New practices in the auto industry

Issue #115, Oct 17th, 2021

Electrification, digitization and sustainability are broad trends leading to new ways and methods in the automotive industry. OEMs increasingly use digital channels for sale of cars to ensure social distancing during these pandemic times. Lightweighting is a trend in electric cars to reduce their carbon footprint. Volvo released its first truck made from green steel. Special purpose steel used in EV motors has led to a legal case filed by Nippon Steel to protect its turf. For those who find e-bikes expensive, lending libraries are an option to try them out first and later purchase if found comfortable. Tata Motors plans to follow an asset-light model for manufacture of EVs, making use of its existing passenger vehicle factories. Below are some new practices reported in the automotive industry recently.

Honda's online car sale

Prompted by the COVID-19 pandemic, consumers are increasingly buying online, even big-ticket items like new cars that they previously purchased only after they had a chance to inspect the merchandise themselves. Honda has started selling cars online. Its online store offers four popular models. The monthly subscription includes the cost of inspections and tax. - Nikkei Asia

Lightweighting of EVs

Major investments in EVs are welcome news. The sector has come a long way, but many challenges lie ahead. One issue that has received too little attention is the increasing weight of vehicles. Combustible, energy-dense petroleum is replaced by bulky batteries. And the rest of the vehicle must get heavier to provide the necessary structural support. Why does this matter? First and foremost is safety. The likelihood of passengers being killed in a collision with another vehicle increases by 12% for every 500-kg difference between vehicles. Heavier vehicles also generate more particulate pollution from tyre wear. - Nature

First vehicle from fossil-free steel

In a world-first, Volvo Group reveals the first vehicle made of fossil-free steel produced by SSAB. The machine, a load carrier for use in mining and quarrying, was recently unveiled at a Volvo collaboration event in Gothenburg. In 2026, SSAB plans to supply the market with fossil-free steel at a commercial scale after a conversion of its Oxel?sund blast furnaces into an electric arc furnace and by using HYBRIT technology, which replaces coking coal traditionally needed for iron ore-based steelmaking, with fossil-free electricity and hydrogen. This process is a deciding move toward virtually eliminating carbon dioxide-emissions in steel production. - SSAB

Lawsuit for EV material

Nippon Steel has mounted a defense of a patented material in demand for EVs, going as far as taking top customer Toyota to court. At the center of the lawsuit is the Japanese patent for non-oriented electrical steel sheets, an indispensable component in electric motors used in EVs, power plants and mobile phones, according to Nippon Steel. Nippon Steel officials said its prized technology is critical to its competitiveness, as the world shifts to "a carbon neutral society" and innovations that reduce emissions are increasingly needed in steel manufacturing. - Economic Times, Nikkei Asia

e-bike lending libraries

Climate-friendly e-bikes are a key part of plans to decarbonize urban transportation. To speed adoption, more cities are offering lending programs that can expose more riders to this new mode. But the cargo-style e-bikes that are most useful as replacements for gas-powered vehicles can cost $2,000 or more, a daunting barrier for many would-be buyers. For now, grassroots efforts like Local Motion’s have emerged as another way to let riders experience what e-bike ownership might be like. The free lending loaner approach has seen signs of success. They give a taste of e-bike ownership. - Bloomberg

Tata Motors' new approach to define car categories

A new trim level strategy, starting with the Tata Punch, aims to also remove any social stigma that may be associated with lower priced variants.?In a departure from using a set of letters to define a trim level, Tata Motors now wants to give its trim levels different “personas”, to reflect the personality of its customer. The Tata Punch trim levels are named as Pure, Adventure, Accomplished, and Creative instead of XE, XM, XT, XZ which has been the practice so far. “It's a kind of a psychological way of approaching it,” says Martin Uhlarik, Global head of design, Tata Motors. - ET Auto

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Tata Motors' asset-light EV making plans

The new EV company of Tata Motors will not own any manufacturing plants but will instead rely on the passenger vehicle factories for output and remain asset-light. PB Balaji, CFO said, “The manufacturing capacities of passenger vehicle will be available on a tolling basis to the EV company. The EV company will not have any asset or any capacity for itself within the company but it will have the access to the PV capacities already created.” The PV business will benefit from the fees paid to it by the new EV company for using its brand and IP. These arrangements will be done on an arm’s length basis. - Money Control

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