Automotive Insight News Briefing: VW & Rivian JV, EV Cost Challenges, and More:
VW & Rivian JV, EV Cost Challenges, and More:The Political Wild Card
The headline news for the week of June 24 features the JV announcement between Volkswagen and Rivian, signaling a new era of strategic partnerships. This collaboration not only highlights the growing importance of software in the automotive sector but also raises intriguing questions about the future of competition and product development.
The Power of Unlikely Alliances
VW’s partnership with Rivian to develop software and next-gen EEA is a testament to the evolving nature of competition. In this new era, collaboration isn’t just about shared resources; it’s a strategic maneuver to outpace rivals; it’s where collaboration is the new competition – – intriguing question: will Rivian’s R2 and VW’s Scout become internal competitors in the off-road EV space?
As we watch this unfold, who will be next to join forces, and how will these partnerships redefine market dynamics?
The Tug-of-War Between Politics and Economics
The global supply chain is undergoing a dramatic transformation. Balancing the political allure of “Made in America” with the undeniable cost, technology, and quality advantages of Chinese manufacturing is a challenge facing every automaker. Modern vehicles, with over 1,500 semiconductors, increasingly rely on China, highlights this delicate balancing act. Can “Made under USMCA” truly compete with the China manufacturing powerhouse?
The Ford Perspective – with $8,000 silicon chips in average Ford, there’s a lot of pressure to save 10% to go to the cheapest player.
The EV Cost Equation
Tesla’s Cost Advantage: BofA’s John Murphy’s Car Wars report reveals that Tesla’s EV cost advantage over legacy automakers stands at an astounding $17,000. This gap challenges traditional OEMs to innovate rapidly or risk falling behind.
More importantly, a new challenger has emerged on the global stage: Chinese EV manufacturers are redefining the economics of EVs, with a 30% cost advantage over western counterparts.
As the industry grapples with this new reality, exemplified by Ford’s ambitious $30,000 Skunkworks EV project, several questions emerge:
How will established automakers in the U.S. and Europe respond to this cost challenge?
How will this push for affordability reshape supply chain, manufacturing, and engineering paradigms?
Can Chinese manufacturers maintain their cost advantage as they expand into global markets with different regulatory environments?
The Power of Consumer Choice
Consumer preferences are the ultimate drivers of industry trends. While EV adoption continues, the growing demand for hybrids and ICE vehicles cannot be ignored. BMW’s cancellation of an EV program and Toyota’s renewed focus on hybrids signal a shift in strategic priorities. Ford’s CEO Jim Farley encapsulates this complexity, stating that portraying EVs as either a total or wrong solution is misguided.
The Political Wild Card
The potential policies of Biden or Trump present a fascinating debate: what actions will they take to support or challenge the automotive industry?
The growing competitiveness of Chinese EVs is prompting policy responses from other nations, including potential tariffs and trade barriers.
The automotive industry is in the midst of a profound transformation. This isn’t just about EVs; it’s a reimagining of entire industries, supply chains, and consumer expectations.