North Americas Sales and Production Outlook - Prepared for: Automotive Logistics and Supply Chain Mexico Conference
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S&P Global Mobility North Americas Sales and Production Outlook Prepared for: Automotive Logistics and Supply Chain Mexico Conference Guido Vildozo, Senior Manager – Americas Guido.Vildozo@spglobal.com
Introducing S&P Global
Our six divisions focus on distinct markets—and together, they deliver
unmatched breadth and depth.
2
S&P Global Mobility
The war in Ukraine creates new challenges for supply chains
Russia and Ukraine are among the world’s top suppliers of key commodities
• Wheat
• Corn
• Vegetable oils
• Fertilizers
• Iron & steel
• Aluminum
Price increases
• Palladium Supply shortages
Food protest risks
• Nickel
• Carbon black
• Neon gas
• Oil
• Gas
3
S&P Global Mobility
Automotive commodities unlikely to return to pre-COVID prices
Key risks remain for essential inputs to both electric vehicle (EV) and internal combustion engine (ICE) manufacturing
Key automotive commodity prices Key automotive commodity prices (EV versus ICE)
$3,500 $90,000 $3,000
$80,000
$3,000 $2,500
US dollars/troy ounce (Palladium only)
$70,000
$2,500
$60,000 $2,000
US dollars/metric ton
US dollars/metric ton
$2,000 $50,000
$1,500
$1,500 $40,000
$30,000 $1,000
$1,000
$20,000
$500 $500
$10,000
$0 $0 $0
2020 2021 2022 2023 2024 2020 2021 2022 2023 2024
Cold rolled steel Hot rolled steel Aluminum Lithium Cobalt Manganese
Copper Nickel Paladium
Source: IHS Markit © 2022 IHS Markit Source: IHS Markit © 2022 IHS Markit
4S&P Global Mobility
Calculated input costs for selected raw materials
Forecast prices are based on direct and immediate pass through of spot market prices—but clear risks for post-recovery trend demand
Key selected raw materials*: US dollar costs in a typical European car
$3,000 +$1550 (€1420) +$1150 (€1040)
+120% above +88% above
average average +$620 (€530)
+47% above
$2,500 average
+$890 (€750)
$2,000 +68% above
Three-year average selected average
input costs in 2019 = $1,300
$1,500
$1,000
$500
$0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Steel Copper Aluminium Nat Gas
Implied % increase in car price ** = 3.3% 6.2% 4.6% 2.8% 1.8%
Note: *As itemized in label, excludes plastics, rubber, precious metals; ** percent increase on 2019 average price level on immediate spot price pass through
Source: IHS Markit © 2022 IHS Markit
5S&P Global Mobility
Automotive chip capacity crunch on mature semiconductor manufacturing
process nodes beyond 2022 – especially for analog chips
Automotive chip categories by semiconductor manufacturing process node in nanometer (nm)
Booming demand for analog for phones: power management, RF front end,
(increases with number of bands), high-end audio, contactless payment….
Deployment: 1995 2000 2005 2010 2015 2020
Semiconductor manufacturing process nodes (the smallest, the most advanced, the most expensive)
>=800 nm 300 nm 180 nm 130 nm 110 nm 90 nm 65 nm 40 nm 28 nm 14 nm 10 nm 7 nm 5 nm 3 nm
16% of semi equipment CAPEX in 2022 and 2023* 83% of semi equipment CAPEX in 2022 and 2023*
Microcontrollers for powertrain, chassis & safety, infotainment, Powerful SoCs for
body & convenience, ADAS/autonomy Autonomous Driving,
15 to 100 per cars Cockpit and High Power
Computer (HPC)
Analog for power management, BUS transceivers, RF, radar, motor 0 to 5 per car
drivers, display drivers, LED drivers, etc.
100s per car Memory for Infotainment/ADAS
2 to 10 per cars
Power discrete for xEV, chassis, powertrain
Image sensors
10s per car
0 to 15 per cars
MEMS Magnetic sensors for current, Capacity crunch in next
sensors position, speed sensing, switches years for automotive on
10s/car 10s to 130 per car
mature process nodes
Note: * CAPEX data from SEMI World Fab Forecast, Q2 2022
Source: S&P Global Mobility © 2022 S&P Global
6IHS Markit
S&P Global
| January
Mobility
2022
But industry missed 2) Increased dependence on TSMC
• Building and maintaining Top 15 car chip vendors in 2020 (70% of market)
semiconductor fabs is
expensive Toshiba
Outsourced part of
Intel
• Trend to fab-light i.e. more Microchip Technology
prod to TMSC
outsourcing to “foundries” for Analog Devices Own fab
contract manufacturing of ams
wafers ROHM Semiconductor
Micron Technology
• TSMC is #1 semiconductor ON Semi
foundry with ~56% share Robert Bosch
STMicroelectronics
• TSMC fabricates vast Texas Instruments
majority of processors and Renesas
NXP
modems for mobile phones, Infineon
processors for gaming, even 0 1 2 3 4 5
now Intel’s processors Billions of US$
Source: IHS Markit – E/E & Semiconductor service Sony PS5
7S&P Global Mobility
11.6 million cars not produced because of chip shortage, and growing…
Chart Title
Light Vehicle production volume loss to-date due to chip shortage
1,000,000 Q1 2021
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Europe Greater China Japan/Korea Middle East/Africa North America South America South Asia
Note: This is not forecast, the figures represent the scale of disruption identified as of July 29th 2022
Source: S&P Global Mobility – Light Vehicle Production: Update assessment of semiconductor supply issues – July 2022 © 2022 S&P GlobalS&P Global Mobility
Three forecasts to get one sales forecast
The current supply chain–constrained sales forecast methodology requires three stages to
complete the final forecast.
1. Semiconductor Supply Assessment to drive Vehicle Production Outlook
2. Theoretical or Notional “Demand Forecast”
3. Distributed Realization of Notional Demand over time to get effective demand and final sales
Each stage has its own set of assumptions.
9S&P Global Mobility
Affordability crunch impacts—household mobility pressures
A mixed picture of new car price pressures, household budget concerns, and policy tightening is bearing down on affordability
Forecast adjustment—evolution through 2022
Energy Gas
Forecast Car Interest
Oil Prices Price Supply
Adjustments Prices Rates
Crisis Squeeze
March Yes Yes Yes
April Yes Yes
May
June
July Yes Yes
Aug Yes
Sept Yes (EU)
EU Gas flow &
rationing TBC
Source: IHS Markit © 2022 IHS Markit
10S&P Global Mobility
Conflict impact on supply chains to weigh on global auto recovery
Estimated impacts of conflict assumed to be higher in outbound years as production recovers
Supply constrained global sales—Ukraine crisis and recovery profile Sources of actual demand destruction*
105
Light vehicle sales (millions)
2.0
Light vehicle sales (millions)
100
0.0
95
90 -2.0
85 -4.0
80
-6.0
75
70 -8.0
65
60 Sales Profile (Demand Destruction)
Supply Chain Losses
Direct Loss, Russia & Ukraine Prod
Production Forecast (Oct 2022) Pre Crisis Improved Chip Assessment
Sales Forecast (Oct 2022)
Note: Delta volume: Oct 2022 vs. Jan 2022 sales forecasts
Sales Forecast Jan 2022 (Pre Crisis)
Source: IHS Markit © 2022 IHS Markit Source: IHS Markit © 2022 IHS Markit
11S&P Global Mobility
Inflation and semiconductor supply remain limits on North American demand
Further declines in 2022 and a recovery toward pre-pandemic not part of the base case forecast anymore
North America light vehicle sales forecast Delta (%)
22
0%
20
-2%
18
Millions
-4%
16 -6%
14 -8%
-10%
12
-12%
10
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 -14%
Source: IHS Markit Oct 2022 FC Jan 2022 FC © 2022 IHS Markit Source: IHS Markit © 2022 IHS Markit
12S&P Global Mobility
US light vehicle sales
Demand vs Sales (October 2022
19
September forecast has “unmet demand”
Millions
18 of 2.5–2.7M units of which 2.0M are
factored between 2023 and 2026
17
16
15
14
13
12
11
10
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Synthetic Vehicle Sourcing Pure Demand New Oct Draft NG
13S&P Global Mobility
Global Production Overview – BEV and PHEV
China and Europe lead in BEV and PHEV production; BEV share increased on stimulus effects, product availability and
preference – volume and share up in tight market, risks easy to identify but no fundamental change forecast in base case
Global BEV and PHEV Production BEV Production by Region
7.9% 5.3% 5.8%
40 40.0% 11.7%
6.6% 6.4% 7.1% 8.4% 7.9% 7.9%
Millions
11.1% 13.1% 14.0%
17.7% 14.0% 14.1% 14.7% 14.6%
35 33.4 35.0%
47.3% 61.7% 64.7% 57.7% 54.6% 52.5% 50.5% 48.6% 47.8%
29.0 35.2%
30 30.0%
31.1%
24.1 26.9% 21.0% 20.3% 22.6% 23.3% 23.7% 25.2% 25.8%
25 25.0% 17.3%
26.2%
20.0 2020 2021 2022 2023 2024 2025 2026 2027 2028
20 20.0%
21.9% Europe Greater China
15.4 North America Japan/Korea
15 15.0% South Asia Middle East/Africa
11.4 17.3%
PHEV Production by Region
10 8.2 13.3% 10.0%
10.4% 9.8% 7.8% 7.8% 7.2% 7.6% 8.8% 8.7% 9.9%
10.1% 5.3 5.7 5.6 5.5 10.8% 12.5% 10.5% 11.6% 12.9%
4.8 6.2% 4.6 15.6% 19.0% 19.3%
5 3.9 5.0% 18.7%
2.3 3.1% 2.8 6.0% 5.8% 19.5%
1.8 6.2% 27.9%
1.1 4.6% 5.2% 46.9% 46.1% 45.0%
5.8% 43.7%
2.3% 3.4% 43.2%
0 1.5% 0.0% 46.0% 47.1%
2020 2021 2022 2023 2024 2025 2026 2027 2028 57.6%
48.6%
33.9% 32.5% 32.2% 29.7%
BEV PHEV 25.2% 21.8% 19.7%
Share of Global Production Share of Global Production
2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: IHS Markit LVP+AP forecast August 2022 14S&P Global Mobility
Global Production Overview
2022 raised again but mixed effects continue, mainland China shows very strong result in August +34% y/y, India too, +25%, North and
South America, South Korea effectively flat in ’22, Japan cut and Europe comes under threat from risk to natural gas supplies
Global Production Comments
100 25%
Millions
90.4 ▲ Mainland China continues recovery on easing of
89.0 88.1
90 85.3 20% lockdown and stimulus, +34% (y/y) increase in August
81.8 LV production
80 77.2 ▲ India demonstrates robust activity expected to underpin
74.6 15%
balance of this year and next
70 ▲ Iran drives sharp increase in Middle East/Africa
10%
▲ Non-automotive chip demand easing but displacement
60 effects limited
6%
5% ▲ More evidence of OEMs proactively de-contenting to
50 3% 4% keep lines moving, recently mainland China
3% 3% 0%
40 ▼ Europe faces risk from permanently reduced supplies of
-5% natural gas from Russia; downside expected to be felt in
30 2022 and 2023
-6%
▼ Other raw materials could be weaponized
-10%
20 ▼ Zero-COVID policy in mainland China in face of fast-
moving Omicron variant is a major challenge that could
10 -15% quickly see lockdowns adopted: recently Chengdu,
-16% Chongqing
0 -20% ▼ Investment in analogue chips limited and lead times are
2019 2020 2021 2022 2023 2024 2025 yet to fall; MCU supply and lead times healthier
▼ General economic squeeze becoming more influential
Global Production Year over Year Change
and earlier in the cycle
Source: IHS Markit 15S&P Global Mobility
North America Production Overview
Semiconductor shortage undermines short-term outlook
Yearly Production Monthly Production Evolution
18 25.0% 1,600 36% 40%
16.31 16.34
Millions
Thousands
16.16
16 15.39 20.0% 1,400 35%
14.47 27% 30%
14 13.02 13.05 15.0%
1,200 25%
10.0% 19%
12 10.9% 1,000 20%
5.0% 15%
10 6.4% 5.0% 800 15%
11%
0.0% 9% 10%
1.1%
8 0.2% 600 3% 9% 8% 7% 5%
-5.0% 0%
-3.8%
6 400 0%
-10.0%
-8% -5%
4 -15.0% 200 -10%
2 -20.0% 0 -15%
-20.2%
0 -25.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2020 2021 2022 2023 2024 2025 YoY Evolution 2021 2022 Actuals
North America Production Year over Year Change 2022 Forecast 2023 Forecast
▲ US inventory remains at historic lows at 30 days’ supply or 1.35M units ▼ Economic slowdown and recession fears increasing
▲ Breaking a 35-month streak of year-over-year declines, US ▼ Potential for demand destruction amid economic pressures
inventory increased for the third straight month by 445K units or 49.5% ▼ 2022 was reduced 0.7% or 109K units to 14.47M units
▲ 1.5-million-unit inventory shortage remains amid ongoing supply chain, ▼ 2023 was reduced 1.5% or 234K units to 15.39M units
labor and logistics related issues ▼ Production results remain volatile and far from normal operating patterns
▲ Improving production and inventory restocking from 2023 onwards ▼ Ongoing short-lead downtime
expected to alleviate pricing pressures in autos ▼ Status of unfinished vehicles
Source: IHS Markit 16S&P Global Mobility
US inventory
Supply chain and logistics issues continues to hinder and skew market
US light vehicle inventory Inventory update
Restock ▪ Inventory: September 2022
4.5 begins 120% ▪ Stock: 1.35M units or 30 days’ supply
Millions
4.0 100% ▪ Y/Y: +445K units or +49.5%
80% ▪ Inventory to Sales Index: +36.5%
3.5
60% ▪ Entering formative stages of restocking
3.0
40% ▪ Third month of y/y increase after 35 months of
2.5 20% declining inventory
▪ 1.5M unit inventory shortage
2.0 0%
-20% ▪ Ongoing shortages, labor and logistics
1.5 issues extending constraints into 2023
-40%
1.0 ▪ Risk of pent-up demand destruction risk
-60%
0.5 ▪ Strong pricing power for OEMs, dealers
-80%
▪ Buying conditions at record lows
0.0 -100%
2008 2010 2012 2014 2016 2018 2020 2022 2024 ▪ Rapidly improving inventory outlook
▪ Expect sharp increases in 2023
Forecast Inventory/Sales Index Current Level Inventory Inventory (SA) ▪ Pricing power risk amid increasing availability
Source: IHS Markit, Motor Intelligence © 2022 IHS Markit ▪ Supply chain related constraint to continueS&P Global Mobility
US inventory analysis
Market connection defines reality
US inventory alignment by manufacturer Inventory Alignment Score (IAS)
▪ Indicates how close inventory is to benchmark
Ford 110 ▪ New benchmark: 2.19 times US sales
Stellantis 107 ▪ Historic benchmark: 2.45 times US sales
GM 101 ▪ Measure of connection to market realities
Nissan 57 ▪ Domestics closer to new normal
Honda 50
▪ Protecting high volume, high margin vehicles
M-B 45
Toyota ▪ Closer to facing market adjustments
37 Higher score
VW means closer ▪ Pricing power to come under pressure
34
Mazda 24 to market ▪ Expect changes to mix and incentives
Subaru 21 realities ▪ Transplants remain more disconnected
Hyundai 20 ▪ Scores more indicative of supply chain issues
BMW 19 ▪ Limited inventory hampering sales
0 20 40 60 80 100 120 ▪ More protracted pricing power
Sep. 2022 Oct. 2022
Source: IHS Markit © 2022 IHS Markit ▪ More protracted overbuild period
18S&P Global Mobility
North American Production
Tail Wagging the Dog, More BEVs than Consumers to Start; Are We Redefining “High Volume” Manufacturing?
Battery Electric Vehicle Production and Model Count BEV Share of Production and Volume per Nameplate
7 180 70 40%
Thousands
Millions
160 35%
6 60
140
30%
5 50
BEV Model Count
120
25%
4 100 40
20%
3 80
30
60 15%
2
20
40 10%
1
20 10 5%
18 25 44 68 85 114 136 146 157 163
0 7 9 0
2019 2021 2023 2025 2027 2029 0 0%
2019 2021 2023 2025 2027 2029
# of BEV models BEV volume % BEV production in NA Vol. per BEV nameplate
Source: S&P Global Mobility © 2022 S&P Global Source: S&P Global Mobility © S&P Global
S&P Global Mobility
19S&P Global Mobility
Robust product activity continues
Longer and shorter life cycles on the horizon
North America light vehicle production launches Delayed launches and extensions
▪ Launches amid industry issues
60
▪ Increasing price scalability
271
50 launches ▪ Execution and pricing risks
50
▪ Utility vehicle expansion continues
40 37 38 ▪ Competition weighs on leaders
35
▪ Splintering segmentation
30 33 30
30 27 28
18 26 ▪ Pricing and margin pressure
25 19 14
21 10
▪ BEV activity: 2022 to 2029
13 9 17
20 12
23 ▪ 119 all-new BEVs, 26 redesigns
13 10
13
9 16
▪ 30% share or 5.0M units in 2029
5 11 13 6
10 7 ▪ Product redundancy: ICE to BEV
1 5 3 3 3
9 4 1 6
5 3
3
4 5 2 5 3 ▪ Another 100 plus BEVs as import or
0 2 2 2 2 1
part of multi-energy nameplates
2019 2021 2023 2025 2027 2029
▪ Legacy ICE programs as a hedge
Car Truck Utility BEV
▪ Extensions amid future costs`
Source: IHS Markit © 2022 IHS MarkitS&P Global Mobility
Updated EV tax credits under IRA 2022
200,000 units cap has been revoked but there are additional restrictions on battery material sourcing
Incentives were introduced in 2011 for EVs in the form of tax credits, up to $7,500 was offered to OEMs to promote clean energy vehicles, for
vehicles with more than 4 kWh battery capacity and 200,000 units sales cap for OEMs this is continued with the new condition of final
assembly plant based out of USA till end of 2022.
New tax credits-The price is still capped at $7,500. The new EV tax credit system has updated the eligibility criteria to promote nationalization
of EV manufacturing.
Eligibility Criteria and Conditions Percentage Nationalization per year
2029
• The MSRP for vehicles is set at $80,000 for SUVs, Vans and pickup
2028
trucks and $55,000 for other vehicles.
2027
• The final income cap is $150,000 for single, $225,000 for head of
household, and $300,000 for taxpayers with a joint return. 2026
• The EV final assembly plant should be based out of the USA. 2025
• The sourcing of Material Criteria to get a $7,500 tax credit is 2024
categorized into two equal categories: Critical Minerals for $3,750 2023
and Battery Components for $3,750. 30% 40% 50% 60% 70% 80% 90% 100%
• The vehicles should be no more than 14,000 pounds, should be
propelled by electric power and should have a battery capacity not ❑ Critical Minerals: % of minerals extracted or processed in the US or imported
less than 10 kWh. from a country which has FTA with the US or from materials recycled in the US.
❑ Battery Components: % of value made or assembled in the US.
S&P Global Mobility 21S&P Global Mobility
Eligible Vehicles
The new law may disqualify the eligibility of about 70% of the battery-electric vehicles (BEVs), plug-in hybrid
electric vehicles (PHEVs) and fuel cell electric vehicles (FCEVs) on sale in the US market for tax credits
Models eligible for Models excluded from
Lincoln Ford incentives incentives due to 200K sales cap
GMC Chevrolet
Aviator Corsair Mach E Escape F series Transit Van
Hummer
Bolt EUV/EV
Rivian Lucid Volvo Chrysler Pickup/ SUV
Tesla
R1S R1T EDV Air S60 Pacifica
BMW Jeep Audi Nissan Tesla Model S Tesla Model X
3 series PHEV X5 Grand Cherokee Wrangler Q5 Leaf Tesla Model 3 Tesla Model Y
S&P Global Mobility 22S&P Global Mobility
North America production outlook
Intra-regional production shifts
North America light vehicle production Reshuffling the deck
▪ Broad IRA and USMCA implications
20.0
▪
Millions
US as safe sourcing hedge amid policy actions
18.0 and discussions
16.0 ▪ Favored for BEV investment from battery
3.8 3.8 4.0 3.9 3.9 3.9 3.9
3.5 cell to vehicle assembly
14.0 3.4 ▪ Reprieve for Canada
12.0 3.0 3.0 1.2 1.3 1.4 1.3 1.3
1.9 1.4 ▪ BEVs as a lifeline for renewal
1.4
1.3 11.1 11.1 11.0 11.3 11.4
10.0 10.6 1.1 10.5 11.0
▪ Follow the incentives:
1.4 9.9
8.0 8.6 8.9 ▪ Ford and Stellantis
6.0 ▪ Tesla potential
4.0 ▪ Fate of GM in Oshawa
2.0 ▪ Toyota and Honda status quo
▪ Mexico under pressure
0.0
2019 2021 2023 2025 2027 2029 ▪ Increasing China imports
USA Canada Mexico ▪ Underutilized capacity amid BEV shift
Source: IHS Markit © 2022 IHS Markit ▪ BEV sourcing implications
23S&P Global Mobility
Global sales overview summary
COVID-19 recovery cycle—a challenging set of evolving drivers is risking “destroyed demand”
Supply chain hangover—the longer the supply squeeze lasts, the more potential there is for “lost”/destroyed
demand (especially chips)
Affordability—elevated raw material prices are hurting prices—new car prices might not fall back as the
market mix normalizes with the easing of the chip crisis (electrification “on top” factor for some regions
especially Europe)
Decent pent-up demand—but the industry is “running out of runway” for 2022, and the outlook for 2023 is
deteriorating
Regions vary—Mainland China stimulus helps short-term “pull forward” while US and European demand
follows supply
Key risks loom large—big questions on big issues especially energy security, geopolitics, climate policy, and
auto regulations
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