In 2020, we met COVID-19.
Last year was all about the microchip shortage.
In a refreshing reminder of what the Before Times were like, 2022 didn’t have one ongoing story that dominated the auto industry.
Instead, it marked a return to many of the topics that automakers, dealers and suppliers had been talking about before we all got sidetracked for a good while:
- Electric vehicles — which there are a lot more of.
- Self-driving cars — which still aren’t much of a thing.
- The future of franchised dealerships — which still is a thing, despite the best efforts of Tesla and Carvana.
- And, of course, the omnipresent Elon Musk — who still hasn’t produced the Cybertruck or robotaxis he said were imminent pre-COVID.
As a result, this was the first time since those halcyon days of the last decade that we at Automotive News weren’t immediately certain what to consider the year’s top story. The lingering inventory and supply shortages? The transition to EVs? Michigan beating Ohio State again?
So, for the 70th consecutive year, we put it to a staff vote. Drama-filled negotiations in Washington emerged as the biggest news of 2022 by just one point. Here’s a recap of the top 10:
When Sen. Joe Manchin of West Virginia finally signed onto President Joe Biden’s sweeping health, climate and tax bill, it set off a high-stakes frenzy to reshape the burgeoning EV supply chain. The legislation, known as the Inflation Reduction Act, extends $7,500 federal tax credits that had previously run out for some brands but imposes new restrictions on where the critical minerals used in batteries are extracted or processed, where battery components are made or assembled and where final assembly of the vehicle occurs. “I am confident the Inflation Reduction Act will be one of the defining feats of the 21st century,” Senate Majority Leader Chuck Schumer said before the August vote. Manufacturers of EVs are now deciding whether to make what in many cases would be multibillion-dollar investments to chase the credits. To be eligible, EVs must be built in North America and meet guidelines on sticker price, buyer income and component sourcing.
Every few days it seems like another company announces a major investment toward building more EVs. Battery plants, EV assembly plants and new parts plants are popping up all over North America as automakers work to speed up their product pipeline and leverage growing demand. Honda formed a joint venture with LG for a $4.4 billion battery plant, while Stellantis partnered with LG and Samsung SDI to spend nearly $7 billion on battery plants. Hyundai broke ground on a $5.5 billion EV assembly plant in Georgia. And just this month, battery recycler Redwood Materials said it’s building a $3.5 billion plant in South Carolina.
With Tesla and Rivian selling directly to consumers, legacy automakers have been seeking ways to overhaul the way customers buy from dealerships. GM opened three regional distribution centers to provide inventory to stores on demand, and executives believe a new digital retailing platform can help the company save $2,000 per EV sold. GM also is offering to buy out Buick dealers who don’t want to adapt to the brand’s battery-powered future. Ford Motor Co. required dealers who want to sell EVs beyond 2023 to sign up for a certification program that calls for investing up to $1.2 million on chargers and training. They’ll also have to follow rigorous new sales standards, including selling EVs at nonnegotiable prices and, in some cases, carrying no inventory on site. Meanwhile, BMW is preparing to use a direct-sales agency model in Europe, under which it would invoice customers directly and pay dealerships a fixed fee per transaction.
For years, some automakers have been saying self-driving vehicles were right around the corner. In 2022, some finally acknowledged that they aren’t as close to reality as hoped, despite some $100 billion poured into the technology so far. Ford and Volkswagen decided to shut down Argo AI, acknowledging that their money would be better spent on technology with more near-term promise. Other autonomous-vehicle companies such as Nuro and Motional are laying off employees. And Tesla is reportedly under federal investigation for claims that its vehicles can drive themselves. But Cruise and Waymo are among those still pushing forward, and the industry continues to make progress toward developing hub-to-hub autonomous trucking.
After a meteoric rise that sparked existential fears for many franchised dealers, Wall Street darling Carvana neared collapse in 2022. The online vehicle seller’s stock plunged as much as 98 percent from 2021’s record high as used-car values dropped and it rapidly burned through cash. It laid off more than 4,000 workers, and its executive team gave up their salaries for the second half of the year to help pay for severance. Compounding its troubles, sales were halted at stores in Michigan and other states over titling violations and consumer complaints. Analysts have made grim projections about the company’s financial prospects, warning that insolvency could be around the corner.
Russian President Vladimir Putin’s war on Ukraine threw the global supply chain into even more disarray. Most automakers halted manufacturing and sales in Russia, and suppliers scrambled to source parts elsewhere. In addition to making gasoline more expensive, the conflict caused metal prices to surge and damaged the global economy.
The U.S. luxury race is no longer just a back-and-forth battle among BMW, Mercedes-Benz and Lexus. Tesla blew past all three stalwarts in 2022. Despite having to compete against many more EVs in the market, Tesla registrations soared 61 percent in the first half of the year, and the company is adding manufacturing capacity around the world in preparation for continued growth.
It’s not just a lack of microchips gumming up the supply chain. All kinds of parts needed to keep assembly plants running are now in short supply, and logistics bottlenecks add to the obstacles companies are facing. But by and large, automakers have found creative ways to avoid prolonged disruptions and keep profits flowing, even as dealerships continue to struggle with tight inventories.
Transaction prices for new vehicles have been setting records for several years and the Federal Reserve’s efforts to quell inflation by raising interest rates repeatedly in 2022 have made it even harder to keep monthly payments affordable. Demand has begun cooling in some parts of the market, causing analysts to slash sales forecasts. Interest rates replaced limited inventory as dealers’ top near-term concern in a fourth-quarter survey by Cox Automotive.
The flow of EV launches grew from a trickle in previous years to a steady stream from BMW, Audi, Mercedes-Benz and other brands in 2022. Ford began selling the highly anticipated F-150 Lightning and Cadillac brought out its first EV, the Lyriq. Kia’s EV6 quickly became a hot commodity. EV sales now represent more than 5 percent of the U.S. market, versus less than 3 percent in 2021.