Auto & Transportation

Recently, the latest research report "Global Automotive Market Outlook 2022" released by Alixplatz shows that the recurrence of domestic epidemics and global economic problems will continue to affect consumers' willingness to buy cars in 2022. Despite the gradual increase in chip supply, overall capacity pressure and high demand will keep new car prices higher despite lower-than-expected production volumes, while at the same time causing operational inefficiencies and worsening conditions for parts suppliers, which is expected to continue by 2024.

According to the latest estimates by Alixibo, by 2035, pure electric vehicles will become the mainstream choice in major markets. However, the development of the pure electric vehicle market faces many challenges: increased raw material costs (compared to gasoline vehicles, the cost of pure electric vehicles is 125% higher), scarcity of parts and commodities, and rising prices (including chips required for electric vehicles) OEMs and their large component suppliers are ill-prepared to transition to an electrified supply chain.

“The economy is currently full of uncertainties, but OEMs and suppliers are still benefiting from strong demand in the market and have shown commitment to electrification transformation. Although the initial capital to drive electrification transformation has been in place, companies are far from achieving scale. The sales volume required for economic and cost competitiveness. However, the market has high expectations for the automotive industry to achieve record economic profits in the next two years.” said Xie Fu, co-head of Asia Pacific at Ariibo, “While many companies are The transformation is planned, but they need to proactively redesign the supply chain and implement strict cost management to avoid costly surprises.”

The report pointed out that with the accelerated popularization of pure electric vehicles and the gradual clearing of infrastructure needs, the relevant investment needs will increase in a snowball-like manner. Ariibo pointed out that although consumers are still in the early adopter stage of pure electric vehicles, as the pure electric vehicles of major OEMs fully cover all market segments in 2024, new customers will pay more attention to transaction prices, daily use car cost and charging convenience. In the United States, for example, building the charging infrastructure required by the market in 2030 will require an investment of about $48 billion, but so far, only $11 billion has been confirmed.

At the same time, Dr. Dai Jiahui, Co-Head of Greater China and Head of the Asia-Pacific Automotive Industry at Ariplatin Consulting, said, "At present, China is in a leading position in the electrification transformation of the global automotive industry: in the new car sales in March this year, the Energy vehicles have accounted for 31%. At present, domestic brands have a very strong influence in the domestic market, but by 2024, after major international car companies have also released a large number of (pure electric) models, they will obviously feel the pressure. The key to maintaining its first-mover advantage is to provide a sticky customer experience and create a more capital-efficient operating model.”

Axo Research also shows that pure electric vehicles will not take a mainstream position in major markets until 2035, which also means that the scale effect of pure electric vehicles will still not be comparable to gasoline vehicles before 2030. . Aruba estimates that 40% to 60% of these costs can be saved if OEMs and component suppliers can proactively address the transformation of their respective supply chains. Risks that need to be considered and avoided as much as possible during the adjustment period include the continuation of the supplier's business, the cost of guaranteeing supply in an emergency, the additional cost of re-validating parts and opening new molds.

Research shows that component suppliers are particularly vulnerable to risks in the process of electrification transformation, because new players such as battery and technology companies will intensify market competition and reduce business share, and OEMs may electrify factories and workers in order to achieve technology transformation. Will choose Homebrew on more new parts. Studies have shown that existing component suppliers may only be able to participate in 28% of the business in pure electric vehicle powertrains. At the same time, a survey of parts supplier executives by Alixi, which was part of an overall auto industry research report, showed that many parts suppliers are planning to gradually shut down or sell internal combustion engine-related businesses.

With the number of ICE vehicles and hybrids declining steadily in Europe and flat in North America over the past four years, Alixi forecasts that the number of ICE vehicles is approaching an inflection point: between 2024 and 2028, the number of ICE vehicles in Europe and North America is expected to The production of hybrid and hybrid models will be reduced by at least 33% and 12%, respectively.

The report concluded that in order to promote the transformation from fuel vehicles to pure electric vehicles, OEMs and parts suppliers must explore new business operation models, including considering the separation of fuel vehicles and pure electric vehicles and operating them separately. This will help companies maintain a stable capital allocation in the face of extremely high expectations from investors, and leave sufficient resources and capabilities for the fast-growing pure electric vehicle business.