Consumers preference towards electric vehicles (EV) in China is growing. According to the China Passenger Car Association, electric cars sales in China added up to approximately three million units in 2021. The association expects the sales to double to six million units in 2022. Electric cars, plug-in hybrids, and fuel-cell autos are expected to make up 5% of the total car sales in the country in 2022.1
The semiconductor chip shortage has had a large impact on the automotive industry for the past few months. Semiconductor chips are integral parts in the production of EVs. Recently, the Biden administration issued a report based on information from 150 firms regarding the chip shortage and concluded that there is a huge discrepancy between supply and demand for the chips. The median inventory of semiconductor chips in the U.S. has fallen from 40 days to now just five days. Its likely that the chip shortage will persist until the second half of 2022.2
Spotlight on Car Manufacturers and Semiconductor Companies
Texas Instruments Incorporated
Texas Instruments Incorporated is a semiconductor company involved in designing, manufacturing, testing, and selling of analog and embedded processing chips. It serves the industrial, automotive, personal electronics, communications equipment, and enterprise systems markets globally.
In January, the company reported its financial results for the fourth quarter of 2021. Revenue for the quarter was $4.83 billion, with a net income of $2.14 billion and earnings per share of $2.27. Revenue improved 19% and earnings per share was up 26%. These results were better than analyst expectations.
Texas Instrument also provided guidance for the first quarter 2022. The company expects revenue to be in the range of $4.50 billion to $4.90 billion, and earnings per share to be between $2.01 and $2.29.3
Volkswagen AG is a leading manufacturer of passenger cars, commercial vehicles, and power engineering in Europe, North America, South America, and the Asia-Pacific. The company has been making strong strides towards becoming an electric vehicles manufacturer.
About five years ago, the company revealed an electric concept of its VW Microbus—an iconic vehicle sold by Volkswagen in North America between 1950 and 1980. The company’s CEO tweeted about the VW Microbus recently and implied the vehicle would be returning on March 9, 2022.
Volkswagen has also said that there’s an autonomous Microbus in the making that the company plans to launch in Germany in 2025. These electric vehicles will be used as full-scale commercial ride-hailing and delivery operations.4
Rivian Automotive, Inc.
Rivian Automotive develops and manufactures electric adventure vehicles. The company’s offerings include five-passenger pickup trucks and sports utility vehicles. Rivian Automotive debuted on the stock market in November 2021. It was one of the largest initial public offerings (IPO) of the year, and sixth largest in U.S. history.
According to reports, the company is getting ready to ramp up its electric vehicle production. The company is aiming to have 200 delivery-ready units a week. At the end of December 2021, Rivian Automotive had averaged 50 delivery-ready units a week. For the entire year of 2021, the company produced 1,015 electric vehicles and delivered 920.5
Investing in Future Cars, Driving Our World Forward
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- “China’s Consumers Risk FOMO as Electric Cars’ Popularity Soars,” BNN Bloomberg, January 10, 2022; https://www.bnnbloomberg.ca/china-s-consumers-risk-fomo-as-electric-cars-popularity-soars-1.1705345.
- Leonard, J. and King, I., “Biden Team Says Global Chip Shortage to Stretch Through 2022,” BNN Bloomberg, January 25, 2022; https://www.bnnbloomberg.ca/biden-team-says-global-chip-shortage-to-stretch-through-2022-1.1712963.
- “TI reports Q4 2021 and 2021 financial results and shareholder returns,” Texas Instruments Incorporated, January 25, 2022; https://investor.ti.com/news-releases/news-release-details/ti-reports-q4-2021-and-2021-financial-results-and-shareholder.
- Hawkins, A., “VW sets a date for the reveal of its production-ready electric Microbus,” The Verge, January 6, 2022; https://www.theverge.com/2022/1/6/22870273/vw-microbus-electric-id-buzz-date-reveal?cmpid=BBD012522_hyperdrive.
- Ludlow, E. “Rivian boosts production of pickups after last year’s woes, report says,” Automotive News, January 26, 2022; https://www.autonews.com/manufacturing/rivian-boosts-production-pickups-after-last-years-woes-report-says.