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Bob, check out this week’s Hot Topics with Industry Analyst Lisa Krusemark and register for the Q2 Briefing!

Automotive Industry Hot Topics

June 7, 2024

This week we are joined by CAR’s Industry Analyst Lisa Krusemark, who discusses Nissan and Tesla safety recalls and automakers unveiling new EV lineups.

We would love to hear from you and welcome your questions anytime. If you're interested in sharing your thoughts with us on hot topics or would like to ask us a research question, please contact Carolyn Mozheev.

Nissan & Tesla Safety Recalls:

• Nissan warns owners of older vehicles not to drive them due to risk of exploding air bag inflators

• U.S. tells owners to stop driving older Nissan vehicles over air bag concerns

• Nissan issues ‘do not drive’ alert for nearly 84,000 older models with recalled airbags

• Tesla recalls more than 125,000 vehicles for seat belt notification failure

• Tesla recalls 125K vehicles to fix issue with seat belt warning system

Lisa’s thoughts:

Recall warnings are being issued for owners of older vehicles due to Takata airbag inflator malfunction risk. The recent recalls for Nissan are tied to another fatality linked to an exploding inflator on the front-passenger side. The Takata airbag inflator malfunctions have led to 27 fatalities and over 400 injuries in the United States, dating back to initial reports from 2018 and injuries beginning in 2015. The Nissan do not drive warnings are linked to models spanning from 2002 to 2006. Overall, there are tens of millions of Takata air bags under recall, and explosions are thought to be associated with long-term exposure to heat and humidity. 

As vehicle recalls place the responsibility for bringing in vehicles on the consumer, data shows that only 50-70% of recalled vehicles are repaired (e.g., the recall completion rate). Additionally, it is estimated that up to 25% of all US vehicles in operation have one or more open recalls. Many factors contribute to the low recall completion rate, including ambiguity for consumers about the repair process, severity of the recall issue, and costs. Manufacturers, dealerships, and federal agencies are tasked with reaching consumers for recalls, however, the increasing age of the average vehicle on the road creates additional challenges for automakers to reach owners of pre-owned vehicles. 

The number of recalls for electric vehicles, ADAS, and OTA updates has nearly doubled in the last couple of years. As vehicle recalls become increasingly diverse and complex, it is even more important to provide consumers with clarity about the methods used to complete recall repairs.

A specific example of the growing recall complexity includes the recent recalls for Tesla 2021-2023 Model S and Model X issues for front seat belt detachments (that require repairs and replacements to front row seat belts). In addition to this recall, Tesla issued a recall for seat belt warning system failures that apply to three different models. Telsa reported that the seat belt alert will be addressed using over the air (OTA) updates which will be deployed this month. The Tesla seat belt recalls highlight how recalls may be either completed by traditional repairs at the dealership or via OTA updates, confirming the importance of educating consumers about how to understand the recalls and initiate repair completion.

Automakers Unveil New EV’s:

• Chevy Equinox EV first drive: GM may have cracked the code in delivering a quality SUV that’s affordable [Video]

• VW to build low-priced EVs on its own, forgoing partnerships

• Jeep reveals all-electric Wagoneer S in EV offensive, starting at $72,000

• Cadillac’s new entry-level Optiq EV to start at $54,000

Lisa’s thoughts:
New EV model announcements reflect a prominent issue for the automotive industry and the consumer: vehicle affordability. This issue proves critical for EV adoption and the broader new vehicle market, particularly given the average new vehicle price is roughly $47K (as of May). Automakers are moved to produce EVs that are priced in a range comparable to lower-priced models produced in China, but this will likely be limited to specific market segments in the near term.  

Following the announcement that the Bolt was discontinued in mid-2023, Chevrolet announced the Equinox EV as a potentially affordable option within the popular crossover market (with a base price around $35K). European automakers are also motivated to offer affordable EV models with direct competition from Chinese automakers (such as BYD which offers the Seagull hatchback below $22K USD). Volkswagen announced plans for a new lineup of BEVs under $27K by the end of 2025 including a lower-priced compact model. The Stellantis EV lineup promises to introduce 6 to 8 electric vehicles this year, including an unnamed $25K model available later this year. Stellantis also announced their global all-electric SUV Wagoneer S with a starting price of $72K, noting that less expensive models will be released at a later time. GM recently announced a fourth EV in their Cadillac lineup starting at $54K, the Optiq, as a compact and more affordable CUV option alongside their premium counterparts. 

The diversified lineups announced by automakers reflect more affordable EV options that accommodate a variety of consumer interests. These recent announcements appear to demonstrate that lower-price trim lines will become more readily available following an initial model release. The ongoing focus on vehicle affordability as more EVs enter the market is notable to observe, whether you are a member of the industry or a consumer, so stay tuned. 

Upcoming Events

CAR Q2 Industry Briefing

Driving Change: Trade, Policy, and The Future of Mobility

We invite you to join us on June 20th at Warner Norcross + Judd in Detroit for our 2nd quarterly briefing of 2024.

The automotive industry is experiencing a period of unprecedented transformation. As new technologies like electric vehicles and autonomous cars take center stage, trade, policy, and government regulations will be crucial in shaping the future of mobility.

Join us for this briefing to gain the latest insights and analysis on how trade and policy developments are impacting the auto industry.

To read previous Hot Topics, please visit our Feature Stories tab at cargroup.org.