Auto manufacturers are entering what Bank of America Securities describes as the most volatile period in modern industry history, with electric vehicle (EV) investments faltering, core product strategies shifting, and global competition intensifying, particularly from China.
In its latest Car Wars report, BofA analyst John Murphy warns that the next four or more years will bring “unprecedented” disruption for automakers, citing delayed EV adoption, regulatory uncertainty, and collapsing pricing in China. “The unprecedented EV head-fake has wreaked havoc on product plans,” Murphy said Wednesday during an Automotive Press Association event near Detroit.
The Car Wars report, an annual forecast of product strategies and model launches, predicts billions in upcoming EV-related write-downs as automakers unwind overly ambitious electric rollout plans. For instance, Ford’s $1.9 billion charge in 2023 for scrapping its planned all-electric three-row SUV is likely the first of many.
Amidst that financial strain, automakers are shifting their focus back to their most profitable core offerings, particularly internal combustion engine (ICE) vehicles and hybrids. Murphy emphasized that cash generation will be critical.
Moreover, automakers are expected to lead product replacement through 2029, with notable contributions from Tesla (22.4%), Honda (16.9%), Hyundai/Kia (16.5%), and Ford (16.1%). Those below the 16% industry average include Nissan (12.3%), Toyota (13.7%), and European legacy brands (15.2%). GM and Stellantis fall just below average at 15.7% and 15.4%, respectively.
Meanwhile, China is experiencing a market collapse due to extreme price wars and oversaturation. According to Nomura, average car prices have decreased by 19% over the past two years, with sharper declines for hybrids (–27%) and EVs (–21%). Murphy warned of looming consolidation among China’s hundreds of automakers and recommended shielding the U.S. market from an influx of cheap Chinese exports in the near term.
The report also notes a slowdown in the launch of new models. Automakers expect to release only 159 models over the next four years, down from more than 200 in previous cycles. Murphy noted that the “crossover surge is over,” as Detroit automakers focus on refreshing their full-size pickups, while Japanese manufacturers struggle with unpredictable production schedules.
Despite missed expectations in EVs and connectivity, Murphy still sees opportunities in automotive software and dealer services. He highlighted a $2.4 trillion aftermarket business, half of which is untapped by automakers. “It is vision critical that you get the dealers on board,” Murphy said, arguing that tech-driven service and sales strategies could unlock $133 billion in new profitability.
The full Car Wars analysis lays bare the high-stakes recalibration facing every global automaker through the end of the decade.
