Automotive Industry Weekly Digest 18-22 January 2021 IHS Markit Automotive Industry Weekly Digest - Jan 2021 WeChat Auto VIP Contents [OEM Highlights] Automakers facing semiconductor shortages, set to hit light-vehicle production in Q1 3 [OEM Highlights] NIO unveils ET7 electric sedan, plans to introduce solid-state battery in Q4 2022 5 [Autonomous Driving Highlights] Chinese autonomous bus receives permit for use on open roads in Paris 8 [Autonomous Driving Highlights] Apple autonomous car may be five to seven years away 8 [CES 2021] Mobileye to launch autonomous vehicle test fleets in four more cities during 2021 10 [CES 2021] Aptiv develops new platform to support automated and electric vehicles 10 [Supplier Trends and Highlights] AAM, Inovance Automotive join forces on next-generation electric-drive technology 12 [Supplier Trends and Highlights] Gentex partners with Simplenight for connected car services 12 [GSP] Global Sales and Production Commentary -2020.12 14 [VIP ASSET] SUVs to remain main growth driver of China new vehicle market in 2021 17 [IHS Markit Insight] Week Ahead Economic Preview - 15 January 2021 19 [Asset Download] Top 10 Auto Tech Trends to watch for in 2021 21 Confidential. ©2021 IHS Markit. All rights reserved. 2 IHS Markit Automotive Industry Weekly Digest - Jan 2021 WeChat Auto VIP [OEM Highlights] Automakers facing semiconductor shortages, set to hit light-vehicle production in Q1 IHS Markit perspective Implications Automakers globally are facing up to semiconductor shortages as they compete with consumer electronics firms for these components, as well as a range of other factors having an effect. Outlook IHS Markit initial analysis suggests that global light-vehicle production during the first quarter will fall by around 485,000 units, although this could rise as more information emerges. Nevertheless, while these shortages are set to hit in the first quarter, some automakers are already planning on pulling these volumes back later in the year. Furthermore, there is some hope that a return to normalcy will take place during the second half of 2021. Automakers globally are facing up to semiconductor shortages. Reuters reported late last week that affected companies have included Honda – its spokesperson has said that it has begun “seeing some impact in the parts supply”. It cited the Nikkei as stating that it will shrink production by around 4,000 units per month, which would mainly affect the Fit, built at its Suzuka (Japan) facility. Separately, its Chinese partner GAC has said its joint venture (JV) with Honda had received warnings over the supply of components for certain models, without giving details. Nissan has said it will cut production of the Note hybrid built at its Oppama (Japan) facility, without giving any details of the scale. However, the Nikkei has reported separately that output will be slashed in January from 15,000 units to 5,000 units. In North America, Ford is pulling forward a week of downtime at its Louisville (Kentucky, US) facility which builds the Ford Escape and Lincoln Corsair. A spokesperson told Reuters, “We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage.” Toyota has also said that it will cut production of the Tundra pick-up at its San Antonio, (Texas, US) facility, although a spokesperson did not immediately know how many units would be lost. He added that no other US-built Toyota models were affected. Fiat Chrysler Automobiles (FCA) has also said that it will delay the restart of production at its Toluca (Mexico) plant, which builds the Jeep Compass and had been due to restart on 11 January, alongside its Brampton (Ontario, Canada) plant that builds the Chrysler 300, Dodge Charger and Dodge Challenger. Both are set to be closed until the end of January. As for other OEMs, Volkswagen (VW) Group has previously warned of limits to production of certain key models across the world because of a shortage of these components. General Motors (GM) and BMW Group have told Reuters that they have not been affected yet but are monitoring the situation closely, while the Financial Times (FT) said that Renault Group and Daimler “are also among those companies grappling with a looming shortage”. Confidential. © 2021 IHS Markit. All rights reserved. 3 IHS Markit Automotive Industry Weekly Digest - Jan 2021 WeChat Auto VIP Tier 1 component suppliers have also voiced their concerns over this issue to the FT. Bosch told the newspaper that it was receiving “significantly fewer” chips for the components it manufactures, while Valeo said it was also noting shortages. Continental added that there has been “extreme volatility” following the coronavirus disease 2019 (COVID- 19) virus pandemic. It said, “After the industry shutdown in the early phase of the crisis and the resulting abrupt drop in demand, automobile manufacturers increased their production volumes much faster than expected by market experts.” The company added, “With lead times of six to nine months, the semiconductor industry has not been able to scale up fast enough to meet this unexpected growth in automotive demand,” stating that overbooking at silicon foundries was part of the problem. One source told the FT that another problem stemmed from demand from other industries. The person said, “The problem is that we are lower down the chain than companies like Apple and HP” before noting that the “auto sector doesn’t pay as much for its semiconductors”. This has been compounded by strong demand for computer devices as more people work from home in the wake of the COVID-19 virus pandemic. In addition, Reuters has noted that a massive fire at a chip production facility owned by Asahi Kasei Microdevices Corp (AKM) in Japan in October put more pressure on the supply of semiconductors. The news service suggests that fears over US regulatory scrutiny of China’s Semiconductor Manufacturing International Corp. has led to chip firms seeking new partners. Outlook and implications Restrictions on the supply of any component related to the manufacture of vehicles is typically detrimental to production volumes. However, in this instance a perfect storm of challenges specifically related to semiconductors has emerged, which is testing the automotive industry, particularly given the expansion of electrified powertrains, infotainment systems and sophisticated automated driver assistance systems (ADAS). Having started to emerge towards the end of last year, it is set to come to a head in during the first quarter of 2021. IHS Markit's initial analysis suggests that global light-vehicle production over this three-month period will fall by around 485,000 units. A large proportion of this will be lost in China, which is set to lose over 245,000 units, with this focused on joint ventures (JVs). Around 100,000 units are set to be lost in Europe, and this is expected to be mainly by the Volkswagen (VW) Group as has already been noted above. In North America and Japan, we see the lack of semiconductors as having an impact of around 37,500 units each, while in the rest of Asia it will suffer a decrease of around 61,800 units. However, as can be seen from the reports above, there is every chance that this volume could increase as other new shortages emerge. Nevertheless, while these shortages are set to hit in the first quarter, some Confidential. ©2021 IHS Markit. All rights reserved. 4 IHS Markit Automotive Industry Weekly Digest - Jan 2021 WeChat Auto VIP automakers are already planning on pulling these volumes back later in the year. Furthermore, there is some hope that normality will return during the second half of 2021. IHS Markit will continue to track light-vehicle production disruptions and stoppages and provide detailed analysis on this situation in the coming days and weeks. [OEM Highlights] NIO unveils ET7 electric sedan, plans to introduce solid-state battery in Q4 2022 IHS Markit perspective Implications The hefty price tag of the ET7 takes it out of reach of mass-market EV buyers, but it still looks fairly attractive if buyers are willing to join NIO's battery leasing programme. By selling its customers the idea of owing an EV on a leased battery pack, NIO has created a unique business model that appeals to a new generation of EV buyers. Outlook It is likely that NIO will later introduce a smaller sedan positioned below the ET7 to attract more customers, although it is unlikely the startup will adopt aggressive pricing strategies to compete with market leaders, like Tesla. NIO ET7 electric sedan NIO NIO made several announcements on 9 January regarding its new electric sedan, an upcoming solid-state battery pack and its second-generation battery-swapping station. The NIO ET7, the brand's first sedan, was unveiled in Chengdu (China). The ET7, which is a similar size to BMW's long-wheelbase 5-Series, measures 5,098 mm long, 1,987 mm wide, and 1,505 mm tall. With a wheelbase of 3,060 mm, the ET7 provides ample interior space for up to five passengers. Design elements shown on Confidential. ©2021 IHS Markit. All rights reserved. 5 IHS Markit Automotive Industry Weekly Digest - Jan 2021 WeChat Auto VIP the NIO ES6 and ES8 sport utility vehicles (SUVs) have been adopted on the ET7. The front end of the vehicle features newly designed LED headlights and the X-Bar design, characterised by a X-shaped front grille. As a model positioned in the premium electric vehicle (EV) segment, the ET7 is packed with an array of comfort features and advanced drivers' assistance technologies. Frameless automatic doors and air suspension system are standard on the ET7. A new 12.8-inch centre console display has been introduced for the ET7, which NIO said has better resolution and improved colour display.