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Current & Future Aluminum Content in Light Vehicles Through Europe & North America

DuckerFrontier, November 6, 2020

Q&A with Hélène Wagnies | Aluminum International Today Online Showcase

DuckerFrontier Managing Director, Hélène Wagnies presented the current & future trends on aluminum content in lightweight vehicles in the U.S. and in Europe on October 6th 2020


Q: How is COVID-19 impacting light vehicle production?

COVID-19 is having a significant impact on light vehicle production. 2020 production levels are estimated to be approximately 20% lower than in 2019 for both Europe and North America. As compared to pre-Covid forecasts which where the basis for Automotive suppliers to define their production and sales targets, about 4 million less cars than expected will be produced in Europe,3.6 million less in North America. A return to 2019 production level is expected in 2022 for North America, and slightly later by 2023 in Europe.

Q: And how is it impacting aluminum demand?

The implications for aluminum are smaller in North America than in Europe. Consumers in NA have been favoring larger vehicles like pick-ups and SUVs. These vehicles – for example, the Ford F-150, Ford Explorer, Chevy Tahoe, Toyota RAV-4, and the Nissan Rogue – utilize higher than average aluminum content, particularly for aluminum ABS (Automotive Body Sheet).  Pick-ups and SUVs/CUVs represent not less than 70% of North American production (vs. 40% in Europe) and are further rising. Pick-ups alone account for nearly 25% of North American production, while these are non-existent in Europe. These major differences in the vehicle mix drive a 29kg higher average aluminum content per light vehicle in North America as compared to Europe. Instead of an average 179kg per vehicle in the EU, net aluminum content in NA amounts 208kg (459 pounds).

Q: What is the outlook on the aluminum demand between Europe and North America?

Overall pretty positive outlook for the aluminum industry in the light vehicle segment. Aluminum demand is expected to further grow at a strong pace by 2025, driven by an increase of the average aluminum content per vehicle by 20-21kg in both regions – therefore increasing aluminum demand even if production were to stagnate.

Growth will benefit all aluminum product forms (sheet, extrusions, castings, and forgings), and especially sheet and extrusions. Castings will remain the major aluminum product form but will start losing momentum, especially in Europe – decreasing from 65% of the average aluminum content today to 59% in 2025 – due to receding ICE powertrain components demand.

Today, due to lower production numbers, the North American market is smaller than Europe in terms of total aluminum consumption; however, it grows faster and will soon outpace Europe. In terms of content per vehicle, the average content is about 30kg higher in North America than in Europe – this higher aluminum intensity is directly linked to the vehicle mix characterized by a strong share of large D and E segment vehicles, particularly the pickup trucks where for example the Ford F-150 contains over 453 kg of aluminum in all product forms.

Q: What is the impact of electrification on aluminum content?

Electrification is picking up in both regions. However, due to stricter CO2-regulation in Europe, the electrification trend will develop much stronger and faster in Europe than in North America. Electrification is expected to translate into a significant increase of BEV and MHEV production. Even though ‘ICE only’ will remain the largest powertrain segment by 2026, the powertrain mix will have undergone a drastic shift toward electrification since 2019 (expected share of 40% ‘ICE only’ in 2026 EU production vs. 82% – twice as much – today).

What this means with regards to the aluminum content in light vehicles?

On one hand, powertrain full-electrification for BEVs makes some components redundant – combustion engine, transmission, driveline – but on the other hand creates the need for new components – such as the battery box (the largest one), electric motor(s), and gearbox. This shift implies losses and gains in aluminum content within product forms and overall as compared to ICE vehicles. Further aluminum content differences can be noticed between BEVs and ICEs due to increased aluminum penetration for structural parts in BEVs which are in higher mass saving need. At the end of the equation, BEVs currently use about 100 kg more aluminum than ICE-only vehicles in North America, in Europe these are even 150kg more. Along with necessary portfolio adjustments, this opens up tremendous growth opportunities for market participants in the aluminum industry. At the same time, the evolution of electrification and specifically battery technologies needs to be closely monitored in order to anticipate the impact on aluminum demand.

Our clients count on DuckerFrontier to help them develop their strategic playbook as it relates to the specific nuances of serving the European, North American, and global automotive OEM and tier supplier networks. A careful review of market demand, (technical) requirements, decision-making process, as well as supply, capabilities, capacities, strategic plans and investments aimed to increase market share and customer intimacy are required to ensure growth and success. Trusted and accurate market data from DuckerFrontier forms the basis for all our consulting engagements.

You can reach Hélène Wagnies, Managing Director, at: hwagnies@duckerfrontier.com or +49 30 92 10 16 64

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