President & Chief Executive Officer, Clarios International Inc.
January 3, 2024: Final 2023 sales results; Clarios CEO Mark Wallace | DAILY DRIVE PODCAST
The biggest U.S. sales year since 2019 wraps up with Hyundai Group poised to surpass Stellantis. Ford is cutting prices on some F-150 Lightnings while raising prices on others. Plus, Clarios CEO Mark Wallace talks about why those lead acid batteries aren’t going anywhere soon in the EV era.
About Mark Wallace
Mark Wallace, president and CEO of Clarios, discussed the continued relevance of lead-acid batteries in electric vehicles during a January 2024 appearance on the Daily Drive podcast. He stated that low-voltage batteries play critical safety and operational roles in EVs, such as powering the vehicle's network when high-voltage batteries are disconnected during charging. Wallace described Clarios as the world's largest low-voltage energy storage company for mobility and noted that automakers, particularly in Europe, seek the company's help in architecting low-voltage networks and providing integrated software solutions. In a 2018 interview on The Open Mind, Wallace, then CEO of the Counter Extremism Project, called on social media companies to remove extremist content from their platforms. He said that technology exists to identify and remove such content, comparing it to methods used against child exploitation material, and argued that companies should be "part of the solution" in establishing guardrails for online safety.
Transcript (22 segments)
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Narrator0:00
This podcast is brought to you by GoMoto, the service lane kiosk that grows your business. Want to increase revenue, improve the customer experience, and maximize service efficiency? Visit GoMoto.com to learn more. GoMoto.com. Want to dive deeper into the topics you hear about on Daily Drive? We're offering listeners a special offer: 20% off a one-year Automotive News digital subscription that gets you access to all of our news, information, and analysis made for automotive industry leaders like you. Go to AutoNews.com/DrivePromo to redeem.
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Jamie Butters0:37
Welcome to Daily Drive for Wednesday, January 3rd, 2024. I'm Jamie Butters, executive editor of Automotive News here in Detroit.
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Kellen Walker0:48
And I'm Kellen Walker in Los Angeles. Today on the show, the biggest US sales year since 2019 wraps up with Hyundai Group poised to surpass Stellantis. Ford is cutting prices on some F-150 Lightnings while raising prices on others, and the number of electric car models eligible for the $7,500 tax credit is now down to 13. Plus, Clarios CEO Mark Wallace talks about why those lead-acid batteries aren't going anywhere soon in the EV era. As things continue to advance on vehicles, we're also seeing changes in chemistries and changes in capabilities for low-voltage batteries.
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Jamie Butters1:33
The final sales numbers from 2023 are starting to come in. Buckle up, we've got a lot of results for you. GM says US sales in the fourth quarter rose 0.3%, with a 57% gain at Buick offsetting declines at Chevrolet, GMC, and Cadillac. For the year, GM deliveries rose 14% to almost 2.6 million, enough to remain the market leader. Toyota says December sales rose 26%, with deliveries rising 18% at the Toyota brand and 88% at Lexus. It was the eighth consecutive monthly increase for Toyota and the 11th straight gain for Lexus as the automaker recovers from chronic inventory shortages. Hyundai's US sales rose for the 17th consecutive month, and Kia set an annual record. Hyundai brand deliveries rose 4% in December to more than 75,000, helping to produce fourth-quarter volume of 206,000. For the year, it saw record annual sales of more than 800,000, an increase of 11%. Kia snapped a 16-month streak of sales increases with December volume down just 147 vehicles, but the brand easily set an annual sales record, up 133% from 2022. Analysts expect Hyundai Motor Group to surpass Stellantis as the number four seller in the US in 2023 behind GM, Toyota, and Ford. Honda's rebound continued in December with sales surging 32%. For the year, Honda Motor's deliveries jumped 33%. Mazda's sales rose 45% to a December record of over 39,500. The automaker's sales were up 23% in 2023. As of recording time, we're still expecting US sales results from Stellantis, Volkswagen, Ford, Subaru, and Volvo. You can find the latest figures at AutoNews.com. Rivian is posting a 73% rise in fourth-quarter sales compared with a year earlier, and the EV startup exceeded its full-year production estimate of 54,000 vehicles. But those results came short of Wall Street's expectations. In the most recent quarter, Rivian reported just under 14,000 deliveries for its R1T pickup, R1S crossover, and commercial vans. That's compared with more than 8,000 in the fourth quarter of 2022. Rivian shipped more than 50,000 vehicles in 2023, a 147% rise over 2022. The number of electric vehicle models eligible for a consumer tax credit of as much as $7,500 has fallen sharply. That's after new rules from the Biden administration kicked in on January 1st. The number of qualifying models is now down to 13. Before the first, that number was about two dozen, according to federal data from fueleconomy.gov. The new rules exclude vehicles that use battery components made by Chinese manufacturers and other foreign entities of concern. A spokesperson for the Treasury Department said the government has been closely coordinating with companies on the new restrictions, but that some companies had yet to submit data, which could lead to additions to the list. Models that lost access to the credit include Tesla's Cybertruck and some versions of the Model 3, the Nissan Leaf, the Ford E-Transit van, and GM's electric Blazer and Silverado. Meanwhile, Ford is raising prices on certain 2024 model year F-150 Lightning pickups by as much as $10,000, but the cost of the most expensive trim will fall as it seeks to boost sales and profitability amid a cutback in production. Ford says that the entry-level Pro trim, which is geared towards commercial buyers, will start at about $57,000, up from about $52,000. The biggest price hike comes to the XLT standard range trim, which will now cost about $67,000 including shipping. That's up $10,000 over the 2023 model. Ford is eliminating the extended range XLT trim as well as the standard range Lariat trim for the 2024 model year. The price of the extended range Lariat trim is increasing by $2,000 to more than $81,000. And those are today's headlines.
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Kellen Walker6:12
Jamie, last quarter sales numbers look great for just about everyone. How do automakers keep this momentum in 2024?
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Jamie Butters6:22
You know, it's always a balancing act. On the one hand, everyone wants to keep their factories running at full speed, have a good efficient supply chain and manufacturing process, but it's always the balance with how many incentives do they need to keep the vehicles moving off the lot, and as we see with some brands, what is their strategy on fleet sales? Are they going to push more into rental cars and other fleets to try to keep the inventories from building up too high? So it should be an interesting year. Looks like we're going to get another year of growth unless there's a surprise.
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Kellen Walker6:58
Gotcha. Coming up, those old lead-acid batteries that have been around for decades, well, they're not going anywhere in the age of EVs. We'll hear from Clarios CEO Mark Wallace about why that is next on Daily Drive.
Daily Drive is kicking off the new year by reviving an old name in a new format. We're bringing back a Weekend Drive edition of Daily Drive. Jamie and I will go deeper into the biggest automotive stories of the week every weekend. You'll hear fresh insights, analysis, and what has me running hot if not overheated. To think that's going to get done in a year, a little over a year, is foolishly optimistic. Let's shift to something a little more positive. You'll also hear from our experts in the newsroom here at Automotive News about the latest industry trends and topics. EV sales are not declining; that's the narrative we're kind of seeing outside of the industry. They aren't declining, but the pace of growth definitely has slowed. Come back this weekend for our Weekend Drive edition of Daily Drive, and of course tune in every weekday for all the news you need to know to keep up in the auto industry.
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Narrator8:08
Listen to Fred Hayes, service manager at Tula Valley Buick GMC, and Philip Candido, fixed operations director, talk about their experience with GoMoto in their service drive.
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Fred Hayes8:17
The part of my contract that makes my job more satisfying is being able to get more vehicles through and do a better quality inspection. The whole process is simplified. I have double the amount of inspections and repairs I can do a day.
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Narrator8:31
Want to increase revenue, improve the customer experience, and maximize service efficiency just like Tula Valley? Visit GoMoto.com to learn more. That's GoMoto.com.
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Jamie Butters8:46
Welcome back to Daily Drive. I'm Jamie Butters with Kellen Walker. Electric vehicles carry enormous high-voltage batteries that hold enough energy to power a house for days, so you might assume there's no need anymore for those heavy brick-shaped lead-acid batteries that are in most cars today once EVs take over the roadways. That's not the case according to Clarios CEO Mark Wallace. He says low-voltage batteries play numerous critical roles in EVs. Wallace spoke with our own Pete Bigelow on Shift, a podcast about mobility.
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Pete Bigelow9:23
We talk a lot about batteries and battery technology on the podcast fairly often, and I think few people probably know that Clarios is essentially the granddaddy of batteries in the auto industry. Tell us a bit about the company.
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Mark Wallace9:37
Yeah, you're spot on. We're the number one player in the world when it comes to low-voltage energy storage for mobility. We mostly have regional competitors, and in those cases, we're five to six times larger. In reality, we've gotten to that position through M&A work in the past, but ultimately, it's about bringing the right solution to our customers and being able to do that all over the globe. So if we have a customer like General Motors or Ford or even some of the German automakers, we're able to cover their production all over the world, which has put us in a great position on new auto production. But given the fact we've been in this business for well more than a hundred years, we also have a very large aftermarket business. It actually is 80% of our total volume goes to the aftermarket, and that's because there's so many more cars in the car park than there is new auto production. So that's made for a great successful story both from a revenue and profitability perspective, but also has well positioned us for the future of new auto technologies.
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Pete Bigelow10:42
Mark, take me back 100 or so years, and some various permutation of what was Clarios back then, and what were you making a century ago?
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Mark Wallace10:55
Yeah, flooded batteries. So the conventional battery, I say we kind of grew up with obviously in the last 50 to 75 years of auto production. You had to start the engine of an internal combustion engine, and really the company was founded on creating the battery technology that today is used most all over the world for starting the engine and supplementing the loads on board a vehicle. So it's been a great journey, and as things continue to advance on vehicles, we're also seeing changes in chemistries and changes in capabilities for low-voltage batteries.
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Pete Bigelow11:34
All right, we're going to dive into that. But first, I want to kind of go from history to the present, I guess it is. I was going to say the future, but EVs are the present, and I want to confess my ignorance to something here off the bat, and it is I had no idea until very recently that an electric vehicle still required a low-voltage battery and low-voltage network. So what's the deal?
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Mark Wallace12:02
Well, great question. You have the same question I get most every time I'm talking to external constituents. So first, maybe to explain just a little bit about an electric vehicle and why there's a low-voltage network on board to begin with and why you need a low-voltage battery. You can imagine today when you have an EV and you plug it in your garage to charge over the evening or whatever the time frame is. Number one, those batteries have to be disconnected from the vehicle, and that's for safety reasons because those are high-voltage batteries and you don't want any leakage current on the vehicle. So they get disconnected. The low-voltage network literally actually disconnects those batteries with a set of contactors, and then everything that happens on board that vehicle is now being ran off the low-voltage network. So that's safety, security, that's infotainment systems, but more recently, probably one of the more important aspects is over-the-air updates are taking place when the vehicle's parked, it has Wi-Fi service, so all that's happening on low-voltage network. And so you got to have a very reliable low-voltage power source, and that's where we come into play for EVs. Second, when you're driving the EV down the highway, now most of your power is coming from the high-voltage batteries, and those get stepped down via DC-to-DC converters and are providing power around the vehicle, and then they're also charging up that low-voltage battery network as well since it's been operating for the last eight hours or 10 hours for charging. But the low-voltage battery also supplements any additional power needs that exceed that of the high-voltage traction batteries. And really, as vehicles have continued to advance, especially with EVs, automakers want to make sure they have backup power on the low-voltage network. And the reason behind this is if you're driving on the highway in your EV and you have some type of high-voltage battery fault, an inverter issue or DC-to-DC converter issue, those systems get shut down, and now you need to depend on the low-voltage network to be able to provide enough power for you to safely steer and brake and get your vehicle off the highway. So that use case is now much more focused around functional safety. And when you think about adding more autonomy on board the vehicle, the automakers want to make sure there's plenty of backup power to make sure if there is a disruption from the high-voltage networks that the low-voltage networks can step in and keep the computer systems active and running so that the vehicle can continue down the highway safely until it can be moved off the road. It's like a redundant system, like you'd see in the airplane, just making sure that you've got the level of power stability and backup power in the event something does happen to the vehicle. And lastly, unfortunately, if you're involved in an accident with an EV, you're required to shut down the batteries in milliseconds, and so you need the low-volts network now to come into play to send your SOS messaging to be able to effectively unlock the doors to allow the occupant out so that they can obviously get away from the vehicle at that stage. So that's why you have low-voltage networks, and today, but as we talk about the rest of the interview into the future, you're going to hear those networks get much more complex as well.
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Pete Bigelow15:39
Obviously, in a human-driven internal combustion world, automakers didn't need that sort of redundancy. Now they're rearchitecting their entire vehicle platforms to accommodate that. What does that new architecture mean for you?
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Mark Wallace15:56
Yeah, so as the vehicles continue to increase complexity to increase user interface and connectivity on board the vehicle, automakers are looking to what we consider we call parsing the network so that they can actually subdivide the low-voltage networks into one, two, or three different systems and then provide power to each of those systems independently to ensure they have the required power to manage that portion of the network, but also at the same time provides redundancy we just talked about. So with switches, as you can imagine, high-speed switches, if there's a problem on one element of the network, a switch can be activated and allow power to come from another one of the low-voltage energy storage devices on board. And when you think about that, that has a lot of complexity, and so most of our auto partners, especially in Europe, look for companies like Clarios to be able to help them kind of architect that network and then also provide the integrated software and solutions from a systems perspective to put all that together and bring them kind of a turnkey solution.
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Jamie Butters17:07
Mark Wallace is the CEO of Clarios. He spoke with our own Pete Bigelow on Shift, a podcast about mobility. You can hear their full conversation on Shift wherever you get your podcast.
That's Daily Drive for today. I'm Jamie Butters and I'm Kellen Walker. Thanks to Automotive News coordinating producer Jake Meer as well as our own David Phillips, Lawrence Iff, and Michael Martinez for their reporting for today's podcast. You can get the latest news on electrification, sales results, and everything happening in the auto industry at AutoNews.com. Come back tomorrow for a look at how pranksters manipulated a ChatGPT customer service provider for auto retailers, even getting it to agree to sell a Chevy Tahoe for $1. It also shows the risk of being an early adopter of technology because ChatGPT learns as it goes, but it's also relatively untested. If you enjoy the podcast, remember to like, leave a review, and subscribe so you never miss an episode.