The automotive industry is racing toward the future. It's electric, autonomous, connected and sustainable.
Sure, the road ahead is full of curves, and it's not entirely clear how the industry will manage some of the challenges emerging. But the industry is driven and determined to redefine itself and achieve its biggest aims. And that adds up to one thing: Change.
Here's a look at five trends that helped to define 2022 and are likely to continue taking shape in the months and years ahead.
The automotive industry has struggled to secure the needed number of microchips to keep up with production.
Microchips are in high demand. And there just aren't enough of them to go around. It's a problem that has plagued the auto industry since the pandemic-induced shutdowns and doesn't seem to letting up.
Automotive News estimates that, in 2022 alone, North America and Europe each will see about 1.68 million and 1.53 million vehicles cut from manufacturing schedules, respectively. China is expected to lose about 216,000 vehicles, while the rest of Asia was projected to cut production for 861,400 vehicles because of the microchip shortages.
Globally, the auto industry is expected to lose 4.56 million vehicles overall.
Moving into 2023, there is both good news and bad news.
The good news? Investments are coming.
In the U.S. between Jan. 20, 2020, and Aug. 9, 2022, companies earmarked more $150 billion for microchip production. And the bipartisan CHIPS and Science Act is expected to bring another $52 billion in government subsidies to U.S. semiconductor research, design and production.
That all amounts to good news for the auto industry. But it's going to a while before those production lines come on stream. And that means the microchip pinch is likely to continue, at least for a little while.
"I don't think it goes back to a normal or an essential non-disruption-type of environment at least through 2023," Jeff Schuster, president of Americas operations and global vehicle forecasting for LMC Automotive, said during this year's Center for Automotive Research's Management Briefing Seminars. "… I think it is going to be far from normal for some time yet."
Climate change is driving the new mobility movement. And while it looked like electrification would lead the charge into a new era, another technology could be positioning to take the lead. Because after decades of pilot projects and sporadic deployments, hydrogen appears to be on the cusp of economic viability and widespread use.
Michelin, for one, believes in its potential.
For more than two decades, the tire maker has invested in technologies that look to harness the power of hydrogen. And starting in the second half of 2023, Michelin intends to prove just what hydrogen can do.
Along with its partner Faurecia and the two companies' joint venture Symbio, Michelin will build and test a hydrogen-fuel-cell-powered truck that it says can at least match the performance of a 15-liter diesel truck. At the same time, those involved in the project said, they will demonstrate how effectively hydrogen can help the U.S.—and the world—achieve carbon neutral goals.
Sustainability isn't an option for OEMs or their suppliers.
No, sustainability is the expectation—of consumers, investors and businesses across the automotive supply chain. So the bar is being set higher than ever before as auto makers aim to achieve carbon neutral operations and products well ahead of the 2050 deadlines.
To this end, auto makers are seeking products and solutions that use renewable, bio-based materials. They're also seeking products that contribute to circularity through recyclability and offer solutions that will extend range and fuel efficiency, often through lightweighting.
For the rubber industry, that could be challenging, especially when plastics look to be a more suitable fit in this regard. Still, the future of the industry looks bright.
New mobility is opening opportunities for companies to apply and expand their innovations, especially in regard to thermal management, sealing, seal and gaskets, NVH and silicone.
For the automotive industry in the middle of a mobility transition, there are great expectations. Take, for instance, the Biden Administration's vision to have electric vehicles account for half of new U.S. vehicle sales by 2030.
The goal, experts said, is attainable, but it'll be quite an undertaking. During CAR's annual Management Briefing Seminars, a panel of industry experts said they were optimistic that the industry could achieve that goal. But it would take some policy support to make it happen.
From there, it requires buy-in from OEMs industrywide and, of course, their suppliers.
But there's another trend that could carry the industry toward its goals: EVs are getting closer to achieving cost parity with ICE vehicles. Experts note that, when the cost of purchasing and owning an EV plays out well financially for consumers, EV sales are likely to climb.
If the COVID-19 pandemic taught us anything, it's that just-in-time supply chains—especially those that wrap around the globe—just aren't sustainable.
So auto makers are looking for ways to diversify their supply chains. That means expanding their supplier base and, more poignantly, looking for suppliers closer to home.
That's been good news for companies like Morgan Polymer Seals, which maintains all of its production in Tijuana, Mexico. The company has seen a significant uptick in sales in recent months, something the Morgan family attributes to its reputation for quality, on-time delivery and, of course, its North American roots.
"That shortens your supply chain," Chief Revenue Officer Sean Morgan said. "It allows you to work with someone in the same time zone or close to it. … We have always been here, and now we have a lot more interest from customers, just given the fact that we're over here."
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