situation. They trap the particles as close as possible to the location of creation – before rainwater can rinse them into the sewers. Laboratory and field testing has shown the filters are effective, but can they work together to solve the issue of tyre particulates?

How could Russia’s invasion of Ukraine impact the European automotive industry?

With Russia escalating its aggression towards Ukraine into an invasion, severe sanctions are inevitable. Depending on how the situation plays out in the coming weeks or months, the European automotive market will see an impact as well. In this special episode, Autovista24 editor Phil Curry, Autovista Group chief economist Christof Engelskirchen, and Autovista Group director of valuations Roland Strilka discuss the possible scenarios for the industry.

You can listen and subscribe to receive podcasts direct to your mobile device, or browse through previous episodes, on Apple, Spotify, Google Podcasts and search for Autovista24 Podcast on Amazon Music.

Episode synopsis

The escalating situation between Russia and Ukraine, which has seen the former send troops across borders and launch air and sea attacks, has the potential to destabilise many markets, including automotive.

Further sanctions are inevitable, and they will be severe. This will have an economic impact, not just on Russia but also those countries declaring them. They may include a ban on exports of high-technology into Russia, which will also impact the companies that trade in this field.

While there are already some impacts of the escalation being felt, such as an increase in the price of oil and energy, other issues will take moretime to unfold. There are two possible scenarios, and each has a differing influence on the automotive market.

In the first scenario, where Russia largely retracts to the separatist regions of Donetsk and Luhansk without conflicts escalating much further, there will be no lasting impact on Europe’s new-car markets, other than the Russian market, as there is an ongoing supply shortage. Lack of supply into Russia can be compensated by selling to other countries.

There will, however, be a small impact on used-car markets, as there might initially be a slight dent in demand for cars, in particular in Eastern Europe, but this will be short-lived in this scenario, especially since weakened exchange rates support current residual values

Most severe

The second scenario sees Russia occupying Ukraine. This is the maximum level of aggression that we believe Russia believes it can afford. Ultimately in this outcome, the most severe sanctions will be imposed, and these will more negatively economically impact both Russia, and those countries declaring them.

Western Europe will be more affected economically by this than for example the US. Not only will the region need to re-align economies towards other areas of the world for some time, it will also need to deal quickly with the rising energy, gas, oil and food prices, as well as supporting Eastern European markets financially and economically to support in their stabilisation. Eastern Europe will be more negatively affected in this scenario, as they are more dependent on economic relations with Russia.

There will be very little impact on new-car markets in Western Europe, as there is an ongoing supply shortage. Even if there will be lower demand for new cars in Russia and Eastern Europe, it is unlikely that this cannot be compensated by selling to other countries.

Several used-car markets in Eastern Europe may still see fewer transaction, yet stable, possibly even rising residual values, as inflation and exchange rate pressure will overcompensate the reduced demand.  This would come after a period of severely rising prices. The market in Western Europe will be less affected, but the expected increases in RVs for 2022 and 2023, in particular for internal-combustion engine (ICE) vehicles, may be slightly lower than initially forecast.

The automotive industry has spent the last two years dealing with a supply chain disruptions. In this time, supply chains should have become more resilient , meaning should problems arise with the supply of components out of Russia, other suppliers   have a vested interest to sell at rising prices. Supply shortage and supply chain disruptions may end up being less impactful in the medium term than during the COVID-19 crisis.