Podcast #68: How Software Intelligence is Driving Safer, Sustainable Battery Management

As more and more carmakers are now introducing electric vehicles (EVs), the battery and its charging and safety have gained the utmost importance. Counterpoint Research’s data shows EV sales crossed 10 million units in 2022. And as more users and fleet owners consider EVs, be it passenger cars, taxis, or even electric trucks, the range anxiety and charging infrastructure are where many are held back. So, what are companies doing to address these issues?

In a discussion with Qnovo, a company that specializes in developing intelligent lithium-ion battery management software, we gained some interesting insights on how it improves the battery performance in EVs. The desired user experience, be it charging or performance that replicates internal combustion engines, is essential for EV adoption. But how are carmakers and battery companies working together to deliver the best experience?

 In the latest episode of ‘The Counterpoint Podcast’, host Jeff Fieldhack is joined by Qnovo CEO Nadim Maluf to talk about the intelligent battery management platform and more. They discuss topics including EVs, battery charging and performance, safety, and much more. The discussion also focuses on Qnovo’s technology implementation beyond EVs.

Click to listen to the podcast

You can read the podcast transcript here.

Podcast Chapter Markers

00:56 – Nadim introduces Qnovo and his role.

02:32 – Nadim talks about the growth drivers within the EV space.

05:22 – Nadim breaks down the various facets of battery performance.

07:55 – Nadim explains the need for quick charging times for fleet vehicles, delivery trucks, and taxis.

10:08 – Nadim talks about the short-term fix for EV charging infrastructure.

13:56 – Nadim highlights some of the key implementations by EV players that could accelerate adoption.

15:30 – Nadim sheds light on where we can see Qnovo’s technology beyond EVs.

17:54 – Nadim on how battery tech is progressing in the smartphone space from a sustainability point of view.

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CES 2023: All about Cars, Electrification & Sustainability

CES, the most influential tech event in the world, was back with a bang in Las Vegas between January 4 and 8, 2023. With over 3,200 exhibitors, the event saw over 115,000 attendees, which was less than pre-COVID times but still a good turnout. It was great to be back attending an in-person event after three years to experience a wide range of innovations.

From wireless TVs to ‘true’ wireless charging solutions, color-changing cars to fridge doors, and robots and drones to concept flying cars, there were a lot of overwhelming products that were showcased at CES 2023.

Though, the key theme was Cars, Electrification, and Sustainability (or CES as we would define this year’s event).

Counterpoint Research analysts were on the ground covering the event. Here is a quick recap of some of the interesting tech we came across at the show.

Futuristic, high-tech electric cars, pickup trucks, and infotainment are in focus

Sony and Honda Mobility’s first EV, a futuristic-looking Afeela

Sony and Honda Mobility announced their partnership in 2022 to challenge Tesla in the EV market. At CES 2023, the companies showcased their prototype, Afeela, designed for urban transport. Featuring a sleek and modern design, it includes advanced technologies such as an Advanced Driver Assistance System (ADAS), all-wheel drive (AWD), a high-capacity battery, and Level 3 autonomous driving features.

The electric vehicle will be embedded with over 40 sensors including cameras, LiDAR, radars, and ultrasonic sensors. It will be made in the US, pre-orders will begin in H2 2025, and shipping is expected to start in 2026.

BMW i Vision Dee can change colors like a chameleon

Last year, at CES 2022, BMW showcased a color-changing car, though limited to just black and white shades. Now, a year later, the new and improved concept car, i Vision Dee, comes with more tricks up its sleeve. To begin with, the “Dee” here stands for Digital Emotional Experience, one where users can customize the car’s exterior color to express their style. There are 240 e-Ink segments that can display 32 different color shades.

BMW has also re-imagined the head-up display (HUD). Drivers can select driving-related information, or can also have a virtual experience with a black-out window while enjoying an autonomous driving experience. BMW said that some of this tech will make its way into production in 2025 in the next-gen platform.

Qualcomm showcases its advanced in-car tech

Qualcomm unveiled its Snapdragon Ride Flex SoC which brings low-power, advanced computing capabilities, including digital cockpit, ADAS, and AD (autonomous driving). Going beyond in-car infotainment, it can unlock in-vehicle experiences, such as the partnership with SalesForce, to offer a one-click over-the-air (OTA) upgrade for new features, buying tickets for a show, parking tickets, or even reserving a table at a restaurant on the go.

The digital cockpit part of the SoC will be able to control a range of features like voice assistant, premium audio, and rear-seat infotainment displays. The chipset is scheduled to go into mass production in early 2024, and Qualcomm is working to make it easier for Tier-1 automakers to embrace the platform.

Stellantis debuts futuristic Peugeot Inception & Ram 1500 EV Truck

Peugeot, which is a part of Stellantis, previewed a futuristic concept EV sedan, called Inception. The all-electric concept car can go 500 miles or 800 km on a single charge. It features an innovative Hypersquare control system that is inspired by video games, replacing the traditional steering wheel with an all-digital electric control. The concept EV will also feature Level 4 autonomous driving with a next-gen i-Cockpit.

Electric pickup trucks are becoming a hot trend in the auto industry and Ram, a sub-brand of automaker Stellantis, unveiled its futuristic-looking Ram 1500 Revolution BEV concept at CES 2023. It comes with all the bells and whistles to outdo itself, loaded with new-age tech features such as an AR heads-up display, an AI virtual assistant, and also autonomous driving capabilities. It features a “shadow mode” which follows the driver as she walks ahead of the vehicle. What’s more, it also features Ram Charger, an autonomous charging robot that can locate the truck and automatically align and position itself to start the charging.

The RAM 1500 Revolution also features a longer cabin with third-row jump seats and even a movie projector. While Ram doesn’t have any EVs to its belt yet, the company says the new BEV truck will be a leader with its range, towing, and payload. Ram also claims that around 10 minutes of charging using 800V DC fast charging up to 350 kW can offer 100 miles of range. The production model of Ram 1500 is expected to be available in the market in 2024.

Samsung Ready Tune enhances the audio experience with software tuning

At CES 2023, Samsung, together with its subsidiary Harman, demoed Ready Tune, a new car audio technology that can intelligently adjust sound settings to offer an immersive and premium audio experience. There are three modes users can choose from to experience differentiated sound based on the content and their listening preferences.

First up, there is Live Mode which replicates the acoustics you would experience in the live stadium. Then there is Club Mode which enhances the audio to offer crisp and punchy bass. Lastly, there is Talk Mode that enhances the spoken content, making it ideal when listening to podcasts, audiobooks, and more.

Microsoft and GM show off in-cockpit gaming experiences

More and more EVs are getting adopted by consumers, but the battery charging scenario still remains a challenge. So, when you are on a road trip and need to charge the battery, what do you do in the downtime? Well, Microsoft and GM demoed one of the things you could enjoy while the car’s battery is charging.

The companies demonstrated a new video game called Dash Runner to showcase how users can make the most of the time when the EV is charging. Tesla already has a mode where you can play games, so this isn’t exactly new. But it was fun playing the game with immersive audio from the in-car speakers. An added touch was the good haptics on the steering wheel and the seat too. But it is not just gaming, users can also stream movies and TV shows and enjoy a rich audio experience.

Electrification of everything from excavators to shuttles and even boats

Moving from cars to electrification, big names like John Deere, ZF Group, Hyundai Mobis and Brunswick, all showcased their EVs.

Brunswick electric boat with an auto-docking made waves at CES 2023

Brunswick, the world’s largest boat and engine builder, unveiled its electric boat called Veer X13. It is a 13-foot fishing boat powered by a rechargeable battery motor. The company said it will be bringing more such boats to the market. They also showcased another solution, an on-boat electric generator called Mastervolt, which can power the TVs, radio, and lights on boats, something that is generally powered by gas engines.

But the coolest thing Brunswick had at the demo zone was a simulator showcasing autonomous features for the Sea Ray boat. It is trying to create future boats with self-docking abilities and intelligent sensor-based solutions for maneuvering, object detection, and avoidance. Besides the electrification of boats, it was interesting to see how Brunswick is combining internet connectivity and AI technologies. The demo showed how a boat when reaching the peer/port, can dock itself. If there is a boat approaching, it can stop in the middle of the process, and then continue once it passes.

John Deere announces electric excavator and new planting technology

Moving over from autonomous and electric boats, John Deere revealed ExactShot planting technology which uses robotics and sensors to place starter fertilizer precisely onto seeds when they are planted in the soil, rather than applying a continuous flow of fertilizer to the entire row of seeds. It will help farmers be economically and environmentally sustainable by reducing the amount of starter fertilizer by more than 60%.

John Deere also announced an electric excavator which is aimed at reducing emissions, noise on site, and daily operating costs, all without sacrificing performance and power.

Hyundai Mobis has a futuristic vision for autonomous mobility

Auto component maker Hyundai Mobis showed off its future mobility technology by presenting the M Vision TO purpose-built concept autonomous shuttle for public transport. The self-driving electric vehicle is equipped with four pillars having radars, sensors, and cameras. Packing more tech, it will also have mixed reality (MR) displays, e-corner modules and LiDARs integrated into the pillars.

The concept shuttle could be ideal for recreational purposes at theme and amusement parks, within big companies, university campuses, and more. The notable thing about the e-corner modules is that it combines an electric motor for steering and braking. It also features a crab walk mode where wheels can turn up to 90 degrees for parking. The company also showcased the M Vision HI concept which builds on the same idea but has a more boxy design. Its windows double as a multipurpose display with multiple use cases – from shopping online or watching movies.

ZF Group offers a sneak peek at futuristic autonomous shuttles

ZF Group is partnering with shuttle operator Beep to bring Level-4 autonomous shuttle that can self-drive without human intervention. With these electric-powered, autonomous shuttles, the companies aim to reduce traffic-related emissions while also tackling the driver shortage for the local public.

There will be two different types of shuttles, one of which will be geared towards use in dedicated lanes, whereas the other will be primarily aimed at use in urban areas with mixed traffic. The shuttles will come with all the sophisticated sensor technology including radar, LiDARs, and cameras.

These announcements clearly showcase the industry’s ambition to automate every form of mobility. And while these are just concepts for now, it will take a few years to turn this vision into reality.

Focus on sustainability for a cleaner, greener tomorrow

We saw the electrification of cars, boats, tractors, scooters, bikes, and more, all focusing on a common goal – sustainability – and reducing carbon emissions. But it’s not just electric vehicles, there are many other industries where sustainability will play a crucial role. Samsung showcased its vision of net-zero homes, one where SmartThings with AI can optimize energy consumption at home by controlling all the appliances efficiently.

One other thing that caught our attention at CES 2023 was one where companies showcased their long-range wireless charging solutions. Besides cutting the chord, sustainability could be one of the key benefits of this technology as it can save the usage of millions of batteries on devices that use supercapacitors or the ones that don’t need frequent replacement of batteries. The wireless charging solutions are ideal for IoT devices such as door locks, electric toothbrushes, bulbs, game controllers, and more. B2B devices with use cases include malls, stores, and restaurants – in display units where they can show product prices, food menus, ads, and more. These display units can have a flat Li-Ion battery which can last for about six years or more.

A company called Wi-Charge showcased its infrared-based wireless charging solution. It features a transmitter device and a receiver that can charge devices from a field of view of 45 degrees, and an operating range of 10 meters.

counterpoint ces 2023 wi-charge

Ossia was another company that uses a physics-based approach. The solution operates on 5.8GHz RF frequency and works in a range of 10 meters. It uses a transmitter box (as big as a PlayStation console) and is good enough to power IoT devices in a room, electric toothbrushes, and more. It could also be ideal for other low-power devices like smoke detectors, light bulbs, and more.

counterpoint ces 2023 wireless charging cota

There was one other company, PowerCast, which already has a working solution powering the Samsung TV remote. It uses a supercapacitor to hold the power, and charges via solar or by any 2.4GHz router when kept in proximity. Home security and even temperature humidity controllers can be operated from up to 120ft without having any battery in them, which is an interesting use case.

counterpoint ces 2023 samsung remote

Overall, CES 2023 was a great show offering a glimpse of an autonomous, electric and sustainable future. It was good to experience these new, futuristic technologies, learn where the industry is headed, and how OEMs are making an effort for a better tomorrow.

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NXP Q3 2022 Revenues Better Than Expected; Automotive, Mobile Segments Shine

  • NXP’s Q3 2022 revenues were $20 million more than the midpoint of the company’s previous guidance. The automotive, mobile and communication infrastructure segments performed better than expected. But the consumer-exposed IoT and Android mobile segments experienced weakness.
  • NCNR order book continued to surpass NXP’s 2023 supply capabilities.
  • For Q4, the company expects revenue of about $3.3 billion (± $100 million). This would mean an increment of 9% YoY with 4% downside sequentially. Non-GAAP gross margins are expected to be 57.8% (± 50 bp) and operating expenses are expected to be near $720 million (± $10 million).

NXP reported revenues of $3.45 billion in Q3 2022, an increase of 20.4% YoY and 4% QoQ, and $20 million more than the midpoint of the company’s previous guidance. NXP’s automotive, mobile and communication infrastructure segments performed well compared to Q2, while the industrial and IoT segment struggled. Specifically, the consumer-exposed IoT business, accounting for almost 40% of revenue, experienced weaker sell-through in the channel. However, demand from automotive and core industrial customers remained resilient supported by accelerated growth drivers. Due to higher factory utilization and sales volume, the non-GAAP gross profit was almost $2 billion and the margin was 58%, up 150 basis points YoY.

NXP Revenues by Segment, Q3 2022 Counterpoint Research

Sources: Company, Counterpoint 


  • NXP’s strong suit, the automotive segment accounted for 52.4% of the total revenue in Q3 and stood at $1.8 billion. This was a 24% YoY and 5% QoQ growth. Auto demand for silicon content continues to be robust with rising EV penetration and increased autonomy efforts. Strong growth for advanced analog, automotive processing and radar solutions was visible in Q3. However, due to supply constraints, there was a shortage of microcontrollers and analog products in automotive. The NCNR order book in this segment continued to outstrip the company’s supply capacity, which will remain “sold out” next year too.
  • The company also announced collaborations and a product launch in the third quarter. NXP’s S32 family of domain and zonal automotive processors is gaining traction among automakers as a preferred scalable platform for software-defined vehicles. A leading global automaker has selected the S32 MCUs/processors for its upcoming fleet of vehicles, starting 2025. NXP released the second-generation RFCMOS radar transceiver, TEF82xx, which supersedes the market-proven TEF810xx. This high-performance, single-chip solution supports short-, medium- and long-range radar applications including cascaded high-resolution imaging radar. Besides, NXP has collaborated with ChargePoint of the US for charging solutions and has also included its proprietary payment solutions to allow a seamless process for the customers.
  • For Q4 revenues, NXP is estimating this segment to be in the high teens and flattish on a YoY and QoQ basis respectively.

Industrial & IoT

  • The industrial and IoT segment’s revenue was $713 million, an increase of 17.5% YoY with no QoQ change and $32 million below the company’s guidance. The YoY increase was driven by the demand for crossover processors, 32-bit AMR MCUs, point-of-sale security solutions and more. As mentioned earlier, the consumer-exposed IoT business was much impacted. Since August, there was a global softening visible in the consumer IoT market with China getting affected strongly. Since NXP has a sizeable channel exposure in China and serves thousands of customers via distribution partners, the revenues in that domain took a hit.
  • Going forward, NXP could ship more into the channel but instead decided to limit channel inventory to 1.6 months (as opposed to the long-term target of 2.5 months) to prevent losses due to uncertain macro conditions. The company will closely gauge and adhere to market requirements depending on the developing demand and, if required, redirect it to other customers. With respect to on-hand inventory, the DIO increased five days sequentially to 99 days with more increments expected in the future.
  • For Q4, the industrial and IoT segment is expected to be in the negative territory in both YoY (low double-digit) and QoQ (high teens) terms.


  • The mobile segment had revenues of $410 million, up 19% YoY and $30 million more than what was expected. Despite seeing weakness in the Android mobile market, NXP attained better than estimated revenues due to being exposed to the higher-end (which seems to be doing better) rather than the lower-end mobile phone market, increased attach rate for its secure mobile wallet, advanced analog high-speed interfaces, eSIM connectivity and more.
  • As Ultra-Wideband (UWB) penetration starts picking up in different verticals like mobile, IoT and cars, the company will be able to accrue more revenues in the future, from its UWB technology along with mobile wallet solutions. UWB use cases are already visible in China as UWB functionality in phones (flagship models) such as those from Apple, Samsung and Xiaomi. These smartphone players have collaborated with automakers to implement UWB-based solutions in cars to offer consumers secure car access. NXP expects four Chinese OEMs to offer this technology by the end of this year with a minimum of three more to follow in 2023. Kostal is using NXP’s UWB technology for its digital key system, which is being adopted by local company Nio.
  • For Q4, the company is expecting this segment to be up in the low single-digit range YoY and down in the upper single-digit range QoQ.

Communication Infrastructure & Other

  • The communication infrastructure and “other” segment’s revenue was $518 million, slightly above the guidance. Annual and quarterly growth rates were 14% and 4% respectively. The growth can be attributed to the demand for network edge equipment, RFID tagging solutions, cellular base stations and more.
  • NXP launched its new higher-power BTS7202 RX front-end modules (FEM) and BTS6403/6305 pre-drivers for 5G massive multiple-input multiple-output (MIMO) going up to 20 W per channel. These solutions complement its 32T32R active antenna systems and are developed using the company’s silicon germanium (SiGe) process. As 5G network coverage expands, there is a need for higher-power solutions to ensure consistent network quality along with reduced operational costs for MNOs. The newly announced devices can cater to these requirements with higher power per channel and modest consumption.
  • For Q4, the guidance seems positive and stands in the low-teens range YoY and flattish QoQ.

Capex Overview and Inventory

  • Cash flow generation continues to be excellent according to the company. In Q3, cash flow from operations stood at $1.14 billion compared to $819 in Q2. Net capex accounted for 8.2% of the revenue or $281 million. Due to supply constraints and strong demand (especially in the auto sector), internal utilization remained in the high 90s. More than 65% of the capacity was focused on IP proprietary mixed-signal, auto-centric capacity internally.
  • Capex for this year has decreased from 10% to 8% due to delays in equipment deliveries. For 2023, it will range between 6% and 8%.
  • From the demand perspective, there is weakness in the consumer IoT and Android mobile market, whereas the automotive and core industrial markets are witnessing resilient demand. On the supply side, the situation is reversed with the latter markets facing supply crunches and not being able to cater to the true demand. On the other hand, in the former markets, excessive shipping in channels is being prevented because of uncertain macro conditions.


NXP’s supply capabilities have improved over time but major end markets like auto and core industrial continue to face shortages. Prevalent weak macro conditions and extended China lockdowns will cause further hindrances to the revenue recovery of consumer-oriented markets. However, the company is being cautious and trying to mitigate costs by reducing its discretionary spending, lowering incentive compensations, and focusing on a strict approach to managing distribution channel inventory.

Tesla – A Game Changer for India’s EV Industry?

Stagnating electric vehicle (EV) sales in the US have led Tesla to explore overseas markets in Europe and China. But the increasing competition in the EV segment and the company’s own ambitions make it imperative to look beyond these markets. It is with this in mind that Tesla recently announced its entry into India. No doubt it is an excellent move by the automaker which delivered close to 500,000 vehicles globally in 2020 and plans to produce 20 million vehicles per year by 2030.

However, the way forward for Tesla in a developing country like India requires a closer scrutiny of the market and the challenges it poses. To begin with, Tesla will have to launch an affordable EV in the country to achieve volumes and long-term success. A local manufacturing base will help here. Inadequate charging infrastructure is both a challenge and an opportunity. The automaker can set up a network of charging stations in key cities to gain an early-mover advantage.

At the same time, Tesla’s India entry has the potential to speed up ecosystem development in the country, encouraging other automakers and suppliers to firm up their EV plans.

Pricing a key factor

A typical Indian car buyer is highly cost-sensitive. Budget cars costing $8,000-$10,000 account for a vast majority of car sales in the country. Much of Tesla’s success in India will depend on the price at which it launches its EVs.

  • Annual luxury car sales are just around 35,000 units in India. Therefore, Model 3 will not find many buyers in the country. However, Tesla has a long-term plan to launch an EV priced at $25,000. Given the battery design, material and production innovations the company is undertaking, Tesla should be able to launch the $25,000 EV in the next three years.

Counterpoint: Tesla Master Plan $25,000 India entry

  • Considering Tesla sets up local manufacturing in the country, this car can be offered at a price at least 20% lower. This is an attractive price point, accounting for some 300,000 units of annual sales and having high growth potential.

Why India?

India is among the most polluted countries in the world. But the eagerness to curb pollution levels in the country is rising among all stakeholders. The low penetration of cars in the country, coupled with rising income levels, also makes India an attractive market for automakers. Below are the key factors that will aid Tesla’s success in the country:

  • Stringent emission norms make way for EVs: In 2020, India leapfrogged from BS-IV to BS-VI (equivalent to Euro 6) emission norms. Corporate Average Fuel Efficiency norms require automakers to improve their fuel efficiency by 10% by 2021 and by 30% or more from 2022, when compared to that in 2017. While still a long way to go in terms of EV incentives, policies like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles have generated industry interest in EVs.
  • Huge potential: India is the fourth largest automotive market with more than 4 million vehicles sold annually. Despite this, car penetration in the country stands at 22 per 1,000 individuals compared to 980 and 850 in the US and the UK respectively, presenting a huge potential for long-term growth.
  • Changing customer preferences: Income levels continue to rise in India. Car buyers are upgrading from budget to mid-premium cars while preferring latest digital technologies and becoming increasingly concerned over growing pollution levels.


Tesla’s move to enter India is certainly not aimed at selling its Model 3 in large volumes but to get an early-mover advantage when EVs prices reach cost parity with conventional vehicles. Below are some areas that Tesla should focus on during its initial years in the country:

  • Set up a network of fast chargers: Tesla should set up a network of fast-charging stations in key cities, where buyers can afford a $20,000 car, to tackle the range anxiety issue that potential customers may face while deciding to buy a Tesla.
  • Study the market: As Tesla is a new player, studying the local market, gaps left by established players (like Daimler and BMW) and pain points of its target customers is of paramount importance.
  • Brand building: The automaker should invest in building a brand which stands for luxury, performance and innovation. Tesla should build on its already positive word of mouth in the country.
  • Local manufacturing: Tesla should set up a local manufacturing unit for assembly and battery to reduce costs and use it as an export hub for Southeast Asian and African countries. Pro-investment polices like Make in India and 100% FDI route for the automotive sector have made India an attractive country to set up local manufacturing.
  • Global R&D center: Tesla should set up an R&D center in the country, employing young, tech-savvy engineers at a lower cost. Tesla can take advantage of the country’s prowess in software development to improve its embedded software, OTA and cloud ecosystems.

Weekly Update: COVID-19 Impact On Global Automotive Industry

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Week 22: August Auto Sales Update – Key Markets Indicate Recovery

While many key markets saw signs of improvement in August on month-on-month (MoM) basis, it remains difficult to ascertain the actual market situation as the pent-up demand may be covering up a lower intrinsic level of market demand. Moreover, there is always a risk of a second wave of COVID-19. As a result, Counterpoint analysts continue to hold on to their 2020 annual outlook of nearly 20% decline over last year, with global passenger vehicle (PV) sales estimated at around 71 million units.

United States

Automotive industry in the US continues to remain fragile. Vehicle sales in August declined close to 20% (YoY), reaching 1.33 million units, despite an extended weekend due to Labor Day falling on a Monday. Total January-August 2020 sales reached around 8.8 million units, down 23%. During the month, Toyota saw a sharp decline of 24.6%, followed by Honda (-23%). Hyundai, on the other hand, performed comparatively better with only an 8.4% decline. Limited inventories and fewer incentives continued to hold back sales.


China automotive sales continue their fast recovery. Vehicle shipments reached close to 2.2 million units in August, up 11.6% on YoY basis. Total shipments during January-August 2020 were down 10% on YoY basis. Counterpoint expects the recovery to continue in coming months driven by improving car-buyer sentiment (especially in affluent classes) and pro-NEV (New Energy Vehicle) policies like scrapping of vehicle purchase tax on NEVs and extension of subsides till 2022 with a slower phase-out pace. In June, the government announced to increase the NEV credit ratio by 2 percentage points every year till 2023, from 12% in 2020 to 14% in 2021, 16% in 2022 and 18% in 2023.


Easing of lockdowns in many countries coupled with stimulus packages to support economic revival seems to have started benefitting the region’s automotive industry. Vehicle sales in August crossed 1.2 million, declining 16% on YoY basis. Despite the decline, this was a good performance considering sales in August 2019 were high as automakers rushed to push their uncertified vehicles before the September 1, 2019 deadline for the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) testing.

Other Markets

Japan: Vehicle sales in August crossed 326,000 units, declining 16% on YoY basis. Counterpoint remains cautiously optimistic for coming months as resignation of Prime Minister Shinzo Abe could adversely impact the market.

South Korea: New vehicle sales in the country from top five automakers — Hyundai, Kia, Ssangyong, Renault and GM — declined close to 6%, reaching around 112,000 units. In June, the government extended the 30% cut in consumption tax on passenger cars till December 2020, benefiting sales.

Other Asia: While the year-to-date sales have seen a considerable decline, they are improving on MoM basis. Key markets like India are seeing recovery in MoM sales due to easing of lockdowns.


Author: Aman Madhok


Week 21: Connected Car Gets Pandemic Push

The COVID-19 pandemic has led to many changes in car-buyer behaviour and attitude. Digital services and features are being readily accepted by people as a way to stay connected, trackable and safe. Increasing penetration of in-vehicle screens will lead to easy integration of many of these digital features. This blog identifies and compares key digital features and services available for cars, and which among these will benefit due to changing lifestyle and behaviour of people.

Counterpoint: COVID-19 impact on automotive connected car IoT digitalisation

In-vehicle features

In-vehicle digitalisation is expected to increase as people spend more time in their personal vehicles (compared to public transport). Popular connected features include navigation, digital keys, and Wi-Fi hotspot. Among these, digital keys will see a high demand in the coming years due to its low-cost implementation. Virtual assistant, voice recognition, personalisation and gesture control will also see increasing demand on growing concerns over touching surfaces.

Safety features

Safety features to prevent accidents, such as automatic emergency braking (AEB), lane departure warning (LDW), head-up displays and surround cameras, are expected to gain popularity. Convenience features like automatic cruise control (ACC) are expected to see a limited impact from the pandemic. Nevertheless, since many times these safety features are sold as bundled packages, COVID-19 will aid in their penetration.

Connected Living

Cars are expected to have seamless integration with home, infrastructure, and other devices promoting vehicle to everything (V2X) technology. Increasing coverage of 5G networks will allow seamless integration of cars with other devices and ecosystem. Vehicle to pedestrian (V2P) communication, in particular, will see development. However, high investment involved in developing a V2X technology could delay its implementation.


Connected services promoting social distancing and reduction in the number of garage trips will see a rise in coming years. Pay-as-you-go services will enable touchless transactions for refuelling, toll payments and purchasing on the go, among others. OTA updates will become popular, restricting unnecessary trips to service centres.

Health and location related apps are expected to gain popularity, aiding family members to track the location and well-being of their loved ones. Recently, GM launched a smartphone-based app, Guardian, which uses phone sensors to detect a crash and inform emergency services. Other features of the app include location status and roadside assistance.


Digitalisation in cars will get a boost from COVID-19 with people embracing a digital life that promotes social distancing, safety, tracking and efficiency. Services and features enabling the above will see growing popularity among car-buyers. Digitalisation will also be supported by other factors like increasing screens in cars and increasing 5G network coverage.

Author: Aman Madhok


Week 20: Global Vehicle Sales Remain Fragile

Global passenger vehicle (PV) sales declined by nearly 7% YoY in July, despite regions showing varied signs of month-on-month recovery from COVID-19 induced lockdowns. Overall, cumulative YTD global PV sales are down by 25% YoY through July.

While most regions are certainly seeing signs of improvement, it remains difficult to ascertain the actual market situation. Pent-up demand remains the most important contributor to recovery, which may be covering up a lower intrinsic level of market demand. As a result, Counterpoint Analysts continue to hold onto their 2020 annual outlook of nearly 20% decline over last year, with global PV sales estimated at around 71 million units.


The Chinese PV market continues to make a V-shaped recovery, with July volumes climbing 16% from a year earlier, a fourth consecutive month of improvement, stepping up sales to a higher gear from nearly 7% YoY growth in June. While July PV sales in China rose to 2.1 million vehicles, on a YTD basis cumulative volume have dropped 13% from last year’s 12.4 million vehicles.

Sales of new energy vehicles (NEVs, i.e. battery-powered electric, petrol and electric hybrid and hydrogen fuel-cell vehicles) in July ended 12 consecutive months of YoY declines, with a 20% uptick to nearly 98,000 units. This sale spike possibly demonstrates that NEV OEMs and customers are now at terms with the lowered government subsidies since last year. Counterpoint estimates NEV sales at over 1.1 million vehicles in 2020, a decline of 11% from last year. Continuing to lead the pack of fully electric vehicles, Tesla sold 11,000 vehicles in July while BYD took the lead position in total NEV sales, delivering over 14,000 units.

With China’s economy still recovering, and the possibility of a second wave of the virus still looming, Counterpoint is holding to its earlier base case forecast of nearly 22 million PV units for 2020, an almost 15% decline from previous year.

United States

Sales in the US continue to drift with the pandemic having a prolonged impact on the country’s economy. July PV sales volume, though up versus June, is down nearly 19% YTD compared to the previous year. Fleet sales too continue to remain weak, with July volumes falling by nearly 30% of the volumes reported in June.

COVID-19 continues to spike in key US states, including California, Texas and Florida, resulting in curbs on movement of citizens and strong headwinds for the country’s PV sales. All this while the industry continues to reel from the effects of earlier lockdowns and “shelter in place” directives that had closed thousands of dealerships in March, April and May.

Counterpoint analysts are holding to their earlier forecast for the US — a 24% annual decline for 2020, estimated at around 13.4 million units.

 Europe and United Kingdom

PV registrations in Europe dropped 5.7% in July, with government incentives and lifting of lockdown restrictions having stimulated sales demand back to near pre-pandemic levels. However, from a year-to-date perspective, Europe is tracking an overall decline of 36% for the same period last year. Counterpoint analysts estimate Europe sales to fall by almost 26% this year to 13.6 million vehicles, with key factors like lowered government subsidies and possible resurgence of COVID-19 lingering.

In the UK, PV sales rebounded in July as dealers reopened with easing of coronavirus lockdowns, even as battery electric vehicle sales continued to surge. Based on sales data released by the Society of Motor Manufacturers and Traders (SMMT), British new car registrations rose by almost 11% YoY in July to nearly 175,000 units. July is the first full month of business in the UK after car dealerships were allowed to reopen.

Notwithstanding the signs of a slight bounce-back, Counterpoint analysts remain cautious. European and UK consumers are still wary about buying high-ticket items like cars, given the uncertainty over the economy.

Rest of World

India’s domestic auto industry may have turned the corner in July, with monthly declining trends flattening out. For the first time in several months, the Indian auto industry reported a single-digit decline of 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs in India continue to resolve challenges with the supply chain, they will also need to procure buffer stocks of material to protect themselves against future lockdown disruptions.

Japan’s PV sales continue to improve, with a relatively moderate 14% YoY decline in July, compared to a 45% YoY decline in May. Consumers are preferring purchase of smaller-sized vehicles to avoid crowded public transportation. Sales of Mini Vehicles (engine size smaller or equal to 660 cc) currently account for nearly 40% of total car sales. However, with the recent sharp rise in new COVID-19 cases, and possible enforcement of movement restrictions, the recovery in sales is expected to slow down.

In South Korea, the selling rate has slowed down from an all-time high in June, with the first phase of a temporary excise tax cut on passenger vehicles expiring at the end of the month. The market, however, continues to perform reasonably well, with sales having increased YTD by nearly 8%. Sales in H2 2020 are expected to be sustained with an anticipated announcement of the second phase of the temporary excise cut, which has proven to have been a key factor in stimulating demand recovery in Q2 and Q3.

Revised Global Automotive Outlook

While varied signs of a fragile recovery continued to emerge in July, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, an over 20% decline from 2019.

Counterpoint: COVID-19 impact on automotive sales

Author: Vinay Piparsania


Week 19: Used Car Sales Start Recovery in Key Markets

Used cars are seeing recovery in key markets not only owing to hygiene concerns amid the COVID-19 pandemic but also reduced car-buyer budgets due to economic downturn. Dealers have started to report increasing (or holding) residual value of used cars, indicating the increasing demand. Increased focus on online sales by automakers, dealers and third-party e-commerce companies is also benefiting the sales of used cars. This blog lists recent positive developments in key used vehicle markets, indicating a much faster recovery for global used car sales when compared to new cars.


  • Leading online used car platform Carvana reported 43% increase in sales during Q1 2020. The company has plans to expand to 100 new markets in the US.
  • Carmax, the leading used car dealer in the country, called back 155,000 furloughed employees (around two-thirds of its workforce).

According to online platform Edmunds, the average listing price of used vehicles increased by $708 in July when compared to June, reaching $21,558.

Counterpoint: COVID-19 used pre-owned car sales growth


Used car market size in India is around 1.4 times higher than that for new cars (compared to 4-5 times in the developed world) and has a huge growth potential. Used car sales had been growing at a much faster rate during pre-COVID-19 times and industry participants are already seeing recovery in such sales:

  • Leading used car online platform Droom announced that the traffic on its platform was up by 175% and leads were up by 250% during the April-June period. During the same period, Maruti Suzuki True Value reported used car sales increasing 15% compared to last year.
  • Mahindra First Choice Wheels also reported higher demand in June compared to last year.


While both new and used car sales continue to decline in many European countries, the rate of decline was steeper for new car sales during Q1 2020 in key markets like the UK, Spain, Germany and Italy.


The fall in used car sales has slowed down in China after the market contracted by 67% (YoY) during Q1 2020. According to the China Automobile Dealers Association, used vehicle deliveries declined from 1.6% to 1.2 million in June, but the deliveries were up 4% compared to May.

 Early Signs

Given the fluid conditions, the early signs of growing used car sales need periodic tracking and should not be generalised as a global trend due to the following reasons:

  • Lower inventory of new cars could momentarily drive used car demand. With auto plants reaching 100% production levels, used car sales could see a decline in coming months.
  • If driven by pent-up demand, the sales could see a decline in coming months.
  • Customers can hold on to their old vehicles for a longer time, creating an inventory shortage for used cars.
  • Used car market growth will vary from country to country depending on government policies, economic recovery and customer sentiments.


Despite the uncertain conditions, it is expected that the used car market will see a much faster recovery from the pandemic when compared to the new car market, considering the strong drivers like growing need for personal vehicles and budget constraints.

Author: Aman Madhok


Week 18: India’s July Automotive Sales on Choppy Recovery Track

India’s domestic auto industry may have turned the corner, with monthly declining trends flattening out, suggest July sales reports.

For the first time in these last few months, the Indian auto industry has reported a single digit decline of just over 1% in passenger car wholesales, with 198,000 units being shipped last month compared to 200,500 units in the same period last year. July shipments are likely the low point of a V-shaped recovery as Indian states increasingly ease lockdown measures and more dealerships open in key urban centres. The month has shown significant wholesales improvement in both two-wheelers and passenger vehicles, indicating significant pent-up demand across the country.

Counterpoint expects to see further improvement in monthly vehicle sales, with new product launches planned, supply chain stability and incremental demand from rural India as the country moves into its traditionally high-selling festive season. We expect extraordinary promotional offers by dealers and automakers to continue, encouraging consumers to visit showrooms and consider purchasing new vehicles.

 Choppy recovery across the country

The July automotive sales distribution pattern, however, shows that recovery from the pandemic not only varies in speed across the country, but is also uneven. This can be attributed to the length of lockdowns in different regions, the underlying economy of a region, consumer confidence, availability of finance and incentives offered by dealers. Broadly, retail sales are recovering faster in semi-urban and rural areas, which have been relatively less impacted by the spread of COVID-19.

Many regions continue to remain vulnerable due to their limited ability to manage further outbreaks of the virus. Intermittent and sudden lockdowns being re-introduced in some states, such as Uttar Pradesh, Maharashtra and Bihar, are negatively impacting the fragile consumer confidence and spending.

While leading automakers Maruti Suzuki and Hyundai have seen a steady recovery in vehicle production and shipments since the unlocking in May, we believe sustaining the retail sales momentum will be a challenge as pent-up demand winds down. While some states could recover faster, the overall longer-term forecast is that some cities and states will take till the year end to recover annual sales volumes to pre-COVID levels, and some possibly not at all.

Let us look at the performance of some of the key players in the passenger car and two-wheeler categories over the month:

 Passenger cars

 Maruti Suzuki posted a 1% growth, with 100,000 units shipped last month against 101,300 in July 2019.  While marginal, it does signal green shoots of recovery ahead with an almost 50% increase in mainstream hatchbacks — about 17,300 units shipped in July. This also demonstrates growing demand for safer, personal mobility options. In addition, Maruti Suzuki is planning to launch a range of compact SUVs in the second half of 2020, enhancing its offerings in this relatively resilient category.

Hyundai too is moving closer to full recovery, having shipped 38,200 units in July versus 39,000 units last year, a 2% YoY decline but a significant improvement against the 79% YoY decline recorded in June. Hyundai continues to have a strong order book for its refreshed Creta SUV, the newly launched Venue Crossover and, surprisingly, for its updated Verna sedan.

While Mahindra & Mahindra has reported a 35% YoY decline with shipments of 11,000 units last month, we expect sales to improve over the rest of the year. Revival in demand for its vehicles is expected to be sustained in rural and semi-urban areas. The scheduled launch of popular utility model Thar in a refreshed, contemporary and feature-loaded avatar, and in time for the festive season, will provide an additional push.

Counterpoint: COVID-19 India July car sales


India’s, and also the world’s, largest two-wheeler manufacturer Hero MotoCorp has reported a marginal YoY drop of less than 1% in July. It is running at over 95% of its production capacity, signalling a healthy rebound. The company’s July shipments saw 14% sequential growth over June. While the numbers primarily show signs of recovery, they also confirm that supply chain issues, such as the availability of workers and raw material, have been resolved considerably.

Till the COVID-19 pandemic is brought under control, Counterpoint expects the country’s two-wheeler segment to continue to grow much faster than passenger vehicles, being a cost-effective personal mobility solution and also popular among Indian commuters.

Counterpoint: COVID-19 India July two-wheeler scooter sales


Counterpoint believes that while July sales may signal the start of a recovery trajectory, the industry still needs to demonstrate a sustainable demand trend, at least over the medium term. As OEMs continue to resolve challenges with the supply chain and scramble to replenish inventories, they will also need to procure buffer stocks of material to protect themselves against possible future disruptions due to re-introduction or extension of lockdowns.

Counterpoint analysts continue to remain cautious and are holding to their earlier forecast of a 25% decline in all categories in 2020 compared to 2019.

Counterpoint: COVID-19 India automotive vehicle car two wheeler forecast

Author: Vinay Piparsania


Week 17: Car Subscription Services Get COVID-19 Push

The shift towards car subscription services, which started during the last few years, is only going to accelerate during the COVID-19 pandemic. Rising awareness about health among car- buyers is making them consider personal vehicles over public transport, with subscription payment models making vehicle ownership more accessible. This blog analyses the key drivers for subscription-based models and the role of COVID-19 in pushing this shift.

Why Subscription?

  • Automakers are looking for new ways to push sales and make cars more accessible for customers in the wake of COVID-19 pandemic, which has put a lot of strain on their purchasing power.
  • There is a generational shift towards a shared economy where everything from OTT to consumer electronics is being subscribed to. In mobility too, millennials are moving away from car ownership to shared mobility.
  • Rental companies are offering flexible subscriptions ranging from 1 to 36 months and attractive schemes, like extended loan tenure, low down payment, no EMI for a year, return assurance and home delivery, to push sales.
  • During COVID-19, dealers have shifted online to provide a quick, streamlined and hassle-free buying process, thus aiding in subscription sales.

Counterpoint: Key drivers subscription car sales

Automakers Taking Subscription Seriously

Counterpoint: COVID-19 automakers key subscription schemes

While subscription services, including Volvo’s Care, Ford’s Canvas, Cadillac’s Book Porsche Passport and Mercedes-Benz’s Flexperience, were already available, more automakers are focusing on such services during COVID-19:

  • India’s largest car manufacturer Maruti Suzuki has partnered with ORIX to start a pilot subscription model for new cars. Hyundai, the second largest player in the country, started its subscription service in 2019.
  • In March, Nissan launched the ClickMobi car subscription services in Japan. The service is currently available in 23 of Japan’s 47 prefectures. The company plans to expand it to the whole country by September.
  • In January, Toyota launched the Kinto subscription service across Europe. This includes Kinto One, a subscription-based service for new cars.
  • In July, JLR launched the Pivotal vehicle subscription schemes in the UK, offering a six-month subscription starting at $934 a month for a Land Rover Discovery Sport or Range Rover Evoque. JLR expects subscription services to account for 10% of all car sales in the US and Europe by 2025.
  • Volvo, which launched its subscription service Care in 2017, expects it to account for 50% of its revenues by 2025.

 Mushrooming start-ups

Many start-ups, including ZoomCar and Revv, are collaborating with automakers and dealers to provide the software platform, schemes and expertise for subscription-based models. Third-party collaboration is helping automakers and dealers in a fast scale-up of their subscription offers.

  • In July 2020, a London-based car subscription start-up secured €22.6 million in funding. The company provides subscription-based car buying in the UK in partnership with automakers including BMW, VW and Mercedes Benz.
  • Australian start-up Loopit (earlier known as Blinker), which has around 500 dealerships on its software subscription platform, announced 52% increase in dealers wanting to integrate into the platform during the country’s initial lockdown period.


  • In the short term, COVID-19 will accelerate the shift towards subscription models as car buyers refrain from lumpsum payments on big-ticket purchases. The need for privacy and social distancing will also push them towards such services.
  • In the long term, shift towards a shared economy and growing competition from ride-hailing services will continue to encourage automakers to adopt subscription models to push car sales.

Author: Aman Madhok


Week 16: Need for more resilient supply chains

The COVID-19 pandemic has demonstrated how vulnerable automotive supply chains are to disruption, bringing under scrutiny the extended global supply strategies.

The abrupt closure of production centres in China and its domino impact, causing widespread chaos among global auto manufacturers, were felt progressively in Europe, the US, India and South America. Having offshored their manufacturing activities to low-cost countries, many automotive OEMs and suppliers are now scrambling to establish shorter or localised regional supply chains.

The drive to shorten supply chains

Even months before the COVID-19 outbreak, there was a growing interest among global automakers to localize manufacturing of critical components. Trade tensions were at their peak with the escalating tariff war between the US and China, resulting in a broader nationalistic spirit arising in some other countries too. The intensification of protectionism, through targeted financial trade barriers, had become a real and present threat for multinational auto operators to deal with.

With globalized supply chain networks currently programmed for the lowest possible price, most Western companies had set up centralised manufacturing facilities in lower-cost economies, where final products are assembled competitively and shipped to higher-income markets. Automakers, in particular, source parts and electronics from China, mainly because they are cheaper. However, rapid political developments, natural disasters and now the global pandemic have revealed the inherent weakness at the core of such a model of offshore manufacturing. For example, when the pro-Brexit (UK’s decision to leave the European Union) vote was announced in 2016, European auto OEMs and suppliers immediately planned for the worse and rushed to invest in new supply chain resources in the UK. While a change towards more flexibility and multi-level sourcing by the global auto industry had already begun cautiously, the COVID-19 impact has now made it a more definitive and urgent course of action.

Over the next few years, Counterpoint analysts expect to see a broad overhaul of the global automotive supply chain infrastructure based on the following trends:

Globalization to regionalization

Currently, most leading global automakers source 30% to 60% of their parts from China, including modules and sub-assemblies. Given the incredibly high number of parts required – each with different lead times – a return to regional supply chains does present an incredibly complex challenge. However, that challenge is being considered worth taking on by stakeholders for a post-COVID world.

Intending to establish alternative, flexible and adaptable supply chains — while mitigating single-source vulnerabilities – OEMs, component manufacturers and auto sub-system assemblers are now looking to strategically source, assemble and deliver from within their regional borders, and are also reconsidering setting up regional logistic hubs.

Counterpoint: COVID-19 need for resiliant supply chain

 Fundamentally rethinking the supply chain

COVID-19 has exposed the weaknesses of a globalized manufacturing system, necessitating a fundamental rethink of existing supply chain operations. The distributed global business model, being primarily driven by an objective to achieve minimum cost, needs to be resilient. Supply chain models will need to be reconfigured, based on business optimization. Modifying the supply chain as a key business driver and bringing back timely human oversight are some critical factors that can bring inherent agility.

With volatility in production volumes and schedules expected to be a norm, suppliers and logistic operator chains will have to be adaptive, and be able to recover quickly from major natural and man-made catastrophic events such as earthquakes, floods, fires, industrial strikes and social unrest. Human overrides and protocols will need to be re-introduced to bring stability back to the global supply chain during such a crisis. As the current pandemic stress-test has demonstrated, large variances and disruptions cannot be managed through statistical and algorithmic models with such unusual events typically disregarded as “outliers” and overlooked in operational programming.

Resilience through re-shoring — easier said than done

Despite the pain caused by production losses, the business case for increasing supply chain resilience is not straightforward. Reconfiguring and reducing the length and complexity of global supply chains is not without its challenges. Inevitably, short-term costs will be a consideration, as well as the ability to recruit new staff with the requisite skills, knowledge and experience, and access to adequate capital.

With thousands of suppliers involved in a vehicle’s value chain, diversifying suppliers to increase resilience involves significant investments and recurring costs. Automotive components are typically sophisticated, intricately engineered, bulky and also fragile, with high logistics and transport costs. In most countries, government policies encourage sourcing from local producers by achieving a local content threshold to qualify for reduced import tariffs. However, even if such suppliers are considered as alternatives, they are required to be tooled, trained and resourced to produce to specifications and quality standards.

Nonetheless, the benefits of shortening supply chains are considerable, specifically greater security and increased resilience to causes of disruption. Although COVID-19 has brought these into focus, it is not the only risk to established OEMs. There is the ever-present threat caused by natural and man-made events, the ongoing trade disputes and tariff wars between major trading nations, and political instability in regions that supply critical raw materials, combined with a rise of nationalism and protectionism around the world.

The current configuration of international supply chains relies predominantly on low trade barriers and assurances that they will remain for a reasonable time period.  Unfortunately, the devasting economic impact of COVID-19 has led to a resurgence of protectionist sentiments in most countries, and a highly probable threat of such benign policies being withdrawn. Further, the economic arguments for offshoring are not as persuasive as they used to be, with average wages in China’s manufacturing sector, for example, having increased over countries such Brazil or Mexico

There could be many other significant factors behind re-shoring decisions too, such as access to qualified personnel, skills, technology and innovation. Proximity to primary markets is another key consideration, as well as improved quality. OEMs look for quality at the most competitive cost. One of the advantages of working with local suppliers is their ability, if set up correctly, to deliver both. Working with localised suppliers also reduces challenges associated with communicating across multiple time zones, languages and cultures.

Among the deciding factors will be the types of components or aggregates being produced, along with market demand, speed of response and ability to supply custom-engineered solutions with short lead-times.


The sheer number of suppliers to the automotive industry, who are currently clustered in specific regions of the world, present major obstacles to diversifying risks. Reducing or expanding the number of suppliers is not necessarily the only way to configure resilient supply chains.

Counterpoint Research believes that ultimately we will see a combination of traditional extended supply chain models with a growing alternative network of short and localised supply chains. The latter network will most likely be established in alliance with specialised suppliers that can deliver components and services, and have the capability to adapt resiliently to changes in market conditions.

Author: Vinay Piparsania


Week 15: Financial Crunch to Promote Alliances in Auto Industry

With most automakers remaining certain about their shift towards emerging mobility options, strategic partnerships and alliances can ensure their leap forward while maintaining a competitive advantage in these disruptive times.

Mobility options involving electric and autonomous vehicles require billions of dollars in investment. With automakers currently facing a severe financial crunch, the need for partnerships and alliances has become more relevant and urgent.

Below are some recent developments and measures taken by global automakers to ensure liquidity to manage their day-to-day operations:

  • Daimler recently secured US$13 billion credit line from banks.
  • Ford secured US$15 billion from existing credit lines and $8 billion from unsecured bonds.
  • Volkswagen has announced losing US$2.2 billion per week due to plant shutdowns.
  • French government will provide US$8 billion (EUR7-billion) bailout to PSA and Renault.

With the financial crunch leading to automakers and suppliers re-allocating capital funds to manage operations in the short term, Counterpoint expects investments to recover slowly post-COVID-19 and after operations become stable again. The table below ranks different strategic mobility opportunities in terms of their short-term investment potential, with comments on the probable partnership/alliance outcomes.

Counterpoint: COVID-19 new mobility investments

Electric cars

Investment drivers

With the automotive industry being a key GDP driver in many countries, governments will look at promoting EVs to meet their overall emission targets (Paris agreement) on the one hand while driving economic recovery and employment on the other.

Partnership scenario

A key area of partnerships includes EV batteries.

  • Securing supplies: Automakers will need to ensure their battery supplies are secured by partnering with large-scale global battery companies like CATL and LG Chem.
  • Saving R&D costs: Automakers will consider partnering with battery companies to develop energy storage technologies, saving or sharing costs.


Investment drivers

  • Social distancing: Car buyers are preferring connectivity services like over-the-air (OTA) updates, predictive maintenance and touchless transactions, and looking to restrict their visits to service centres to maintain social distancing.
  • New revenue avenues: OEMs are looking at value added connected services as an important area for generating additional revenues and shoring up profit margins amid declining vehicle sales.

Partnership scenario

There will be increasing partnerships across the ecosystem and supply chain — between automakers, telecom operators (to provide connectivity, subscription plans), TCU players (to provide the hardware) and software companies (to develop apps)

Shared mobility

Investment drivers

  • Work-from-home options to employees are expected to become permanent for many companies moving forward, potentially leading to a surge in short-distance travel
  • Amid the economic downturn, choices for last-mile and personal transportation will need to be economical. Hiring e-scooters, e-bikes and kickboards comes at a significantly lower cost when compared to owning a personal vehicle.
  • Maintenance of social distancing is encouraging people to avoid public transport, boosting take-up of shared e-scooters and e-bikes.

Partnership scenario

  • Acquisitions: There are more chances of acquisitions rather than partnerships in this market. With cashflows for small and medium companies remaining stressed, they are suitable targets for acquisition by big companies like Amazon at lower than the valuation price. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for $900 million signals the possibility of similar acquisitions in the sector.

Autonomous vehicles

Investment drivers

Partnership scenario

  • There will be relatively fewer alliances (at least in the short term and compared to 2019) among stakeholders for advance autonomy (Level3+) as automakers try to invest in technologies with relatively faster RoI, and avoid cost on new technologies which are not proven and riskier to invest in.


While COVID-19 will delay immediate investments in new mobility, market drivers will continue to encourage investments in the long term.

Alliances and partnerships will become important tools for automakers to gain a competitive advantage. However, the nature of alliances will vary for each mobility type.

Author: Aman Madhok


Week 14: June Update – Global passenger vehicle demand to decline over 20% this year

COVID-19 continues to have a profound impact on the global passenger vehicle (PV) industry. As markets around the world move into H2, there are some varied signs of recovery visible, as well as of further turbulence ahead. Uncertainties remain, with COVID-19 infections rising in several countries of Asia and South America, and, most alarmingly, in the US.

Even as China was showing encouraging signs of a possible V-shaped recovery, June sales slipped significantly, indicating a bumpy ride ahead. The US industry too, despite having turned in some encouraging numbers in May, retreated last month. Europe, the UK and India remained sluggish and stuttering, with sales volumes expected to be under last year’s by over 25%, while South Korea remains a bright spot, tracking ahead on a year to date basis in June.

With the risk of further virus spread and preventive lockdowns remaining high over the rest of the year, Counterpoint analysts continue to remain cautious in holding to their earlier PV global sales forecast.


Based on recent numbers released by the China Passenger Car Association (CPCA), sales in China have significantly dropped in June, despite encouraging recovery trends demonstrated over May and April. Passenger vehicle sales came in around 1.68 million units in June, a 6.5% YoY decline. May sales had risen over 12% YoY to 2.1 million vehicles, and almost 4.5% YoY to 2 million vehicles in April.

The June decline is a setback for an industry expecting to see a rebound in demand with the pandemic having been brought under control in the country, and showrooms and retail markets reopening for business. Evidently, the auto industry’s long-term dependency on a broader economic recovery in China and on overcoming already established consumer mobility trends, such as preferring ride-hailing options and putting off purchase decisions, remains.

Sales of new-energy vehicles (NEVs), including electric cars, also continue to decline. NEV sales in June fell 35% YoY to 85,600 units, following a drop of 26% in May and 30% in April. After growing rapidly for several years, electric car sales have lost momentum, with the government rolling back subsidies in mid-2019 and prevailing lower oil prices making typical internal combustion engine (ICE)-powered vehicles more economical to operate. Electric vehicles (EVs), however, remain a priority for China and authorities are considering fresh stimulus measures to support their recovery.

Bucking the trend, Tesla accounted for nearly 23% share of electric car sales in June. The American company, which started production at its greenfield Shanghai factory at the beginning of the year, has rapidly achieved market leadership and boosted monthly EV registrations in China. Counterpoint analysts are monitoring Tesla’s rise in China and the impact its operations and popularity are having on other domestic EV manufacturers.

 United States

In June, COVID-19 cases saw a spike in some key US states, including California, Texas and Florida, triggering fresh curbs on movement of citizens and resulting in some strong headwinds for the country’s PV sales. With more social restrictions and lockdowns likely to be introduced over the weeks ahead, recovery prospects for the US remain fragile.

Counterpoint analysts are holding to their earlier forecast of an over 24% annual decline for 2020, at around 13.4 million units.

On a positive note, Tesla’s market capitalisation now exceeds Toyota’s, making it the most valued carmaker in the world and underscoring its sustained global EV sales momentum over the pandemic period.


In Europe, we are beginning to see some improvement in vehicle markets, propped by a combination of pent-up demand and various government subsidy programmes encouraging drivers to trade in older cars for new ones. In France, car sales rose for the first time this year in June, recovering by 1.2% YoY to just under 234,000 units. Following France, Germany and Spain too have introduced similar incentives for their auto industries.

The UK car industry has also demonstrated signs of improvement in June, boosted by the reopening of more showrooms. According to reports of the Society of Motor Manufacturers and Traders (SMMT), June registrations fell 35% YoY to 145,377, an improvement over prior months when YoY demand fell by 89% in May, 97% in April and close to 45% in March. While car showrooms in England reopened at the beginning of June, dealers in Wales and Scotland were allowed to do so only from near the month end.

Notwithstanding the signs of a small rebound, Counterpoint analysts remain cautious. European and UK consumers are wary about buying high-ticket items like cars, given the uncertainty over the economy and their job security.

 Rest of World

South Korea remains a bright spot in Asia, with domestic production and sales rebounding in June by over 41% YoY to 176,468 units.

In India, while leading automakers like Maruti Suzuki, Hyundai and Mahindra ramp up production and demonstrate incremental wholesale shipments month on month, sales remain a far distance from the pre-COVID-19 levels. June wholesale volumes for each of these automakers show an over 50% YoY decline. While PV production schedules for July may be higher, disruptions to the supply chain on account of COVID-19 induced restrictions and manpower availability continue to challenge their manufacturing stability. On the other hand, tractor and two-wheeler sales have seen a sharp recovery in June, led primarily by rising rural demand and resumption of movement of goods following progressive easing of lockdowns across the country.

Revised Global Automotive Outlook

While some varied signs of recovery have begun to emerge in June, Counterpoint Research remains cautious and is holding to its earlier global automotive sales outlook of around 72 million units for 2020, a 20.1% decline from 2019.

Counterpoint: COVID-19 impact on global automotive market

Author: Vinay Piparsania


Week 13: COVID-19 Impact on EVs


Counterpoint expects electric vehicles (EVs) to weather the pandemic storm better than the conventional vehicles due to the commitment of governments to meet their overall emission targets. The impact of the pandemic in 2020 will differ across regions. China will recover the fastest due to its control on pandemic spread and pro-EV policies. In longer term, the impact of the pandemic will be minimal and EV sales will be driven by government regulations and incentives. Despite slower recovery in Europe, the investment in the region is expected to remain strong in the long term, driven by strong regulatory tailwinds. Long-term demand in the US will be the lowest if the emission norms remain lenient and the oil prices remain low.

United States

The COVID-19 impact on the US EV market has been limited due to strong sales of Tesla during Q1 2020. Plant shutdowns during the March-May period have started making impact on all OEMs including Tesla, which reported 5% YoY decline in deliveries during Q2 2020.

The EV sales in the US will be hit hard by COVID-19 and see a slower growth in the coming years:

  1. In January 2020, the administration rejected GM’s and Tesla’s plea seeking extension of the $7,500 tax credit qualification to cover three times the initial 200,000-EV threshold per automaker. The government did not increase the threshold. On the contrary, it reduced the tax credit to $7,000.
  2. Protracted legal battles between Zero Emission Vehicle (ZEV) states and the central government will continue to adversely impact EV sales in the US, at least for the next couple of years. Cash-strapped automakers will be encouraged to invest in profitable vehicles like gasoline trucks and SUVs.
  3. Low crude oil prices (which fell to -US$37.6 in April) will encourage car buyers to stick to gas fuelled cars.


Chinese government has taken positive steps in 2020 to revive the demand for new-energy vehicles (NEVs). It is expected that the government will continue to support NEVs with sales mandates and subsidies driving the market.

  1. In April 2020, China scrapped vehicle purchase tax on NEVs, effective in 2021 and 2022, and broadened the scope of the exemptions to include all NEVs.
  2. The NEV subsidies were supposed to end this year. However, during the same month, the government announced to extend the subsides to 2022, with a slower phase-out pace.

NEV sales during the January-May period crossed 260,000 vehicles, declining 44% from last year. However, sales decline continues to drop with each passing month as the pent-up demand is released and business activities comes to normal. Counterpoint expects a strong H2 2020 for EV sales in the country compensating for the demand lost during H1 2020.


The European car sales increased around 90% during January-April 2020 compared to last year due to following reasons:

  1. 2020 is the target year for EU CO2 emission standards to limit average CO2 emissions per kilometre per new car sold
  2. Germany increased the EV subsidies in February, boosting demand in the region
  3. Italy’s move to introduce incentives worth €60 million in 2019 and €70 million in 2020 and 2021 started to have its impact on sales

The impact of the pandemic will be diluted during rest of the year as OEMs focus on meeting their emission targets. It is likely that the governments will respond to the pandemic by increasing subsidies and incentives for EVs to meet emission targets, boost economic growth and generate more jobs. The proposed US$22.6 billion (€20 billion) package for two years for clean vehicles, with 2 million electric and hydrogen vehicle charging stations to be installed by 2025, is a step in this direction.

Counterpoint: COVID19 Impact on EV sales

Author: Aman Madhok


Week 12: Micro mobility – Silver linings amidst the pandemic?


Micro mobility globally has been severely impacted by COVID-19 with lockdowns resulting in reduced ridership. The road to recovery is a tough one, but Counterpoint believes micro-mobility will be the biggest beneficiary from COVID-19 among all forms of shared mobility.

Citizens and governments in many cities are becoming increasingly aware of the benefits of micro-mobility, and companies should prepare for coming opportunities to not only survive, but to grow over the long term.

Counterpoint: COVID19 Impact on Micromobility

Key indicators showing potential for rebound as lockdowns ease:

  • Changing customer preferences – businesses are realising productivity is not an issue. In fact, it has increased in some cases as employees work from home. This is expected to become permanent for many companies moving forward, leading to a surge in short distance travel. People are more likely to choose quick and eco-friendly e-bikes and e-scooters as they travel short distances around their home rather than taking long commutes.
  • Amidst the economic downturn, choices for last mile and personal transportation will need to be economical. E-scooters, e-bikes and kickboards are significantly cheaper than owning a car.
  • Concerns around social distancing will encourage people to avoid public transport, boosting take up of shared e-scooters and e-bikes. In China, bike share operators like Hellobike, Mobike and Didi Chuxing are seeing good growth after easing of lockdowns, as people reduce dependence on public transport.
  • Lockdowns have resulted in less pollution, increasing environmental consciousness amongst the general public. This is expected to benefit the sector in near future. Indeed, high pollution levels in many Chinese cities have boosted the profile of the sector, making bicycles and e-bikes an important mode of last mile transport.

Government support

To aid social distancing, governments are considering infrastructure investments to help the micro-mobility sector to grow.

  • The UK government is urging people to avoid public transport and instead use private vehicles, bicycles, or walk. It has announced an initial £250m (US$306m) emergency active travel fund (the first stage of a £2bn investment commitment) for EVs, cycling and walking infrastructure. Buildout of E-scooter trails in the country will be brought forward to 2020 from 2021. Pop-up bike lanes, wider pavements and safe junctions will be a part of the fund. £10m (US$12.2m) from the fund will be committed to street EV charging infrastructure.
  • Bogotá, Colombia has added 47 miles of cycling lanes to accommodate more riders and aid in social distancing. Cities such as Mexico City and London are benefiting from the current cycling infrastructure.
  • Other cities have blocked some roads to traffic, providing more space for pedestrians and facilitate social distancing. For instance, Oakland, California has restricted traffic on 74 miles, or 10%, of its roads, helping pedestrians and cyclists keep at least six feet apart.

Green shoots

As lockdowns ease, some e-bike companies are already seeing an increase in demand.

  • E-bike maker Vanmoof, which secured funding of $13.5m in May 2020, saw sales increasing 48% YoY during Feb-March period, and over 20% for the Jan-May period.
  • UK-based foldable bike manufacturer Brompton announced its online sales increased five-fold since the launch of the ‘Direct To Home’ service from the start of April.
  • E-bike sales in Germany have seen a significant increase from April with the easing of lockdowns, creating a shortage of e-bikes in many cities.


  • The global micro-mobility market recovery will likely start in 2021, or as we see stabilization in COVID-19 cases. A second wave of infections could delay the recovery further.
  • Most micro-mobility companies are relatively small and localized start-ups, with many already seeing losses before the pandemic started. The market will see consolidation as cashflow continues to tighten. Intel’s recent acquisition of Moovit, a mobility-as-a-service (MaaS) provider, for US$900 million signals the possibility of similar acquisitions in the sector.
  • E-bikes, e-scooters and kickboards are still illegal for travel on roads in many cities. Further, there is a lack of standardization for these types of vehicles.


  • Governments can play a pivotal role in the adoption of micro-mobility. The recovery will vary from country to country depending on favorable government policies, subsidies and infrastructure development.
  • Measures such as self-sanitizing handlebars, onboard sanitizers and periodic cleaning of vehicle fleets will become important to attract riders.
  • Innovative schemes and discounts can help micro-mobility companies through the tough times. For instance, two-wheeler sharing company Bounce is offering its bikes on a weekly and monthly subscription basis.

Utilization of existing vehicle fleets into logistics and food delivery can open up new revenue streams for micro-mobility companies. For instance, two-wheeler sharing company Rapido is looking to earn 25% of its revenues from logistics moving forward.

Author: Aman Madhok


Week 11: US May sales – Is the worst over?

Actual passenger vehicle (PV) sales reported for the US in May suggest the domestic auto industry could be on its way to recovery.

Reported May sales for PVs and light trucks came in at around 1.1m units, down 33% YoY but an improvement over April and March’s respective 45% and 38% declines. Further, breaking the 1m monthly mark for the first time this year, May volumes showed significant improvement over the 350,000 units sold in April, with light trucks being a bright spot.

US auto sales on the rebound

May is traditionally a critical month for the US auto industry as it marks the beginning of the summer sales season. With almost all states having eased COVID-19 restrictions, most automakers in the country have reported sales rebounds during May.

Monthly sales declined over 30% YoY for General Motors, Ford, and FCA. Leading Korean carmaker Hyundai saw a 13% YoY decline, a 5% pt improvement from April. Honda saw a May YoY sales drop of 17%, with trucks performing much better than cars – down 10%  and 25%, respectively. Toyota reported a YoY sales decline of 26%, May’s unit sales were almost double that of April, which fell 56% YoY.

It is possible April could be the low point in a possible V-shaped recovery, with states re-opening and dealerships returning in May. The month has shown significant sales improvement and recovery, highlighting pent-up demand. As well, extraordinary promotional offers by dealers and automakers alike have brought consumers back to showrooms and encouraged buying.

Counterpoint believes that May’s sales pace, while lower than last year, is indeed the start of recovery for the industry. Automakers are already scrambling to replenish inventories as customers return to showrooms. However, there is still a long road ahead, and we will continue to track the market over the coming weeks.

Production hiccups stalling assembly lines

As many states across the country eased shelter-in-place restrictions during the month, May also brought attempts by auto OEMS looking to return to normalcy with restarts at their assembly plants.

However, supply chain issues continued to plague production lines at major auto plants, as they faced problems from suppliers in Mexico. While most plants in the US and Canada restarted by mid-May, most manufacturers in Mexico had not resumed operations even by the end of the month. Given the inter-dependency of the North American automotive supply chain, most plants in the US continue to face parts shortages, resulting in sporadic production operations. It may still be a few months before we see some stability.

Counterpoint estimates prolonged plant/supplier shutdowns have resulted in the loss of nearly 3m units of vehicle production in H1. Anticipating slower line-speeds and reduced demand over Q3 and Q4, we expect full-year 2020 output losses to increase to over 3.5m units, a 22% decline from last year.

In any case, with automakers already concerned about record low inventories at dealerships, carmakers have been looking to continue working over normally planned shutdowns in summer.

Keen on riding the wave in customer demand, especially for light trucks, General Motors has called off its traditional two-week summer shutdown and will continue to produce vehicles at most of its North American plants.

Similarly, Ford Motor Company has shared that most of its US assembly plants will be reducing their annual summer shutdowns to one week.

As well, most other auto OEMs are considering deferring annual summer breaks to later in the year.

Sales recovery to hit headwinds?

The question going forward is whether recovery signs will continue into June and further out.

While recent trends suggest sales are showing steady gains and automotive manufacturing in North America is gradually coming back on stream, there is also the possibility of a resurgence of the virus bringing further economic headwinds.

However, Counterpoint continues to maintain its current outlook for the US auto PV and light trucks market at a base case estimate of almost 13.4m units in 2020, marking a 24% YoY contraction.

Exhibit 1: US Vehicle Sales,’000 units

Counterpoint: Coronavirus Pandemic Impact on US Automotive Industry

Author: Vinay Piparsania


Week 10: Changing consumer behaviors and how mobility companies can adapt

The pandemic is affecting most sectors of the economy, especially shared and smart mobility operators. Public-transport usage in major cities has declined anywhere from 70 – 90% of normal loads, and operators are now required to follow strict protocols like requiring face coverings, temperature scans and limiting the number of riders in trains and buses to ensure social distancing.

Similarly, ride-hailing mobility usage has plummeted dramatically, with several players suspending services during lockdowns. In the US, demand for Uber and Lyft fell by over 80% in April from pre-COVID levels.

Over the long term, the outbreak will have lasting impacts on shared mobility as the pandemic alters the economic, regulatory, and technology environment, as well as changing consumer behaviour.

Changes in consumer behavior and preferences

Mobility is an essential aspect of our lives, but how we get around in the future could be significantly different in the post-COVID world. Social distancing is the most significant driver of change in this new environment, with people rethinking their transport modes to avoid the risk of infection. Recent trends in China’s major cities are demonstrating that as bus and subway ridership drops, private cars, walking, and biking are gaining in popularity.

Personal vehicle use may be the winner in the short term, and app-based ride-hailing aggregators are seeing a dramatic decrease in consumers using their services as remote working becomes the norm.

Further demands are being made on share-car drivers and their companies to take responsibility for keeping vehicles clean and virus free. To adapt, mobility industry players are adjusting their tactics, with leading companies focusing on various strategies.


Lyft, which announced cuts and furloughs affecting hundreds in May, stated that rides on its platform in the US reached only 25% of pre-COVID levels during the month, with consumers slowly coming back in cities where lockdown restrictions were eased. Lyft drivers are now required to self-certify within their app of wearing a facemask before they are allowed to pick up passengers.


While the global number for June trip requests are picking up as several countries ease restrictions, rides are still significantly below last year’s levels. In an attempt to improve profitability, Uber has remained focused on its core businesses of ride-hailing and food delivery, and also announced cuts to its workforce. Uber also introduced a new feature requiring drivers to take a selfie of themselves wearing a facemask before logging onto the company’s network. Uber has also been providing disinfectant sprays to drivers, encouraging them to sanitize their cars regularly.

Didi Chuxing

With cities in China now officially re-opened for business, Didi Chuxing, the country’s largest ride-hailing app, is seeing ride-sharing demand coming back to levels similar to last year.  Since May, Didi has been using AI technology to authenticate that its driver-partners are wearing face masks.

Diverse regulatory and policy responses across regions

The current crisis is helping some regions move more quickly towards sustainable mobility, while others are looking to defer or relax regulatory mandates to support depressed automotive industries.

In some markets, incentives such as cash for turning in old cars is driving sustainability through replacement and also encouraging adoption of electric vehicles (EV).  In other regions, like the US and China in particular, regulators have considered relaxing emission targets in support of automakers.

Chinese regulators are also relaxing, at least for now, policies limiting personal vehicle ownership in order to facilitate social distancing. Many governments are also showing interest in dedicating space for pedestrians and cyclists, while some cities like New York are looking to close some streets to vehicular traffic.

Technology development 

Over the short to medium term, the pandemic could delay the development of advanced technologies, such as autonomous driving, as automakers divert research budgets to fund immediate cash requirements. Similarly, investments in micro-mobility and shared-mobility start-ups are expected to fall and could drive market consolidation.

The impact of COVID-19 on EV development will differ across regions. In China, we expect post-COVID EV sales to rebound, with continued investment in development. In Europe, while ramp-up of EVs may be delayed with historically low oil prices, stringent environmental regulatory pressures could remain a counter-balance. In the US, we could see EV demand stagnate should federal emissions regulations be eased and oil prices remain subdued.

Over the long term, however, autonomous vehicles, micro-mobility solutions and other technologies that support physical distancing will benefit. We believe that as the initial crisis subsides, customer demand for these solutions could soar.

How can mobility companies cope?

Even before the pandemic, mobility and automotive start-ups were suffering from slowing growth in major economies. Battered by lockdowns and movement restrictions, ride-hailers around the world have had to resort to cutting jobs and slashing costs.

Looking ahead as the pandemic gradually comes under control, mobility companies will need to look at developing detailed plans to scale up operations, not only focusing on where, but how. A portfolio review aiming to rationalise services can help focus on profitable operations and decide on which technologies are to be prioritised, so to emerge from the crisis leaner and stronger.


Counterpoint believes recent consumer behaviour changes in the mobility space will be temporary, and shared-mobility solutions, including public transit, will rebound. Micro mobility and last-mile solutions, too, will eventually recover, as cleaning and disinfection protocols are practised, with status updated on ride-hailing apps.

Now more than ever, it has become imperative for automakers and mobility operators to review their long-term strategy.

Exhibit 1: COVID-19 Impact to Global Automotive and Shared Mobility IndustryCounterpoint: COVID19 long and short term impact on automotive industry

Author: Vinay Piparsania


Week 9: Poised for a rebound?  May’s mixed signals

As the effects of the pandemic are being brought under control, we are seeing gradual automotive sector recovery, though at varied rates.

With most parts of the world easing lockdowns in May, auto sales have begun to show some signs of improving. Prospects for China, having reopened earlier than most, and the US are looking more positive than for Europe.

In the short term, the global automotive industry appears to be poised for a rebound as manufacturers replenish dealer inventories and meet pent-up demand, especially with many consumers expected to take efforts to avoid public transport and ride-sharing.

Longer-term, however, Counterpoint sees a more gradual recovery, with dampened vehicle sales from Q1 carrying over into Q2. Supply-side issues will also cause problems, with stuttering production schedules from broken supply chains, financially stressed suppliers, and delayed new model launches limiting supply.

With some leading indicators now visible, we have decided to maintain our current 2020 PV forecasts. However, key risk factors of a virus resurgence remain high for some locations, with the possibility of markets going into lockdown again.

Below is our latest outlook, incorporating May sales updates from key global markets.


The first country to be impacted by the virus outbreak, China has been quick to recover from the pandemic, and PV sales are almost back to pre-coronavirus levels of growth. Largely on account of the automotive industry’s effective restart in March, sales and production activity approached normal levels in April, with PV sales up 4.4% YoY to 2.1m units. May saw further improvement, with sales rising 12% YoY to 2.1m vehicles.

Pent-up demand drove steady deliveries in April. This was further supported by government subsidies and intensive promotions and discounts offered by dealers. The momentum continued into May, raising our overall expectations for Q2.

However, domestic and global headwinds remain, and the market still faces a high level of economic uncertainty. Consumer confidence is fragile, with fear of unemployment and income loss dampening high ticket, discretionary purchases.

As a sustained, comprehensive recovery is still to be established, prospects for H2 remain cloudy and we maintain our current forecasts.


May sales are estimated at around 1.1m PVs, down 30% YoY, but an improvement to April and March’s respective declines of 45% and 38%. Easing of restrictions across most of the country helped May pass the one million mark.

Throughout the lockdowns, however, the market did demonstrate some resilience, with significant commercial activity continuing as vehicle sales were categorised an ‘essential service’ by many states.

While American retail consumers are coming out again to look at cars and trucks, facilitated by digital retail tools and appealing discount offers, fleet and commercial category buyers, particularly those in rental cars, are not. This is worrying as new vehicle sales to rental car companies accounted for about 10% of the overall market, or 1.7m vehicles, last year. Bankruptcy filings of Hertz and its parent company Advantage Rent A Car in the last week of May will likely weigh down US auto sales.

We maintain our current outlook for the US, with a 24% YoY contraction expected in 2020.

Europe and the UK

European car sales picked up slightly in May after a disastrous April. In Spain, May sales dropped over 72% to 34,000 units, and to almost half previous year totals in France, Italy and Germany, which saw sales of 96,000, 100,000, and 168,000 units respectively, as partial lockdowns remained. Overall, YoY sales for Western Europe fell over 57% in May, to 556,000 units.

For the UK, new car registrations were down 89% YoY in May, with 20,200 cars registered last month. Despite the drop, the figure marks an almost five times increase over new car registrations in April, when only 4,300 cars were sold. The Tesla Model 3 topped the UK new car sales chart for the second month running, with 850 units delivered, making up nearly 5% of all registrations.

With around half a million new cars registered since the beginning of the year, the overall UK market has halved in the first five months of 2020, compared to almost one million units registered during the same period last year. While showrooms in England have reopened after two months, dealerships in Scotland, Wales, and Northern Ireland are still shut.

Reopening’s have helped sales in Germany, with May sales falling by 50% compared to over 60% in April.

As we look ahead, Counterpoint is paying particular attention to any government announcements around fiscal policy or economic relief programs such as that planned for France and Germany, which are looking to lower VAT. While details will vary by country, recent announcements imply modest levels of incentives can be expected.

Even with some signs of improvement in May, the industry remains in crisis, with various stages of lockdowns expected for some time. Our outlook for Europe remains unchanged – a 26% contraction expected in 2020, with the possibility of a gradual recovery in H2 2020 as consumer sentiment improves with the easing of lockdowns.


After zero sales in April, preliminary shipment data for May suggests only 37,000 units were sent to dealerships, an 85% decline YoY, as the country started to open up gradually during the month.

With auto OEMs and dealerships estimated to be holding nearly 300,000 units of inventory – about two month’s stock based on current projected retailing rates – wholesale shipments over the next few months are expected to be difficult.

Overall consumer sentiment in the country remains weak, mostly because of the economic fallout of a complete nationwide lockdown lasting 50 days, depressing GDP forecasts, and increased caution around car loans. For any significant recovery to happen this year, it is critical that automakers and dealers have operations and consumer offers fully in place as the festive sales season commences during the last quarter of the year.

Our India sales forecast remains unchanged. Our base case outlook sees YoY passenger vehicles declining by 25% to around 2.1m units.


While having been a relative bright spot so far, the Japanese market worsened in May. Sales dropped, nearly 55% YoY to 218,285 vehicles, compared with a 29% YoY decline in April.

Consumer sentiment remained depressed, with expectations of an economic downturn curbing big ticket purchases. Also, the government’s declaration of a state of emergency and stay-at-home advisory, which ran into the Golden Week holiday in late April to early May, severely impacted sales, which normally spike during the annual holiday.

While overall economic activity shows some positive signs of recovery since lifting of restrictions in May, our outlook remains unchanged.

Revised Global Automotive Outlook

While varied signs of recovery began to show in May, Counterpoint Research remains cautious and we leave our earlier global automotive sales outlook unchanged at around 72m units for 2020, a 20.1% decline from 2019.

Exhibit 1: Global Automotive Sales (M units)

COVID19: Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 8: India’s Auto Industry to decline by at least 25% in all categories in 2020

India’s automobile industry, the fourth largest globally by volume, is headed for another year of significant declines as extended lockdowns impact production and consumer demand. Sales volumes of passenger and commercial vehicles are projected to drop to levels not seen in over a decade.

The storm continues

At the beginning of the year, the auto sector was already suffering in the midst of a challenging economy.  Compounding this, more stringent environmental and safety regulations, the growing popularity of shared mobility platforms and cautious lending by banks and non-banking financial companies (NBFCs) negatively impacted vehicle sales. COVID-19 is now making the situation far worse.

Based on data reported by the Society of Indian Automobile Manufacturers (SIAM), March passenger vehicle sales declined 51% YoY to 143,014 units. Sales of two-wheelers fell 40% to 866,849 units, and commercial vehicles declined 88% to 13,027 units. With a nationwide lockdown in effect from the last week of March, the industry saw zero production and sales of new vehicles in April.

Factories and dealerships struggle to resume operations

While automakers began partial operations in May, it has been an uphill struggle. Openings were allowed only after receiving due approvals from respective state authorities, and conditional to following safety protocols such as body temperature scanning, social distancing and ensuring high standards of sanitization.

Shutting down operations was far easier than reopening factories as companies need to manage complex synchronization issues. The resumption of operations requires OEMs to coordinate with hundreds of local and global suppliers, logistics partners and thousands of employees. The biggest challenges come from not having enough workers willing to come back and sufficient and continuous parts supply. It is likely plants across the country will function with a skeleton staff at least until July.

Slow dealership re-openings are another problem, with almost all vehicle sales delivered through them – online sales are a rarity and still under development. As of the last week of May, only 3,500 dealerships were operational around the country, representing 20% of the total network. And amongst these, half were operating only their service departments and not showrooms.

The sharp contraction in sales will also lead to a decline in average manufacturing capacity utilization. For the PV segment, effective annual capacity utilization is projected to drop down to as low as 45%, from 60% a year ago. Two-wheelers and commercial vehicles will drop to below 50% and 35%, respectively, from 65% and 51% a year ago.

Demand outlook for 2020

The lack of government policy intervention for the automotive sector in this year’s national budget and also recent fiscal stimulus packages combined with a lack of visibility around when social and economic demand conditions will get back to normal has resulted in Counterpoint revising our 2020 forecasts. Our base case outlook sees YoY passenger vehicles, two-wheelers, and commercial vehicles declining by 25%, 21% and 28%, respectively. CV sales in particular, have been languishing under the impact of a new axle load norms, and is unlikely to show much recovery this year with freight demand projected to remain low.

Recovery timing

Demand recovery can only be expected around the festive season in the last quarter of the year. With growing consumer preference for cheaper, personal transport, two-wheelers – motorcycles in particular, with their higher rural share – will likely be the first category to see a rebound. Should the government develop scrappage schemes and lower interest rates for vehicle loans, along with reduction in sales and road taxes, as seen across SE Asia, these interventions could accelerate recovery.

Despite the above challenges, we remain positive longer term in view of India’s comparatively low vehicle penetration – 110 two-wheelers and 32 cars per 1,000 – Australia has 740, Japan has 591 and China has 164 vehicles per 1,000 individuals. We expect recovery post-2022, helped by improvement in non-banking financial institutions and the overall economy. Combined with a young population, rapid improvements in road infrastructure, growth in rural demand and possible introduction of entry-level passenger cars, this could significantly boost consumer demand.

Exhibit 1: Key Factors Affecting the Market

Counterpoint: COVID19 Key Factors Impacting Indian Automotive Industry


Exhibit 2: India Vehicle Shipments1 (in Million Units)

Counterpoint: COVID19 Growth Rate of Indian Automotive Industry; Cars, Two-Wheelers and Commercial Vehicles

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 7: Southeast Asia Pressure Points

As the world continues to deal with COVID-19, economies are moving into recession. The automotive sector, with its large-scale production and tightly interconnected global supply chain, remains the worst impacted.

This week we focus on the impact to Southeast Asia, with ASEAN representing the fifth-largest auto market cluster in the world.

Lockdown measures introduced mid-March

Like many others, most ASEAN countries underestimated the risk of outbreak at the start of the year, with governments doubtful on it becoming a pandemic. Remaining tentative on diverting resources to public health, most ASEAN countries waited, introducing lockdown measures only around mid-March. As a result, key economic sectors in the region remained, for the most part, unaffected by the outbreak before this time – this included international travel, tourism, and export dependant businesses.

However, as the crisis erupted and lockdowns ensued, millions across the region rapidly began losing jobs as business came to a standstill. As immediate countermeasures, central banks across the region introduced rate cuts and easier lending terms to ensure liquidity. Governments also announced fiscal support measures including direct disbursement, soft loans, and tax cuts to mitigate the impact of the potential economic crisis.

The auto sector has been hit hard, with overall Q1 vehicle sales in ASEAN5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) falling to 683,000 – levels not seen in nearly a decade.

Declines for the month of March are the most revealing, with new vehicle sales plummeting around 40% YoY across ASEAN, and auto OEMs selling only 197,000 vehicles – this compared to 328,000 a year earlier. We expect April to be worse, with auto production remaining shut across the region last month and economic damage possibly worse than the 1998 Asian financial crisis.

Significant revisions to our Indonesia, Thailand, and Malaysia Automotive Outlook

Economic growth in the region was already slowing down due to US-China trade tensions, and lockdowns have only exacerbated the situation – especially in Thailand and Malaysia. The extent and duration of distancing measures have been severe, and we have reviewed our FY 2020 outlook in this updated context.


In Indonesia, SE Asia’s largest auto market by volume, vehicle sales saw a comparatively moderate Q1 decline of 7% YoY to 237,000 units, with negative lockdown effects mitigated by a mid-March rollout. Though skeptical early on, the government eventually announced a partial lockdown on March 18, allowing only essential businesses such as food, healthcare, banking, and utilities to operate; as a result, vehicle sales for the month dropped 15% YoY to 77,000 vehicles.

With the full effect of shutdowns to be felt in the weeks ahead, we project steeper YoY vehicle declines from April onwards. And with a recession imminent, Counterpoint estimates this year’s auto demand to fall 36% to 603,000 units.


One of the region’s largest markets, Thailand reported Q1 sales of 200,000 units, a YoY decline of 24% after an especially bad March, which saw a 42% YoY plunge to 60,000 units. This has worsened the shrinking market, which took a U-turn in 2H19 after two straight years of strong growth.

With a prolonged lockdown, Counterpoint expects broad-based economic challenges resulting in a 2020 GDP decline of -5.5%, the worst drop since the 1998 Asian financial crisis. We have revised this year’s outlook accordingly, and estimate new vehicle sales of 745,000 units, a 28% annual decline.


Malaysia was one of the worst-performing markets in the region with Q1 sales falling by over 26% to 106,000 units. The government implemented its Movement Control Order (MCO) from mid-March, prohibiting all interstate and international travel, and sales of non-essential items including automobiles. Sales plunged by almost 60% in March to around 22,000 units. With no new vehicle production and all dealers in the country closed, zero vehicle sales have been reported for April.

While Malaysia has begun to ease lockdowns, allowing resumption of partial manufacturing operations, restrictions on reaching full capacity at automotive plants remain in place until June 9. Counterpoint estimates Malaysia’s vehicle market this year to fall by over 29% to 426,000 units.

The Philippines and Vietnam

The Philippine market is fell in Q1 by over 16% YoY to 90,000 units, with the impact of the pandemic becoming evident only in March when the government began mid-month to lockdown the country’s most populace regions. We expect the full effect of the pandemic to become more apparent from April.

Vietnam was the region’s worst-performing market during the quarter, with sales estimated to have dropped around 32% YoY to 50,000 units. Its comparatively bad performance was due to Vietnamese authorities in February taking an earlier stand to contain the spread of the virus. Recently on May 20, the Vietnamese government, in a move to stimulate automotive demand, has approved plans to reduce vehicle registration fees by 50% till the end of the year.

2020 ASEAN vehicle sales outlook

We have revised our overall vehicle sales projections for 2020 and now estimate a YoY decline of 30% to 2.3m units, with country breakdowns as follows:

Exhibit 1: ASEAN5 Vehicle Sales, Q12019 & Q12020, ‘000 Units

Counterpoint: COVID19 ASEAN Automotive Sales


Exhibit 2: ASEAN5 Vehicle Sales, 2016-2020E, ‘000 Units

Counterpoint; COVID19 ASEAN Annual Vehicle Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 6: Challenges in Syncing Supply Chain

As the COVID-19 pandemic broke out in China at the beginning of the year, vulnerabilities in the global automotive supply chain were exposed with nearly 85% of the world’s supplies dependent on China in some way or another. The ripple effect was felt globally, and most auto manufacturing came to a sudden halt as lockdowns shut plants.

Even before the pandemic, the industry was stressed financially from increased emissions-related upgrade costs and increased R&D investments in emerging technologies. As manufacturing operations resume, the added burden of COVID-19 safety protocol compliance, plummeting demand, and inefficiencies from underutilized capacity are further exposing OEMS and suppliers to severe liquidity issues. Further disruptions are likely to continue, bringing the possibility of major consequences to specific segments of the auto ecosystem.

Most regions remain vulnerable, and Counterpoint expects substantial volume drops in 2020. For example, in the major markets of North America and Europe, we expect base case sales of 13.4m and 13.6m, a YoY decline of 24.1 % and 25.7%, respectively.

Below is our analysis around April updates from key global markets.


China’s April auto sales were up 4.4% YoY to 2.07m units, as reported by China’s Association of Automobile Manufacturers (CAAM). February and March saw MoM declines of 79% and 43%, respectively. With April having apparently turned the corner with an MoM increase, we expect the trend to continue over at least the next two months with potential pent-up demand being fulfilled.  However, even as China is now in recovery mode, CAAM expects auto sales to drop 15% in 2020 to 21.3m units. This is in-line with Counterpoint’s recently downgraded forecasts.


While US passenger vehicle demand tanked over the past few months, April sales slightly exceeded our expectations falling 46% YoY versus our estimate of a 50% decline. While a catastrophic hit in any other year, the number does offer a glimmer of hope, especially in the context of states and local governments lifting restrictions at manufacturing facilities, dealers opening their doors, and online channels continuing to engage with customers.

Adhering to new safety norms, i.e. frequent plant sanitization, wearing of face masks, and temperature checks upon entry – Daimler and Hyundai have resumed production at their Alabama plants in the last week of April. The UAW union has also given a go-ahead for its members of the Detroit 3 (GM, Ford, and FCA) to return to work. Other automakers plan to follow similar protocols, including modifying layouts and floor plans of manufacturing sites to have fewer workers at each work station. All these additional safety measures will limit the pace of ramp-up and eventual production line rates. While parts inventory may theoretically be available – with WIP material already in place before the shutdown – it will take time to rebuild and stabilize the supply chain, with component suppliers needing to implement safety measures at their facilities too.

May should mark the start of a gradual recovery in US output, although volumes for the month are still projected to decline by 65% YoY. Even with all plants back online, subdued demand will result in lower production volumes. As a result, we expect 2020 passenger vehicle sales to remain 24% below last year.

Europe and the UK

With lockdown measures in place since mid-March, some markets have registered almost no registrations in April. France’s sales fell by 88% last month, while sales in Italy plunged 98%.

New car sales in the UK fell 97% as dealerships remained shut. Interestingly, the month’s top-selling brand, typically dominated by traditional automakers such as Ford, Volkswagen, and Vauxhall – was the Tesla Model 3, selling 658 units, outselling the next two best-sellers combined (Jaguar I-Pace and Vauxhall Corsa at 367 and 264, respectively). Overall, however, the numbers were very small when compared to a year earlier, when Ford’s Fiesta topped the list with 5,606 registrations. In possibly a sign of changing times, Tesla’s online sales system, with buyers pre-ordering their cars and being directly delivered with a contactless handover, may have just given it the edge. Britain’s biggest car factory, operated by Nissan in Sunderland, will not resume production until June.

Overall, Western European registrations fell 80% YoY in April, compared with April 2019, and we expect the declining trend to continue through at least the next six months with risks remaining high on growing unemployment and soaring government debt, as well as the possibility of virus cases picking up as lockdowns are lifted.


With the lockdown of all showrooms and manufacturing facilities, the Indian auto industry saw zero production and sales in passenger and commercial vehicles (PVs and CVs) in April, which followed March’s 50% and 88% drop in PVs and CVs, respectively.

The largest carmaker in India, Maruti Suzuki, only managed export shipments of 632 units during the month with port operations having been partially resumed. Similarly, exports of Hyundai and Mahindra stood at 1,341 and 733 units respectively last month, while having reported zero domestic production and sales. Compared to April 2019, when the country reported total PV sales at around 320,000 and exports at 56,800 units, the current lockdown will surely leave some deep economic wounds. With the partial opening of a few plants allowed from last week subject to strict safety and social distancing protocols, every auto manufacturer is working with dealers and supplier partners to rebuild the ecosystem.

With no clear definitive indication of when the social and economic conditions in the country will get back to normal, Counterpoint is holding to its base case scenario of 20% YoY decline in auto sales, and revising the worst-case outlook to a 35% YoY decline should the GDP growth outlook become negative.


South Korea remains the industry bright spot as the country continues to be successful in managing the pandemic domestically. Sales increased 8.3% YoY in April, a second consecutive month of YoY growth. However, a recent resurgence of some new coronavirus cases may be a growing concern.

There continues to be an increased risk that global passenger vehicle demand could drop to 70m or below if the current economic recession becomes further entrenched or a second significant wave of the virus occurs post-lockdown. While economic interventions and industry incentives could have a big impact on reversing demand declines – as we saw with scrappage schemes implemented during the 2008 financial crisis in North America – the success of any stimulus package will depend on the quantum of financial support from governments, the duration of such initiatives, and qualifying criteria for consumers.

Revised Global Automotive Outlook

The scale of distress to the automotive supply chain in the current crisis is unprecedented. A general lack of visibility, particularly on the lower tiers of the supply chain, means the weakest links will inevitably be revealed as production restarts and companies scramble to secure components. The most financially vulnerable are the smaller tier 2 and 3 suppliers, specialist tooling suppliers, and some logistics providers. As a result, our global 2020 base case sales growth estimate is around -20%.

As current FG stocks near depletion, future production planning will need to be revised to the new normal of lower demand. Although the adage ‘with every crisis there is an opportunity’ still rings true, things will be especially tough as the industry right-sizes and become leaner.

With efforts initiated by automakers and suppliers to consolidate, Counterpoint’s outlook remains cautious. Keeping in mind production already lost, the challenges in returning to work and the risk of prolonged low-capacity utilization from subdued demand, our revised global passenger vehicles sales outlook is around 72m units for 2020.

Exhibit 1: Impact of COVID19 on Global Automotive SalesCounterpoint:COVID19 Impact on Automotive Sales

Note: The nature of the current global health crisis means we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 5: Digital Auto Retailing to Become More Widespread


Car sales have traditionally been a single, decentralised sales channel, i.e. automakers/importers sell cars to dealers, and dealers to consumers; COVID-19 is shifting some of this dynamic towards digital.

We have recently seen dealers ramping up their websites to help buyers select desired models, process payments and complete related paperwork.

Mercedes Benz has plans to convert 25% of its sales online by 2025, and long term, it is possible some automakers may adopt a Tesla-like business model by going fully online and removing the dealership from the equation.

However, we believe many car buyers will continue to want a brick and mortar experience, preferring to kick the tires and test drive before buying. Dealerships will continue to account for a vast majority of cars sold globally during the next decade.

The Tesla Model 

All Teslas are sold online and delivered to the customer’s doorstep. Company-owned showrooms are limited and located at high footfall places like malls. The purpose of the showroom is not to close sales, but to educate, display the product, showcase the latest technologies, and answer any customer queries. By removing franchise dealers from the buying process, Tesla is able to save on dealer commissions and control the overall buying experience. Maintaining closer contact with car-buyers not only enhances this, but also helps Tesla better understand customer expectations and communicate offerings.

Tesla is the only major automaker to have shown increasing sales during Q1 2020. An important factor behind the company’s performance was that its supply was less disrupted due to COVID-19 compared to competitors’, which depended on traditional dealerships. The success of the Tesla business model is expected to encourage other automakers to shift part vehicle sales online.

Exhibit 1: Factors Driving the Shift Towards Digital Retailing

Counterpoint: Factors Driving the Shift Towards Digital Retailing

Key Drivers of Online Sales

  • With most car sales in many countries happening online due to COVID-19, car-buyers are becoming more aware and accustomed to the idea of buying cars online. Dealers are enhancing their online selling capabilities and using unconventional ways to communicate with car-buyers, using Zoom calls and WhatsApp for instance. Initial industry feedback has been somewhat surprising, revealing an overall better buying experience via compared to walk-ins.
  • Growth of comparison and buying sites like, Carvana and Vroom provide a wealth of information like availability, specifications, comparisons and video reviews to aid buying decisions. Price comparisons influence buying behaviour by helping consumers make informed decisions around costs.
  • The COVID19 pandemic has accelerated the shift towards digital retailing. Dealers lacking online capabilities are now partnering with third-party apps to connect and communicate with car-buyers online.

Key Hurdles

  • Automakers are bound by franchise agreements and many states do not allow direct selling by automakers.
  • Many state governments require in-person signature on the documents making full online sales impossible.
  • Many car-buyers prefer to evaluate the car in person and take it for a test drive before making a decision.
  • Arranging home test drives would add to extra time and costs for the dealers.
  • In many countries the e-commerce ecosystem is not developed enough to fully support online sales.


With social distancing unlikely to disappear in the foreseeable future, e-commerce will become an important buying channel for almost everything, including cars. Automakers and dealers are being forced to accept online sales or lose business. An online presence will soon become a ‘must have’ feature. However, dealerships and walk-ins will likely continue to account for the vast majority of car sales through the long term, mainly due to customer preference for test driving and seeing the vehicle in person.

Author: Aman Madhok

Week 4: Automotive Industry Creeping Forward

The COVID-19 pandemic continues to pummel the global auto industry, resulting in its one of the worst performing quarter since the financial crisis of 2008.

With governments having mandated various lockdown measures over the past few months, both supply and demand have been affected. Automakers in China, Europe, and the United States suspended plant operations, disrupting production, and consumer demand has waned as showrooms have closed and people shelter at home.

This week, while many production centers globally have announced extending shutdowns further into May, some automakers have also begun the process of re-starting manufacturing, albeit with caution.

Ensuring Enhanced Safety Protocols

Automakers and suppliers are taking the required steps for safe operations. These include things like temperature screening, daily health update questionnaires, reconfiguring of assembly lines to facilitate one-to-two-meter social distancing, and requiring the use of facemasks and gloves.

Some manufacturers are going beyond the requisite measures. Ferrari will offer voluntary blood tests to check for virus exposure, and FCA’s unions are proposing to move mealtimes to the end of shifts, allowing employees to avoid crowded canteens by clocking off 30 minutes early and eating at home or elsewhere.

Global Plant Openings

In the United States, several large automakers, including FCA, Honda, and Toyota, are aiming to restart production during the first week of May. In Europe, major automakers are hoping to begin building vehicles again in early May. Other automakers around the world are also publicly releasing opening dates, signaling to their suppliers when to ramp up for restart of production.

China Already Back to Business

In China, the initial epicenter of the outbreak and the world’s largest auto market, manufacturers in lockdown since late January resumed operations progressively from mid-February to early March; Volkswagen, Nissan, Hyundai, and Honda announced plant re-openings in mid-February, while General Motors, BMW, Toyota, and Volvo announced re-starting of plants from early April, including those in Wuhan province where the virus outbreak began. Volkswagen has managed to restart manufacturing at 32 of its 33 Chinese plants.

US Big Three in Re-Start Discussions with UAW

For the Detroit automakers, the United Auto Workers union (UAW) plays a critical role in deciding when and how plants will restart. Among the union’s primary concerns is to ensure members who report being ill will not be penalized for time away from work. The UAW has already supported GM and Ford’s efforts to launch the production of essential ventilators at their US plants – operations that have allowed the companies and the union to try out new safety protocols.

Ford, GM, and FCA are looking to restart some of their US plants in early May, and establish regular health protocols like screening, sanitizing, and social distancing. Production of Ford vehicles and engines is expected to resume during this period. Among others, Volkswagen has announced it will restart operations at its Chattanooga, Tennessee, plant. Volvo and Hyundai too hopes to restart work at its US plants by early May. Tesla is going to extend its factory shutdown orders through the end of May, following the extension of shelter-in-place orders in the Bay Area. Hyundai and Kia started operations of in their Alabama and Georgia on May 4.

 European Plants Returning to Normalcy

In Europe, an estimated one million jobs have been lost, with production losses at around two million vehicles. Several automakers have now started some limited production at their plants. Toyota resumed operations at its French and Polish facilities on April 22, after a month-long shutdown. Volkswagen restarted production in Zwickau, Germany, the first assembly plant in the country to restart operations. Audi restarted its engine plant in Gyor, Hungary on April 21. However, the luxury carmaker from the Volkswagen Group is yet to resume its car production in Germany. VW plants in the UK, Turkey, and the Czech Republic are likely to commence operations by early May. Jaguar Land Rover announced last Thursday it will gradually resume production at its Solihull facility in the UK, as well as its factories in Slovakia and Austria from May 18.

Hyundai has restarted output at its plant in the Czech Republic, while Renault has reopened its Portugal plant. The French carmaker’s Romanian facility is likely to resume operations soon. Volvo Cars announced its plants in Sweden and Belgium restarted work on April 20. Daimler’s contract manufacturer, Magna Steyr, restarted production of the Mercedes G-Class luxury SUV at its site in Austria last week. Italian sports car manufacturer Ferrari, one of the first carmakers to close its plant, is preparing to roll out cars from its Maranello facility in the next few weeks.

Indian Auto Industry Given Government Go-Ahead

Automobile, auto parts, and tractor manufacturers in the country have resumed operations after receiving due approvals from respective state authorities, conditional to following precautionary protocols such as social distancing and ensuring high standards of sanitization and hygiene.

Bajaj Auto, India’s leading 2W and 3W manufacturer, restarted operations this week at two of its plants, prioritising production of knock-down kits for export markets. Mahindra & Mahindra also commenced assembly at its tractor plant. Truck and bus OEM Ashok Leyland announced a partial production re-start.

In contrast, and despite having received necessary state approvals, Maruti Suzuki, India’s leading carmaker, has chosen not to resume production at its Haryana facility, as it wants to ensure both its own operational preparedness, and that of its entire supply chain.

Revised Global Automotive Outlook

Despite efforts initiated by automakers to resume manufacturing, Counterpoint remains cautious about the practicality, consistency, and effectiveness of these plans. Automotive supply chains are complex, and depend on many suppliers from disparate locations to be in sync. Shortage of even a single component can hold up an entire production line, resulting in inventory and cashflow backlogs. Unless the entire supply chain is up and running smoothly, vehicle production will remain challenging and constrained. Keeping in mind production already lost, extended lockdowns, challenges in returning to work, and the anticipated subdued demand, we have this week further downgraded our global sales outlook to around 73m units in 2020.

Exhibit 1: COVID-19 Impact on Global Automotive Sales, 2020Counterpoint: COVID19 Impact on Global Automotive Sales in 2020

Week 3: New Health and Safety Features to Come in Cars

Safety features in cars have long been considered critical and fitment mandated by policy continues to progress in this area. The COVID-19 pandemic now brings new health considerations and preventative features to the fore.

Counterpoint Research sees a rising trend over the next few years around health-related features being requested by car buyers – especially amongst vulnerable older age groups, those spending considerable amounts of time in their cars, and drivers and passengers of shared mobility and other public transport options.

Emerging Health and Safety Features in Cars

Preventive health and safety features currently offered by popular automakers as well as those under development are outlined in the exhibit below.

Exhibit 1: Emerging Health Features in Cars

Counterpoint: Upcoming COVID19 Specific Health Features in Cars

COVID-19 Specific Safeguard Features

Recent features developed by OEMs specifically for preventing the ingress of virus and bacterial contagions like COVID-19 include the following:

  • An N95 certified Intelligent Air Purification System which prevents bacteria and viruses from entering the car’s interior environment has been introduced by Geely Motors in China. The OEM is also developing self-cleaning and anti-bacterial surface treatments for commonly used touch points like grab handles.
  • Jaguar Land Rover (JLR) is working on adding a special ultraviolet (UV-C) light sanitizing unit as a part of future models’ HVAC systems to kill germs, bacteria, and viruses.
  • MG Motors recently partnered with Singapore-based Medklinn to explore areas related to car cabin and surfaces sterilisation. Car sterilisation is also gaining popularity in the used car market and workshops.

Given the current climate, these recently introduced health features could prove to be a key consideration for customers, all other things being equal. For instance, clean-air filtration systems are already popular, driven by a growing awareness around rising pollution levels. Additional safeguards combatting bacteria and viruses could further improve brand image by conveying innovation, safety and customer centricity.

With the continued spread of COVID-19, we expect other OEMs to follow in the footsteps of Geely Motors, JLR and MG Motors in the introduction of similar health features, though much is currently unknown about the spread of COVID-19 and efficacy of new features will need to be proven.

Other prevention-related growth areas include aftermarket products of car disinfectants and anti-bacterial seat covers.

Non-Embedded Connected Car Health Applications an Emerging Revenue Opportunity

While embedded health systems fitted as original equipment will add to development time and costs, non-embedded connected services (via smartphones, wearables, and personal devices connected to car infotainment systems) can be implemented more quickly and cheaply. These types of applications can become an alternative alert system for drivers, providing important information on things like hospital locations and infection hot spots as well as enabling general health-related services. Increasing consumer awareness around healthy lifestyles may boost the popularity of such apps, opening potential revenues streams for stakeholders across various sectors.

Exhibit 2: Non-Embedded Connected Health Services Key Stakeholders Counterpoint: Ecosystem of COVID19 Related Health Services

Author: Aman Madhok


Week 2: Vehicle Sales Tracking Severity and Subsiding of Outbreak

Global Update

With almost all countries having initiated varying levels of COVID-19 lockdown measures in March, a significant decline in global vehicle sales for the month was to be expected. Sales numbers from key markets confirm the impact, tracking the growing severity, as well as subsiding, of the COVID-19 outbreak.

Exhibit 1: Global Automotive Sales, M Units

Counterpoint: COVID-19 Automotive Sales Forecast by Region


With automotive production having stopped mid-March, US car sales for the month have dropped by over 39% YoY to around 1m units, the lowest volume for March in over a decade.

The biggest losers in relative volume terms are Chevrolet, followed by Toyota, Nissan, and Honda which have declined by over 60,000 units each.  In most states, however, sales figures for the first week of March were relatively normal, so the reported figures may not yet provide an accurate picture of the full virus impact. April and May will continue to be dismal in light of extended lockdowns, counterpoint expects full year US sales forecast to 13.9m units.


Day-to-day life is now reportedly gaining some normalcy in China, with auto plants cautiously resuming manufacturing operations and consumers slowly coming back to showrooms. Most dealers, however, continue to face inventory shortages; the Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

According to the China Association of Automobile Manufacturers (CAAM), car sales declined 42% YoY in 1Q20 largely on the near 80% drop in February, which saw only 310,000 unit sales. Overall, the Chinese automotive market remains weak and fragile, with last month having seen 1.3m vehicles sold, a 46% decline over March 2019.

In a normal year, China would have sold more than 6m new cars in the first quarter; this year, the figure is around 3.6m.

As automakers restart production, boosting demand is now the industry’s main priority. The government has announced cash incentives to stimulate demand and support the industry’s recovery. Several metro cities and provincial administrations are offering cash subsidies of as much as $1,400 per vehicle.

Earlier in April, Beijing announced extending subsidies and tax breaks for new energy vehicles (NEVs) for two more years. It is now evident that electric vehicles have suffered more than the broader market. In March, only 53,000 NEV cars were sold, less than half compared to a year earlier.  It should be noted, however, this number excludes Tesla, which is pushing hard to deliver to its Chinese customers resulting in some replacement effect.

In any case, while the car market may rebound slightly in the second quarter, it is unlikely to sustain nor be able to make up for the first-quarter losses. Counterpoint Analysts are holding to their estimates that China’s auto sales decline this year will be approaching double digits, close to 9%.

South Korea

The one bright spot in the global auto market is South Korea.  The country saw its domestic industry – comprising of Kia, Hyundai, Renault-Samsung, GM Korea, and SsangYong – bounce back nearly 10% in March after seeing big declines in February, when it was down nearly 20% YoY, on automaker shutdowns. 


The situation in Europe remains critical. With Spain and France having gone into lockdown in mid-March, new vehicle sales fell by almost 70% in each market. Sales in Germany, the largest market in the region, dropped by nearly 40%. In the UK, where March is traditionally the strongest selling month with new number plate series being registered,  passenger cars and SUV sales declined nearly 45%. Figures for Western Europe as a whole showed an over 50% sales decline in March.

Counterpoint Analysts expect April sales to be far worse, with lockdowns remaining until at least the end of the month, and likely into May.

Exhibit 2: COVID-19 Impact on Global Automotive Sales, 2020

COVID19:Automotive Sales Forecast 2020E, Counterpoint

Note: The unprecedented and unpredictable nature of the current global health crisis means that we cannot rule out further revisions to the global 2020 automotive forecast.

Author: Vinay Piparsania

Week 1: Current Status and Upcoming Challenges

Recent Developments

US: The US is the new epicenter of COVID-19, where automotive production has entirely stopped with automakers GM, Ford and FCA not announcing any specific dates for reopening their plants. Other automakers Honda, Toyota, and Hyundai plan to open their plants by mid-April, however, considering the situation in the US, these automakers too are expected to extend the shutdown.

China: Life continues to gain normalcy in China. Automotive plants have started to resume operations, and footfall is increasing in showrooms. Most dealers, however, are facing inventory runouts and car shortages. The Honda-Guangzhou JV plant in Wuhan is currently operating overtime to meet demand.

Europe: The situation remains critical in Europe. According to the European Automobile Manufacturers Association (ACEA), the EU-wide production loss now stands at over 1.5 million vehicles, with an average of 18 working days.

Exhibit 1: COVID-19 to Lead Global Automotive Industry into Recession

Counterpoint: Coronavirus impact on global automotive growth

Long Term Impact

The COVID-19 impact to the global automotive industry will linger for the next few years:

Exhibit 2: Current and Future Impact of COVID-19 on Automotive Industry

Counterpoint: COVID-19 Upcoming challenges for automotive industry

Regional Growth

  • China will recover the fastest considering the sustained steps to curtail the virus from resurging, growing indication of normalcy, and the inherent latent demand for vehicles.
  • Historically, Europe has taken more time over economic rebounds compared to the US. For instance, it took European economy over eight years to rebound to the pre-2008 financial crisis level.

Each country will have its own economic recovery packages, incentives, and policies to boost consumer demand. Automakers will need to recalibrate sales and launch strategies, depending upon the recovery timeline of each country.

Cash Crunch

Early April, Daimler has signed up to a new US$13 billion credit line with banks, improving on its financial flexibility. In March, Volkswagen CEO Herbert Diess had announced that plant shutdowns were costing the company US$ 2.2 billion per week. Small suppliers, who do not have much financial buffer, are expected to suffer most amid plant shutdowns. Many of them will need to close if the shutdowns extend beyond a couple of more weeks. While automakers continue to incur costs such as salaries and debt repayments, sales are seeing a steep decline, impacting revenues. We expect most economic relief packages will be in the form of loans (instead of grants), leading to more highly leveraged balance sheets for the coming years.

A Shift in Sourcing Strategy

Having experienced severe supply disruptions during the last few months with an over dependency on China as a manufacturing base, automakers will review their supplier strategy across geographies, and possibly rely more on indigenous suppliers. Japan has earmarked US$2.2 billion to help companies shift manufacturing base from China to Japan, and US$214 million to other countries.

Product Development Delays

Product development cycles and new model launches will be delayed due to the financial challenges and supply chain disruptions. The spend on R&D may likely be reduced as automakers look to conserve capital. Investments in new technologies, like autonomous vehicle, will be deferred. On April 7, GM announced postponing launch of updated models – Chevrolet Equinox, Silverado, and Bolt EV, as well as the GMC Terrain, Sierra, and Cadillac XT4 in the US to year 2022.

Regulatory Changes

Emission norms could be relaxed for automakers to cope up with declining sales. Automakers are already lobbying European Commission to delay the introduction of stricter CO2 norms. During the recession in 2008/9 the governments in the US and Europe implemented scrappage schemes to encourage consumers to replace older vehicles and inject spending into the auto sector. Counterpoint expects the return of similar schemes, with escalating rebates for the most fuel-efficient cars such as full electric.

Author: Aman Madhok

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NIO’s Battery-as-a-Service (BaaS) Strategy: A Smart Move

Nio has launched battery as a service (BaaS) under Nio-Power, offering charging and swapping of batteries for EV owners. BaaS users can buy a Nio car without the battery and enjoy more than $10,000 (CNY70,000) off on all NIO models. They can subscribe to a 70-kWh battery for $142 (CNY980) per month.

This blog discusses why this is a smart move by Nio and a perfect time to launch such service. Below are some of the strategic advantages Nio will get by launching this service:

Lowering of EV cost

High prices of EVs have been a major barrier for their sales, especially during the pandemic when people are saving on high-ticket items. A $10,000 price cut can reduce the price gap between Nio cars and the conventional ones. Nio can also improve its price competitiveness against new entrants (like Tesla) in the China luxury EV market.


In April, Chinese authorities enhanced the 2020 NEV policy, favouring battery swapping. EVs over CNY300,000 are eligible for subsidies only if they support battery swapping. Combining BaaS benefits with subsidies can considerably reduce the prices of Nio models.

China NEV policy battery swapping subsidy pricing forBaaS


Battery swapping is a great tool to get user feedback on battery performance and user preferences. Moreover, Nio can obtain critical user data, including frequency of battery change, and offer tailored services.

New revenue streams

With EV sales in China declining during H1 2020 due to the COVID-19 pandemic and reduction in subsidies, automakers are finding new ways to improve their bottom-line. The BaaS service is included in Nio’s common platform, which supports other services like home chargers and on-the-move charging. Moreover, this platform is fully integrated from app to cloud and supports EVs of other automakers. Such a solution can go a long way in opening new revenue streams for Nio. The company has obtained more than 1,200 patents related to battery swapping.

Brand value and popularity

Nio is still a small player in the global EV market with around 10,000 cars sold during Q2 2020. Nio-Power will give Nio much needed visibility and popularity, and enhance its brand image of being an innovator. Nio apps, charging stations, swappable batteries and mobile charging vans will not only give the company visibility but also a positive word-of-mouth like in Tesla’s case. As the platform supports EVs from other automakers, it is much easier to scale. Nio has already completed more than 800,000 battery swaps.

Choice of battery

Users can choose the best battery option based on their requirements. They can upgrade to a more powerful battery pack or incorporate a battery with the latest technology. The Nio scheme also helps users avoid any battery degradation cost, thus improving car’s resale value.

Tesla Q2 2020: Strong Performance, Positive Outlook


  • Tesla ended Q2 2020 with $5.2 billion in automotive revenues, a decline of 3.7% from last year. The performance is impressive considering the closure of its main factory in Fremont for nearly half of the quarter. The company also earned a profit of $104 million during the period.
  • Automotive gross margin increased from 18.9% in Q2 2019 to 25.4% in Q2 2020, driven by 285.5% increase in regulatory credits to $428 million, operational efficiencies and cost reduction.
  • The company announced a new Gigafactory at Austin in Texas to manufacture Cybertruck, Model Y and Model 3 for the US east coast. The plant will also manufacture Tesla Semi. The company also has under-construction plants in Shanghai (for Model Y) and Berlin. Tesla expects all the three plants to be operational in the next 12-18 months.

Tesla managed to earn profits by offsetting some of the costs related to plant shutdowns by furloughing employees and making use of increasing regulatory credits. The company expects regulatory credits to double in 2020 from that in 2019. Increasing regulatory credits will help the company to remain profitable in coming quarters.

Technological Updates

  • During the quarter, the company rolled out a beta version of OTA update to slow the car down to a complete halt in response to traffic lights and stop signals. The update was rolled out only to owners having the recent Hardware 3 package ‘full self-driving’ option. The company realised $48 million in deferred revenues through the above update. In February, the company released an OTA update to activate rear-seat heating for $300. During the quarter, Tesla also enabled interior camera recording and side camera blind spot detection with OTA updates. Tesla aims to earn additional revenue by rolling out OTA updates to unlock features.
  • Tesla plans to launch its insurance solution in a few more states other than California in 2020. The company’s priority is to develop a reliable telematics-based insurance service rather than expanding the services in California to other states.
  • In July 2020, Tesla announced an updated Model S with an EPA tested range of 402 miles. The company continues to increase the range of its batteries through incremental changes in design and technology.

Counterpoint: Tesla Q2 2020 results analysis


  • Decent performance despite the main Ferment plant being closed for nearly half of the quarter indicates growing Tesla sales overseas, especially in China where conditions are coming back to normal after the COVID-19 pandemic. Reduced ASPs of some models helped the company to increase sales, compensating to an extent for the tough market conditions. Increased reliance on online sales could have helped Tesla to maintain its deliveries during the lockdown period.
  • The company reiterated its earlier commitment to produce 500,000 vehicles in 2020, indicating that demand is not a major issue (as with other automakers) for Tesla. In fact, according to the management, demand continues to exceed supply.
  • While the situation still remains fluid with the possibility of a second wave of COVID-19 cases, considering Tesla’s strong performance in Q2 2020, we revise our earlier view of declining Tesla sales in 2020.

Tesla’s Chinese Foray: Why, What and How

In 2018, Tesla CEO Elon Musk signed an agreement with the Shanghai regional government to set up the first Gigafactory in China. Here we discuss why Tesla decided to enter China, the competitive advantage it has over other local players and how Tesla’s entry in China will impact the domestic electric vehicle (EV) market.

Why China?

China is among the largest automobile markets in the world with annual vehicle sales of around 25 million. Long-term growth potential and supportive government policies for EVs make China an attractive market for Tesla.

  • China is the largest EV market in the world, accounting for 1.1 million EV sales, out of the 2.2 million sold globally in 2019.
  • EVs have strong government support in China. It aims to increase the penetration of EVs to 25% by 2025. Since 2012, the government has supported EV adoption through billions of dollars in subsidies. These subsidies have since been progressively reduced. From 2019 onwards, automakers are required to sell a specific number of EVs annually to earn tradable EV credits.

Counterpoint: Tesla in China market competition

Competitive advantages

  • Like Apple in smartphones, Tesla enjoys a strong brand image in the minds of Chinese car buyers. Tesla cars are perceived to be of better quality, better designed, offering a high range and relatively long-lasting when compared to other EV
  • Tesla is technologically advanced compared to local EV Examples of Tesla’s advanced technology include:
    • Autopilot: Tesla’s autonomous platform is considered among the most advanced in the world.
    • OTA updates: The company uses over-the-air (OTA) software updates for maintenance and adding/loading new features.
    • Battery: Focus on improving battery technology, range and efficiency. The new LFP battery lasts a million miles.
    • Infotainment and connected services: Software update V10 provides advanced infotainment features like video and music streaming, and karaoke. It also includes a Smart Summon, or smart parking, feature.
  • There are more than a million Tesla cars on the road globally. The company has the advantage of collecting feedback and data from these cars and improve its current software like Autopilot and Smart Summon. Not many automakers have sold so many EVs till now or have enough focus on autonomous cars/technology updates.

Shanghai factory

The key advantage of owning a factory in China is the cost savings associated with local sourcing and production. Utilizing parts manufactured by Chinese suppliers, rather than importing them from the US and paying additional tariffs, brings down the production cost. Around 30% of parts used in the China facility are sourced locally and Tesla plans to increase it to 100% in 2020.

Recently, Tesla reduced the price of Model 3 to avail government subsidies and remain competitive. Lowered costs due to localization and falling battery prices could encourage Tesla for further price reductions.

 Impact on Chinese EV market

  • Domestic Chinese companies will continue to dominate the New Energy Vehicle (NEV) category as a vast majority of cars sold in the country cost less than $45,000, a price segment where Tesla does not compete. The share of expensive EVs (>$45,000) is limited in China.
  • Start-ups like Nio and Byton, which focus on high-end EVs, will be most impacted by Tesla. These start-ups are already struggling to make sales and profits. Tesla is expected to give them competition with its global experience and expertise in EVs, batteries and technology.
  • The price of Tesla Model 3 is expected to decline due to falling battery prices and localization. Automakers (especially premium EVs) would need to upgrade in terms of battery, build and technology to stay competitive.
  • Increasing pressure to upgrade product quality will benefit the overall Chinese market. Despite many local Chinese brands in the conventional car market, international brands like General Motors and Volkswagen (with JVs) account for the majority of sales in the country. Chinese government restricted the entry of (standalone) foreign players, which impacted the overall evolution of domestic automakers. Companies like Tesla will change this and promote competition, forcing domestic EV companies to innovate.


Tesla sales will see significant growth in China due to the above-mentioned advantages. However, the current growth rate in sales comes from a low base and increasing competition is expected to slow it in the long term. New models like Model Y (possibly Cybertruck) will benefit sales in the mid-term.

Tesla Q1 2020: Manages to Stay Profitable

Key Highlights

  • Tesla ended Q1 2020 with US$5.1 billion in revenues, up 37.8% from last year. The company earned a small profit of US$16 million, despite Q1 typically being a seasonally weak quarter.
  • Free cash flow turned negative at -US$895 million, with inventory built up at the end of the quarter due to the lockdowns.
  • Gross Margin increased from 20.2% in Q1 2019 to 25.5% in Q1 2020 due to operational efficiencies and reducing costs. Model Y sales attained a positive gross margin during the quarter.
  • Tesla announced reduced prices for standard range of Model 3 in China to take the benefit of subsidies.
  • The company expects to announce the next Gigafactory in the US during Q2 2020.

Exhibit 1: Tesla Production and Deliveries

Tesla Q1 2020: Productions and Deliveries


Technology Updates

Autopilot: Users with the Full Self Driving package received a software update to their Autopilot that makes their cars to respond to traffic lights and stop signs, after approval from the driver. Tesla has close to a million vehicles on the road equipped with Autopilot hardware. Unlike other companies that rely on in-house simulation data to improve their algorithms, Tesla gets first-hand, real-time data from its drivers. Tesla claims that this makes its autonomous platform more reliable than its competitors.

The company said that for the above software release it is collecting data from over one million intersections per month, and expects this to exceed a billion intersections per month once all users get the update and people start driving again. The company has registered more than 1.2 million sessions for Smart Summon (smart parking), a feature released last year.

Increasing Range: Tesla increased the range for Model S and Model X to 391 miles and 351 miles respectively, through many incremental hardware upgrades over the months. Unlike other automakers focusing on increasing the battery size, Tesla is focusing its efforts on battery technology and incremental upgrades in hardware and software, extracting more range from the same battery size. For example, the company installed a new heat pump in the Model Y to increase battery range.

Structural Design: The company introduced two-piece castings technology to make the structure for Model Y. Instead of many smaller components separately machined and joined, the Model Y structure uses two high-pressure die-cast aluminum castings (one for the front and one for the rear), joined to form the entire structure, bringing more strength and making the structure lighter. It also reduces waste, and is simpler and cheaper to manufacture. The company plans to introduce a unibody structure in the future.


Tesla’s Fremont plant has been shut down since March 23rd in response to government orders to curtail the spread of coronavirus. The Fremont plant is an important one for Tesla as it produces the vast majority of Model X and Model S, most Model 3, and all of Model Y. Counterpoint expects a steep fall in sales during Q2 2020 (and probable overhang during Q3 2020) due to prolonged plant shutdowns. Vehicle sales in the US are expected to decline by around 25% in 2020. Over dependency on the US market will adversely impact Tesla sales during the year. The recovery in China, and ramp-up in production (expected 4,000 Model 3 per week) will, to some extent, offset the declines in other markets during the year.

Regulatory Gridlocks Slowing Down EV Growth in US


The US remains an important market for automakers, accounting for 20% of vehicles and about 15% of EV sales globally. However, regulatory gridlocks in the country are hampering EV from reaching their full potential. A closer analysis of the US EV market reveals that sales are mainly driven by Tesla and by pro-EV policies introduced in California. Growth in EV sales though has failed to meet industry expectations with uncertainty prevailing in regulations and policies at the national level, leading to slow development of the EV ecosystem.

 Exhibit 1: EV Sales in the US, (in ‘000 Units), Share of California in Total Sales (in %)

Counterpoint: US EV Sales, Tesla and California Share
NOTE: Only BEV and PHEV included

Uncertain Regulatory Environment

In 2017, at the recommendation of a few automakers, the Trump administration approved easing fleetwide Corporate Average Fuel Economy (CAFÉ) standards to 37 miles per gallon (mpg) by 2025, from 54.4 mpg mandated by the earlier administration (in 2013). The Trump administration also directed all states to comply with these new, more lenient, standards and revoked California’s autonomy to implement stricter polices, e.g. the Zero Emission Vehicles (ZEV) Program. In 2019 California, along with 22 other states, filed a suit against the revocation to reinstate the previously established standards.

In January 2020, the administration rejected GM’s and Tesla’s plea seeking extension of the $7,500 tax credit qualification to cover three times the initial 200,000 EVs threshold per automaker. The government did not increase the threshold, on the contrary, the government slightly reduced the tax credit to $7,000.

Lack of EV Charging Infrastructure

Inadequate charging infrastructure has hampered the growth of EVs in the country. Out of the total 68,800 public charging stations in the country, California (with 22,620 charging stations) along with other ZEV states account for the vast majority. Unlike China, where the central government plays a pivotal role in setting EV charging infrastructure, state governments provide incentives, rebates in the US with central government playing a minor role.

While stringent emission norms in these states have encouraged the growth of EV charging infrastructure so far, the lower than projected EV demand being realised (due to regulatory uncertainty regarding emission policy) will adversely impact their sustainability and growth.


Central governments’ role in providing subsides, setting stringent emission norms and mandates like ZEV programs have played pivotal roles in promoting EVs in countries like China and Norway. Protracted legal battles between states and central government will continue to adversely impact EV sales in the US, at least for the next couple of years. Counterpoint expects slower growth of EVs in the US compared to key markets like Europe and China. The legal wrangles are leading automakers to consider limiting their EVs objectives and launches only to ZEV states and focusing on other countries with supportive EV regulations. For example, GM plans to launch all its 20 upcoming EVs during the 2019-2023 period in China.

Consensus between the central and state governments and stringent national emission standards, in line with prospective EV regions like Europe and China, would encourage automakers to set aggressive EV sales plan for the country, and promote standardisation and development of products for domestic and export markets. A national level ZEV policy along with financial subsidies, and non-financial benefits like free parking, use of bus lanes etc will further benefit the sales of EVs in the country.

Exhibit 2: EV Sales in US (‘000 Units)

Counterpoint: US EV Sales Growth to 2025

NOTE: Only BEV and PHEV included

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