GM’s Need for Strategic Change

In 2015, GM exited Russia; in 2017 operations were closed in India; and in the same year in Europe the company went through the sale of Opel/Vauxhall to PSA. Finally, in February 2020, GM’s Holden brand was terminated in Australia. Between 2018 and 2020, GM also reduced the number of nameplates in North America with the termination of most sedans. This left only the Chevrolet Malibu, the Cadillac CT4 and CT5 to compete in the market. New modular platform strategies aimed to reduce complexities, cost, and development costs are fully implemented at most carmakers. And although GM is largely following this trend with its VSS platforms, it appears they may be behind the competition, forcing the OEM into drastic measures to keep up with the competition.

Along with market rationalization, GM has been investing in several technologies to better prepare for upcoming market shifts:

• Commitment to electrification with a battery program named Ultium, integrated in a new skateboard platform. GM’s choice has been to favor steel for both the platform and the battery housing aiming to reach the goal of $100 per kWh using lower cost materials at to help Electric Vehicle’s gain greater market acceptance due to lower competitive vehicle pricing
• Connected technology reorganization with the transfer of HMI programs to Google’s AOSP (Android Open Source Project) platform. The new platform will provide for greater integration of personal assistants (Amazon Alexa) to revamp a somewhat sluggish OnStar strategy
• Increased adoption of its ADAS technology with the arrival of Super-Cruise, hands-free driving assistance, on all Cadillac models next year. It will be extended to a total of 22 GM models by 2023
• The expansion of Cruise, GM’s business unit in charge of the development of autonomous vehicles with the upcoming production of the Cruise Origin shuttle

Strategic Partnerships Signed for Future Success

As the automotive environment is under increasing competitive pressure, the strategy focusing on profitability aligning with the right segments and markets has been a necessary step in GM’s turnaround. This has led to two different challenges for GM:

• The reduction in market footprint may limit its potential for growth in the medium-term
• The capability to cope with increasing technology trends that require significant CAPEX

To address those issues, GM has recently signed agreements with Honda and Nikola (EV Trucks) to secure current market position and focus on future growth as the economy is expected recover from Covid-19. The Honda partnership agreement opens the way to sharing ICE with traditional platforms. In the meantime, Honda will be using the Ultium battery program and platform for its own models. This partnership will help to rationalize platforms and component sharing with Honda for North American vehicles. The participation in Nikola highlights GM’s strategy in EV trucks, while the Nikola Badger will benefit from GM’s parts bin and production capacities.

GM needs to fuel up its position as the entry ticket in technologies is increasing and the competition is being consolidated. FCA is merging with PSA in the Stellantis brand; Ford is reinforcing its partnership with Volkswagen; Nissan and Renault are putting their alliance back on track; and Toyota continues to work with Suzuki, Subaru and Mazda on future technology and manufacturing developments. The move with Honda and Nikola provides GM with the capacity to keep up and remain strong in the OEM landscape.

DuckerFrontier’s Automotive team continues to follow and analyze the key trends and impacting the automotive and transportation industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.

In battery electric vehicles (BEVs), the battery becomes a key component, however, will impact vehicle weight and cost. The compromise between battery performance, crash properties, cost, and platform integration constraints are crucial to determine the success of BEVs. This set of priorities leads to various battery housing design and material choices to meet regulatory and profitability targets, while still focusing on providing an attractive vehicle to final customers.

Choosing a Battery Technology Leads to Compromises in Technology:

• Battery integration into the vehicle depends on the type of vehicle platform (i.e., dedicated, versatile, or skateboard), and, more specifically, if the battery will be a structural element or not
• Manufacturing capabilities and costs are also key OEM considerations in battery design decisions
• Battery cell form directly influences the battery energy density, overall volume and design of the housing, and impacts thermal management
• Battery chemistry determines the energy density, reliability, costs, and sets several other technical requirements for housing design and thermal management
• The vehicle segment strongly influences the battery size and cost targets, leading lower segments to consider steel for the battery housing while higher segments and performance-oriented models are likely to select aluminum for lightweighting purposes

All these parameters can be combined in multiple trade-offs, leading to a large diversity of solutions.

OEM Decision-Making Follows a Ranking in the Set of Priorities

• Mandatory requirements: As electric vehicle models tend to be sold globally, regulations from all three major automotive markets (China, Europe, and North America) are being applied by OEMs from all continents
• Critical requirements: Machineability, processability and serviceability of the housing parts; thermal management system to optimize temperature and energy efficiency; vehicle integration costs that impact vehicle design at a larger scale (suspension, linkages, running gears, etc.); NVH management for durability, handling and comfort are considered critical to electric vehicles
• Second-tier priorities: Priorities can vary from one OEM to another, particularly with respect to range improvement, manufacturing capabilities and costs, and supplier diversity

Depending on priorities in the decision-making process, OEMs will set technical requirements that are communicated to battery cell manufacturers, material and part suppliers, battery packagers, and BMS suppliers – all resulting in the final design of the battery housing.

Major Regulations Define Overall Safety Through Four Main Test Categories

Regulations are focused on containing the consequences from runaway cells, road hazards and aging to keep vehicle occupants safe.

• Crashworthiness sets the crushing capabilities of the housing, along with mechanical shocks (decelerations) and internal integrity
• Fire mitigation and thermal management requirements are tested through fire exposure, thermal shock, and overheating
• Charge/discharge must be proven for a battery to be considered safe, with requirements including overcharge, over-discharge, and short circuit
• Automotive grade of batteries and housings and must resist long-term vibrations, without any failures, cracks, or excessive fatigue to achieve current automotive standards

As battery technology evolves and experience with EV safety grows, regulations are expected to consider longer time resistance for fire mitigation.

Impact on Lightweighting and Material Choices:

• While in its infancy, no standardization has yet occurred; however, regulations are currently being proposed and implemented and vehicle volumes are increasing
  • Premium automakers tend to utilize aluminum for battery housings in order to reduce weight creep and secure performance, range, and handling
  • Volume brands are typically more material-agnostic, and tend to select materials based on costs, manufacturing capabilities, and platform strategies
• In the medium term, OEM strategies should result in a reduction in the diversity of battery design and material choices
• With the solid-state battery technology expected to arise before 2030, and progressively replace current li-ion technology, battery designs will become more compact, with a reduced need for skateboard platforms, as well as lower thermal management and fire mitigation requirements – a reset of material choice decisions is expected

The automotive industry is still in the early years of electrification and various approaches are under development. The rise of a limited number of best-compromise designs – proven safe, performant, and cost-effective – will come with experience as the number of automotive applications increase.

Based on your technological expertise, geographical coverage, value chain positioning, and growth ambitions, DuckerFrontier can help you achieve your goals with fact-based market analyses and market projections relying on direct OEM and supplier inputs on strategies, specifically for battery housing design and material choices.

DuckerFrontier’s Automotive team continues to follow and analyze the key trends and impacting the automotive and transportation industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.

Impact to Hospitality and Travel Industry

At the onset of Covid-19, the outlook for both the hospitality and travel end markets were initially negative; however, recent data and consumer/business behavior suggest increased potential for facility retrofits and Tier 2 city construction activity. North America is leading in domestic travel and seat capacity expansion leading to:

• High performing facilities investing in safe occupancy measures, redesign of space, and updates to improve experience and attract new customers
• Individuals are beginning to move outside of urban areas to more rural locations, leading to development for new hospitality options (e.g., restaurants, strip malls, hotels)
• The CARES Act created support for consumer spending, including vacation and holiday planning, which is likely driven by pent up demand for domestic travel and tourism

“More and more hotels are re-opening, and many others have begun to move-up renovation plans and/or are repositioning their property with a brand conversion.” – Hotel Design Consultant

Industry Indexes Indicate Recovery

The AIA/ABI index is an early indicator of future construction and major remodeling activity; the index provides details on activities, inquiries and trends across the entire industry.

Data through July indicates improving conditions:

• Inquiries have increased since May at a significant rate for architectural and design services
• Contracts have remained consistent through early July with an suggesting a rebound due to holiday vacations and slow process to award contracts
• The commercial and industrial segments experienced the largest decline initially, however, are rebounding as a result of demand and opportunities

DuckerFrontier’s Building and Construction team continues to follow and analyze the key trends and impacting the hospitality and travel industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.

Multi-material vehicle construction, onslaught of electrified powertrains and battery electric vehicle platforms drive aluminum’s increased market penetration. To view a summary of DuckerFrontier North American Light Vehicle Aluminum Content and Outlook (August 2020), click here.

---

DETROIT, Aug. 12, 2020 /PRNewswire/ — A new survey released today confirms aluminum, already the fastest growing automotive material, is expected to grow to content levels of 514 pounds per vehicle (PPV) by 2026, up 12% from 2020 levels. The survey, conducted by DuckerFrontier, analyzes the latest information on material content for North American light vehicles from the full automotive value chain, including automakers and their suppliers, and credits aluminum content penetration increases to its growing use in vehicle closure parts, body-in-white parts and chassis applications in traditional vehicles, as well as growth of electrified powertrain and battery electric vehicle (BEV) platforms.

“As consumer pressures and environmental challenges increase—so too does the use of automotive aluminum. This demand is accelerating as low weight, high-strength aluminum is helping automakers adapt to new mobility trends, and we’re bullish on the growth potential of the metal in the fast-emerging electric vehicle segment,” said Ganesh Panneer, chair of the Aluminum Transportation Group (ATG) and vice president and general manager for automotive North America at Novelis. “Automotive aluminum market penetration enjoyed year over year growth the past five decades and that expansion is expected to continue as far down the road as can be projected today. As electric vehicles become more widely available, greater aluminum use to extend range and help offset battery weight and cost will ensure consumers will still be able to choose high performing cars and trucks that are safe, fun to drive and better for the protection of the environment.”

Automakers will continue to increase the use of aluminum in new vehicles as the design evolution to multi-material cars, trucks and SUVs continues. According to the 2020 DuckerFrontier “North American Light Vehicle Aluminum Content and Outlook” report, aluminum flat rolled sheet remains a key solution to replace heavier steels and help automakers achieve mass reduction goals. Doors represent the single highest net growth application of aluminum content per vehicle with penetration reaching 30% by 2026. Also, by 2026, aluminum hood penetration is expected to reach 81% and liftgates/tailgates reaching 44%. By 2030, total aluminum content is estimated to reach 570 PPV, a 24% increase over the next decade.

As electrification grows, the analysis confirms demand for aluminum extrusions and high-pressure aluminum diecast parts will grow due to increased use in applications like battery housings, motor housings and body structural components. Aluminum also continues to drive vehicle safety, with extrusions for crash management system (CMS) applications projected to increase 10% from 2016-2022.

“The aluminum industry is keeping its foot on the pedal, developing solutions aimed squarely at addressing automakers most pressing needs to offset mass given added content and weight from new features, additional safety needs, and the move to electrification. Aluminum will record relentless year-over-year growth through 2030,” said Abey Abraham, managing director, DuckerFrontier.

Automakers continue to favor aluminum in an ever-changing industry climate as demonstrated by recent product launches, including the Ford Bronco and Jeep Gladiator, which both feature intensive use of aluminum closures and structural components. As the automotive aluminum sector thrives it remains vital to the nation’s manufacturing base and a healthy U.S. economy. The aluminum industry invested or committed more than $3 billion to ensure increased automotive capacity in the U.S. since 2013, and the industry is prepared to continue such investments in domestic manufacturing jobs as demand continues to grow.

To view the study, visit the Research and Resources page on www.drivealuminum.org. Please also follow the ATG Twitter: @DriveAluminum.

About DuckerFrontier

Ducker is the leading division of DuckerFrontier, now Ducker Holdings, a premier consulting and research firm that is driven to help its clients achieve their most ambitious growth goals. Custom market intelligence, strategic consulting and financial advisory services are delivered by fully engaged Ducker principals and a diverse team of global talent. With exclusive access to industry leaders and opportunities, Ducker applies robust analytics and critical thinking to every engagement, delivering unique, fact-based solutions for our clients – solutions which produce confident decisions to advance growth. Ducker is headquartered in Troy, Michigan with offices around the world, including Paris, Berlin, London, Bangalore and Shanghai.  Founded by William H. Ducker in 1961, Ducker has built a legacy of success in research, consulting and financial advisory solutions and will be celebrating a historic benchmark of 60 years in business. For more information, please visit https://www.ducker.com/.

About the Aluminum Association

Through its Aluminum Transportation Group, the Aluminum Association communicates the benefits of aluminum in ground transportation applications to help accelerate its penetration through research programs and related outreach activities. The ATG’s mission is to serve member companies and act as a central resource for the automotive and commercial vehicle industries on aluminum issues. Members of the ATG include: Constellium, Hydro, Kaiser Aluminum, Novelis and Rio Tinto. Visit us online at DriveAluminum.org, and follow us on Twitter @DriveAluminum.

SOURCE Aluminum Association

Related Links

http://drivealuminum.org