Three Takeaways from the SC Auto Summit
The SC Auto Summit was held in Greenville in mid-February this year. UMA was there to learn about all of the latest trends, opportunities, and realities facing the automotive sector.
Here are three takeaways we left with after a packed agenda:
1. We’re Not Done Innovating Yet
The sector is advancing rapidly. From new technology for passengers to enjoy, new energy sources to power vehicles, and new advances in manufacturing, the auto sector is changing every day. So, while new electric vehicles are a big part of South Carolina’s changing auto landscape, the sector isn’t done innovating, or responding to innovations, just yet.
Everything from tires to interior finishes are being impacted by innovation. For example, EVs are heavier and produce more friction with a road surface, so tire companies are having to adjust their designs to maintain their high standards on the roads. Michelin is putting RFID technology into every tire over the next few years so that “smart cars” can better monitor wear and tear in real-time to help balance the different impacts of new cars on tires. The tire industry alone is having to pivot some of its productions to meet the unique needs of the emerging trends.
Perhaps most importantly, it’s important for South Carolina to understand that not every car produced here is sold here. In fact, most cars and/or parts made in SC are exported globally. You can’t just look out onto I-85 and think that is a snapshot of the auto market our auto sector is thinking about. Step back and you’ll see that our sector is having to rise to the occasion for European and Asian markets, which themselves are innovating faster than ever as well.
2. There Are Real Challenges
It’s not all glitz and glamour dealing with these innovations. There are real economic forces and challenges that the sector has to wrestle with today, and prepare for in the future.
Labor in particular is becoming a huge hurdle for SC suppliers and manufacturers. While SC is home to some of the best employees for auto manufacturers, the pool of employees isn’t growing at a rate to meet the demand. When 300 jobs are announced, many of them are filled by pulling from current employers, creating a cycle that is hard to manage internally for every employer.
Demand and adoption of EVs and newer vehicles have seen interesting trends over the last five years. The average car payment right now in the US is around $650/mon, with an average loan period of nearly 6 years. The average cost of a new EV is upwards of $65,000. Affordability of new cars for most folks is an increasing challenge.
Additionally, and perhaps most importantly, is the supply chain. It’s not just shortages, there are long term challenges in the supply of crucial elements for batteries and other materials. Most of the supply chain in these arenas is owned by China. While there are big steps being taken in the US to mitigate this, the reality is that China may own the vast share of the supply chain for quite some time.
3. We’re Positioned for Success
Despite these challenges, the Southeast region of the US is well-positioned to be ready to meet the needs of an ever-changing mobility landscape from the perspective of production. South Carolina in particular offers a business-friendly environment that continues to attract new investments and expansions.
South Carolina’s investments in itself are also key to point out. The deepening of the Charleston Port to handle some of the world’s largest cargo ships, is helping suppliers meet increasing global demand and access critical components for production. Education programs ranging from Clemson’s first-in-the-nation undergraduate degree in Automotive Engineering (announced at the Summit) to high school and technical college programs are helping prepare new workers for the jobs of today and tomorrow. And policy incentives for the sector make choosing South Carolina a good business decision in addition to everything else.
Sitting in the “sweet spot” of the Southeast’s robust, and growing, automotive sector, South Carolina is taking the steps it must to be prepared for the challenges and opportunities coming to the automotive sector.