• Despite recalls hampering BMW’s Q3 volumes in North America, it remains optimistic for a record year in 2024, surpassing the 2023 record of 362,266 vehicles.
• Lucid CEO reaffirms the company continues negotiations for licensing of its advanced battery and motor technologies.
• Scout Motors CEO confirms the company is set to announce a vehicle lineup that will include a truck and SUV. The lineup will honor the brand’s legacy while implementing the latest technologies.
• Bosch and ZF Group recognize the growing trend of Chinese OEMs standardizing technologies that are not customer-facing, thus creating cost efficiencies.

“Day 0” at the Reuters Automotive USA 2024 conference was laden with C-Suite executives discussing some of the most pressing matters in the US automotive market. Hot topics of the day included general market conditions/sentiment, slowing growth of electrification and the looming threat of competition from Chinese counterparts.

Source: Counterpoint Research

BMW remains optimistic for a record year in 2024

BMW North America CEO Sebastian Mackenson discussed the dynamic market environment, noting increased demand and competition. BMW’s Q2 saw a 4% sales growth, but Q3 was impacted by a recall, leading to a weaker performance. Despite this, Mackenson remains optimistic for a record year in 2024, surpassing the 2023 record of 362,266 vehicles. He highlighted BMW’s battery electric vehicle (BEV) share, which was nearly 16% in Q3, and emphasized the importance of a multi-energy strategy. The company is also investing in charging infrastructure through the IONNA venture, with plans to launch two “rechargery” hubs in North Carolina and Texas by the end of the year.

Analyst take: BMW has been doing well on the back of its BEV offerings, with the i, i5, i7 and iX models providing around a 20% YoY increase in sales. BMW is unique in that it offers a diverse selection of ICE, hybrid, PHEV and BEV versions of the same car/SUV, thereby introducing traditional BMW buyers to new powertrains while allowing them a choice. This strategy has proved to be a winner with BMW gaining significant BEV market share, helping the company maintain its sales momentum despite a model changeover year for its Mini vehicles.

ZF Group, Lucid Motors discuss Chinese OEMs, software

In a panel discussion, ZF Group North America President Ramiro Gutierrez and Lucid Motors CEO/CTO Peter Rawlinson discussed the current state and future of the automotive industry. Rawlinson reaffirmed that Lucid Motors was expanding with a new factory in Saudi Arabia and planned to launch an affordable mid-size EV in late 2026 to rival the Model Y. The topic of Chinese OEMs also came up during the discussion. Raising some interesting points on Chinese OEMs and their cost-competitive edge, Gutierrez said while US OEMs focused on differentiation at every step of the process, Chinese OEMs were standardizing what the consumer could not see, like pooling supplier resources and achieving economies of scale in parts acquisition to drive down cost.

Another interesting discussion emerged from the perception that the US public is growing increasingly agnostic to what is under the hood and simply wants a good experience at an accessible price point. Finally, Gutierrezand Rawlinson reaffirmed that while software-defined vehicles (SDVs) do not need to necessarily be an EV, software integration throughout the vehicle works better with an EV as the architecture is already built in a way that supports the functionality and upgradability needed in an SDV.

Analyst take: Lucid has been struggling with poor sales and very high losses. Despite Saudi Arabia’s PIF investment of around $8 billion and 60% share in Lucid, the company has had to announce another share sale to raise funds for capital expenditure and working capital needs this week. In return, Lucid is setting up a factory in Saudi Arabia to provide the country with its first locally-made vehicle. A lot hangs on the shoulders of Lucid’s next offering, the Gravity SUV, and its smaller SUV promised in 2026. Lucid selling technology is a good move (as it does have a class-leading powertrain) but it may not be enough without the success of its BEVs.

It is true that Chinese OEMs have been economizing and sharing components and technologies that are not consumer-facing. These OEMs have a software-first mindset where software is the primary point of differentiation for consumers, the reason why mobile phone companies like Xiaomi and Huawei have launched EVs. Chinese OEMs have become leaders in SDVs, where smart features and intelligent technologies are the real draw for consumers, unlike traditional OEMs where the strong points tend to be the steering feel, chassis dynamics and performance.

Having said that, the shift towards designing a compelling user experience is gaining momentum across the automotive industry, including traditional OEMs. Mercedes has demonstrated immersive visuals and auditory experiences as well as gaming in its new operating system MB.OS. Sony, in partnership with Honda through the Sony Honda Afeela concept, is focusing on bringing the creative community together to elevate the user experience. Such experiences are enabled by semiconductor developers like Qualcomm, as well as software providers such as TomTom, Cerence and Mavi.io. While Chinese OEMs lead in this space in terms of fast rollout of features and implementing feedback, the rising importance of UX is gaining globally.

Lucid CEO Peter Rawlinson and ZF Group North America President Ramiro Gutierrez.

Source: Counterpoint Research

Scout Motors discusses revival plan

Scout Motors CEO Scott Keogh discussed his journey from Volkswagen and Audi to leading the revival of Scout Motors. He emphasized the importance of leadership, transparency and customer trust, drawing lessons from Volkswagen's “dieselgate” scandal. Scout Motors aims to create 4,000 jobs in Columbia, South Carolina, and revive the iconic brand with an all-new truck and SUV lineup to be unveiled this Thursday in Fort Wayne, Indiana. The unveiling location is a nod to the final Scout to roll off the assembly line 43 years ago to the day on October 21. The company will leverage Volkswagen's manufacturing and supply chain efficiencies. The brand has made sure to keep legacy Scout owners in mind in the decisions it has made so far on design and functionality. Scott highlighted the need for trust and enthusiasm in the automotive market and stressed the importance of maintaining Scout's heritage while innovating for the future.

Scout Motors CEO Scott Keogh

Source: Counterpoint Research

Analyst take: Volkswagen’s acquisition of the rights to the Scout brand could be seen as a debatable move after the partnership between VW and Rivian was announced in June 2024. Rivian will provide a license to the joint venture for its existing intellectual property (IP) related to the zonal hardware system that is currently used in Rivian’s vehicles. In return, Rivian will benefit from economies of scale through the VW group, lowering production costs for current vehicles as well as the upcoming R2 and R3 models. However, the up-and-coming Scout SUV and pick-up are competing with Rivian vehicles.

Bosch Mobility Americas not worried over China software gains

Discussing the North American automotive market’s challenges in 2024, Bosch Mobility Americas President Paul Thomas noted the need for a portfolio balance serving ICE vehicles, PHEVs, hybrids and BEVs. Bosch currently views hybrids as a long-term solution for the US consumer due to their affordability, flexibility and efficiency. The conversation also touched upon the importance of software affordability and middleware in vehicle development. Collaboration with OEMs was emphasized again, even as Thomas expressed a similar sentiment regarding Chinese OEMs as that of ZF Group’s Gutierrez. He noted that they benefit from significant government assistance and standardization of components to achieve cost efficiencies. However, Thomas did not seem worried about advancements made in the software. He believes that anything that Chinese OEMs achieve in this regard can be easily replicated and made better by Bosch and its partners.

Analyst take: There has been an anti-BEV sentiment globally of late, slowing down BEV sales. There are multiple reasons responsible for this, including the high purchase price of BEVs (most OEMs have launched more BEVs in the premium price bracket), lack of charging network for non-Tesla BEVs (this is getting rectified with tie-ups of legacy OEMs with Tesla) and higher insurance premiums (due to expensive and prolonged storage costs of damaged EVs). All this has translated to lower retention values of BEVs in the used car market, resulting in higher lease costs creating a downward spiral. In Europe, the withdrawal of subsidies has further suppressed the BEV market. But in the US, the applicability of tax credits to leased vehicles has led to record BEV sales in Q3 2024 and a market share of 9%.

As discussed above, Chinese OEMs have benefitted from standardized components, while government policies and subsidies are also a matter of record. However, we disagree that software advancements of Chinese OEMs are easily replicable. The software revolution of Chinese OEMs is based on their fundamental resetting of hardware choices and development. Applying SDV principles to new BEV platforms and also focusing on software features as differentiators appears relatively easy but the implementation requires a cost-effective hardware platform, high value proposition and effective execution to attract consumers.