Automotive course corrections

Issue #66, Mar, 2021

The automotive industry makes course corrections for the changes that it witnesses in its journey. Cars can be sold directly to end customers, in a shift from the traditional B2B model involving dealers to a B2C model. Batteries are not the only source of power for electric vehicles as hydrogen powered fuel cells are a strong competition and alternate. Some vehicle makers are investing in hydrogen as an alternate and a back-up. Car makes popular for their just-in-time way of manufacturing have stock piled inventories of chips, creating an advantage for them. Here are some recent course corrections witnessed recently in the auto industry.

Overhauling the auto supply chain for chip shortage

Europe’s largest semiconductor company, Infineon, has warned that car companies need “a different model” for procuring critical chips, after supply constraints brought assembly lines around the world to a sudden halt. “The auto industry cannot say: ‘OK fine, we don’t need [any more chips], and then come back later and say: ‘Now we need them’,” chief executive Reinhard Ploss told FT. Bottlenecks in the supply of semiconductors to the auto industry began to emerge late last year, after an unexpected rebound in demand for cars coincided with a booming consumer electronics market. - Financial Times

Battery or Fuel cells for green trucks

Volvo’s view is that batteries are well-suited for shorter-range applications and for fleet vehicles and buses, which regularly return to fixed fueling depots. With hydrogen fuel cell applications, “you come from the other angle–really demanding long haul, where you really have long driving distances." In a related development, Daimler Truck and the Volvo Group on Tuesday completed the formation of “cellcentric,” their fuel-cell joint venture announced in 2020. - Forbes

Direct sale of EVs to customers

Volvo says that its retail partners will still take part in “selling, preparing, delivering, and servicing cars,” but that it “will radically simplify the process for, and reduce the number of steps involved in, signing up for an electric Volvo.” A digital sales channel changes not only the number of people needed to sell a car, but also the nature of their jobs and where they work. It means no one waiting in a showroom for people to drop in, no office managers, no janitors. EVs also have far fewer moving parts than internal combustion engine vehicles, and therefore are far less likely to need the same level of service. - Bloomberg

Air taxis for cargo and humans

German aviation startup Volocopter said it had raised 200 million euros ($242 million) from investors including funds run by U.S. asset manager BlackRock as it seeks certification for its battery-powered flying taxi. Volocopter said it expects to bring its VoloCity air taxi into commercial service within the next two years, while it has also teamed up with logistics group DB Schenker to deploy heavy-lift cargo drones.

Stockpiling an inventory of chips

Hyundai Motor has so far avoided a chip shortage that has plagued global automakers, largely maintaining its stockpile of chips last year and even accelerating purchases towards the end. The shortage has forced production cuts worldwide, including at Volkswagen and General Motors, prompting Germany and the United States to ramp up efforts to resolve the shortage. Other than Japan's Toyota Motor, which said this month it had enough chip inventory to last it about four months, Hyundai and its sister firm Kia Corp are the only global automakers to have maintained a stockpile of low-tech chips that helped them keep up production. If it doesn't ease soon, though, the shortage could hit Hyundai too. - LiveMint

Honda's Level-3 autonomous car

Honda Motor will on Friday launch a new car equipped with the world's first certified level 3 autonomous driving technology, paving the way for the automobile industry to gear up efforts to commercialize such automation for passenger vehicles. - Nikkei Asia