North America launches IPOs, continues EV focus in 2022
In 2021, the fleet and mobility industry in North America was resetting, a year which boasted several IPOs in addition to setting the catalyst for electric vehicles in the region.
By Daniel Bland, Editor Americas, Global Fleet (pictured)
As for 2022, I expect pretty much of the same. Although costs and expenses are seen high for the year owing to inflation and supply chain disruptions, less constraints are expected from the COVID-19 pandemic of which the worst looks to be over. Expect a stronger focus on electrification beyond California.
Launching IPOs to overcome 2021 challenges
Among the IPOs which occurred in 2021 included ChargePoint (NYSE: CHPT) - the Silicon Valley-based electric vehicle recharging company – and Los Angeles-based shared electric scooter company Bird (NYSE: BRDS), both of which went public following SPAC mergers.
California-based electric vehicle (EV) maker Rivian Automotive (Nasdaq: RIVN) also went public, in addition to UK-based electric van manufacturer Arrival (Nasdaq: ARVL) and telematics firm Samsara (NYSE: IOT) out of San Francisco.
In terms of electrification, Ford Motor Company acquired California-based EV charging management and fleet monitoring software provider Electriphi and Canadian lithium-ion battery recycling company Li-Cycle started readying the construction of its third recycling facility in North America.
Meanwhile, automakers showed their push to go electric in 2021 by announcing investment plans. GM has earmarked US$35bn from 2020-2025, Ford is planning US$30bn in projects from 2021-2025, and the Hyundai group (including Kia) intends to invest US$7.4bn from 2021-2024.
Tesla remains the EV sales leader in North America with its Model Y, 3, X, and S. The company is in the final phases of building its Cybertruck factory just outside of Austin, Texas.
Finally, we cannot go without mentioning the merger of two US-based giants, being vehicle leasing and management companies Wheels Inc. and Donlen, LLC.
The new group, now boasting a larger product range and highly diversified customer base, will be offering a slew of enhanced mobility solutions for fleets of all sizes. Financial services company Athene is its primary stakeholder.
Among the other major players in North America are ARI (Holman Enterprises), Element Fleet Management, and Athlon.
Besides interest rates, a focus on EVs are seen up in 2022
One thing I see in 2022 is inflation for at least a few months and this is partially due to pent-up demand which has taken place in the automobile industry. Despite this, interest rates in North America are quite low so there is room for fiscal adjustments aimed at stabilizing the market to some extent. Expect at least a couple rate hikes for the year.
In a nutshell, below are some of the things I see taking place in the North American fleet and mobility market in 2022.
• High inflation seen continuing at least in 1H22
• Fuel prices will remain high for at least a few months
• Leasing contracts will continue to be drawn out as stock levels remain low
• Vehicle inventory seen low, mainly in terms of trucks, LCVs and EVs
• Driver distraction will remain a big problem owing to increased workloads
• Last-mile delivery seen growing at an exponential rate
• Remarketing is also seen strong, owing to high resale prices
• Many technological offers in the market (Video Telematics, ADAS, and AI)
• Lack in semiconductors seen continuing at least until year-end 2022
• Prepare yourself for tech and mobility IPOs and startups
Although I see several things occurring in 2022, I’ll focus on increased costs and expenses, the growth in electrification, and the new companies seen entering the market.
The cost to operate a fleet will likely remain high and this is due to a variety of factors, among them being the lack in semiconductors and raw materials which has been impacting automobile industry supplies. Although some of this was brought on by the COVID-19 pandemic, other factors such as natural disasters and factory fires are to blame.
It is this coupled with a healthy demand which is increasing prices, especially for the fleet market. The scenario today has resulted in less incentives for fleet and a focus toward higher-return sales such as those for the B2C market.
Fuel prices (US average of $4.46 per gallon in December 2021) will likely continue to be high in 2022 and maintenance costs will follow suit as more companies opt for extending their replacement schedules and end up maintaining older vehicles. The price of tires, motor oil, and parts are also seen higher.
Meanwhile, in terms of electrification, I can say that the US has come a long way. Although most of it is just planning, expect to see much more focus on EVs in 2022 than you have seen in the past and this is due to efforts from both the public and private sector.
For one, the Infrastructure Investment and Jobs Act (IIJA) was signed into law in late 2021, a 5-year infrastructure development bill budgeted at well over US$1 billion which includes many EV infrastructure and clean energy investments.
Plans include many steps to implement electrification infrastructure and clean energy projects, including $65 billion for upgrading the national power grid, $7.5 billion for charging infrastructure, among others.
As for the private sector, Ford is planning to build EVs at a new auto production complex under construction in Tennessee and batteries at a “gigafactory” in Kentucky, both of which are multi-billion-dollar projects. The company is planning 40% of new vehicles sales to be electric by 2030, launched by the current success of the Mustang Mach-E, F150 Lightning pickup and E-Transit Van.
Meanwhile, General Motors is seeking to double revenues by 2030 with the help of EV sales. Although launches are not seen until 2023, expect to see the marketing of the Cadillac Lyriq, Hummer EV and full-electric Chevy Silverado in 2022.
Also look out for a new US$5bn Rivian factory which will be built just outside of Atlanta, Georgia. Electric vehicle production, however, will not start until 2024.
And don’t forget the IPO of Mobileye, the advanced driver-assistance systems (ADAS) and self-driving solution company of semiconductor producer Intel. Some reports are pointing toward a valuation of US$50bn.
Finally, keep your eyes peeled for startups in the tech and mobility sector. Among them are autonomous vehicle manufacturer Udelv, mobility solutions company Launch Mobility, EV manufacturer Lordstown Motor Corporation, and many others.