OESA convened its latest “Mobility Providers Forum” on August 25e at SRI International on the campus of Stanford University in Palo Alto. This was the first in-person forum held in Silicon Valley by OESA within a few years, and attendee interest was high as thought leaders in the electrified mobility space – including electric vehicles, audio-visual vehicles and related infrastructure and other technology areas – shared their views on current business, technology, legal and regulatory trends facing the mobility industry.
The agenda included presentations from Daron Giffordwho directs At Plante Moran automotive strategy consulting firm based in Detroit; and James Buczkowskiwho watches Ford Motor Company laboratories in Silicon Valley as Executive Director, Research and Advanced Engineering. Foley & Lardner’s Natasha Allenfirm partner Northern California offices, hosted a roundtable with Foley DC partners Chris Grigorianhead of NHTSA at Foley, and mike walshformerly General Counsel Commerce Department which focuses on federal regulatory issues. Chris and Mike focused on legal and regulatory developments impacting automotive and mobility technologies.
The California décor provided a poignant backdrop to the discussion, as that same day, state of california approved regulations (including proposed objectives) for California march (more like a race) to zero ICE passenger vehicles by 2035. Left unanswered in this context was whether EV infrastructure in California and the rest of WE – whose networks are already under stress – will be able to meet such aggressive deadlines, and will consumer demand behave as expected, both of which are key factors in achieving ambitious EV deployment targets in the WE
Daron Gifford began by citing the three main drivers of industry transformation: propulsion and energy technologies (including battery and material supply chain, electric drives, charging infrastructure, recycling batteries and second-use and energy storage systems), mobility (including autonomous driving, mobility as a service, connectivity and retail services – operations, repair, maintenance and parts) and engineering , manufacturing and logistics (including engineering, program design and launch, cost reduction and simplification of manufacturing processes, supply chain and distribution efficiency and manufacturing sustainability and supply).
Gifford predicted electric vehicle penetration of 58% by 2035, with global electric vehicle growth over the period 2022-2035 at a CAGR of 22%. Suppliers must manage this shift from ICE vehicles (which contain an average of around 10,000 parts) to electric vehicles (which contain an average of around 3,000 parts). He noted the planned investment in North America of 23 giga-battery factories to help meet the projected demand for electric vehicles in the WEwith approximately 825 GWh of battery capacity planned to be installed in North America by 2031. Gifford noted that three essential elements are required by consumers for mass adoption of EVs: price parity with ICEs, a minimum range of 300 miles, and adequate charging infrastructure. Four sources will help achieve the energy storage system capacity needed to support the influx of electric vehicles: grid/utility, commercial/industrial, electric vehicle charging and residential, with efficient distribution being the biggest challenge to achieve. the objectives for the deployment of electric vehicles.
Gifford also spoke briefly about mobility and AV vehicles, noting that a large portion of “driven” AV miles will be shared, with vehicles expected to rotate every 3-4 years (significantly less than the current 12-year average parking in the WE). Mobility as a service should be a $2.5 trillion market by 2027 and $5.7 trillion by 2050, which is getting a lot of attention.
The panel began with an overview of recent legislation driving the adoption of electric vehicles, including the CHIPS Act and the Bipartisan Infrastructure Act which included $7.5 billion funding for electric vehicle infrastructure and several NHTSA rulemaking mandates. mike walsh then noted some confusion around EV provisions in the Cut Inflation Act 2022, which should be ironed out in future reconciliation bills. On the audiovisual side, Chris Grigorian hoped that the recent formation of a bipartisan “Autonomous Vehicle Caucus” in Congress, which includes Reps. Dingell and Latta, will serve as the impetus to finalize AV legislation that stalled a few years ago. This legislation should address, among other things, the preemption of the existing patchwork of state laws and cybersecurity topics. Walsh noted that imposing “Buy America” requirements creates opportunities for the WE enter into free trade agreements to help create a more resilient supply chain with content that will hopefully meet these requirements. He also noted the requirements of the Forced Labor Law that apply to all raw materials, components and sub-components sourced from the Xinjian region. China (“even a single grain of silicate is covered,” he noted), and the resulting due diligence burdens placed on the automotive supply chain.
Grigorian then elaborated on NHTSA’s current crash protection, crash avoidance, other rulemaking actions, as well as the agency’s investigative activities, including an ongoing investigation. General order requiring more than 100 vehicle manufacturers, suppliers, and operators to report certain crashes involving vehicles using ADAS Level 2 (L2) and L3 and above automation to NHTSA. Grigorian noted that NHTSA (like other federal regulatory agencies) is required to publish a unified agenda every six months, with estimated timelines for rulemaking and other actions, and that the agenda is as solid as it has ever been.
Assessing what the next two years might look like, Walsh predicted a keen and growing congressional interest in protecting WE industry as part of our national security and supply chain resilience, with an even greater emphasis on protecting technology, monitoring relationships with China and control the export or deemed export of technology to overseas operations of WE companies. He also noted that the recent economic sanctions imposed on Russia demonstrate what the playbook expected from WE sanctions may look like in the event of serious deterioration of the WE– China relationship, especially in the context of growing hostility towards Taiwanand that auto suppliers and other mobility companies should work with legal counsel now to test/evaluate their resilience and response to potentially destabilizing events.
In the areas of current NHTSA research and rulemaking, Grigorian noted research in the areas of AVs, ADAS, battery management systems, and cybersecurity, as well as rulemaking activities rules to remove regulatory barriers for AVs and automated driving systems. He also noted ongoing investigations into AVs, ADAS and other advanced technologies. His message to automotive suppliers: “We [suppliers] are on NHTSA’s radar screen more than we’ve ever been.
Jim Buczkowski of Ford then highlighted the disruptions and changes facing the industry. “There has never been a time like this” in his 40+ years in the industry, in terms of the pace and simultaneity of these disruptive factors. He highlighted four key trends that Ford manages: (1) the digital transformation/digitalization of the company, (2) the transition to a Sustainable world(3) Activation of 21st Century Workforce and (4) Creation 21st Century of resilience. These challenges come at a time of unprecedented competition from traditional OEMs and big tech players, as well as a myriad of startups and other mobility players; “Every part of our business is tested at the same time.” This disruption was one of the determining factors Ford separation of its Model e (EV) and Ford Blue Companies (ICE) and to use Ford heritage as a constituent element rather than an obstacle to its necessary transformation.
Buczkowski noted six areas of “unprecedented simultaneous disruption”:
- Product/Technology
- AV/ADAS
- Supply chain and distribution
- Sustainability
- Competitors
- People
Each of these elements alone would be a huge driver of disruption; taken together, they represent a huge challenge for Ford and all the other players in the mobility space. He later noted that “battery supplies will be the next chip crisis” if not managed effectively. Buczkowski also noted that the ICE-to-BEV transaction will result in an estimated 30% reduction in capacity utilization in the supply base, which needs to be carefully managed and supported. Finally, he also noted the migration to multiple “high performance computing centers” in the vehicle from the current array of dozens of systems each interfacing with the vehicle’s CAN bus, requiring computing power and system integration. even more important.
Foley continues to monitor developments in the area of electrified mobility and infrastructure, and is available to assist customers in formulating and executing deployment strategies in these areas.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
M Marc AielloFoley & Lardner
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