Semiconductor shortage: How the automotive industry can succeed



During the earliest days of the COVID-19 crisis, automotive headlines focused on the huge drop in vehicle demand. But for more than a year now, concerns have shifted to the supply side. Although vehicle orders have surged to unexpected heights, a shortage of automotive semiconductors is forcing OEMs to close production lines or remove some popular features, such as heated seats, from their offerings.

We first explored the automotive chip shortage in a May 2021 article, noting that a quick fix was likely impossible. The situation has worsened since then, and the recent drop in automotive revenues is largely occurring because OEMs and Tier 1 suppliers cannot procure sufficient quantities of chips and must delay vehicle production. While manufacturers of laptops, white goods, and other devices have also cut production because of semiconductor shortages, the repercussions in the automotive industry have been more severe. Some premium OEMs were able to safeguard profits with selective manufacturing and sales strategies designed to optimize margins. This strategy, however, may result in a shortage of lower-margin vehicles and could cause extreme fluctuations in demand for automotive chips.

Russia’s invasion of Ukraine has introduced further uncertainties to both the semiconductor supply chain and automotive demand. For instance, Ukraine supplies 25 to 35 percent of the world’s purified neon gas, and Russia supplies 25 to 30 percent of palladium, a rare metal used for semiconductors.


Another wrinkle: many semiconductors are transported by air, but transport costs have significantly increased while available shipping volume has dropped. And yet another problem: OEMs have been unable to obtain critical vehicle components, such as wiring harnesses, and have reduced their production volumes in response, which has added even more uncertainty by decreasing demand for some semiconductor-based components.

Given the ongoing instabilities in the semiconductor supply chain, the automotive industry should consider refining its strategy. Companies can start by focusing on the implications of three critical activities that form the foundation for strategic shortage management: the creation of strong technology maps, reliable short-term demand planning, and guidance for long-term demand planning.

Factors behind the escalating challenges in semiconductor supply

More than two years into the pandemic, the gap between chip supply and demand has widened across all semiconductor-enabled products. While sales of all consumer goods plummeted in the first half of 2020, and automotive sales dropped precipitously—up to 80 percent in some locations—demand rebounded more than expected later in the year, continued to grow in 2021, and remains strong today. The high-tech sector, in particular, has seen sales volumes increase, partly because of changes wrought by the COVID-19 pandemic. The growth in working from home, for instance, has contributed to a greater demand for wireless connectivity and PCs. These market shifts have rippled back to affect demand for semiconductors and other components. Across almost all industries, the demand for semiconductors in 2020 and 2021 exceeded prepandemic forecasts (Exhibit 1). And this means automotive

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Can the automotive industry scale fast enough?




The automotive sector is on the cusp of changes not seen since the Model T Ford rolled off the production line in the early 1900s, as new regulations, technologies, and consumer preferences transform its products and business models. Both traditional OEMs and new start-ups are spending more to address these trends: since 2010, intrigued investors have funneled $280 billion into innovative automotive hardware and software solutions. Almost half of this investment, about $115 billion to $120 billion, has gone to electric vehicles (EVs).

Capital markets have rewarded this influx. With a weighted average total shareholder returns (TSR) of 79 percent from March 2020 through January 2022, traditional OEMs and component suppliers outperformed companies in many other thriving sectors, including high tech and chemicals. The results were even more impressive for the relatively new kids on the block, such as NIO, Tesla, and other EV start-ups, whose weighted average TSR of 278 percent topped the list.

The industry has typically relied on sales of traditional vehicles with internal-combustion engines (ICE) for much of its growth. But overall vehicle sales are projected to increase at a modest 2 percent CAGR through 2025 and might even decline over the balance of the decade. But the industry’s TSR remains high because of optimism about increasing revenue from other sources, including those related to new technologies and services. EVs, which now represent a small portion of vehicles sold, are at a tipping point and are responsible for much of the enthusiasm within capital markets. In the second half of 2020, sales and penetration of passenger EVs accelerated in major markets despite the economic crisis caused by the COVID-19 pandemic. McKinsey projects that worldwide demand for EVs will grow sixfold from 2021 through 2030, with annual unit sales going from 6.5 million to roughly 40 million over that period.

These optimistic projections for EVs come with some big caveats, however. While consumer demand appears clear, the automotive ecosystem must quickly address three major constraints before EV production and sales can gain scale:

  • difficulties sourcing enough raw materials, including lithium, nickel, and cobalt, used in batteries
  • an insufficient number of gigafactories that produce batteries, as well as low productivity within existing facilities
  • a public charging infrastructure that must be built up to keep pace with the number of EVs on the road

Although some large companies may attempt to increase their access to raw materials, most automotive companies currently lack this option. What the industry can tackle, however, are issues related to gigafactories and the charging infrastructure. Taking quick action will be key to extending the momentum in EVs and may even help to accelerate adoption of autonomous vehicles (AVs), through which OEMs will find even more opportunities in services and life cycle revenues from such things as over-the-air software updates, mapping services, and in-vehicle entertainment.

EV motors get their energy from batteries

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How COVID-19 Reshaped The Automotive Industry And Why It Issues

The automotive market has knowledgeable a series of setbacks and surprises since the start out of the COVID-19 outbreak.

SYDNEY, NSW, AUSTRALIA, Might 8, 2022 /EINPresswire.com/ — Lockdowns, vacation bans, and the next outcomes have experienced a one-of-a-type impression on the automotive marketplace.

Right before the pandemic, car or truck gross sales ended up mounting, with some classes location new highs. Having said that, the all-consuming COVID-19 brought everyday lifestyle to a halt, with governments globally imposing lockdowns and quarantine laws. Persons couldn’t go to showrooms to acquire cars since of these limits. Additionally, the world wide economy took a hit because of to popular inactivity.

There had been layoffs all all-around the market. Nissan selected to shut its Barcelona facility soon after asserting a large reduction in a 10 years. The personnel at the plant, in flip, protested. In the same way, thanks to manufacturing unit shutdowns, generation slowed in other areas. The fact that the auto sector is closely reliant on world-wide offer traces exacerbated the circumstance (Li et al., 2020). Source chains are dispersed throughout many areas of the globe, and every single place enacted its possess COVID policies.

The COVID-19 circumstance has had massive and unparalleled world wide ramifications. A lot of automobile-retail shops, shut for months. It could choose a lengthy time to get better from this impact. Basically, the epidemic has accelerated many decades of development in the auto sector. Several of these developments are excellent this sort of as the boost in internet website traffic and authentic machines manufacturers’ improved readiness to function with partners—both automotive and non-automotive—to solve problems. Others have experienced detrimental penalties, this kind of as a tendency to concentrate on main pursuits alternatively than branching out. Though original equipment manufacturers may be focusing on the core correct now to maintain the lights on, failing to glance at other options could injury them in the extensive operate.

Some of the alterations that occurred because of to the pandemic may possibly persist. Suppliers and sellers will have to be inventive, agile, and imaginative in their ways to reclaim stable gross sales ranges. This is since individuals are more and more adopting digitalization, sellers could thrust for a continual on the net profits increase in the coming months. Seamless digitalization may soon become a realistic technique for corporations to attain marketplace share. The thrust for digitalization could lengthen to increased electronic accessibility and integration of technology from automobiles’ on-display controls, as very well as contact-totally free fuel station payments and upkeep.

Aside from these variations, companies and dealerships are very likely to keep on featuring incentives such as decrease borrowing premiums, bargains, and other particular delivers to entice possible shoppers to buy automobiles now. As people exercise social distancing, this could also be an possibility to increase research on autonomous vehicles. Furthermore, the automobile field must enhance and invest in source chain processes. Utilization of equipment mastering resources and major details evaluation is very important to be certain that source

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Optimising offer chain resilience in the automotive industry

The route of vacation for the automotive market is clear. Clients have to stay a important component of the provide chain method, experts say

Panellists:

DDC: Damien de Cacqueray, vice-president, supply chain new jobs, Stellantis
RH: Richard Harding, InDigital area director, worldwide paying for, supply chain and manufacturing, Jaguar Land Rover
DR: David Richards, chairman and founder, Prodrive
JR: Judith Richardson, world wide supply chain director, Jaguar Land Rover
AS: Andy Sutton, vice-president strategic accounts, Infor
OR: Ozgur Tohumcu, controlling director, automotive (EMEA), AWS

What have you learned from handling your supply chains in the final two years?

DDC: Modern occasions verified that we dwell in a globe of change and that crises can come from wherever. We have the by no means-ending semiconductor trouble in the automotive market, and now there is a war in Ukraine. How we operate has experienced to improve, and we have to function with really minimal inventory ranges. Having that agility and versatility is critical, as is controlling the provider ecosystem instead than personal suppliers.

AS: Infor partners with several foremost world wide brands in the automotive field, and the challenges have been intense in the final two yrs. It has come to be clear to all companies that cloud computing is vital. Infor has benefitted from its strategic partnership with AWS in sustaining to supply multimillion dollar assignments globally utilizing remote performing and collaboration instruments to ensure tasks are delivered on time and to spending plan, regardless of the journey limits and lack of experience-to-facial area conferences which would be the norm. The provision of sturdy, scalable and agile business unique cloud answers has enabled Infor to sustain its provider stages in this hard time for companies, globally.

DR: At Prodrive, we have figured out to be a lot more adaptable and versatile and use our modern tactic to various takes advantage of. For example, we made a reduced-price ventilator for the duration of the pandemic in a task with the College of Cambridge. Also, we collaborated once more to build quick-circulation coronavirus exam kits in just eight months.

JR: At JLR, we have figured out there desires to be increased transparency throughout the source chain and protection of our suppliers. To make sure we have the ideal outcomes, we require to recognize what is likely on in real time, the place essential areas are and wherever the gaps may be. Our transformation venture, which I’m foremost, focuses on transparency and collaboration.

RH: We have set electronic at the coronary heart of the source chain at JLR. We’ve created a digital organisation that supports the broader company with knowledge science, automation, analytics and predictive modelling. Of class, there is nevertheless a lot more to do, so we can bend and flex the necessities of our shoppers, but we are becoming a lot additional responsive.

OT: Small business agility, and higher stop-to-stop visibility of the supply chain, are enabled by cloud computing. Servers can be spun-up in minutes, it supplies scale throughout continents and

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C2A Stability and Stefanini Team Collaborate to Convey Robust Full Automobile Life Cycle Cybersecurity Remedy To Automotive Industry

Collaboration Features Advanced Stability Operations Centre Providers and In-Car or truck Cybersecurity, Bridging the Hole Between Product Safety and Stability Monitoring

JERUSALEM and BUCHAREST, Romania, May perhaps 2, 2022 /PRNewswire/ — C2A Safety, a major service provider of reliable mobility cybersecurity solutions, and Stefanini Team, $1 billion world wide technological innovation firm, declared currently a collaboration to bring a robust cybersecurity option to the automotive industry. The collaboration features OEMs and their suppliers both equally Stefanini’s superior Stability Functions Center (SOC) companies and C2A Security’s auto lifecycle cybersecurity option, bridging the gap amongst item security and stability checking.

Connecting Stefanini’s SOC options to C2A Security’s AutoSec enables an highly developed SOC playbook and empowers groups with whole visibility and command about the car automotive cybersecurity from idea to publish production.

Stefanini’s SOC providers offer the automotive market qualified resources and specialised applications that assist with investigations, root cause analysis, sophisticated menace hunting, and eradication of threats.

Stefanini’s Managed Protection Functions SOC’s capabilities provide accessibility to cybersecurity incident checking and response abilities, with the additional benefits of quick deployment, nominal infrastructure investments, and adaptable deployment products that can in shape most companies’ budgets and security procedures.

C2A Security’s AutoSec System is an automotive Cyber Safety Management Method (CSMS) that empowers OEMs and their suppliers with complete-spectrum visibility, management and protection of cybersecurity standing for all automobile courses. AutoSec platform delivers product security equipment these as Danger Examination and Danger Evaluation (TARA), community safety and IDS, and binary stage operate time safety. AutoSec is developed to integrate with existing security resources and procedures to give a complete image of hazard management. The collaboration between C2A and Stefanini, enables the automotive field with the most highly developed cybersecurity methods on the sector currently.

“Our partnership supplies an all-in-a single package deal for OEMs and suppliers hunting for state-of-the-art cybersecurity remedies that offer total lifecycle visibility, combining C2A’s security system with Stefanini’s SOC answer,” states Roy Fridman, CEO of C2A Security. “As the marketplace moves forward to adapt to the new prerequisites of the ISO/SAE 21434 normal and UNECE WP.29 regulation it is additional essential than ever for the automotive business to have a option in put that will maintain them in compliance and protect their vehicles from opportunity cyber attacks.”

The new automotive regulations – WP.29 and ISO/SAE 21434 have to have OEMs and suppliers to scale cybersecurity capabilities across the offer chain, and assure compliance in all new automobile models. The laws detail both equally in-auto and external regions that want to be secured.

“Tier-1s and OEMs are catching up to satisfy the new normal demands that have been a short while ago handed,” says Alex Bertea, Main Cybersecurity Strategist, Stefanini EMEA. “Our collaboration with C2A Security will give them the full cybersecurity package deal they need to ensure compliance each in and outside the vehicle.”

Farlei Kothe, Stefanini EMEA CEO, says: “Stefanini has a well-established record of collaborating with companions to make exceptionally impressive solutions

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World Automotive Plastics Marketplace (2022 to 2027) – Industry Trends, Share, Size, Growth, Option and Forecasts – ResearchAndMarkets.com

DUBLIN–(Organization WIRE)–The “Automotive Plastics Sector: Worldwide Sector Tendencies, Share, Measurement, Growth, Prospect and Forecast 2022-2027” report has been added to ResearchAndMarkets.com’s giving.

The world automotive plastics industry reached a value of US$ 38.7 billion in 2021. On the lookout ahead, the sector is projected to access a price of US$ 51.65 billion by 2027, exhibiting a CAGR of 4.60% through 2022-2027.

Providers Talked about

  • Asahi Kasei Corporation
  • BASF SE
  • Borealis AG
  • Covestro AG
  • Dow Inc.
  • Koninklijke DSM N.V.
  • Lanxess AG
  • Lear Company
  • LyondellBasell Industries N.V.
  • Saudi Fundamental Industries Company
  • Solvay S.A
  • Teijin Confined

Trying to keep in head the uncertainties of COVID-19, the analyst is continually tracking and assessing the immediate as effectively as the indirect influence of the pandemic. These insights are included in the report as a key market place contributor.

Automotive plastics contain polypropylene (PP), polyurethane (PU), polyvinyl chloride (PVC), acrylonitrile butadiene styrene (Abdominal muscles), nylon, polyethylene (PE), polyoxymethylene (POM) and polycarbonate (Computer system). These plastics guide in extending the life of automobiles, increasing design and style adaptability, lowering manufacturing expenses and easing integration of components. In addition to this, they also assistance decrease the bodyweight of cars by changing hefty supplies, such as metallic and glass, to preserve vitality and improve fuel effectiveness.

There is at present a increase in the revenue of electric powered and hybrid motor vehicles (EVs/HVs) close to the world. This signifies 1 of the key variables propelling the progress of the market place. Additionally, automotive plastics uncover apps in the output of fuel tanks, carpet fibers, wheel addresses, suspension bushings, dashboards, headlamp lenses, truck bed liners, mud flaps, bumpers, and gears. In addition, there is an raise in the use of synthetic coatings on metallic surfaces to limit the danger of corrosion triggered by salt damage, higher heat and water exposure. Aside from this, nylon is utilized for production seat belts and airbags on account of its tear-resistant attributes. This, alongside with the escalating demand from customers for lightweight and reasonably priced motor vehicles, is positively influencing the sector.

Aside from this, foremost gamers are relying on bio-dependent plastics and polymers as an alternative of fossil-primarily based plastics to cut down their carbon footprint and market sustainability. Additionally, they are using recycled plastics for manufacturing seat cushions, substitution bumpers, splash guards, and wheel liners. This, coupled with the burgeoning plastics marketplace, is augmenting the all round income and profitability. Other components facilitating the advancement of the market place involve technological advancements and in depth analysis and growth (R&D) routines financed by car brands.

Important Inquiries Answered in This Report

  • How has the international automotive plastics current market performed so much and how will it accomplish in the coming decades?
  • What has been the impact of COVID-19 on the world wide automotive plastics industry?
  • What are the essential regional marketplaces?
  • What is the breakup of the market dependent on the automobile sort?
  • What is the break up of the marketplace based mostly on the materials?
  • What is the breakup of
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