What CAR is Checking Out: American Made Edition
What CAR is Checking Out: American Made Edition

In honor of Independence Day this week, we are bringing you a special edition of What CAR is Checking Out! This week we are focusing on current American events, news, and companies that are captivating our research team.

Tyler Harp

Industry Analyst

What Tyler is Checking Out: 

Tyler’s Thoughts:

The SelectUSA Investment Summit is the premier conference for companies and investors looking to do business in the United States. Hosted by the US Department of Commerce, the SelectUSA Investment Summit is designed to facilitate business investment and deals providing access to representatives from Economic Development Organizations (EDO’s) from US states, territories, and communities. This year’s 10th annual conference was the largest to date – over 5,000 attendees, 96 international markets, and over 1,000 EDO representatives encompassing all 56 US states and territories. On top of this ecosystem curated for dealmaking in the exhibition hall, there are panels, armchair discussions, pitching sessions, and more, providing opportunities for investors, companies, and EDO’s to learn from industry experts.

This year, CAR had the privilege to attend the conference. We were amazed by the unparalleled access to so many EDO’s, covering the entire US, all in one location – not to mention the innovators and startups as well as established leaders across multiple sectors. As an analyst at CAR and contributor to the CAR Book of Deals, I relished the opportunity to learn from industry experts covering all topics relating to foreign direct investment (FDI) into the US. I particularly enjoyed the panel discussions on the energy industry, the CHIPS Act and the development of a semi conductor ecosystem, and clean energy and advanced manufacturing opportunities through the Inflation Reduction Act. Outside of the exhibition floor networking and the thought-provoking panels, the plenary sessions were also impressive – including a speech from the Honorable Anthony J. Blinken, the Secretary of the US Department of State.

Throughout this conference, there was one recurring message: “The US is open for business.” It truly highlighted the opportunity for growth and investment in the US, but also the importance of foreign investment. FDI creates jobs and brings manufacturing back to the US. Looking at the CAR Book of Deals data for 2023, FDI from automakers totaled over $19 billion in the US and is expected to create over 12,000 new jobs. Suppliers made big announcements too – and as companies establish new vehicle assembly and battery plants in the US, more investment will follow as the suppliers co-locate. This was a key point discussed at the SelectUSA Investment Summit, especially regarding the battery and semiconductor industries. As new gigafactories and fabs come online, their respective supply chains are expected to be onshore and nearshore. This presents opportunities for US communities to capture investment leading to advanced manufacturing and future mobility job growth. This is of particular importance in the EV transition. FDI will play a key role in helping communities not just survive but thrive in the transition to an electrified future.

K. Venkatesh Prasad

Senior VP of Research and Chief Innovation Officer

What Prasad is Checking Out: 

Prasad’s Thoughts:

Back in 2022, CDK, the cybersecurity firm said “When It Comes to Cybersecurity, Everyone Is a Target | CDK Global,” and on June 19, 2024,CDK itself got attacked. This news made for a lot of reading at CAR, as CDK serves about 15,000 automotive dealers with its dealership management systems (DMS) in the United States. The numbers add up quickly – whether in the resultant economic impacts from lost or deferred auto sales or the long-term impacts of what happened behind the scenes with CDK and the cyberhackers.

Much is still to be discovered here but cybersecurity and its ramifications in physical systems (referred to as cyberphysical systems) is a rapidly growing risk factor that needs to be factored into any investment or economic development work we undertake in the industry. The market is still relatively “young” for all this, so there will be certainly more to come on this topic. Yes: when it comes to cybersecurity, everyone is a target.

The Rivian – VW news emerged early in CAR’s internal hot topics discussions. We sliced and diced this a bit. It fits the textbook models of build-buy-partner options that firms use to quickly build capabilities. Rivian needs cash, and VW needs “software.” How this will play out, only time will tell. Some of this might seem like a “replay,” but the third time could be a charm. Ultimately, a product that is both appealing and affordable is key – VW’s strong track record in this area and Rivian’s appeal make this deal worth closely monitoring.

Finally, a bit of hyper-local reading where the headlines at the Monroe Daily News (in Monroe County, Michigan) read “’May be controversial’ but Monroe summit seeks fact-based discussion of EVs.” The point here is the importance of engaging with those who market shifts or business transformations differently. Is the internal combustion engine going away? Are electric vehicles here to stay – no, yes, maybe so – it all depends. The key insight or affirmation (perhaps not new to anyone) was that a policy made without ears on the ground is a policy that is hard to execute. We see a deep and committed set of investors and local economic developers on the ground wherever we go and when we listen to both sides we always come away with a better, more inclusive design.

Automotive Industry Hot Topics with CAR Industry Analyst, Lisa Krusemark (06/07/2024)

Lisa Krusemark

Industry Analyst

 

What Lisa is Checking Out:

Lisa’s Thoughts:

4th of July Travel

Embracing the American tradition of road trips, many people continue to choose this popular getaway during the Independence Day holiday season.

This year’s Independence Day travel period is expected to exceed 70M travelers, showing nearly a 5% increase in the number of drivers forecasted for 2024 compared to the previous year (over 2.8 M additional travelers). This forecast also exceeds the total number of drivers during the 2019 Independence Day holiday week. AAA estimates that 85% of travel is by vehicle in comparison to other modes of transportation.

Increased work flexibility has extended Independence Day travel patterns, reflected by holiday travel estimates that are calculated over a 9-day period spanning two weekends. As in-vehicle conveniences and services are more widely available, road trips can offer amore enhanced and safer experience during busy travel seasons.

CDK Global Outage

In addition to enjoying the American tradition of road trips, consumers are using the Independence Day holiday to shop for vehicles amid the availability of new and current-year options. The recent CDK Global outage has impacted dealer management systems and vehicle registration applications, potentially resulting in dealer losses of nearly $1 billion should outages last through the holiday. To prevent any inconvenience for consumers, dealers have opted to use alternative methods for sales and scheduling.

Automotive Ownership and Independence

With the rising availability of ride sharing, car-sharing, and questions about vehicle affordability, questions have emerged about whether independent vehicle ownership remains an American pastime. Two initial metrics to answer this question include tracking vehicle sales trends and differential rates of ownership among younger drivers. Despite the assumption that individual vehicle ownership might be decreasing due to factors like slowed EV adoption, recent reports suggest that car ownership has continued to rise (2018-2022). Notably, most US households report owning at least one vehicle.

Even with assertions that younger consumers might forgo purchasing their own cars, several factors, such as valuing personal independence, a wide range of vehicle choices, and extended vehicle longevity suggest that individual vehicle ownership is unlikely to decline abruptly.

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The post What CAR is Checking Out: American Made Edition appeared first on Center for Automotive Research.