CX Insights - Trend Watch - Automotive Industry (ICYMI June 2023)
ICYMI - I’m not sure where you’re reading this from, but near our headquarters in Saginaw, our surrounding farm fields are starting to show the results of hard work and planning. So too are OEMs worldwide, as the “seeds” of their investments are growing into industry-changing centers for both EVs and future ICE-based vehicles before our very eyes. It’s clear that as the dog days of summer start, the auto industry continues its full-throttle cruise toward the future.
| WHAT'S AN SDV?
Over recent years, we’ve seen how software development has become an integral part of mobility’s future. The software takeover is experienced not only in key areas like autonomous and assisted driving but also in new revenue models in telematics and other subscription services. This month, I was alerted to software’s increasing importance through a new term that has appeared in industry news articles:
Software Defined Vehicles (SDVs).
In previous months, we shared that other OEMs such as Ford and Stellantis increased their software integration efforts in their vehicles. In fact, our November 2022 blogpost covers this exact topic in extensive detail! In June, however, we also learned about creation of new organizations and revamps from others like Hyundai and Porsche to accommodate SDV production:
Hyundai & Kia revamping R&D: Hyundai Motor Company and Kia recently announced a sweeping reorganization of their joint R&D collective in order to focus more on electrification and SDV development. Their mission: Become the industry leader in EVs and future mobility through flexible, startup-like development centers. Here’s a snapshot of what this R&D space might look like.
Porsche software group enabling change: In June, Porsche AG also announced a newly formed software division wholly dedicated to vehicle and software integration. Based in Italy, this center is focused on highly automated driving functions, V2V and V2I communications and other forms of connectivity. Read on for further remarks from NTC Managing Director Antonio Gratis regarding how this will position Porsche as an industry leader in digitally-enabled vehicle functionality.
| PLANTS BLOOMING ACROSS THE MIDWEST
Another important topic in my monthly monitoring was how robust investment in the automobile industry is at present. This time, though, I’m not talking about just EV investments. ICE-based vehicle production is driving manufacturing investment from GM in four different states (Michigan, Ohio, Indiana and Texas) – definitely great news and more reasons to celebrate the Fourth of July!
GM continues to invest in the ICE: General Motors is doubling down on ensuring customers have a choice with their future vehicle purchases – quite literally, in fact. They’ve been busy pledging capital toward the following Midwest plant locations:
$920 million in Brookville, Ohio, for a 1.1 million-square-foot Duramax (DMAX) Diesel plant for heavy-duty truck production
Over $1 billion in two Flint, Michigan, plants for next-gen ICE trucks
$632 million in Wayne, Indiana, for ICE light duty trucks
This news doesn’t mean EV production is ruled out – in fact, quite the opposite:
Ford secures $9.2 billion from the USDE: This marks the largest loan the U.S. Department of Energy Loan Offices has given out to anyone – four times as large as last year’s loan for GM and LG’s joint venture for Ultium Cells. But why so much? Ford and South Korean battery partner SK On aim to build three battery production plants and meet the Biden administration’s challenge of all domestic car sales to be EVs by 2030.
New partnerships in GM and Samsung: New Carlisle, Indiana, will finally break ground on a $3 billion GM battery cell plant in 2026 after months of speculation from experts wondering who GM would partner with after its initial plan with LG Energy Solution dissolved in January. Bringing in Samsung SDI solidifies GM’s dedication to achieving industry-leading status for domestic EV production – for fuel sources as well as the vehicle itself.
| MORE MISCELLANEOUS NEWS
With all this talk about ICE vehicles and EVs, one topic that may remain overlooked is alternative fuel sources – a third option, if you will. We’ve covered eFuels in previous blogposts, but I’ll bet you never expected to read the following:
Auto-moo-biles coming to Michigan: It was seen as an alternative fuel source in the 1970s, but now milk-based ethanol is gaining traction. In fact, a $41 million plant is under construction in Constantine, Michigan, adjacent to an MMPA Dairy plant. Here’s a brief explanation about how the milk-based ethanol process works and how soon this could be integrated into vehicle production.
For further information on how we got to where we are, I encourage you to check out our previous ICYMI blog posts throughout 2023.
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