By Sam Hsieh, International Affairs Department of TEEMA
Opening Ceremony of the EV Track
AIT Director Mr. Brent Christensen delivered a welcome remark addressing all the participants of the bilateral meeting. In his speech, Mr. Christensen stressed the importance of the annual SelectUSA for the US-Taiwan relation. Thanks to the hard work by the Commercial Section of AIT, there will be 6 tracks conducting parallel meetings with their respective US organizations on June 8 and 9. The 6 tracks are electric vehicle, semiconductor, personal protective equipment, drones, semiconductor supplier, and startups. Each of these tracks will meet with several organizations related to their fields, including US governmental offices such as the Department of Defense and Department of Commerce, state and local economic development organizations, associations such as the Semiconductor Industry Association, US leading companies such as Ford, GM and Intel, and venture capitals such as Acorn and 500 Startups. Mr. Christensen pointed out that these bilateral meetings will provide excellent opportunities for Taiwan to be exposed and cooperate with these US organizations, and he hopes to see great outcome from these engagements.
Deputy Minister Deng pointed out in his speech that the SelectUSA is the annual highlight of US-Taiwan relation, and this year, Taiwan kept its title as the largest delegation in the SelectUSA third time in the row. It shows the positive attitude and willingness of Taiwanese companies seeking to cooperate with the US. Mr. Deng said that the Taiwan Travel Act and the Taiwan-US Economic Prosperity Partnership Dialogue will serve as the foundation of continuous cooperation between US and Taiwan in the coming future. Mr. Deng also took the opportunity to thank the US for donating 750,00 doses of vaccine to Taiwan recently, which is a great demonstration of the friendship between the two countries. Taiwan and the US are "real friends making real progress", he said. Mr. Deng pointed out that in 2020, Taiwan has surpassed France and India and become the US's 9th largest trading partner and 10th largest export market. According to the US's Department of Commerce, Taiwanese companies have cumulatively invested about 16.2 billion USD in the US. The number is even higher according to Taiwanese government's survey. The survey shows that Taiwanese companies have cumulatively invested about 47 billion USD in the US and has created 370,000 full time jobs. The Biden administration places a great deal of focus on domestic chip production, digital economy, clean energy and battery technology, which are areas where Taiwan can be a great partner to the US. Mr. Deng suggested, if Taiwan and the US could sign a bilateral trade agreement, it will boost the confidence of both Taiwan and US companies significantly, fostering more cooperation between the two countries.
Meeting with Ford Motor
The EV track began with the meeting with Ford Motor, AIT Economic Section Deputy Chief Ms. Arati Shroff, Ford Global Director Electrical Purchasing Mr. Matt Duffy, TEEMA Chairman Mr. Richard Lee, and Wistron Director of Smart Transportation and Mobility Mr. Edgar Chang were invited to give their welcome remarks to the attendees. Ms. Shroff pointed out that the US manufacturers are looking to diversify and strengthen resilience and scalability in their supply chain. The reason behind Biden's executive order for the 100-day review of semiconductor, medical supply, critical minerals and battery is also to reduce vulnerability in supply chain. Ms. Shroff said that the US is the largest auto market in the world, and with auto makers and even US state government making announcement for their EV goals, there are abundant opportunities for US-Taiwan collaboration in the EV field. The Biden administration has also announced in April of this year that the US will cut its emission by half by 2030, has a carbon pollution free power sector by 2035, and achieve zero emission economy by 2050. From her team's research, there are nearly 800 companies in Taiwan who supply EV related products, including autonomous driving system, battery technology, nuts and bolts. Many Taiwan ICT companies are teaming up with local companies in other countries to enter the EV market as well. In his opening remarks, Mr. Duffy shared that 80％ of Ford's materials are from external supplier partners, therefore, having reliable suppliers is a key to the company, and Ford has had good relationship and experience working with Taiwan.
In his speech Mr. Richard Lee, Chairman of TEEMA, shared that "In 2017, TEEMA established the Taiwan Electric Vehicle Team, a special interest group （SIG） called V-Team to create a platform to integrate Taiwan's car manufacturers, auto electronics manufacturers, and ICT manufacturers. Two founding members of TEEMA V-TEAM, Chairman Winner Yu of Philhone Technology and Founder & Chairman of Eton Technology Dr. Nicky Lu are joining this track with us together with many of TEEMA V-Team members. Through our efforts, Taiwan has a relatively complete supply chain for EV components, and many Tier-1 car companies rely heavily on Taiwanese suppliers for a majority of their EV parts. Yet, Taiwan has not produced a viable EV brand to contend in the global market. The whole EV industry is constantly changing. Companies such as Delta Electronics has been at work with many Tier-1 car companies to provide leading power and thermal management solutions. There is tremendous innovation with the chassis that can lead to the development of embedding the software in the hardware to create a seamless in-vehicle human machine interface （HMI）. Companies such as Advantech, a leading IoT intelligent systems provider, have come up with a dedicated total solution for EV charging. Lately, the EV industry has increased focus on renewable energy and the potential reduction of transportation's impact on climate change and other environmental issues. TECO Electric and Machinery has transformed itself from an original home electronics firms to an active EV participant, working on green motors for EV and smart power management. The forecast report from 2020 to 2027 has just been released by Meticulous Research. By 2027, globally the EV market will reach 2,500 billion US dollars, growing at CAGR of 33.6％ from 2020. By volume, in 2027 the EV market is expected to reach 234 million units, at a CAGR of 21.7％. The Asian-Pacific region held the largest market share mainly attributed to the increasing demand for EVs and associated charging facilities, the rising number of EV start-ups offering numerous solutions and services, growing government initiatives to develop charging infrastructure, and increasing incentive programs to promote the adoption of EVs. In accordance with Taiwan's government policy to promote domestic EVs, we shall complete the conversion of government-owned vehicles and public transport buses by 2030 to EV and convert all new sales of motorbikes to EV by 2035. There are tremendous opportunities in the EV industry in the global market as well as in Taiwan. Through the next 2 days of EV Track, I believe we will jointly explore much more EV collaborations between Taiwan and the U.S."
Mr. Matt Duffy presented Ford's vision for EV. He compared the auto industry's traditional business model with the new model. In the old model, auto companies focus on vehicle sales, after sales and financial services, however, the objectives have completed transformed in the new business model. Car companies can no longer only focus on the physical products. New business models such as vehicle as a platform and mobility as a service are now the key to their future. Ford is transforming into a mobility company rather than just a vehicle company, Matt said. In order to cope with this fast-changing and disruptive transformation, the traditional model of tiers must be broken down. The old model is a pyramid of closed tiers with regimented structures optimized for predictability with low appetite to quickly adapt new technology from outside system. In comparison, the new model is an ecosystem with highly fluid structures optimized for agility with strong appetite for seeking out innovation and quickly productizing disruptive technologies.
The automotive industry is commonly conceived as being slow and traditional, however, the industry has been rapidly evolving in the past decade. For example, there were only a handful of auto companies in the Silicon Valley before, but now, the auto companies are heavily engaging with tech companies for cooperation. According to Ford's new CEO, James Farley, the company's plan is to include new disruptive business model, new connected software, new capabilities and partnerships, new parts and service, new subscription model, new organization, talent and expertise.
Ford expects EVs to make up 40％ of all its global vehicles by volume by 2030, and it will invest more than 30 billion USD in electrification through 2025. New EVs will require high-voltage components such as DC/DC converter, electrical distribution system, electric AC compressor, coolant heater, power onboard generator and onboard charger. These new cars will also incorporate the state-of-the-art ADAS for connectivity, such as cameras, radar, LiDar, sensors, HUD, displays, antennas, smart surface, electrical components and SaaS. Matt pointed out that Ford is constantly looking for partners who can bring them new technologies which they can translate into Ford's next generation of vehicles. The future will be exciting and disruptive, he concluded.
Q&A with Ford Motor
Q: When you evaluate a new supplier, what criteria do you look for?
A: Quality, product performance, and local footprint.
Q: What is the decision process for choosing a new supplier?
A: We want long-term trusting relationships, and we look for partners who are on the same page with us, which is bringing new and exciting experience to our customers. Undoubtedly, cost is an important factor as well. By estimation, EV will make up 40％ of our sales by 2030, which is about 2 million units. The potential for suppliers is enormous. Since Ford is a global company, local regions has their own design requirements. Suppliers should contact local Ford representative for details.
Q: What do you think is the advantage of Taiwanese company?
A: The Taiwan supplier base is fast in development, has great discipline in manufacturing, able to provide consistent quality product and has an innovative mindset. They are valuable partners to Ford.
Q: Could you elaborate on the SaaS you are looking for?
A: Ford does not have all the resources needed to develop the SaaS we desire on our technology roadmap, so we are looking for partners who can provide software services such as HMI, software maintenance, next generation connectivity, cyber security, navigation service, etc.
Q: When evaluating a potential partner, is local footprint important to Ford?
A: Not really. We value the quality of the products and services.
Meeting with General Motors
According to Mr. Shilpan Amin, VP of Global Purchasing and Supply Chain, GM's goal is to realize a world with zero crashes, zero emissions, and zero ongestion. GM is working to become the most inclusive company. It prides itself for being named one of the world's most ethical company in 2021 for making difficult but necessary value based decisions. The company has supplied 3,000 ventilators and millions of facemasks during the pandemic, and it has also donated to organizations working on racial justice.
GM has announced that it will invest 27 billion USD in EV through 2025, and it will have 30 EV models by 2025. It aims to develop an EV product line for every lifestyle at every price point. According to a third party research, the percentage of EV in global industry vehicle sales will be 10％ by 2025, 28％ by 2030, and 58％ by 2040, therefore, GM is investing heavily on its EV development and production. GM has announced to build the Factory Zero in Detroit, Michigan at the price of 2.2 billion USD. It will be a factory 100％ devoted to producing EVs. GM has partnered up with LG Energy Solution for its Ultium battery. The joint venture has announced investment in Ohio and Tennessee for 2.3 billion USD each for building battery plants.
At the consumer end, GM will construct infrastructures such as charging stations in homes, workplace and public places. EV accessories and installation services will be available for customers. GM has signed cooperation agreements with 7 charging station providers, and together, they will deploy 60,000 plugs throughout the US and Canada. GM is also working on a pay-per-charge program for the customers' convenience.
In terms of suppliers, GM holds their suppliers to 6 core principles: Sustainable value streams, total enterprise cost & profitability, safety, launch excellence defect free vehicles, accelerate innovation, nurture relationship/be inclusive. GM will evaluate its suppliers with sustainability indicators such as diversity, carbon emission, transparency and cultural priority. The goal of GM is to win together with their suppliers.
Q&A with General Motors
Q: What strategy would you recommend to Taiwanese companies in becoming GM suppliers?
A: Taiwan has an innovative supply base. Come to us with innovative ideas and tech that focused on equity, inclusion and sustainability.
Q: What is the entry requirements for a new supplier?
A: Delta and AUO who are present in the meeting are great examples. Companies should bring their best ideas forward with transparency, and they should be able to move quickly and be innovative.
Q: How can a Taiwanese company become GM's battery partner?
A: GM has a sound partnership with LG Energy and are working on the future roadmap of battery together. We would recommend to share your technologies to us, and we can see where we match on our roadmap.
Q: Are there any specific areas in technology that you would like to work with Taiwan?
A: You can come to us with your innovative technologies, and our engineering group will evaluate the content. To become a supplier, the basic skills such as quality, competitive price, launch excellence are all fundamental. Besides new technologies, companies can also take old tech and improve them. For example, making the products more sustainable or use alternative materials while maintaining the durability.
Q: Does GM require local footprint from their suppliers?
A: As a global company, GM has to comply with localization rule around the world. For example, in the US, GM must comply with the rule of local content value specified in the USMCA. After COVID-19 and the chip shortage, GM will consider resilience in its supply chain. The 100-day review report was just released, and it mandates US companies to avoid single point of failure in their supply chain and recommend them to enhance cooperation with like-minded partners and countries to solve that issue. On that note, investment in the US will definitely help building long trusting relationship with GM.
Meeting with Georgia Economic Development Organization & Blue Bird
Georgia has a population of 10.6 million, of which 5.1 million are in the work force, ranking the state 8th largest in the nation. The Hartsfield-Jackson serves 150 US destinations and more than 75 international distinations in 50 countries. Atlanta is within a 2-hour flight of 80％ of the US population. Georgia has diverse education institutions such Georgia Tech, University of Georgia, Georgia State University, Emory University, etc. Automotive manufacturers in Georgia include KIA, Hyundai Transys, Toyo Tires, Blue Bird, Suzuki, Club Car, Yamaha, etc. The incentive programs offered by Georgia include state income tax credits, monetizable tax credits, R&D tax credit, and sales & use exemptions. Georgia also offers the "Georgia Quick Start" program where the state will provide customized training to each company's unique process and equipment.
Blue Bird was founded in 1927. It is a leading school bus manufacturer in the US. It has manufacturing base in Peach County, Georgia and Quebec, Canada. It built its first EV bus in 1996 for the Olympic which took place in Atlanta. Currently, it is the only bus company with EV bus on the road in the US. The Biden administration has announced that the US will have 20％ of its school buses convert to EV buses in 6 to 8 years, and Blue Bird is expected to benefit greatly from the policy. In numbers, there are currently 60,000 transit buses in the US transporting 8 million passengers per day, while there are 480,000 school buses transporting 24 million passengers per day, so Blue Bird is at the front end of the industry.
Blue Bird's challenge is to increase its 500 EV school buses on the road to 6 times the amount in the next 12 months, so it need significant capacity from their supplier base. There are 6 categories of requirement to become a Blue Bird's supplier, and they are as follow:
1.Local present
2.Capacity must be in place and ready to deliver
3.Commit to long term partnership
4.Sound sourcing strategy
5.Quality
6.Total cost of product
Q&A with Blue Bird
Q: Is localization required?
A: There are many opportunities for suppliers, such as motor, wire assembly, components, battery, etc. Local present is important for Blue Bird's just in time production process. According to the US federal rule, at least 70％ of value content must be made in the US.
Q: What is the decision making process for new suppliers?
A: The selection process usually takes 1 to 3 months. Blue Bird would evaluate engineering expertise, business model, company traits, quality, location proximity, etc. It is a comprehensive review process and relevant document can be provided if needed.
Q: What features do you seek in battery other than safety?
A: Quality is the key. The average lifecycle of a school bus in 12 to 15 years, so the battery must be reliable and durable.
Q: What is your procurement policy and distribution channel?
A: We look at the total cost of acquisition, meaning cost of design, logistic, packaging, and not just the price per unit. The supplier must be able to scale up and down and comply with US policies. In terms of distribution channel, ours is similar to the traditional auto distribution channel. Blue Bird has 43 dealers in the US and 1 in Canada. It sells to 164 countries and regions for various industries.
Q: Is AI something Blue Bird is looking for?
A: Yes, we are looking into AI but it has only begun to take shape. It is not our priority but there are opportunities in AI for the safety features that it can provide.
Meeting with Michigan, New Mexico and Texas Economic Development Organizations
Mr. Richard Lee, Chairman of TEEMA, is asked to give an opening remark at the EDO panel. He addressed each of the participating states for its significance and TEEMA's relationship with the state. He said that Michigan is wildly known as the center of US's auto industry. It has a population of 10 million people. TEEMA members in Michigan also produce auto parts and components, such as Delta and Lite-on, and these companies are transforming and adapting themselves into the EV ecosystem. The New Mexico state gained tremendous advantage from the USMCA and has now become one of the most attractive destinations for Taiwanese companies. Taiwanese companies in New Mexico include Xxentria Technology, Admiral Cable, etc.T exas is home to many Fortune 500 companies, and the state leads in many industries, including tourism, agriculture, petrochemicals, energy, computers and electronics, aerospace, and biomedical sciences. There are many Taiwanese companies in Texas, and many of them are TEEMA members. There is great potential for Michigan, Texas, New Mexico and Taiwan in the EV sector. Mr. Lee hopes that TEEMA could arrange a delegation to visit the 3 states after the pandemic.
Brian Connors, Investment Promotion Director of State of Michigan, is invited to introduce the investment climate in the Michigan state. Michigan ranked 13th
in GDP in the nation. It is located within 500 miles （800 kilometers） of nearly half the US and Canadian populations. Michigan has the highest concentration of engineers in the US. It is home to 98 of the top 100 global auto suppliers, and it is the epicenter for the future of transportation mobility. Taiwanese companies in Michigan include Delta, EOI Group, CMAI, HTC, Hipr, Soloman, TungThih, etc. The University of Michigan offers 19th top engineering programs, and Michigan State University offers globally-recognized supply chain program. Over the last decade, Michigan has seen new investment and re-investment from companies. 41.5 billion USD in new OEM and supplier investment and 90,00 new jobs were created from 2010 to 2019. While the internal combustion engine cars are making an exit, Michigan is still the center for EV. The Michigan state offers customized incentive packages for businesses that create jobs and new investment.
According to Melinda Allen, President & CEO of New Mexico Partnership, New Mexico has numerus research institutions, including several governmental research facilities, R&D centers, and national labs. Santa Teresa is the largest of three border crossings with Mexico. In 2019, New Mexico surpassed all other states with 68％ growth in exports to Mexico and a 31％ increase in global exports. Some of the leading sectors in New Mexico include advanced manufacturing, aerospace, distribution and logistics, energy and natural resources, and food processing. The compensation cost for employees in New Mexico is below the national average, which create more incentive for corporations to invest. The local government can also provide various tools such as job training incentive program, high wage job tax credit, industrial revenue bond, etc.
According to James Chen , Asia Pacific Representative for Investment and Trade of Texas Governor Office, Texas ranked 1st in the country for population growth in 2019. In 2020, there were more than 800 new projects announced in Taxes with a total investment of 12.9 billion USD, creating 44,000 new jobs. Some of the big names include Tesla, CBRE, Oracle, HP, Whole Foods, Amazon, Tata, Southwest, and Verizon. The state has no corporate income tax and no individual income tax, making it one of the lowest tax burdens in the country. In 2020, Texas was the nation's top exporter for the 19th year in a row. It also has the second largest civilian workforce in the US with 14 million industrious people. Texas has 148 higher education institutions, and its R&D expenditures was as high as 5.6 billion USD in 2018. There are 380 airports in Texas, including 26 commercial airports, and it has 16 seaports. In 2020, Texas was home to 50 Fortune 500 headquarters and is ranked 1st destination state for foreign investment by capital expenditure. Taiwanese companies in Texas include Formosa Plastics, BENQ, Foxconn, Wistron, Pegatron, etc., many of which are TEEMA members. In 2020, more than 1200 EV-related companies employed more than 7100 people in Taxes. EV sales in Texan more
than doubled from 2017 to 2018.
