The industry seems to be a bit confused about what's going on with EV adoption. Some manufacturers believe that it's slowing, while others are having some pretty great months. And some industry experts are pointing the finger at Tesla's bleak sales for skewing numbers industry-wide. Whatever the reason is, the pain is now reaching automotive suppliers—the companies that make parts and components for these cars—and that isn't a good sign.
Welcome back to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about automakers pumping the brakes on R&D spending for electric cars, unreliable charging stations, and what China's robotaxi rollout means for jobs. Let's jump in.
30%: Auto Suppliers Slamming The Brakes On R&D Spending
Electric cars aren't hitting sales benchmarks as quickly as automakers predicted. Shocker, I know, but with the turbulent political climate around EVs, automakers are more focused on contingency plans should the EV tax credit program fall through following the November election, and that means playing it safe with new model rollouts. So safe, in fact, that suppliers have started to feel the domino effect of wha
Many of the world's top-tier suppliers of automotive components are now hitting the brakes on their own R&D and engineering spending in order to stay within new short-term budget projections. And that could extrapolate problems scaling EV tech quickly and reliably in years to come.
Automotive News explains:
Some of the world’s largest, most tech-savvy parts producers have hit the brakes on spending due in part to electric vehicle launch delays and a dim outlook for returns on investment.
Aptiv is cutting its engineering spend by up to $100 million this year, while Magna International Inc. targets its engineering operations for a $200 million reduction. Meanwhile, BorgWarner said it will cut its previously planned R&D in half, and Continental is pulling back R&D dramatically as it evaluates a spinoff of its automotive group.
The cuts are being made to protect balance sheets amid less-than-anticipated demand for EVs in North America, but they could jeopardize some of the progress made over the past three years, industry experts say. U.S. automakers are leaning on suppliers more than ever in their quest to make affordable EVs and secure a long-term future.
Experts warn that the recent spending cuts could jeopardize the rapid progress that global automakers have made over the last three years, especially as U.S. automakers are leaning more on Tier 1 suppliers—including the big ones, like Bosch, Denso, Johnson Controls and more—to build affordable components for EVs now more than ever.
Specifically, suppliers and component manufacturers are worried that their investments may never pay off at a time when the industry is struggling to figure out what's next. These suppliers, which help to build the components that form the backbone of modern EVs, are now wary of burning cash just for the North American market when it isn't producing results as quickly as anticipated.
But slowing R&D is a risk in and of itself.
"I think the risk is we lose that momentum in EVs and software that we’ve been doing for the last three years to get to where we are today to be able to launch the EVs," said Collin Shaw, president of MEMA Original Equipment Suppliers, in an interview with Crain's Detroit Business. "I fear we take a pause and that globally, the rest of the world continues that investment. You look at China specifically, that’s a risk for us."
Manufacturers like General Motors have stalled on releasing new electrified models in recent months, with Buick going onto the back burner and its electric Silverado being pushed out over the delay of the Orion assembly plant going online. Likewise, German automakers have taken an about-face on cutting off R&D for the combustion engine with Audi, BMW, and Mercedes re-igniting their respective investments into gas and diesel-powered engines.
Some automakers aren't having it though. Sales numbers for brands like Ford indicate that EV sales are still strong, which could indicate that automakers may have just been overly optimistic about the speed at which EVs would sell. Unfortunately for suppliers, the cat-and-mouse game may have led to some funding unsustainable financial commitments that need to be reworked to fit more realistic adoption expectations.
60%: Charging Station Status Inaccurate More Than 25% Of The Time: Study
EV charger companies have a big problem: the software sucks. And, no, we're not just talking about the DC fast chargers that have major issues with accepting payments or the car's handshaking protocols, but the user-facing side of the software that alerts drivers about the status of their chargers for better trip planning.
A recent study by ChargerHelp, an EV charging station repair contractor based in California, reveals that more than 25% of chargers incorrectly report their operational status to users, including if the charger is functionally operational or if it is occupied by another vehicle at any given time.
From Automotive News:
Stations either appeared as out of service and were functional, appeared online but were offline or appeared to be in use when they were available 26 percent of the time in a study by ChargerHelp, a company that handles operations and maintenance for EV chargers.
Nearly 11 percent of stations appeared offline but were actually online, 1.9 percent appeared online but were offline, 3.6 percent misreported occupancy status as either busy or available, and roughly 10 percent had both software and physical cues indicating the station was online while failing to deliver a successful charge.
In general, the study found that chargers significantly misreport their uptime, or the amount of time that the charger is functional.
The core of the study is about transparency of uptime. It found that a significant number of EV chargers vastly misrepresent the actual time when they are functional, leading drivers to an incorrect understanding of how reliable a charging network actually is, as well as problems while on the road.
"[People are saying] 'everything is broken; nothing works,' but not really getting into the specifics of this being a software, data, interoperability problem," said ChargerHelp CEO Kameale Terry. "A solidified uptime calculation holds us accountable."
Charging availability as a whole has proven to be a barrier to EV adoption. 32% of drivers reported that the lack of charging stations in their area was an issue, according to a survey from Cox Automotive in 2023. But ensuring those chargers are in working order is another story, as illustrated by a separate study conducted by J.D. Power which showed that 18% of public charging attempts failed in Q4 2023.
It's worth noting that each charging port funded under the National Electric Vehicle Infrastructure (NEVI) grant program are also required to maintain an uptime of 97%, meaning "hardware and software are both online and available for use, or in use, and the charging port successfully dispenses electricity." If chargers are purposefully misrepresenting uptime, that's a huge deal for grant compliance.
90%: China Fears Robotaxis Will Eat Up Jobs: 'Everyone Will Go Hungry'
China's ride-hailing industry is freaking out over the pace in which robotaxis are hitting local streets. Many of the industry's millions of workers fear that the automated cars are set to directly compete with manual labor and will effectively force people out of jobs at an alarming pace.
Currently, China has around 7 million drivers registered to provide ride-hailing services. That's an uptick of 59% in just two years, but the rapid growth in manual labor now sees direct competition coming from a seemingly equally rapid influx of driverless robotaxis across the nation.
Via Reuters:
Ride-hailing and taxi drivers are among the first workers globally to face the threat of job loss from artificial intelligence as thousands of robotaxis hit Chinese streets, economists and industry experts said.
Self-driving technology remains experimental but China has moved aggressively to green-light trials compared with the U.S which is quick to launch investigations and suspend approvals after accidents.
[...]
China has 7 million registered ride-hailing drivers versus 4.4 million two years ago, official data showed. With ride-hailing providing last-resort jobs during economic slowdown, the side effects of robotaxis could prompt the government to tap the brakes, economists said.
Currently, there are at least 19 cities in China with autonomous taxi and public transportation trials today. Of those, seven services are testing without drivers: Apollo Go, AutoX, Pony.ai, SAIC Motor, and WeRide.
These aren't small numbers of driverless vehicles, either. Apollo Go is aiming to have 1,000 vehicles deployed by the end of 2024 and will continue to expand into an estimated 100 cities by 2030. Pony.ai is currently operating around 300 robotaxis and is planning to quadruple that number by 2026.
Pony.ai, like many others, is planning to continue to grow and become profitable. And once that happens, its executives believe that it will expand "exponentially."
Industry experts warn that China is in line with the tech industry's "move fast and break things" mentality. The government is issuing permits at a rapid rate versus the United States, which is more reserved with safety and on-road testing.
"There's a clear contrast between [the] U.S. and China", said former Waymo CEO John Krafcik, referring to AV ridesharing developers.
The result of a rapid push could lead China to experience earlier widespread adoption of these robotaxis. This, of course, worries those who depend on income from ride-hailing as a means of last-resort income during a slowing economic period.
"I'm afraid that after [Apollo] comes, Tesla will come," said local 36-year-old ride-hailing driver, Liu Yi. He later added: "Everyone will go hungry."
100%: How Often Is Public Charging Giving You Grief?
Earlier, I talked about the study showing how unreliable EV chargers report their uptime. Funny enough, I experienced this over the weekend myself.
I showed up at a parking garage after reaching my destination expecting one of the two ChargePoint chargers to be available, however, both were in use. The culprit wasn't ChargePoint, but PlugShare, which was reporting incorrect status information. Chargepoint eventually notified me that the charger became available and I was able to move my car into the spot, but it was still inconvenient.
This isn't the first time I've run into the problem of expecting to charge my car and not being able to because of a software glitch, though. And I don't expect it to be the last. How often have you run into something similar? Let me know your experiences in the comments.
