Electric Vehicles on the next Growth Engine in Chemicals

 

The automotive market is undergoing rapid change. Based on a forecast by the McKinsey Center for Future Mobility, battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) will make up more than 55 percent of new vehicle production by 2030 across China, Europe, and North America. This represents 47 million units globally—seven times more than in 2021.
 

Adoption has moved beyond start-ups, with all mainstream OEMs now focused on electric vehicles (EVs) and with forecasts for EV penetration continuing to accelerate: more than 500 EV programs will come to market from 2024 to 2026 alone. In short, tomorrow’s vehicle archi-tecture is being defined today, offering a narrow window of opportunity for chemical companies to set the standard for materials applications in the years to come.
 

Although EVs have been a hot topic in the chemicals industry for some time, a major paradigm shift in automotive procurement practices has made the space dramatically more attractive for chemical players, not considering cell chemistry, a market governed by unique value chain dynamics. Whereas chemicals in the automotive industry were traditionally considered on a unit-cost basis—with suppliers barely able to hold value over the program life cycle—savvy automotive OEMs and tier suppliers are now moving to a system value approach. These players recognize that materials solutions can provide outsize value in reducing cost and improving the reliability of expensive parts such as batteries, power electronics, and electric motors.
 

To illustrate this point, consider the powertrain of a typical BEV. The battery, inverter, and electric motor together cost more than $10,000—often three to four times the cost of their equivalent parts in a conventional combustion engine vehicle. Hence, the vehicle system must come down in cost for BEVs to gain widespread adoption.
 

In this context, leading OEMs have discovered that using the right thermal and insulation materials in the powertrain can lead to significant increases in system efficiency and reductions in warranty cost, which together can be worth several hundred dollars per vehicle. These savings make it much easier for OEMs to invest in enabling these materials.
 

For example, a transition from silicon oxide (Si) to silicon carbide (SiC) power modules in the inverter can generate system savings on the order of $200 per vehicle for OEMs. This is because of the semiconductor’s greater power efficiency (reducing battery cost) and more optimal cooling profile (reducing thermal management cost), despite SiC costing more than Si counterparts. Consequently, innovations in materials that enable system cost reductions can provide tremendous value to OEMs.

The Future of Interior for Automotive

 

Imagine a world where a car’s interior, and the accompanying cabin experience, are two of the most important vehicle differentiators. In this world, affiliates of a vehicle brand are not waiting for the next start of production of a vehicle but for the next operating-system update; OEM CEOs introduce new human-machine-interface systems as stand-alone products to as much anticipation and fanfare as new models, and car magazines discuss comfort levels rather than acceleration and horsepower. This world is now emerging within the automotive industry, and it will transform how OEMs make and market cars.

Very soon, the cabin experience is expected to take the spotlight away from automotive elements that have traditionally dominated headlines, including engine performance, exterior design, and powertrains. The rapidly evolving ACES megatrends—automation, connectivity, electrification, and shared services—will change the configuration of cars and allow vehicle occupants to enjoy new experiences during trips.

To assess the growing importance of vehicle interiors, we reviewed insights from eight sources. These included an analysis of the interiors of over 50 current and concept vehicles; roundtable discussions and in-depth expert interviews with over 60 decision-makers from 25 leading players; various consumer surveys; and panel discussions with automotive experts. We also analyzed mobility patterns by customer segment and drew on our work with automotive companies on vehicle interiors, connectivity, HMI, and the customer experience.

Our research clearly revealed the growing significance of vehicle interiors and the in-car experience. For instance, a survey revealed that 71 percent of automotive executives expect vehicle interiors to become more important, while only 38 percent held the same views about vehicle exteriors.

In our article, “The future of interior in automotive,” we examine the implications of this research, focusing on two areas. First, we review the evolution of vehicle interiors in response to five forces (exhibit). One basic shift involves the emergence of new vehicle types, including, electric vehicles which will have a massive effect on interior layouts and could enable features that were previously unimaginable, such as swivel seats. Similarly, innovations in connectivity and HMI could alter the cabin experience. For instance, automated assistants might have an improved ability to respond to the voices of all passengers. The cabin itself will become more comfortable, with OEMs providing more “homelike” trim, such as seats that resemble those in a living room, or other features that enhance the driving experience, such as automatic climate-control systems. As OEMs experiment with new interiors, they must keep sustainability issues in mind, since customers are increasingly concerned about decarbonization. Cost control will also be critical, especially for features that are not readily visible or do not add value.

As vehicle interiors evolve, OEMs and suppliers should consider how to position themselves for future success. With new players catching up or even leading in connectivity and interior experience, established players cannot rely on their past reputations and must instead articulate their future vision.

Chicago Area Auto Dealership Raises Funds for Folds of Honor

 A longtime automotive executive, Leo Sfikas helped guide the Currie Motors Auto Group in Chicago for nearly two decades and oversaw several growth-focused Ford dealerships. A strong supporter of the US Armed forces and those who serve their country, Leo Sfikas has coordinated events that raised money for organizations such as Folds of Honor.

The nonprofit had its inception in the personal experiences of an Oklahoma Air National Guard F-16 fighter pilot, who witnessed firsthand the profound impact that a service member's death had on loved ones. Since 2007, the Iraq War veteran has coordinated scholarships that provide educational support to the children and partners of disabled and fallen military members. The symbol of this is a folded flag that serves as a remembrance of those who sacrificed so that others can enjoy peaceful and productive lives.

As general manager of Currie Motors Ford of Valparaiso, Mr. Sfikas facilitated a Memorial Day Car, Truck, and Bike Show that benefitted Folds of Honor each year. Held under large tents, the show brought together automotive enthusiasts and featured 13 classes of vehicles, with a trophy awarded to the winner of each class. The event featured a hamburger grill that kept attendees well fed while they participated in a raffle for items such as the new Ford Mustang to support a worthy cause.

Unleashing the Ford Transformation

 

Ford is continuing to transform its global automotive business, accelerating the development and scaling of breakthrough electric, connected vehicles, while leveraging its iconic nameplates to strengthen operating performance and take full advantage of engineering and industrial capabilities.

“This isn’t the first time Ford has reimagined the future and taken our own path,” said Ford Executive Chair Bill Ford. “We have an extraordinary opportunity to lead this thrilling new era of connected and electric vehicles, give our customers the very best of Ford, and help make a real difference for the health of the planet.”

Last May, Ford President and CEO Jim Farley introduced the Ford+ plan, calling it the company’s biggest opportunity for growth and value creation since Henry Ford scaled production of the Model T. The formation of two distinct, but strategically interdependent, auto businesses – Ford Blue and Ford Model e – together with the new Ford Pro business, will help unleash the full potential of the Ford+ plan, driving growth and value creation and positioning Ford to outperform both legacy automakers and new EV competitors.

“We have made tremendous progress in a short period of time. We have launched a series of hit products globally and demand for our new EVs like F-150 Lightning and Mustang Mach-E is off the charts,” Farley said. “But our ambition with Ford+ is to become a truly great, world-changing company again, and that requires focus. We are going all in, creating separate but complementary businesses that give us start-up speed and unbridled innovation in Ford Model e together with Ford Blue’s industrial know-how, volume and iconic brands like Bronco, that start-ups can only dream about.”

Driving the change was recognition that different approaches, talents and, ultimately, organizations are required to unleash Ford’s development and delivery of electric and digitally connected vehicles and services and fully capitalize on the company’s iconic family of internal combustion vehicles.

The creation of Ford Model e was informed by the success of small, mission-driven Ford teams that developed the Ford GT, Mustang Mach-E SUV and F-150 Lightning pickup as well as Ford’s dedicated EV division in China.

“Ford Model e will be Ford’s center of innovation and growth, a team of the world’s best software, electrical and automotive talent turned loose to create truly incredible electric vehicles and digital experiences for new generations of Ford customers,” Farley said.

“Ford Blue’s mission is to deliver a more profitable and vibrant ICE business, strengthen our successful and iconic vehicle families and earn greater loyalty by delivering incredible service and experiences. It’s about harnessing a century of hardware mastery to help build the future. This team will be hellbent on delivering leading quality, attacking waste in every corner of the business, maximizing cash flow and optimizing our industrial footprint.”

Ford Model e and Ford Blue will be run as distinct businesses, but also support each other – as well as Ford Pro, which is dedicated to delivering a one-stop shop for commercial and government customers with a range of conventional and electric vehicles and a full suite of software, charging, financing, services and support on Ford and non-Ford products. Ford Model e and Ford Blue will also support Ford Drive mobility.

With the creation of Ford Blue and Ford Model e, Ford is announcing several leadership appointments. Farley will serve as president of Ford Model e, in addition to his role as president and CEO of Ford Motor Company.