Steve Greenfield’s 9 predictions for the future of automotive in 2024


Welcome back to the latest episode of The Future of Automotive, with Steve Greenfield, Founder and CEO of Automotive Ventures, where we put recent automotive and mobility news into the context of the broader themes impacting the automotive industry.

What better way to ring in the new year than to present our big predictions for 2024?

So, with no further ado, let’s get started!

1. EV Pain Just Beginning

First up, I think the EV pain we witnessed in the latter half of 2023 is just getting started and will continue to grow throughout 2024.

EV sales are decelerating. EV market share did rise to 7.4% of the U.S. market through Q3 of 2023. A year earlier, EV share was sitting at 5.2% of all new passenger vehicle sales.

But, the outlook for electric vehicles isn’t quite as bright as it was even just six months ago. It seems that the early adopters have already satisfied their demand, and incremental sales are getting that much harder. And new EVs are backing up on dealer lots as we speak. All this is before we see another 150 new EV makes/models hitting the market over the next two years. 

Under increasing pressure from new competition, Tesla spent the past year slashing the average price of its models by roughly 25%. Tesla is hoping that lower prices will drive up sales and slow the advance of the company’s rivals – maybe even scare some of them out of the market altogether.

If consumer demand softens, because we’ve saturated the early adopter demand – and we enter an environment where legacy automakers have already committed to new EV models and volumes – expect that the OEM incentives aggressively mount starting mid-year 2024 and grow over the latter part of the year.

Given that 2024 is an election year, it’s worth noting what impact politics are likely to have on EV adoption.

If Trump is returned to office, he will seek to undo much of the Inflation Reduction Act, the landmark climate bill signed last year by President Joe Biden. While the law couldn’t be fully repealed without an act of Congress, Trump 2.0 would likely be able to undermine many of its provisions through the rule-making process. For instance, a future president could set the EV tax credit rules in such a way that no tax credits are awarded.

EVs are likely to be a polarizing issue during Presidential debates, lumped into the topics of climate change, global warming and energy independence. Republican presidential candidates like Donald Trump have lumped the pro-electric vehicle crowd with coastal elites, socialists and other rhetorical targets of the political right.

At the other end of the table are EV proponents who see the technology as an existential issue and argue that the U.S. needs to dramatically slash carbon emissions to slow global warming. Trading fossil fuel vehicles for their electric counterparts is one of the fastest ways to slash greenhouse gas emissions and achieve that goal, they say.

The discussion also encapsulates a host of issues dominating the nation’s political conversation: the cost of living, reliance on Chinese manufacturing and cultural factors such as the feasibility of the cross-country road trips that remain an element of American identity.

In parallel, expect more press about how EV vehicle insurance premiums are more expensive than their internal combustion counterparts. 

EVs are far less reliable than gasoline-powered vehicles, according to Consumer Reports, but most of their issues represent growing pains as automakers launch models with new powertrains and the latest features that EV buyers expect.

EVs had 79% more problems than vehicles with internal combustion engines, according to Consumer Reports 2023 Auto Reliability Survey of 330,000 vehicles. Plug-in hybrids were twice as bad with 146% more flaws than gasoline vehicles. But hybrids scored best, with 26% fewer problems than gasoline-powered vehicles.

For EVs, repairs following a collision can cost thousands of dollars more than their gas-powered counterparts, because the fixes tend to require more replacement parts, the vehicles are more complicated and fewer people do such repairs. While those issues may ease over time, first-time electric owners may be startled by the higher costs and longer wait times. 

EV collision repair costs continue to outpace expenditures to repair vehicles with internal combustion engines, according to Mitchell International, which reported the cost difference to be $950 per repair.

During Q3 2023, EV repairable claims frequency was up almost 2% in the U.S. over the prior year.

Insurers are, in some cases, writing off entre EVs just because of minor physical damage to battery casings. There is a dearth of auto repair shops that know how to properly assess batteries, let alone repair them.

And forget collision repair for a minute. Even minor repairs can be tricky on EVs. And some automakers are making things extra difficult for mechanics. 

Parts can be tricky to get hold of, and there’s often little or no official information explaining how to repair certain EV battery units. The small number of independent mechanics who repair EV batteries struggle to do so affordably due to design challenges, safety requirements, and a lack of access to spare parts. 

Calculating residual values on EVs is going to continue to be a challenge. Three-year-old EVs aren’t holding their value as well as the average 3-year-old model according to Black Book’s historical retention data and predictions for the next 3 years.

Finally, I believe we’re going to see some pretty incredible discontinuing and incentives on EVs in 2024. Any buyers looking to get a bargain on a new car might want to consider an electric vehicle. As sales growth has slowed for battery-powered models, automakers and dealers are slashing prices and piling on discounts to clear out unsold inventory, pressures that will only increase over the course of the year.

2. UAW = a Pyrrhic Victory?

The United Auto Workers campaign against Detroit’s three automakers can be described as one thing for the union: a win. The tentative deals are the richest contracts since at least the 1960s. The wage increases alone over four years total more than workers got in the past 22 years.

But it does beg the question: did the UAW win the battle but lose the war?

A Pyrrhic victory is a victory that inflicts such a devastating toll on the victor that it is effectively a defeat.

The phrase originates from a quote from Pyrrhus of Epirus, whose triumph against the Romans in the Battle of Asculum in 279 BC destroyed much of his forces, forcing the end of his campaign.

The UAW deal portends difficult times ahead for the Detroit Three with the new pacts expected to push the companies’ labor costs higher than initially expected when talks began.

Ironically, the deals are already elevating wages outside the union tent — Toyota immediately raised hourly rates for its US assembly workers — and the UAW is now planning an aggressive push to unionize factories run by Volkswagen, Hyundai and Tesla.

You also wonder if these richer contracts won’t have the automakers double down on factory automation – to run operations with fewer and fewer workers with each passing year.

3. Chinese Enter the U.S. Market

Washington has effectively built a fortress to keep out Chinese EVs. Former President Donald Trump imposed a 25% tax on Chinese auto imports. President Biden backed that policy and went even further, denying them “Buy America” credits that can reduce consumers’ price tag by thousands of dollars.

These steps have made it virtually impossible for Chinese automakers to compete with vehicles built in the U.S. or imported from friendly nations, even as they rapidly penetrate other markets.

But, with over 100 car brands, many unprofitable, and slowing sales growth at home, China’s auto industry has a powerful incentive to look for more lucrative markets overseas. China’s share of global EV exports grew from 4% in 2020 to 21% in 2022.

By the end of 2024, China will have shipped more than 10 million vehicles to 120 markets worldwide in the span of 24 months. 

More recently, three major Chinese EV companies are planning new factories in Mexico: BYD, Chery and Great Wall will begin building plants in Mexico in 2024.

China is already the number one supplier of vehicles to the Mexican market. Chinese automakers want to access to the massive US market and stiff American tariffs will drive them to do this end-around via Mexico.

Lawmakers on a select committee on China recently warned that stronger trade rules may be needed to prevent Chinese automakers from “gaining a backdoor to the US market” through its trading partners. 

I encourage dealers to try to stay open minded about franchise opportunities. Remember back in the 50’s and 60’s when the Japanese automakers first entered the U.S. market and then more recently as the Korean brands entered in the 1980’s. Dealers who had the risk tolerance to embrace these new entrants made out well as the products improved over time and volumes grew.

4. No More Agency Model

In 2024, we’re going to stop hearing any more threat from the “Agency Model.” Legacy automakers are going to wise up and realize that taking the new vehicle inventory risk in an environment of softening consumer demand, increasing interest rates, and EV demand uncertainty would cause tremendous pain to automaker balance sheets. They’ll quickly come to their senses and realize that it’s a much better world when their dealerships take the new vehicle inventory risk. And that will be the end of the “Agency” and direct sale buzz that was common during the Covid pandemic.

5. Dealer Margins Heading Downward

A recent Cox Automotive Dealer Sentiment Index revealed a significant decrease in U.S. auto dealer sentiment in Q4 2023 compared to Q3. This decline is attributed to the adverse effects of high interest rates and a weakening economy on the automotive market. 

I expect that dealer sentiment will continue to track downward over the remainder of 2024, as inventories mount, profits per vehicle decrease and overall dealer margins come back down to something that looks more like pre-Covid levels.

But all is not lost. Dealers have experienced incredibly profitable years during COVID-19, and while 2023 was down a bit from all-time highs, we still have a few more great years ahead of us as we slowly regress back to pre-COVID levels.

I suspect that as the market softens and dealership profitability tracks downward, we’ll also see a correction in dealership valuations, which may put a bit of a damper on the volume of physical dealership buy/sell deals transacting as the year progresses.

6. Automakers Continue to Feel Pain

The legacy automakers are struggling to make the transition to electrification in an environment where consumer demand is uncertain. As a result, they will continue to bleed cash in their EV operations.

As automakers look towards the “Software Defined Vehicle” as the future that will unlock both new revenue from unbundling features as a service as well as dramatic cost savings from Over-the-Air Updates, they will continue to face an uphill challenge to build out a software competency. A good example of this is Volkswagen’s software division Cariad losing over $2 billion last year, and laying off a significant percentage of their employees.

Software is hard. Especially for legacy automakers.

A cause of Ford’s quarterly earnings call miss late in 2023 was $1.2 billion more in warranty costs than the previous year. The expense of repairing vehicles under warranty has been a problem at Ford for years, causing bumpy financial results that are hard to predict. It is now being compounded by inflation in dealers’ repair costs.

The root problem is the complexity in the traditional product portfolio. Embracing gadgetry has helped Detroit automakers charge higher prices in recent years, but in Ford’s case, it also put a lot of strain on the electrical systems of products designed by mechanical engineers.

Finally, circling back to the new UAW contract, Ford estimates that the new agreement could add $850 to $900 in labor cost per vehicle. 

7. Focus on Costs

Given all of the uncertainties just mentioned, dealers are best to get ahead of the curve and begin to aggressively focus on cost reduction.

At Automotive Ventures, we believe there will be a wave of new startup companies that help dealers manage their operations more efficiently, taking out costs and delivering stronger bottom-line profitability.

A good example of this is our investment in WarrCloud, which automates a dealer’s OEM warranty claims, and both reduces operational costs while simultaneously increasing revenue.

We’re looking to invest in more win-win vendors like WarrCloud.

8. Enter: Artificial Intelligence (AI)

JPMorgan Chase recently announced that artificial intelligence tools are starting to generate revenue for the bank.

JPMorgan set a target of $1 billion in “business value” generated by AI in 2023, and the firm increased that goal to $1.5 billion at its investor day in May. The gains come from benefits including personalized recommendations to clients in the card businesses and providing insights to client-coverage teams.

The world’s biggest banks have been experimenting more with artificial intelligence in recent months, spurred by the promise that it will help them boost staffers’ productivity and cut costs.

UPS just opened its largest warehouse, a 20-acre facility on the outskirts of Louisville, KY, where robots outnumber humans by a ratio of 15:1.

Like the examples of JPMorgan Chase and UPS, Automotive Ventures is actively looking to identify companies that will automate tasks at dealerships and make human capital more efficient.

9. The Amazon Factor

One of the biggest news items near the end of 2023 was that Hyundai became Amazon’s official launch partner for vehicle sales. Hyundai customers who want to skip going to a dealership will have a new option in 2024: shopping on Amazon.com.

Hyundai is the first automotive brand to offer such an option for customers.

The arrangement will allow customers to purchase a new car on Amazon from a local dealership and then either pick it up or have it delivered.

While the program will begin with only 18 Hyundai dealers, a broader rollout is expected to follow in the second half of the year. And expect additional automakers (beyond Hyundai) to be added later in the year. 

Dealers should be paying attention to how this plays out. There are now approximately 200 million Amazon Prime customers, representing nearly every household in the U.S. We have trained the next generation of shoppers to start their shopping process on Amazon and not Google. More than half of product searches now begin on Amazon. 

It’s not much of a stretch for me to think that in a few years, a third of all new car sales could originate on Amazon.com, with a significant portion of those being delivered directly to a consumer’s driveway with no dealership visit involved.

Dealers should think through the implications of what that future might look like.

Companies to Watch

Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my weekly Intel Report, we showcase a company to watch, and we take the opportunity here on this segment to share that company with you.

Rail Vision

Rail Vision provides the railway industry with advanced vision sensor technology using engineering, big data, and AI. 

Rail Vision’s advanced sensor technology ensures safe and efficient train operations, enabling seamless business continuity and cost efficiency for their customers in the railway industry.

The system streams a live video feed, allowing railway operators visibility into issues way before they need to take action. Their intuitive, hands-free interface empowers operators to make precise decisions at the pivotal moment.

Rail Vision’s technology is designed for trust, ensuring operational efficiency and safety for operators, drivers, and railway workers. With advanced sensors, AI, and real-time data analysis, their solutions offer unmatched situational awareness, detecting hazards and mitigating risks.

Real-time monitoring and analysis detect potential issues proactively, minimizing downtime and optimizing maintenance planning. Their solutions prioritize safety, reliability, and uninterrupted service for optimal resource utilization.

Rail Vision’s technology minimizes disruptions in railway operations by proactively detecting and managing risks, enabling swift responses to threats and incidents. With automatic obstacle detection and classification, they help railway operators stay ahead, mitigating potential disruptions.

If you’d like to learn more about Rail Vision, you can check out their website at railvision.io/.


If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our new DealerFund.

If you’re interested in joining our Investment Club to make direct investments into AutoTech and Mobility startups, please join. There is no obligation to start seeing our deal flow, and we continue to have attractive investment deals available to our members.

Don’t forget to check out my book, “The Future of Automotive Retail,” which is available on Amazon.com. And keep an eye out for my new book, “The Future of Mobility”, which will be out at the end of the year.

Thanks (as always) for your ongoing support, and we look forward to working closely together with you to create the future of this industry.

Thank you for tuning into CBT News for this week’s Future of Automotive segment, and we’ll see you next week!


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