2022 could be the worst car sales year of the decade

Car sales It was a big hit in the US 2022 Due to a number of factors, people want to buy electric vehicles but he can’t pass high pricesand electric truck creator Rivian It almost missed its production target for 2022. All these stories and more Morning shift For Wednesday, January 4, 2023.

1st Gear: 2022 Has Been a Tough Year for US Auto Sales

Supply chain issues, high interest rates and low inventory meant 2022 was a tough year for auto sales. While automakers are pushing up their 2022 sales numbers, analysts are predicting about 13.7 million new cars will be sold last year.

That would be the lowest US auto sales figure in a decade and an eight percent drop from 2021. The forecast for 2023 is not so good: According to analysts, sales figures are expected to remain well below pre-pandemic levels. It predicts about 17 million new cars will be sold in 2023 The The Wall Street Journal:

The drop marks a turnaround for the sector, which began the year on hopes that historically low interest rates and an end to parts shortages would spur a revival in sales. Instead, vehicle shortages persisted, largely as automakers waited for scarce computer chips. Russia’s aggression against Ukraine, a major supplier of auto parts, has exacerbated supply chain problems.

A prolonged shortage of semiconductors led to a drop in demand for new cars, which meant cars and trucks went to waiting buyers almost as soon as they arrived at dealerships. The lack of availability pushed the average price paid for a car to a near-record high of $46,382 in December, with buyers paying top dollar for rides they could afford, according to JD Power.

Record high prices boosted the automaker’s profits last year despite falling sales volumes and insulated the industry from a broader decline in consumer spending.

Now, while some supply constraints have eased, automakers face other hurdles, such as rising interest rates and rising material costs. Inventory levels return, puts pressure on car companies resisting the profit-damaging discounting historically used to counter slowing demand.

Some analysts caution that it’s too early to tell whether rising prices are keeping buyers off dealer lots. Employees at JP Morgan say that heavy snow in the northern United States may negatively affect sales in December 2022.

On Wednesday, GM, Toyota and several other automakers are set to release year-end sales figures for 2022. Ford is set to announce its 2022 results on Thursday.

Gear 2: US Customers Want Homes But Can’t Afford Them

A new survey from consulting firm Deloitte shows that while U.S. consumers want to buy electric cars, ever-rising prices are keeping them away. Nearly seven out of 10 potential EV buyers in the U.S. expect to pay less than $50,000 for their next vehicle—a number that’s difficult to achieve with most EVs on the market today.

More than half of people surveyed between September and October 2022 said lack of affordability was their biggest concern when shopping for an electric car. This coincides with rising EV prices and high inflation taking a toll on people’s wallets. From Reuters:

Tesla Inc’s flagship Model Y starts at $65,990, while veteran automaker Ford Motor Co’s Mustang Mach-E starts at $46,895, according to the companies’ respective websites.

Deloitte said in its 2023 Global report that despite price pressures, intentions to purchase electric vehicles in the U.S. rose 3 percentage points year-over-year, with the same growth recorded for hybrid electric vehicles and plug-in hybrid electric vehicles. Automotive Consumer Research”. The intention to buy an internal combustion engine fell from 68% to 62%.

“While historically high transaction costs have been a significant challenge for consumers, a strong desire to reduce fueling costs is driving EV purchase intent around the world,” said Karen Bowman, Deloitte LLP vice chairman and US automotive leader.

A few interesting tidbits from the study: 30 percent of US consumers don’t want anyone to collect data from their cars, and buyers prefer to pay upfront for features as part of the vehicle’s transaction price. instead of using a subscription plan.

3rd Gear: Rivian Simply Missed Production Target

Electric truck maker Rivian says it missed its 2022 production target of 25,000 units due to supply chain issues. Slow growth at the automaker’s manufacturing plant in Normal, Illinois, hasn’t helped.

It is reported that the company produced 24,337 cars in the first year of production. This figure covers Rivia’s three current models: R1T pickup truckthe R1S utility vehicleand EDV Amazon delivery van. The company did not divide production by model. From Automotive News:

Rivian had forecast production of 50,000 vehicles in 2022 before critical parts shortages caused multiple assembly line shutdowns and a mid-2022 reassessment of capacity. The Irvine, Calif.-based automaker delivered 20,332 vehicles last year, leaving about 4,000 vehicles in inventory.

For the fourth quarter, Rivian produced 10,020 vehicles and delivered 8,054 units after adding a second production shift to improve parts supply. In its third-quarter earnings report, the company said more than 100,000 pre-orders for the R1T and R1S were backlogged, in addition to a multi-year Amazon order for 100,000 vans.

Production is limited to 2022 difficult year for one of the world’s most promising EV startups, the startup briefly had a higher market value than Ford Motor Co. when it began trading on the Nasdaq stock market. Rivian’s stock price has fallen 87 percent since its initial public offering in November 2021.

Rivia’s market value is now less than $15 billion, down from a high of more than $100 billion immediately after its IPO, Reuters reports.

There is a bit of a silver lining though. Technically, Rivian managed to roll 25,051 cars off the assembly line; Of those, 714 were still in the process of being completed as 2022 rolled into 2023 as they waited for parts, software checks, tire alignment, filling, and a few other odds and ends.

4th Gear: Microsoft Gets into the Autonomous Driving Game

Microsoft is reportedly in early talks to invest in autonomous driving startup Gatik. It’s part of Microsoft’s cloud partnership with the California-based company. The news comes from two sources familiar with the pending deal.

The software giant plans to invest more than $10 million in a funding round that values ​​Gatik at more than $700 million. Part of the deal will see Gatik use Microsoft’s cloud and edge computing platform Azure to develop autonomous technology for trucks. From Reuters:

Terms of the deal could still change, added the sources, who spoke on condition of anonymity to discuss personal matters.

Microsoft and Gatik declined to comment.

Like other big tech companies, Microsoft has recently invested in self-driving technology. In January 2021, Microsoft invested in GM-owned robotics company Cruise in a deal worth $30 billion. Cruise plans to use Azure to boost its commercial autonomous vehicle solutions and competes with Alphabet’s Waymo and Amazon’s Zoox.

Autonomous driving technologies are considered revolutionary for the transportation and logistics industry, but have faced setbacks in a slowing market due to regulatory concerns about safety and less available funding.

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Founded in 2017 by industry veterans Gautam Narang and Arjun Narang, Gatik focuses on mid-haul, business-to-business logistics for the retail industry.

As of 2021, it has launched fully driverless commercial delivery services with Walmart Inc and Loblaw Companies Ltd, where Gatik offers short-haul delivery on box trucks in Arkansas and Ontario, Canada.

It has raised more than $120 million from investors including Koch Disruptive Technologies, Innovation Endeavors, Goodyear Ventures and RyderVentures.

In the first quarter of 2023, Gatik reportedly plans to integrate Class 6 autonomous box trucks into the Pitney Bowes e-commerce logistics network in Dallas.

On the other side of the coin, Ford and Volkswagen shut down a self-driving technology unit called Argo AI because the companies said building self-driving “robotaxis” would be “harder than putting a man on the moon.”

5th Gear: Nvidia is partnering with a handful of automakers

Computer gaming and artificial intelligence company Nvidia continues to drive automotive development, manufacturing and in-car gaming. To that end, the company announced a number of automaker partnerships around the world ahead of CES. From Automotive News:

* Mercedes-Benz is using Nvidia’s Omniverse platform to create a digital twin of its assembly plant in Rastatt, Germany, allowing the company to plan production changes and test them in a virtual environment before reorganizing the physical plant.

* Foxconn will use Nvidia technology in the development of its flagship vehicles and provide automakers with electronic control units based on Nvidia chips and sensors for highly automated driving.

* Hyundai Motor Group, Polestar and BYD plan to offer Nvidia’s GeForce NOW cloud gaming service in cars. Nvidia’s vice president of automotive, Danny Shapiro, said that specific models for in-car gaming haven’t been identified yet, but the idea is to help entertain not only passengers in the back seat, but also drivers who park their electric cars to charge.

The slew of announcements are intended to help showcase Nvidia’s role as a “turn-on” partner for automakers.

“We’re not like a Tier 2 chip supplier — that’s not how we operate,” Shapiro told Automotive News. “We make chips that Tier 1s integrate into ECUs and go into cars. But we tend to have direct relationships with car manufacturers. We do a lot of collaborative engineering and product development with them.”

On the contrary: Imagine you are ahead of this curve and bend it