The Center for Automotive Research (CAR) reconvened its popular Management Briefing Seminars in Traverse City last week, with its usual mix of technical, financial and market topics delivered in person this year. It was good to see many colleagues and friends, and to attend the “Financial & Capital Markets” (aka “Who Will Make Money in this New Auto Tech World?”) panel. The panel was moderated by Edgar Faler, Senior Industry Analyst from CAR, and featured Trevor Upton, Mobility Sector Head from Mosaic, a unit of Key Bank; Justin Mirro, CEO of Kensington Capital; and John Murphy, Managing Director and lead automotive analyst at Bank of America.
Murphy began with an overview of the current automotive market, noting that we are currently “bumping off the trough” from last year and forecasts 15.6 million units of sales in the North American light vehicle market this year. Murphy believes the “supply shock” that we experienced will continue to drive a multi-year recovery in automotive. For consumers, he noted it was a good time to buy a vehicle “if you can find the one you want,” with the real monthly cost of ownership levelling off from historical levels. Murphy summed up the current challenge as a “Core to Future” transition: to make money in the current environment dominated by trucks/SUVs and luxury to charting a future course to electrification.
Justin Mirro similarly noted that “the #1 trend is the electrification of the powertrain,” which will require public market capital to support (in addition to private capital and government support). His SPAC Kensington (NYSE: KCAC) recently completed the acquisition of battery maker QuantumScape and EV charging company Wallbox.
Trevor Upton echoed the comments of the other panelists, noting that the simplification of the powertrain in an electrified mobility world will be very disruptive, and is the leading challenge facing the industry.
Faler then launched into an extensive Q&A session, which included the following:
The headline from the panel is that public and private investment in the automotive industry is alive and well, with aggregate public capitalization of about $1 trillion and aggregate private capitalization of $2 trillion. Market developments and government support should continue to drive these numbers up, as the transition to the EV world unfolds over the next decades.