By: Marc AmblardManaging Director, Orsay Consulting 

The automotive industry and mobility at large underwent a transformation in 2021. Many factors contributed: supply chain problems, emerging electric vehicle OEMs pressuring incumbents, new CO2 regulation in Europe, and consumers shifting online. This transformation brought a radical shift in powertrain mix, new types of partnerships, and new ways of working across the ecosystem.

My predictions for 2022 focus on electrification, autonomous driving, partnerships beyond the traditional ecosystem, and distribution.

Electrification – more OEMs commit

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The penetration of battery electric vehicles (BEV) is about 10% in Europe and China and 2.5% in the USA. Many countries have set deadlines for the ban of ICE-based vehicles, e.g., Norway in 2025 or the UK in 2030. During 2021, most OEMs committed to shifting to BEVs or fuel cell EVs at some point. Some brands have set deadlines for their new vehicles, such as Cadillac (2021), Jaguar or Genesis (2025), Audi (2026) or Peugeot in Europe (2030). Others announced when they will stop selling ICE-based vehicles altogether, such as Volvo (2030), VW (2033) or GM (2035).

I expect OEMs that have not yet committed to shifting to clean vehicles will do so in 2022. Many OEMs that have already committed may pull their deadlines forward (at least regionally). In 2022, I expect BEVs to hit 15% of the market in Europe and China and 4-5% in the USA as exciting products are introduced. By the end of 2022, the global fleet of BEVs could reach 15-million, almost twice today’s fleet.

The electrification boom, combined with the continuing chip shortage, also forced OEMs to rethink their supply chains. At a minimum they are extending their visibility through the whole chain to increase resilience.

Locking in supplies

Electrification brings new challenges: the need to secure sufficient capacity for batteries and raw materials for electric vehicles. Most OEMs have now locked in battery capacity several years out. In 2021, we began to see partnerships all the way to mining and refining, such as Renault with Volcan or BMW with Lilac for lithium. This year the remaining OEMs will lock in battery capacity, and many will secure raw material mining and refining.

Autonomous driving

In 2021, there was a transformation in autonomous driving (AD). Vast funds were committed to the leading AD stack developers – over $15bn across the top eight at a cumulative valuation of about $100bn. The leaders in AD now have plenty of money to recruit, to invest in more cities, or to acquire smaller players.

Waymo and AutoX are already operating fully driverless robotaxi services in Phoenix (USA) and Shenzhen (China), respectively. In 2022, we will see several new pilots. Cruise (backed by GM and Honda) will operate a fully driverless, commercial ride-hailing service in San Francisco. Waymo will do the same, but keep the safety driver. 

The leading stack developers will also prepare to deploy in more cities in 2022, mainly in the USA and China. Europe will continue to lag. Zoox will start testing in Seattle and may announce its deployment plan for the vehicle introduced a year ago. Cruise is expected to start producing its “Origin” robotaxi electric vehicle late in the year.

Freight transport and deliveries will move closer to autonomy. In 2021, Aurora began to haul freight for FedEx. Gatik recently removed the safety driver on its commercial middle-mile, fixed-route deliveries, and Starship reached 2-million deliveries with its sidewalk bot. Waymo, Aurora and TuSimple each announced plans to establish networks on US highways to connect with trailers and perform tractor maintenance. In 2022, expect more pilots and planned networks to turn into physical assets for deployment in 2023-24.

Partnerships in new fields

Multi-tier supplier-customer relationships are turning into agile co-development partnerships across multiple stakeholders. As we move to software-defined vehicles and frequent OTA updates in more functions, development loops become short and agile, and remain active throughout the life of electric vehicles – and others. 

This trend will accelerate in 2022. We are moving fast to new E/E architectures (domain and zonal compute) which enable more ubiquitous OTA updates, and introduce more features-on-demand and subscriptions. 

Google your car

We have seen recent partnerships outside the traditional ecosystem, especially in software, cloud, and data management. Google has made inroads, first with Android Auto and more recently with the embedded Android Automotive with OEMs such as Volvo, Renault or GM. The system will be deployed on new models in 2022, giving Google access to more of the vehicles’ inner workings. 

Cloud players built new positions in the automotive industry in 2021, with partnerships such as Continental with AWS or ZF with Microsoft (Azure). Expect several new long-term partnerships in this space in 2022.

Direct-to-consumer

Tesla disrupted the dealer-based distribution model with its direct-to-consumer (DTC) approach to selling electric vehicles. The pandemic encouraged online purchases, which forced the auto industry to use fewer showrooms. Tesla has also shown the benefits of a direct relationship with customers. This includes full control of pricing, potential for recurring sales, short customer feedback loop or enhanced customer understanding.

A few OEMs have experimented with subscription models, with limited success to date. In 2021 Volvo announced its intention to sell its electric vehicles exclusively online, and its sister brand Polestar is full DTC. US-based emerging OEMs – e.g., Rivian, Lucid, Fisker – are all also 100% DTC. Cadillac shrank its distribution network by a third.

In 2022, a few OEMs will follow Volvo’s footsteps – Audi announced such a move for its EVs starting in 2023.