Financial analysts and investment bankers watching the auto industry s transformation to electrification say access to capital will be the biggest determinant for success and staying power for electric-vehicle startups, as well as for legacy automakers trying to fend off dominance of the battery-electric-vehicle market by Tesla and Chinese automakers.

 

One of the biggest advantages that Chinese automakers have in this era is essentially free access to capital provided by the Chinese government, says John Murphy, auto industry analyst at Bank of America.

 

The motivation of China s investments in EVs is not environmental. It s dominance, says Murphy. The analyst says he believes that General Motors, Ford and Stellantis should pull up stakes in China because of the government s intention to dominate BEV sales globally.  For European automakers, it is more complicated because they are making most of their profits in China.

 

Tesla, too, Murphy notes, has essentially free access to capital. Tesla could allocate 10% of its value to building 40 factories, and shareholders would support that, says Murphy.

 

For all but Tier 1 suppliers, says Guggenheim Securities John Casesa, access to capital is getting harder. Venture capital firms and investors have a lot of uncertainty about how the transformation to electrification is going to play out. One of the most frequently asked questions we get is, Where should we put our money? he says.

 

Part of the uncertainty is around where the future revenue and profit streams are coming from and at what pace they will develop, Casesa says, referring to BEV profits versus ICE profits, connected-car revenue, subscription services and other revenue streams.

While there has been much politicization of battery-electric vehicles in the current election cycle, automakers presenting at the Center for Auto Research s Management Briefing Seminars here say they are working past the unknown of November s results and focusing on customers.

 

We are committed to developing and making an EV for every purse and purpose, says Dan Nicholson, vice president of Technology Strategy Initiatives at General Motors. The transformation to electric vehicles is not going to be a straight line, but what is most important about it is the customers.

 

GM currently has six BEVs but is also hurrying more hybrids to market, as well as maintaining a lineup of internal-combustion-engine vehicles ranging from Chevrolet and GMC pickup trucks and SUVs to the Buick Envista and Encore, which are 100% ICE models.

 

No matter who gets elected in November, Nicholson says, we are going to focus on what customers want.

 

Nicholson says the automaker has learned that affordability and choice, along with a reliable charging infrastructure, are what will bring BEV buyers off the sidelines. Our research shows that people do not want to switch segments to drive an EV. If they are driving and prefer a pickup or SUV, then they want an affordable EV version of that.

 

Styling is important too, says Nicholson. That is why, for example, Chevy is offering an ICE Blazer, as well as an BEV version, he says. For most customers, owning a BEV needs to be a seamless experience and comparable to ICE ownership.

 

Volkswagen Group Chief Engineering Officer Lyndon Lie says the German automaker is still committed to BEVs representing 50% of its sales by 2035, but is also looking to increase hybrid offerings. Hybrids are a big opportunity we are looking at, Lie says. We, too, believe that we have to have electrified vehicles for every price point in order to reach our targets.

 

John Bozzella, president and CEO of the Alliance for Automotive Innovation, says the change in government policy earlier this year has created a bigger opportunity for hybrids and plug-in hybrids, and even more efficient ICE vehicles to achieve clean-air targets. We told the administration that pace of change was the biggest obstacle facing the industry and to their credit they listened, and this is going to make it easier for automakers to stay in compliance and do better for consumers.

Shailen Bhatt, administrator at the Federal Highway Admin., addresses V2X group at MBS.

 

A top Biden Admin. official joined a Center for Automotive Research s Management Briefing Seminars discussion that addressed the challenge of accelerating and optimizing V2X in automotive.

 

The roundtable brought together Audi, Volkswagen, Harman, Tata and Continental along with Haas Alert and startup Cavenu. Also joining the conversation was Shailen Bhatt, administrator at the U.S. Federal Highway Admin.

 

Attendees discussed what many see as the elephant in the room : That the industry has squandered an opportunity to utilize the 75MHz of spectrum in the 5.9GHz band allocated by the FCC back in 2002 and that has now been reduced to 30MHz. There is a real need to show motion in V2X and to deliver benefits to society or there is a future risk this spectrum allocation could also be at risk. One person said delay is unacceptable because a fatal road accident occurs every 15 minutes.

 

The point was made that it is necessary to think about the subject differently. For too long there has been a chicken-and-egg scenario of who should start first; the automakers or the transport infrastructure owners and operators (IOO). Now, Utah s Department of Transport has concluded that it must be both the chicken and the egg and initiated infrastructure investments as well as enabling their fleets of vehicles with V2X capability.

 

Others in the room identified the challenge as the 10,000-plus IOOs of various sizes, many of whom do not have the budget nor the capability to implement V2X, which means getting nationwide interoperable V2X infrastructure is a real challenge.

 

Recognizing the enormity of this capital investment is part of the challenge and it was suggested that embracing an existing infrastructure and using the power of the 4G/5G mobile networks could accelerate the V2X program. Only about 20% of V2X use cases require low-latency connectivity, while the other 80% could be delivered via V2N. It’s not so much about mission-critical information; it’s more about preventing people and vehicles from getting into danger zones by sharing available information early from sensors and other vehicles. But this also requires ubiquitous coverage from mobile operators, including the possibility of vehicles seeking and swapping to the strongest network coverage including non-terrestrial networks in the future.

 

It was noted that there is a tendency in the automotive industry, and to a degree in the transport industry, to make everything and want it perfect before implementation. Incremental advances could save lives and waiting is fatal as technology is changing and accelerating at a very fast pace.

 

Haas, with their safety alert system, has integrated with Stellantis bringing the service to millions of vehicles via OTA updates and backend software. They have also worked with Tesla and are working with VW, who say the process is very easy to do. Haas said they spent time with public safety officers and roadworkers who are all vulnerable if cars are not aware of them. It’s not about policy or technology; it’s about focusing on the service and delivering value by leveraging existing technology and using the available data.

 

Common platforms and open data sharing will facilitate deployment at scale, but at this time the sharing of data is still a real issue. There must be established mechanisms to facilitate this that add benefits to everyone and create trust for the consumers. Equally, business models need to recognize that consumers must to see the value otherwise, why would they pay more for the technology and capability?

 

There is an increasing sense of urgency to start and scale V2X but also a more open mind to collaboration and different technologies being leveraged to incrementally move the deployment forward.