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Automotive Predictions 2022 – Thematic Research

Pages: 18 Published: December 22, 2021 Report Code: GDAU-TR-M040

In this report, the top 10 themes that will impact the automotive industry in 2022 are identified. Globaldata classifies the top 10 themes into three groups: Automotive Industry, Macroeconomic, and Technology.

The major automotive industry themes making an impact in 2022 continue to be the CASE megatrends: connected vehicles, autonomous vehicles, shared mobility, and electrification, along with EV batteries for the latter theme. The major macroeconomic themes impacting the automotive industry in 2022 will be: COVID-19, strategic partnerships, and ESG. The major technology themes impacting automotive in 2022 will be cybersecurity and Internet of Things (IoT).

Overview of global in-vehicle infotainment market

Overview of global in-vehicle infotainment market

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What are the key themes involved in automotive predictions?

ESG:

The need to lower the auto industry’s environmental impact is driving the sector’s ESG considerations. It’s mainly focused on reducing emissions through more efficient engines and the introduction of more EV options. EVs generate almost no direct emissions in use. Both the mining of materials for batteries and motors, and their manufacturing processes bring ESG risks, such as the overconsumption of natural resources, high energy use in production, human rights violations in mines, and the uncertain fate of spent batteries. As the auto industry transitions to EV production, it will use novel techniques to minimize the environmental impact.

Connected vehicles:

Automakers previously only had a few ways to continue earning money from customers once they had sold a car – usually aftersales and servicing packages. However, the advent of on-board infotainment and connected vehicle technologies has opened new avenues for automakers to monetize their products. GlobalData forecasts show that global infotainment revenue is expected to increase at a CAGR of 5.9% between 2021-2025. Automakers are also looking to connected vehicle tech to differentiate their on-board experience from their rivals

Autonomous vehicles:

Transport as a Service (TaaS) is the most significant driver of demand for AVs and is driving strategic partnerships – Alibaba is funding AutoX, while FedEx, Aurora, and PACCAR will launch AV trucksin 2023. Waymo is developing autonomous cargo vans and robotaxis with Stellantis and Volvo. By 2025, Level 4 robotaxis will be launched across many urban areas, led by the likes of Didi Chuxing, Uber, Lyft, and tech giants Apple, Amazon and Baidu.

Shared mobility:

Ride hailing companies will add new dimensions to their suite of offerings. While 2021 witnessed a gradual recovery in number of rides and revenue per ride, ride hailing companies continued to struggle with squeezed profits from the segment. A GlobalData survey indicates 46% of respondents remains pessimistic on recovery of shared mobility services to pre-COVID levels in 2022. The omicron COVID variant adds to uncertainty over the pace of recovery in 2022 leading to more ride hailing companies restructuring, divesting or diversifying their core business.

Electric vehicles:

The shift towards EVs has been driven by legislative changes to meet ESG targets, but momentum is beginning to shift to being demand-led too. In the short term, the lithium shortage will have little impact on large players with a more vertically integrated supply chain, such as Tesla and Toyota. By 2025, the first solid-state -powered EVs will arrive, likely costing much more than regular Li-ion versions. By 2030, solid-state batteries will be introduced to mass-market EVs.

In the race to launch new vehicles and secure manufacturing and supply networks, some EV startups sought to list themselves publicly to take advantage of ready investor cash. Some opted to list via special-purpose acquisition companies (SPACs), shielding them from some of the investor scrutiny involved in a traditional IPO.

EV batteries:

Battery producers around the world are committing to multi-billion-dollar expansion strategies, opening new ‘gigafactories’ to supply cells to automakers. GlobalData figures show that worldwide production capacity for Li-ion cells stood at 622.6GWh in 2021 – assuming an average pack size of 60kWh, that’s enough to power around 10.4 million electric vehicles. For 2022, this figure is set to nearly double to 1,140GWh – enough for 19 million 60kWh EVs.

Solid-state batteries promise more energy and power density, lower production costs, and better safety. While solidstate developments are progressing, we don’t expect these next-gen cells to appear in EVs until around 2024/2025.

COVID-19:

COVID-19 piled unprecedented financial and organizational pressure on the auto industry at a time when it was already straining to respond to emerging CASE megatrends. 2020 saw sharp declines in auto sales and production, and the recovery through 2021 has been hampered by supply chain issues. While there is currently decent demand, macroeconomic storm clouds are gathering, and the omicron variant brings more uncertainty. Pressures from rising energy costs and inflationary sources are mounting, potentially dampening demand before supply is realigned. On the flip side, fiscal stimulus is still abundant and personal mobility needs are high.

Strategic partnerships:

Spending on CASE megatrends came under scrutiny with the emergence of COVID-19, but there is still a feeling that they remain important, even if their timelines and weightings have changed. Software is an area where we are seeing more collaboration between automakers and suppliers. Many automakers have struck agreements with battery makers including CATL, LG, Panasonic, Samsung and SK, with more to follow in 2022. 2021 was a wake-up call for the auto industry, highlighting significant weaknesses in its semiconductor supply. In response, new partnerships emerged, including Ford’s agreement with GlobalFoundries, aiming to boost US chip supplies and enhance R&D efforts in ADAS, battery management, and networking.

Cybersecurity:

The United Nations Economic Commission for Europe formally introduced Regulation 155 in January 2021. It obliges automakers to implement best practices to mitigate cybersecurity threats. This includes ensuring they have sufficient processes in place to promote cybersecurity, their vehicles are using appropriate cybersecurity architectures, and that they can demonstrate cybersecurity risk mitigation. The driving reason behind the increased focus on cybersecurity is due to the increased risk of cyberattack the auto industry faces as it introduces more connected, digital and electronic systems to new models. Ransomware attacks have already impacted Honda, VW, Peugeot and Kia across 2020 and 2021, with many other global OEMs suffering data breaches of their own.

Internet of Things:

IoT finds its application in all stages of the automotive value chain. With the rapid growth of CASE megatrends and intelligent/smart manufacturing, the penetration will go deeper. GlobalData expects the global IoT market to generate $1,077bn in revenue by 2024. Global IoT revenue for connected cars is expected to grow at a CAGR of more than 6% between 2019-2024. With a growing focus on connectedness by all OEMs, IoT applications in auto such as in-vehicle entertainment, telematics, autonomous features, safety and security will continue to grow.

Market report scope

Key themes ESG, connected vehicles, autonomous vehicles, shared mobility, electric vehicles, EV batteries, COVID-19, cybersecurity, strategic partnerships, and Internet of Things (IoT)

This report is a thematic analysis of the top themes in automotive predictions. It provides:

  • The major themes impacting the automotive industry
  • Whilst most investment research is underpinned by backwards looking company valuation models, GlobalData’s thematic methodology identifies which companies are best placed to succeed in a future filled with multiple disruptive threats

Reasons to Buy

  • Our thematic investment research product, supported by our thematic engine, is aimed at senior (C-Suite) executives in the corporate world as well as institutional investors.
  • Corporations: helps CEOs in all industries understand the disruptive threats to their competitive landscape.
  • Investors: helps fund managers focus their time on the most interesting investment opportunities in global TMT.
  • Our unique differentiator, compared to all our rival thematic research houses, is that our thematic engine has a proven track record of predicting winners and losers.

Table of Contents

|Contents

Executive Summary

1.  ESG

2.  Connected Vehicles

3.  Autonomous Vehicles

4.  Shared Mobility

5.  Electric Vehicles

6.  EV Batteries

7. COVID-19

8.  Strategic Partnerships

9.  Cybersecurity

10.  Internet of Things

Further Reading

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| About GlobalData

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Frequently Asked Questions

The top 10 themes for 2022 are classified into three groups which include automotive industry, macroeconomic, and technology.

The major macroeconomic themes impacting the automotive industry in 2022 will be COVID-19, strategic partnerships, and ESG.

The major technology themes impacting automotive in 2022 will be cybersecurity and Internet of Things (IoT).

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