What does the car industry expect in 2022?

From the lack of important semiconductor chips to closures at large assembly plants, as well as sky-high car prices and empty dealers, 2021 was a year to remember for both car manufacturers and consumers. But there was also an increase in sales of electric vehicles and an increasing shift from sedans to SUVs and pickups.

So what awaits in 2022? Of some accounts, it may be more of the same, as shortages continue to cause retailers to struggle with inventory and consumers to face ever-higher prices. But buyers will also find many more options if they are looking for electric vehicles.

Here are the stories we expect to dominate this year:

Ongoing product shortage

When Covid-1[ads1]9 struck, automakers cut production and parts orders. But as sales began to pick up again, they discovered that they could not get all the semiconductors they needed, which led to major production cuts. The industry lost about $ 210 billion in revenue in 2021, according to AlixPartners, a business management consulting firm. While chip supplies are loosening, they are far from back to normal, and production cuts will be damaged well into 2022. Even worse, the industry faces other shortcomings that affect products such as tires and interior plastics and seat foam.

In total, car manufacturers worldwide produced around 8 million fewer vehicles than planned last year due to product shortages. Even if production picks up again, retailers will not be able to build inventory until well into 2022, said JD Power analyst Tyson Jominy. As a result, buyers should expect limited choice – while prices will continue to rise at record speeds. At the end of 2021, a typical new vehicle cost $ 45,000, an increase of around $ 8,000 from December 2020, according to industry data.

Normalization of online car purchases

When the United States was locked in, the industry got a new idea. Because customers could not go to retailers, retailers went to them – over the internet. Even after the country reopened, more and more customers are shopping for their cars online, and many dealers are planning test drives and delivering new vehicles to buyers’ homes or offices. Meanwhile, with showrooms almost bare, normally impulse-driven drivers have begun to order their cars and waited – sometimes for several months – to receive delivery.

Electric cars start the movement in pole position

They account for a modest fraction of new car sales in the US, but demand for battery-powered vehicles doubled in just the first half of 2021. This year could bring a “tipping point”, said GM CEO Mary Barra, with the EV market exploding. Several factors will play a role, starting with a host of new offerings: Analysts expect the number of long-distance models to quadruple this year.

The Effect of Build Back Better

President Joe Biden has placed great emphasis on the automotive industry. In December, the White House announced its most aggressive fuel economy standards, and Biden has said he wants to see electric cars account for up to 50 percent of U.S. sales by 2030. His infrastructure bill provides money for a nationwide charging network. But other means, including money to increase incentives for electric car sales, are currently stopped in Congress.

Startups will continue to shake up

The car industry was a largely closed club since World War II, but Tesla showed that it is possible to crack the code. Now other start-ups want to share the success. Wall Street has rewarded several of the most promising players. Rivian now has a market value of over $ 90 billion, more than either Ford or General Motors. But others, like Byton, Lordstown Motors and Faraday Future, are struggling and could fall by the wayside in 2022.

Tesla takes some heat

At first glance, 2022 should be a good year for Tesla after setting sales and earnings records in 2021. The California-based electric car maker has two new factories, one in Austin, Texas; and the other in Berlin. But several key products, including the Cybertruck, are well behind schedule, as are the next-generation batteries Tesla is counting on. Tesla is under pressure from the Chinese government and is facing several security investigations from US regulators.

Autonomous vehicles may stop

Car manufacturers once promised to have a fully self-driving vehicle ready by 2020. However, 2022 could see some breakthroughs. GM and Mercedes-Benz will launch the first true hands-free – Level 3 in industrial-speaking – driving technology for consumers. Others, such as Waymo and Cruise, focus on carpooling services and trucks. But safety probes involving Tesla’s autopilot serve as a warning of how difficult a challenge it is to develop a fully autonomous vehicle.

China edges closer

China is the world’s largest car market, but domestic manufacturers such as Geely and the Great Wall want to reach beyond their borders. However, attempts to enter the United States, the No. 2 global market, have been repeatedly delayed. Trade frictions under the Trump administration have not yet been resolved under President Joe Biden. So while a handful of Chinese-made products are available in US showrooms, including Buick Envision and Polestar 2, a real car invasion could be years away.

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