What's ahead for the auto industry in 2022?
S E E D E D C O N T E N T
From shortages of crucial semiconductor chips to shutdowns at major assembly plants, plus sky-rocketing car prices and empty dealerships, 2021 was a year to remember for auto manufacturers and consumers alike. But there was also a surge in sales of electric vehicles, and an increasing shift from sedans to SUVs and pickup trucks.
So, what's ahead for 2022? By some accounts, it may be more of the same, as shortages continue to leave dealers struggling for inventory and consumers facing ever higher prices. But shoppers will also find a lot more options if they're looking for an electric vehicle.
Here are the storylines we expect will dominate this year:
Ongoing product shortages
As Covid-19 struck, automakers slashed production and parts orders. But, when sales started to rebound, they discovered they couldn't get all the semiconductors they needed, leading to major production cuts. The industry lost around $210 billion in revenue in 2021, according to AlixPartners business management consultancy. While chip supplies are now loosening up, they're far from back to normal and production cut be hurt well into 2022. Worse, the industry faces other shortages impacting products like tires and interior plastics and seat foams.
Higher prices for new cars
All told, automakers worldwide produced about 8 million fewer vehicles than planned in 2021, due to product shortages. Even if production rebounds, dealers won't be able to build back inventories until well into 2022, according to J.D. Power analyst Tyson Jominy. As a result, buyers should expect limited choices — while prices will continue rising at a record rate. At the end of 2021, a typical new vehicle cost $45,000, up about $8,000 from December 2020, according to industry data.
Normalization of online car buying
When America went into lockdown, the industry discovered a novel idea. Since customers couldn't come to dealers, dealers came to them — over the internet. Even after the country opened back up, more and more customers are shopping for their cars online, and many retailers schedule test drives and then deliver new vehicles to a buyer's home or office. Meanwhile, with showroom lots nearly bare, normally impulse-driven American motorists have begun ordering their cars and waiting — sometimes for months — to take delivery.
EVs start their move into pole position
They account for a modest fraction of U.S. new vehicle sales, but demand for battery-electric vehicles doubled during just the first half of 2021. This year could bring the "tipping point," contends GM CEO Mary Barra, with the EV market exploding. Several factors will play a role, starting with a plethora of new offerings: Analysts anticipate the number of long-range models will quadruple this year.
The impact of Build Back Better
President Joe Biden has put a lot of emphasis on the auto industry. In December, the White House announced its most aggressive fuel economy standards, and Biden has said he wants to see EVs account for up to 50 percent of U.S. sales by 2030. His infrastructure bill delivers funds for a nationwide charging network. But other funds, including money to boost EV sales incentives, are currently stalled in Congress.
Startups will continue to shake things up
The automotive industry was a largely closed club since World War II, but Tesla showed it's possible to crack the code. Now, other start-ups want to share in its success. Wall Street has rewarded several of the most promising players. Rivian now has a market cap of over $90 billion, more than either Ford or GM. But others, like Byton, Lordstown Motors and Faraday Future are struggling and could fall aside in 2022.
Tesla takes some heat
At first glance, 2022 should be a good year for Tesla after setting sales and earnings records in 2021. The California-based electric vehicle manufacturer has two new plants, one in Austin, Texas; and the other in Berlin. But several key products, including the Cybertruck, are well behind schedule, as are the next-gen batteries Tesla is counting on. Tesla is under pressure from the Chinese government and facing more safety probes by U.S. regulators.
Autonomous vehicles could stall
Automakers once promised to have a fully self-driving vehicle ready by 2020. However, 2022 could see some breakthroughs. GM and Mercedes-Benz are set to roll out the first true hands-free — Level 3 in industry-speak — driving technology for consumers. Others, like Waymo and Cruise, are focusing on ride-sharing services and cargo haulers. But ongoing safety probes involving Tesla's Autopilot serve as a cautionary note on just how difficult a challenge it is to develop a fully autonomous vehicle.
China edges closer
China is the world's largest auto market, but domestic manufacturers like Geely and Great Wall want to reach beyond its borders. Efforts to enter the U.S., the number-two global market, have repeatedly been delayed, however. Trade frictions under the Trump administration have yet to be resolved under Biden. So, while a handful of Chinese-made products are available in U.S. showrooms, including the Buick Envision and Polestar 2, a real automotive invasion could be years off.
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Necessity being the mother of invention we will now move inexorably towards cleaner renewable energy and safer more autonomous electric vehicles...
It almost takes a fortune to buy a Tesla, and even more to fix them. Then there is a possible battery replacement
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Apparently EVs and charging stations don't need computer chips. But that's an odor matter; something smells fishy.
Why is only the automotive industry being affected by a shortage of computer chips? The computer chips in short supply are used for creature features like digital instrument displays, self parking features, rear mounted cameras, etc. These are common electronic products that have been incorporated into vehicle designs. And those features are not necessary for a vehicle's operation; they're luxury features.
No, what appears to be happening is the automotive industry attempting to create a market for electric vehicles. Creating that market requires a very large investment and the lack of consumer interest means those investments involve a lot of speculative risk. If these companies can't build traditional vehicles then why should we believe they can produce electric vehicles? We're supposed to believe that electric vehicles and charging stations aren't more dependent upon computer chips than traditional vehicles?
No, the current market demands new cars have autonomous safety features like pedestrian recognition and accident avoidance and lane keep assist and adaptive suspensions. Nobody wants to buy stripped models. Short term supply issues are because the market wants, no it demands, more autonomous and more electronics on vehicles...
It's not. Just try to buy a new PS5 or XBox at retail.
That means the consumer market likes them.
That really depends on the consumer market. If enough people want electric vehicles and/or vehicles with bells and whistles, then the industry will try to fill that need.
The shortage of computer chips is due to a fire at a crucial chip manufacturer in Japan.
The auto industry brought this upon themselves by designing cars with so much computerized crap that it fell like dominoes.