Tech Training Transition, Today!
For the first time in history, workers from Detroit’s Big Three automakers have decided to go on strike simultaneously. After failing to reach a new deal by 11:59 pm this past Thursday night, United Auto Workers’ President Shawn Fain directed workers from the largest union in America to walk off the line at three assembly plants: the GM factory in Wentzville, Missouri, a Stellantis plant in Toledo, Ohio, and a Ford plant in Wayne, Michigan. As a part of Shawn Fain’s “standup strike” strategy, only 13,000 of the 150,000 workers in the UAW are on strike right now, but more shutdowns are threatened at a moment’s notice if negotiations do not proceed as planned. UAW workers are striking for a variety of improved benefits including a 40% increase in wages, better retiree healthcare, and the restoration of lost pension benefits. Many within the UAW see the successes of the OEMs, especially with the increasingly massive adoption of EVs as the perfect time to field their demands for matching improvements in pay and benefits. Antiquated mindsets have left the average worker in the dust, but OEMs have a once in a generation opportunity to reframe their relationship with workers and unions as this strike progresses. For the last century, the relationship between worker and employer has evolved quite significantly. The advent of collective bargaining in the automotive workplace during the 1930s, 40s, and 50s laid the groundwork for the modern relationships between unions like the UAW and Detroit’s Big 3 OEMs. Decades of negotiations and strikes defined the pay, hours, and benefits that the average worker receives in 2023, but as technology rapidly advances within the smart vehicle and EV spaces, the needs of these workers (and of the OEMs) have suddenly been turned upside down. OEMs have traditionally considered their factory employees blue collar workers, more akin to electricians, machinists, or even plumbers. This mindset is outdated however, as cars increasingly do not require the assembly of engine parts and transmissions, but instead of high-tech motors and batteries. Perhaps thinking of line workers as high-tech employees is where the real future lies. It is no secret that the realities of manufacturing are changing significantly. The last twenty years have seen the rise of automation within manufacturing. More and more “robots” and other high tech industrial systems are being implemented, requiring fewer and fewer people to do the same jobs. For example, an engine assembly line that required 100 people in 1995 may only need a fraction of that total to function today. Even on traditional ICE assembly lines, what is required of the workers has been changing for years. Now, as EVs gain traction and automakers dedicate more and more of their time, capacity, and resources to their development and production, these workers will need to be reoriented and retrained to do things essential to EV production. As a part of an eventual deal reached with the UAW, OEMs will need to consider how high tech cars require more high tech workers, and how the benefits afforded to their tech employees should align with the technological intricacies of modern EVs. According to Representative Debbie Dingell (D-MI), battery plant employees in Lordstown, OH are making $16/hour, while employees at a neighboring McDonalds are making $23/hour. Pay issues like this are partially a symptom of the enormous cost undertaken by OEMs to retool their factories for EV production, modernize old facilities, comply with Federal regulations on material sourcing, and incorporate all of the advanced “smart” mobility technologies that consumers now demand into new vehicles. Detroit’s Big 3 along with other auto manufacturers have justified the lagging pay and benefits as an inevitable cost-saving measure, arguing that consumers will struggle to afford new EVs if union demands are met. Moreover, the Big 3 are competing against competitors that do not have unionized labor, squeezing profitability even further. While these concerns do have some merit in the short term, a reoriented mindsight shows that treating plant employees as high tech workers and investing in them as such will pay off in the long run. And unlike McDonald’s, which already struggles to staff their franchises, OEMs will have an increasingly hard time hiring high-tech workers for entry level wages, potentially leading to harmful staffing shortages. The requirements of the Inflation Reduction Act (IRA) will continue to constrict OEMs and incentivize them to build more EVs in America, and by investing in workers today, OEMs will be better prepared to shift over to all electric vehicle production within the next 10-15 years. Strikes are a complex matter. Disagreeing leaders are forced to come to a compromise on nearly non-negotiable terms, sometimes accepting sub-optimal outcomes. Complexity doesn’t even begin to describe the difficulties of negotiating a deal between three of the largest corporations in the world and 150,000 workers in 2023. Despite this though, there are solutions which are mutually beneficial to the OEMs and UAW alike. With some shrewd negotiations and a focus on a better future, the OEMs and the workers will be able to come to an agreement and work together to forge a path through this brave new world. Learn more about how the AutoMobility Advisors team can help you and your business seize the amazing opportunities to serve the new mobility market. Click on the link below and get in touch, we’d love to talk with you!
Electric – Connected – Predictive
As the automotive industry transitions towards EVs, many important questions have arisen about maintaining these increasingly complex and expensive vehicles.
Summertime Classics
This past Father’s Day, two parts of the AMA team had the opportunity to celebrate the occasion by enjoying the Cheekwood Concours d’Elegance in Nashville, Tennessee. Dan, our Advisory Director, and his son Hayden, our Head of Market Research, are lifelong car enthusiasts, with Dan having spent extensive time in the industry and Hayden growing up surrounded by car culture. Both of them are passionate about classic cars, and Hayden aims to share this love with other members of the younger generation. Hayden is a rising senior at Harvard studying history as well as a cadet in the Air Force ROTC program, with an interest in all things fast stemming from an early exposure to muscle cars and supercars. Below we describe our favorite vehicles at the show and some of the observations garnered from the outing. Boasting a fun and friendly environment, the Father’s Day show was an absolute blast. With cars spanning nearly one hundred years of automotive history, it was fascinating to see some of the greatest vehicles of different eras in perfect working order. Going chronologically, the oldest and perhaps most interesting cars at the show were the 1927 Rolls Royce Phantom I, a 1930 Lincoln Sport Roadster, and the selection of Packards from the 30s. Evoking feelings of splendor and glamour, the Gatsby-esque Rolls Royce was more akin in size to a Ram 2500 than a Rolls Royce Phantom of today. Fun to imagine what life might have been like for the lucky aristocrat or baron who had the privilege to be driven around in such a vehicle. A favorite feature of the car was the dual windscreens. Though not unique to Rolls Royce, the concept of a two windshield convertible coach exudes prestige and class while encapsulating the design language of the roaring 20s. An absolutely extraordinary piece of engineering. The next car that really caught our attention was the 1930 Lincoln Sport Roadster with a body built by Locke and Company of Rochester, New York. One of a mere 15 models ever produced, this was probably the rarest car at the exhibition. Finished in two tone green with a tan convertible top, this special Lincoln cost over $5000 new (nearly $90k today accounting for inflation). This car is one of three surviving examples of the original production run, and has gone through two restorations in order to preserve the car’s rich history for modern day car enthusiasts. Unsurprisingly, the roadster is frequently featured at prestigious events including but not limited to Amelia Island, the Glenmor Gathering, and St. Johns. I really enjoyed the combination of 20s and 30s car design combined together to create the ultimate Depression-era roadster. Seldom seen on American roads anymore, the show boasted several Packards from the 1930s. Two Packard Super Eights, a green convertible built in 1934 and a red sedan built in 1937 were on display. Both cars had beefy straight eight cylinder engines and would not look out of place in a 1930s gangster movie. More interesting than that, we had the opportunity to sit in and hear the owner start a 1938 Packard Twelve Coupe Roadster. Powered by a 437 cubic inch V-12 paired with a three speed manual transmission, the remarkable engine was nearly silent upon start. Epitomizing 30s luxury, the car at new would come in at a whopping $122,000 adjusted for inflation. Additionally, a great variety of more “classic” post-WWII American and European cars were on display. Our personal favorites were a 1959 Cadillac Coupe DeVille, a 1958 Porsche 356a Speedster, and a 1969 Mercedes 280 SL Roadster. Timeless but each encapsulating their different eras, we also had the opportunity to sit in and explore the interior of the Mercedes. Showcasing some early connected features, this car had a 5-band radio. Even cooler, it was the one featured in the Mercedes-Benz 2011 Super Bowl commercial. Far from the features of a modern car, it is nonetheless intriguing to examine the precursors of connected vehicles. With that, we’ve covered our favorite cars from the Cheekwood Concours d’Elegance. Going to events like this is an essential activity for any car enthusiast, because rarely is so much automotive heritage on display in such pristine condition. As EVs are phased in and ICE cars are retired from production, there’s something special about seeing and experiencing the power and feel of classic cars. Happy belated Father’s Day and Fourth of July!
AMA at Auto Tech: Detroit 2023
Bridging the long gap between CES 2023 and CES 2024, AutoTech Detroit marks a productive halfway point through the year for the automotive industry to showcase their latest advances and outlooks in automotive technology.
An Automobility Start-up from ITALY!
Innovation and technological development in the automotive industry is a global phenomenon. Companies hailing from all over the world create and invent revolutionary products and services, driving the advancement of technology forward at a breakneck pace. Hailing from Rome, Italy, 2hire, an auto mobility company specializing in car sharing, rental, and connected services, is one of these global innovators. Founded in 2015 as a moped-sharing company for students of LUISS University in Rome, 2hire has humble beginnings. The company quickly became something more though, transitioning from focusing solely on scooters to connected vehicles in 2016. CEO and Co-Founder Filippo Agostino, COO, and Co-Founder Elisabetta Mari, and Head of Product Design Giacomo Agostino describe this transformation the best: “The 2hire team is composed of tech experts who have a strong background in the communication protocols of vehicles. Our team was originally founded with the mission of bringing shared and sustainable mobility to the city of Rome through the launch and operation of an electric moped-sharing service. However, over time, we have pivoted towards developing the technology that supports these types of services. Our approach is software-based, which sets us apart from our competitors and allows us to offer a hardware solution that is easy to install and customizable for each mobility operator’s specific needs.” By 2017, 2hire had rolled out a brand new prototype device that was able to remotely lock and unlock the doors of a Fiat 500L. Securing multiple investments from venture capitalist firms, 2hire was able to turn this prototype piece of hardware into a universal device and launched an API layer named the “Adapter,” which would become the foundation of their business, and allowed them to take the company international. Less than two years later, 2hire was providing mobility services to vehicles and companies in Italy, Spain, France, and across South America. Driven by a relentless passion for sustainable technology, the 2hire team took a small startup firm and turned it into a rapidly growing global presence. When asked what motivated them to push through the trials and tribulations of being a startup, Filippo, Elisabetta, and Giacomo asserted that they “have always been interested in the mobility industry and saw a significant need for innovation in the car rental and fleet management space. The idea of helping people move more efficiently and sustainably was very appealing to us, and we saw a huge opportunity to make a difference in this industry.” Now in the first quarter of 2023, 2hire is as ambitious as ever. Thus far, the company’s technology has received widespread acclaim in Europe and South America. With over 15 million cars that can access the company’s services across 100 cities in 23 countries, it is no surprise that their technology is known for saving time and operational costs due to its ability to provide innovative solutions that help mobility providers in the car rental, peer to peer car sharing, car sharing, and fleet industries. With all of these successes in Europe and South America, 2hire is making the leap into the North American market with the aim of becoming an essential partner for mobility providers as they transition towards fully connected fleets (i.e. rental cars, delivery vans, corporate vehicles). Recently, Filippo, Elisabetta, and Giacomo traveled from Italy to Boston and Atlanta to showcase their technology to potential partner companies. With this trip to the United States, it’s clear that 2hire is ready to take the next step in expanding their business to an even larger international market. Having interests expressed in this technology by OEMs, major rental car companies, and car sharing platforms, 2hire demonstrates their ability to provide bona fide seamless integration solutions between service providers and connected vehicles while also supporting automotive companies in making their cars easily accessible to a growing ecosystem of digital service providers. From here, 2hire can only go up as they gain traction and secure partnerships in the United States. Taking a business from a small startup composed of college friends to a global company doing business with Fortune 500 corporations is no small feat. When asked for advice on lessons for other startup companies in the mobility space, the 2hire team shared three key pieces of guidance: For more information on 2hire’s technology and business, visit their website and LinkedIn page. Information on Filippo, Elisabetta, Giacomo, and the other members of the 2hire team can be found on each of their LinkedIn pages. And you can learn more about how the AutoMobility Advisors team works with companies like 2hire and can help you and your business seize the amazing opportunities waiting for innovative companies ready to serve the new mobility market. Click on the link below and get in touch, we’d love to talk with you!
Carpe EV Diem
Automobility Roadmap Newsletter – A perspective on all the changes in automotive transportation and the technology that’s now driving you. This week’s topic Carpe EV Diem and the EV adoption future.
The High Cost of EV Adoption Today
George Ayres Automotive | Leader | Sales | Marketing | Mobility | Connected | Electric | Autonomous | Shared | Revenue | Growth 18 articles The transformation of the auto industry from internal combustion engines to battery power is accelerating, no doubt about it. And the infrastructure, charging networks, and government support for this change are increasing. Consumer themselves are listening, learning, and becoming more interested in moving towards EV’s too. The article below describes a recent Consumer Reports survey that said 14% of people would definitely purchase an EV, but twice this number (28%) definitely “would not” consider an EV. What about the 58% in the middle? What will it take to move them? I think the main issue at the moment is not range, charging infrastructure, or fear of new tech. It’s simply cost. EV’s are expensive right now. Too expensive! And it seems things will be this way for at least 3 years. Let’s look at why. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8431522422095463804&li_theme=dark It’s clear that soon we will have many varieties of electric vehicles available, and some will be more affordable. All OEM’s are moving quickly. Just take a look at the center-spread of this week’s Automotive News (shown below) and you can see that every Automaker is moving faster to transform their product line-up to more EV’s. And States like California are moving to full EV only. But much of this terrific new product development is not helping buyers yet, as the models currently available for sale are all just too expensive. For example, the EV market leader, Tesla, has not expanded its model range for awhile, and even the Model 3 starts at $45k. Ford has the F-150 Lightning and Mach E, but they both cost $40k or more, and very hard to get. And yes, the Cadillac Lyriq sold out in a few hours, but it is in very limited production and costs over $60,000 which is much more expensive than the majority of the buyers in the new car market can afford. And because GM is no longer eligible, there is not even an EV tax credit for this vehicle. But GM did recently reduce the price of the Chevy Bolt. So GM is clearly thinking about EV affordability. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8673126474556867075&li_theme=dark But all of the new EV vehicles are not here yet. And people need to buy something, or upgrade their current vehicle, and can’t wait. Supply is constrained due to the ongoing semi-conductor chip shortage. And component material prices for batteries are increasing, especially for lithium and cobalt, due to the overall growing EV demand. See the article below from Alix Partners, a research firm, outlining the current situation. One key point they mention is this comparison. “At $3,662 per vehicle (in the US), ICE raw-material content is nearly double pre-pandemic levels. This pales in comparison to BEV raw-material content, which is now $8,255 per vehicle. The disparity is driven largely by cobalt, nickel, and lithium prices.” https://www.linkedin.com/embeds/publishingEmbed.html?articleId=7764712561928756266&li_theme=dark While new advances in battery technology like “solid-state” batteries promise better range and greater materials supply, these batteries currently cost four times more than standard lithium-ion batteries, exaggerating the current problem. Toyota is well placed to lead in this area, but it will be awhile before we see the majority of vehicles with solid-state batteries. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=9124043172319042537&li_theme=dark Add in rising global inflation, which means you can buy less for the same money, and a war in Ukraine which keeps energy markets volatile, and no wonder consumers are hesitating. While they are paying $5 for gasoline, and sure don’t like it, coming up with the cash for a new EV is getting harder and harder. For example, the average new car payment is now over $700 per month. Since the cost of borrowing is rising as the Fed raises interest rates to combat inflation, car buyers can either buy less car, or they have to put up more of their income for a car. Since all other prices are also rising, like mortgage payments, groceries, and school supplies, they feel the squeeze. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=7812184282103910342&li_theme=dark And the average car loan length is now six years, which means that consumers that buy ICE vehicles today will be “upside down” a few more years longer, meaning they will owe more for the car than the car is worth. A negative equity situation. We have seen this phenomenon in the car market more than once, and it never works out for the either the consumer or the automaker. It delays purchases and keeps people trapped in their old technology. The average car on the road in the US is currently 12.2 years, which is much longer than historically we have seen. The current financing market dynamics are suggesting this may get even longer. The promise of a new EV will be in the distant future for too many. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8622472421372719983&li_theme=dark So if OEM’s want people to move to EV’s they need to bring affordable EV’s to market. They need to work with the government and their ecosystem to ensure that there is wide penetration of EV infrastructure. And of course the government needs to increase EV incentives and encourage more switching from ICE to EV, and not with just tax cuts. What about helping people pay for installing home chargers? While there is good commitment for this from the current administration, these programs are not yet simple, practical, and easy to access. Why not a “voucher” system for anyone buying an EV from a dealer, or even online, to receive a rebate on the cost of a home charger. Tax credits are hard to access and too far removed from the original cost outlay. Consumers need relief on this cost more quickly. https://www.linkedin.com/embeds/publishingEmbed.html?articleId=6987414249488379809&li_theme=dark Overall consumer will move to electric vehicles, the trend is now inevitable, as product development cycles for automakers are many years long. The ocean liner turns slowly. So we will see lots of EV choices for new car buyers in a few years. And high volume categories like Pick-up trucks will even be very EV
The Auto Digital Experience Fight Club
George Ayres Automotive | Leader | Sales | Marketing | Mobility | Connected | Electric | Autonomous | Shared | Revenue | Growth 18 articles Ok, what happens when you put all the competitors in a room and tell them to start swinging while simultaneously placing bets to pick the winners (and of course the losers) too? You guessed it, a fight club where it’s everyone for themselves. Makes a good movie perhaps, but does it make for a good way to digitally transform the automotive user experience? Are owners, drivers, riders, and fleets better off with tools that only work in one setting, or vehicle, and not in another? Do you need to put on a new pair of digital driving shoes each time you jump in a different car? Well, currently we are witnessing a sort of fight club mindset within car software experience development. It may get a little bloody, so hang on. First, some boundary, or “ringside ropes” terminology to clarify this discussion. In the battle for the Digital Experience within Automobiles there are many terms, but all eventually come down to the same thing: How the car works when you’re either inside it, or controlling it remotely when outside of it. We can include ideas like “Software-Defined Vehicle” and the in-vehicle “Operating System,” in this mix. And proprietary names like Apple CarPlay or Google’s Android Auto are part of it too. And Amazon Alexa, as a way to control the experience with your voice, is included. And now we can add new names like “Ultifi,” General Motor’s new “end-to-end software platform” that is “designed to unlock new vehicle experiences and connect customers’ digital lives” as their announcement recently said. All of these things are coming together very rapidly, and the gloves have now been taken off all the participants. They used to play nice together, but now it’s getting serious. For decades of course, only the carmakers controlled how the car worked; how you turned the radio on, adjusted the climate control, or how the car collected data. Then they started working with other companies like Verizon and WirelessCar to enable “telematics,” a way to transmit vehicle information to an off-board platform and for the vehicle to receive instructions “over-the-air” or OTA. Then smartphones came along and customers started to complain that if they actually complied with the local highway safety rules, and did not use or talk on their handheld phone while driving, then the car effectively became a black hole for them. They were “off the grid” in terms of data and communication when they were driving. Since nearly everyone now relies on text, email, internet, and voice, to do basically anything, the automakers then needed a way to integrate these phones into the car so they could be used on the move without distraction. So Apple was given access to the vehicle and introduced Carplay, and Google was given access and introduced Android Auto. This was a love/hate relationship for most Auto OEM’s because when they give access, they lose control of the experience. Sometimes they forget of course that customers really LIKE their Apple i-phone experience, and enjoying this in their car as well is a good thing for owner loyalty. Once the door was open and the tech companies had access, they started pushing on it harder. Many Auto OEM’s have now signed up to let them too, and we’ll see if they are taking a punch in the process. At right is a recent listing from Google about the OEM’s that use the Android Automotive O/S. And just this week Apple made a big announcement about the new CarPlay and its ability to “more deeply integrate with a car’s hardware.” Ouch! Here is a view of what they mean. Without leaving the Apple interface you will be able to adjust climate controls, for example, so that you’re not jumping between CarPlay and the vehicle controls, keeping you inside the Apple O/S while you drive. It’s kind of like pushing you up against the ropes and holding you there awhile. From a carmaker point of view, ceding control of the customer experience for actually operating the car must be gut-wrenching. But they have already done it for music and “infotainment” so why not for other functions? But where does Apple stop and the Automaker’s own systems begin? How will GM’s Ultifi, for example, work with Android Auto and Apple CarPlay? What is Ultifi giving up? Who is going to win the fight for control of the experience? It’s a melee today. Below as great chart from my friends at MotorMindz that shows a few good examples of how some Auto OEM’s are betting on winning this fight themselves. Of course for over 100 years automakers have controlled how their cars got built, but once sold, they were done. The only things they needed to worry about was paying for repairs under the warranty. Now they want to control, or at least participate in, how their cars get “operated and updated” by the first, second, and even third owners. Over the “lifetime” of your vehicle, they want to continuously upgade how your car works, help you enjoy improvements in operations and performance (and charge you for this) and generally make a car like a smartphone, with easy to install OTA updates. But what happens when Apple decides they don’t want to make that change to how the climate control gets adjusted, either because they are not ready or because they are not getting paid to do it? Does the Automaker have any recourse to force them? Giving up control has a downside if you are an OEM. Of course, the driver or passenger wants the best experience, so delays in making updates, or incompatibility stemming from a fight for control of the experience, may end up disappointing users, who will remember who’s car worked seamlessly, and who’s didn’t. One of the reasons Apple has been successful across phones, computers, tablets, and even tv’s is