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The electric vehicle revolution is fully underway. Led by successful vehicles like the Tesla Model 3, EV sales are taking off.
The momentum of EVs as a whole may hit some challenges soon, however, partly due to the rising prices of raw materials critical to the production of batteries.
The prices of lithium-ion batteries have seen a 90% decline to just about $130 per kWh. That’s very close to the widely targeted $100 per kWh level, estimated to be the point where EVs could become fully competitive with ICE cars in terms of cost. Expectations were high the battery industry would hit $100 per kWh in 2024, but recent trends in the market suggest this may not necessarily be the case.
Benchmark Mineral Intelligence, a company that tracks the worldwide battery supply chain, noted lower costs helped boost EV sales by 112% in 2021 to more than 6.3 million units globally from the previous year. And sales are only poised to increase.
EV leader Tesla, which sold nearly 1 million pure electric cars on its own in 2021, is looking to grow its deliveries by 50% this year, and estimates among TSLA bulls suggest the company’s growth might be even more impressive.
Benchmark Mineral Intelligence said battery-grade cobalt prices are up 119% from Jan. 1, 2020, through mid-January 2022. Nickel sulfate prices saw a 55% rise in price, and lithium carbonate saw a whopping 569% increase.
Benchmark Mineral Intelligence Chief Data Officer Caspar Rawles, in a statement to The Wall Street Journal, said some battery cell makers that typically offered long-term fixed-price contracts have ended up shifting to a variable price model instead. This allowed them to pass on some of the costs of rising material prices to consumers.
Battery materials may remain in short supply for some time. China, which dominates the battery supply chain, is also aggressively increasing its electric vehicle production. And considering it generally takes about seven to 10 years to deploy a new mine, a lot of key battery components may end up being supply-constrained in the coming years.
The rising prices of battery raw materials do not mean the EV revolution would likely be slowed down, however. The battery recycling industry is now gaining some momentum, with companies like Redwood Materials—led by Tesla co-founder and former CTO JB Straubel—already preparing to sell recycled battery components to Panasonic for the production of battery cells at Tesla’s Gigafactory Nevada later this year. This helps foster a closed-loop system since Redwood also receives Panasonic’s battery scrap from Tesla’s Nevada facility.
Other initiatives that may help the auto sector weather the rising costs of battery materials involve a focus on batteries that use less expensive, more abundant components. Tesla China is among the companies at the forefront of this movement, with Giga Shanghai using lithium iron phosphate (LFP) batteries for the Model 3 and Model Y. LFP batteries use iron in their cathodes instead of nickel and cobalt, making them less controversial and far more affordable.
And while LFP batteries typically result in vehicles with shorter range than cars equipped with nickel-based cells, tests from veteran electric vehicle owners in countries such as Norway are starting to reveal iron-based cells are nothing to scoff at. Longtime EV advocate Bjorn Nyland, for example, recently conducted one of his 1,000-km tests in a base Model 3 equipped with an LFP battery produced in Gigafactory Shanghai. The vehicle performed amazingly despite the cold conditions and its relatively small 60 kWh battery pack.
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SCA Claim Services has firmly staked its claim as a leader in the claim servicing industry. For more than 40 years, the company has expanded its nationwide capabilities, providing a broad menu of services to insurance companies, most notably adjusting and appraisal services in the auto, specialty, and property verticals.
Now a well-known and highly respected name among insurance professionals everywhere, SCA has become a prime destination for people possessed with the entrepreneurial spirit and seeking new opportunities to apply their skills and expertise.
That includes many auto body professionals.
Taking Ownership of Your Future
Erik Clayton was once a body shop estimator. In 2009 however he made the career decision to become a contract auto damage appraiser for SCA. After just a few months, recognizing an even greater opportunity, he became an SCA franchise owner in Dallas County. Just six months later, he added North Dallas County too.
What makes the Franchise Ownership Program at SCA special is the company’s commitment to its franchisees’ success. “At SCA we say, ‘As a franchise owner, you are in business for yourself, but not by yourself,’” says Chief Operating Officer Jon Gironda.
“SCA gives you all the tools you need to be successful,” agrees Clayton. “And they are always adding new clients.” SCAoffers franchise owners not just initial training but ongoing partnership and support. That includes file reviews by its fully licensed, centralized Quality Control team, dedicated Customer Care teams, and technology to help provide industry-leading accuracy and cycle time.
For more details on becoming a SCA franchise owner, visit SCAClaims.com/franchise-opportunities/
Being Your Own Boss
Franchise ownership isn’t for everyone with the itch to pursue a career change. Many auto body professionals have instead decided to put down their tools and pick up a phone or tablet to become a contract auto appraiser.
Skills acquired in the shop easily translate into insurance auto damage appraisal, and when it comes to the necessary education and certification, SCA offers guidance and support. In select markets, SCA will even pay a signing bonus to contract auto damage appraisers.
Contract auto damage appraisers can set their own hours and decide how much they want to work, and therefore how much they can earn.
The workforce in the auto claims industry is aging out of the business, creating a need to infuse it with fresh blood. Auto body professionals eager to be their own boss and chart their own course are recognizing this and the opportunity SCA provides. Ambitious appraisers can pursue additional training in specialty or housing claims to truly stretch their earning potential or, like Clayton, purchase their own SCA franchise.
Additional details about becoming an auto appraiser for SCA can be found at SCAClaims.com/appraiser-opportunities/
and opening new shops. Responding to the constant demands of its insurance “partners” for performance across multiple markets, Caliber now operates in more than 40 states and in 80 of the top 100 Metropolitan Statistical Areas in the U.S.
Gerber/Boyd Group really stepped up to the plate with two significant transactions: the acquisition of Oklahoma-based Collision Works and South Carolina-based John Harris Body Shop for a total of 51 shops out of the 97 additional shops they acquired or developed in the U.S. during the year.
Gerber also acquired a large, four-shop MSO in Wisconsin and a plethora of single shops and smaller MSOs, ending the year with an estimated 684 shops in the U.S.
Service King continued to shrink its footprint but only modestly, ending the year with seven fewer shops for a total of 336. While much has been written and speculated about Service King’s financial situation, they celebrated the new year by opening a brownfield in Illinois. 2022 should bring more clarity to their situation.
The new kids on the block grew into robust adults. The next two largest consolidators accelerated their acquisitions at an incredible pace. Chicago-based Crash Champions grew by more than 300% during the year to a total of 175 shops after beginning the year at 53.
Crash’s appetite included the 24-shop Signature Collision MSO based out of Annapolis, MD, but covering multiple markets in the east and southeast. They acquired MSOs from the Pacific Northwest to Florida and many places in between from Montana to Nebraska, New Mexico and Ohio, acquiring dozens of single shops and MSOs.
Equaling Crash’s dramatic expansion was Classic Collision, which grew to 174 shops from a base of 54 at the year’s inception.
Classic entered Texas with a blockbuster transaction, acquiring 45 shops that previously operated under the Procare and Austin Motor MileEllis & Salazar brands. Procare was owned by private equity firm Kinderhook, which had been invested in the company for approximately five years.
The rest of the Classic story included some large MSOs, such as Central Collision with 13 shops in Oregon, Platinum Collision Center’s eight shops in Southern California, and Fender Mender’s eight shops in South Carolina. Classic also entered Alaska in dominant fashion by acquiring two MSOs, Able Body Shop and Fix Auto Alaska, for a total of nine shops in the state.
With more than 300% growth in 12 months and backed by $15 billion private equity firm, New Mountain Capital, Classic is also on its way to becoming a billion-dollar company.
Joe Hudson’s three years into its ownership under new sponsor, TSG Consumer, grew by 23 shops, which seems modest compared to Crash and Classic but still increased store count by 20%.
Up and comers went on an acquisition spree as well. Seemingly from out of nowhere, private equity-backed Collision Right, formed in 2020, added 39 shops to its base of 19. So far, Collision Right’s model has retained the local branding of its acquisitions rather than rebranding as most of its competitors do.
Another up and comer has a similar branding strategy: Quality Collision Centers added 10 locations during the year including B&S Hacienda Auto Body, a large sixshop MSO in Northern California.
Kaizen Collision, a new private equity-backed MSO based in Southern California, more than doubled its size to a total of 19 shops in California, Arizona and Colorado. Franchisors andAffiliate Groups continued their expansion. Premier franchisor Driven Brands grew both its franchise footprint with CARSTAR, Fix Auto, Maaco and ABRA as well as its corporate portfolio. By acquiring another 10 shops in the Pacific Northwest, Driven now operates a total of 18 corporate CARSTAR and Fix Auto locations.
Even after the sale of a number of CARSTAR MSOs and single shops, the total number of franchisees continues to expand. Final numbers for 2021 are not yet available. Affiliate networks Certified Collision Group and 1Collision continued to expand, with CCG claiming more than 707 affiliates by year end and 1Collision claiming 50 locations in the U.S.
Fix Network World acquired ProColor, a 172-unit franchise in Canada. It began signing its first franchises in the U.S. in February and by year-end claimed a total of nine locations.
Source: Focus Advisors
MICHAEL HOHL Motor Company
Continued from Cover EV Chargers
keep up with the rapidly increasing number of EVs in the U.S. Projections say by 2030, the country will have 30 million EVs on its roads, which, according to the source, would require the construction of 478 charger stalls per day for eight years in order to meet the need. The Biden administration is aiming for 500,000 stations by decade’s end.
The study also notes which states are best when it comes to the ratio of charging stalls to EVs. North Dakota, Wyoming and West Virginia are the three states where you are most likely to find an empty charging stall, while the worst are New Jersey, Hawaii and Arizona. In the last three there is a higher chance you may find all local public chargers are taken and you may havetowaitorfindawaytochargethe EV at home.
According to a report from the U.S. Department of Energy, the ideal ratio of EVs to charging stations is 40 Level 2 charging ports and 3.4 DC fast chargers (DCFC) per 1,000 EVs. A DCFC charger usually has three ports.
Currently, there are 41 Level 2 charging ports and 5.7 DCFC charging ports per 1,000 EVs, respectively, or about 21 EVs for every charging port. There are 2,514 internal combustion engine (ICE) cars per gas station.
EVs are currently at a disadvantage compared to ICE vehicles when it comes to their average range—259 miles versus 360 miles. And the time it takes to charge an EV is longer than simplyfillingupagastank,sovehicles will be occupying more of the available charging stalls for longer.
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