This article is an excerpt from Reuters Events State of Automotive Report — available for download now.
In earlier times, it might have been a barnstorming debut. But when Lotus Technology launched on Nasdaq through a special purpose acquisition company in February 2024, investors gave the luxury electric vehicle manufacturer’s shares a mere 2% lift on the first day of trading.[i]
The lackluster response followed share price falls for EV makers Rivian Automotive and Lucid Group, highlighting weakened confidence in auto industry electrification plans.
While the automotive industry is clear that EVs are the way forward, growth in demand for electric models in 2023 failed to match predictions, catching OEMs off guard.
As a result, even EV market doyen Tesla’s valuation has taken a hit, dropping from an all-time high of $407.36 a share in November 2021 to $202.64 at the start of March 2024.
Ford’s vice president and chief sustainability, environment, and safety officer, Bob Holycross, told audiences at Automotive USA that his company had been forced to scale back its EV expansion plans in favor of hybrid vehicles.
Bob Holycross
Vice President and Chief Sustainability, Environment, and Safety Officer, Ford
“It may be that for the time being, or the foreseeable future, this mix of technologies is going to be more of a mix than just a straight sprint to fully electric,” he said. “The customer is ultimately going to decide what the mix of these technologies is.”
Click here to download the State of Automotive 2024 report
End of the ice age
Despite the uncertain pace of progress, the auto industry is clear on the direction of travel. Companies are still planning for an electric future as part of a wider focus on environmental, social, and governance (ESG) issues.
Most large auto manufacturers now have net zero carbon emissions goals that cannot be achieved without switching to EVs. Ford Motor Company, for example, is planning for half its product volume to be electric by 2030, according to Mary Wroten, global director of sustainability and ESG.
Mary Wroten
Global Director of Sustainability and ESG, Ford Motor Company
The company is also looking to have all its manufacturing plants powered by carbon-free electricity come 2035, she said during Automotive USA.
“When we set our carbon neutrality goal, we wanted to understand where our biggest sources of CO2 emissions were — and we found our vehicles make up a little north of 80%, our facilities 1%, and our suppliers about 15%,” she said.
“Our commitment to vehicles is a well-to-wheel commitment,” she added. “It’s not just the tailpipe emissions, but also the energy used to propel the vehicle — so the grid is a very important piece, not just for our facilities but for our products.”
The biggest challenge facing Ford, she said, would be to make sure its suppliers had access to carbon-free energy not only in the United States but also in countries like China. “We found that three main categories of suppliers represent pretty much most of that 15% of our emissions,” Wroten said.
These were companies supplying batteries, plastics, and steel and aluminum, she said. Ford has pledged to source 10% of its steel and aluminum from carbon free sources by 2030, she added.
Automotive transformation
The need to adapt to a low-emissions future extends not only to OEMs and their supply chains, but the whole automotive industry ecosystem. The state of Michigan, for example, is supporting vehicle electrification as part of an aim to become carbon neutral by 2050.
It has set a goal of having 100,000 EV chargers in place by 2030 and has established a body called the Michigan Mobility Funding Platform that provides grants to mobility and electrification companies looking to deploy their technologies in the state.
Justine Johnson
Chief Mobility Officer, Michigan Economic Development Corporation
“We have something called a My Future Mobility plan, which talks about workforce development and strengthening the mobility industry within the state,” said Justine Johnson, chief mobility officer at the Michigan Economic Development Corporation.
While the move to electric drivetrains and the charging infrastructure to support them is a key concern for the automotive industry ecosystem, OEMs and supply chain companies are also working to increase the level of digitalization of products and processes.
Underpinning this drive is a growing realization of the value that digital technologies can bring to a range of vehicle features and functions, from driver safety to in-car entertainment.
This value is underscored by demand for the intelligent vehicles being brought to market by Tesla and other EV makers. “From very early on, we focused on connectivity,” said Shen Zhang, vice president of electrical engineering at EV maker Karma Automotive, in a session at Automotive USA. “We work with partners and suppliers to be able to update software through connectivity. After launch, we can continue to fix issues, deliver new features and leverage that technology for our development.”
Given the benefits that electrification could bring, it is easy to see why the auto industry placed a heavy bet on EVs — and remains committed to them despite the bumps on the road.
Click here to download the State of Automotive 2024 report
[i] Echo Wang and Lance Tupper, Reuters, February 24, 2024: EV maker Lotus Tech closes up modestly in Nasdaq debut after SPAC merger. Available at https://www.reuters.com/technology/ev-maker-lotus-tech-closes-up-modestly-nasdaq-debut-after-spac-merger-2024-02-23/.