During the Equipment and Tool Institute (ETI) ToolTech conference in April, an automotive industry update was provided by Steve Greenfield, general partner at Automotive Ventures and author of “The Future of Mobility,” “The Future of Automotive Retail” and the weekly “Intel Report.”
Greenfield pointed to the current migration toward purchasing larger vehicles, pickup trucks and SUVs. As an example, the top three selling light vehicles in 2024 were the Ford F-Series (765,649), the Chevrolet Silverado (549,945) and the Toyota RAV4 (475,193).
Looking back to the mid-1970s, Greenfield noted that sedans and wagons were the dominant cars on the road. Fast forward to today, and many U.S. vehicles are similar in weight, although their miles per gallon and horsepower have doubled.
“With lightweighting technologies, we've been able to bring the weight equal to what the weight was back in 1975 and found a lot more efficiencies with drivetrains,” he explained. “That’s why we’ve had this creeping up in size and weight.”
As a result, he said automobiles have never been heavier, more powerful, less polluting or more efficient.
He also shared the reason why many prefer to have their loved ones in heavier cars.
“The fatality rate is roughly seven times higher when colliding with a heavy pickup truck than with a compact car,” he shared. “As the weight of your car increases, the risk of killing others increases dramatically.”
Greenfield forecasted the trend will continue. “It’s an interesting philosophical argument to say, ‘How do we convince the American consumer to go back to smaller and lighter-weight vehicles?” he said. “I think the toothpaste is out of the proverbial tube.”
EV Updates
Greenfield said electric vehicle (EV) sales continue to increase. According to BloombergNEF, global passenger EV sales are forecast to rise 30% to 22 million in 2025.
“However, the rate of change is coming down,” said Greenfield. “In the U.S. especially, we've topped out on battery electric vehicles (BEVs). We're hovering around 8% to 9%, even with the tax incentives, which haven't yet been repealed but are likely to get repealed at some point.”
Currently, China has the largest share of EV sales, while Western countries, including the U.S., have slowed down.
With EVs losing ground, Greenfield said hybrid sales are rising, which will have implications on repairability. He provided data from Cox Automotive focusing on the market share of U.S. car and truck sales by vehicle type. EV sales have softened and are currently at 6.2%. Non-plug-in hybrids make up 8.5% and plug-in hybrids account for 2.3%.
BloombergNEF expects slow growth in EV market share this year in the U.S., followed by an acceleration in the years to come.
Greenfield said EV growth would likely be dependent on advancements in battery technology, such as solid-state batteries and inductive (wireless) charging, which provide faster charging, improved safety and better range.
He forecasts that, ultimately, EVs will be the dominant drivetrain. However, in the interim, especially if the tax credits get repealed, he said, “We've got a world of hurt and a lot of noise between now and that vision in the future.”
In the meantime, he said, “balancing this is very, very hard for legacy automakers,” which are evaluating when to build battery plants and anticipating when consumers will be ready to purchase EVs.
He used the example of Ford’s lack of profitability in EVs.
“All this noise about consumer adoption means that Ford believes there will be a future where EVs are dominant, but in the meantime, they're eating a lot of losses with their business.”
He said it would be easy to say, “Stop building EVs. We're going to go all in on ICE.” However, that would be shortsighted if automakers believe that batteries will be the dominant drivetrain in the future.
Implications of U.S. Tariffs
Greenfield also discussed the impact of tariffs on car purchases. From the conversations he has had with dealerships, Greenfield has found they are experiencing strong sales.
“If I give you any hint today, buy a car soon because when these tariffs hit, you're going to see a massive increase in MSRP and the used car market will react almost immediately like it did during COVID,” said Greenfield.
As a result, he said consumers will face higher prices and likely slow down purchasing due to shell shock. This dynamic, according to Greenfield, will not be beneficial for inflation or consumers.
China Perspective
After two centuries of the West leading five successive technological waves — the Industrial Revolution, the Age of Steam & Rail, the Age of Steel & Electricity, the Age of Oil & Mass production and the Information Age — Greenfield said that China is poised to lead the world into the sixth major technology revolution: the Renewable Age.
Data from BloombergNEF illustrates that China dominates the battery value chain, with 95% of all battery technology. In addition, Chinese car production shares have risen from 1% to 39% over the past 20 years, according to Bloomberg/BofA Global Research.
Greenfield said China’s car production capacity has risen faster than sales due to lower production costs.
“China now comprises 40% of all vehicles built,” he said.
With approximately 150 Chinese automakers, Greenfield said the country is experiencing overproduction.
“The Chinese are pushing very aggressively to export cars elsewhere,” he explained.
However, he said the dynamics are unsustainable and forecasted there will be fewer automakers and franchise dealers, as well as less capacity, as a result.
“I think you are going to see more pressure on the legacy automakers, for lack of any other strategy, to consolidate,” Greenfield predicted.
Repair and Service Implications
In terms of repair and service implications, Greenfield noted that franchise dealers have been consistently losing market share for vehicle maintenance. In the 1960s, they had about 45% market share, according to a study by Cox Automotive Maintenance and Repair. Today, that percentage has fallen to about 30% of consumers who use franchise dealers to service their vehicles.
Greenfield attributes this to the reduced number of components in EVs. An ICE vehicle, for example, has about 2,000 moving parts, whereas an EV has 20.
“The fewer the parts, the less frequent service,” Greenfield acknowledged.
Greenfield said the rise in hybrids provides more opportunities for repair and service centers due to the vehicles’ two drivetrains.
“You're going to need the service intervals for the battery, but you're also going to need the service intervals for the ICE engine,” he noted.
With hybrids, there are more chances for components to fail, additional maintenance and potential recalls, which provide the opportunity to see consumers more frequently.
“I think franchisors should be feeling pretty confident now as opposed to a few years ago,” said Greenfield.
With vehicles becoming more complex, Greenfield acknowledged it will be challenging for technicians to keep up with the various OEM certification programs and specifications. In addition to new skill sets that will be needed, there will be specific tools and equipment required by automakers.
He forecasted a movement toward a national Right to Repair Act that would enable independent repair shops to obtain the schematics and telematics data needed.
Looking ahead, Greenfield predicted OEMs will do everything within their power to drive loyalty back to franchise dealers.
Greenfield cited data from Bloomberg, Bureau of Labor Statistics, showing the cost of vehicle repairs has increased by almost 50% since the start of the pandemic, far exceeding regular inflation.
“We had supply chain issues all of us lived through. You couldn't get parts. You couldn't get technicians to show up,” he recalled. “As a result, all of that meant very much higher cost to repair vehicles overall.”
He predicts this will continue.
Greenfield also provided a comparison of EV vs. ICE construction based on information from Mitchell.
“EVs are comprised of a higher percentage of lighter-weight materials such as aluminum, carbon fiber and composites,” he explained. “These substrates respond differently than mild steel after an accident and are much more likely to require replacement than mild steel major component parts.”
The average number of replacement parts per estimate has grown by more than 15% since 2019 in the U.S. and Canada, according to Mitchell data. Replacement parts account for more than 51% of the overall repair cost.
As a result of these changes, Greenfield said the average repair bill for a vehicle after an accident will increase severity. Higher repairability costs will also likely manifest in higher insurance premiums.
“There has to be a reconciliation at some point,” said Greenfield. “I don't really hear ever that consumers are pushing back around buying a car because of the insurance premiums in the car, but maybe that's going to be more of a topic of conversation going forward.”
