14 Jul 2022

Dr Mike Redwood examines ongoing turmoil and uncertainty in the automotive sector and the possible consequences for the leather industry.



When I asked a neighbour in our tiny English village whether he liked his new electric vehicle (EV), he responded that while he thought it was a very expensive purchase, he was ecstatic that a full charge (using a special overnight EV economy rate) only cost £10 (US$11.90).

This is less than a tenth of what I pay to fill my car with diesel, albeit I can go a bit further than his 400 miles. Across the road another neighbour has two EVs, one a hybrid, and charges them for free using his own solar panels.

As a schoolboy, I remember my father being involved in a decision to stop making automobile leather for Detroit as textile and vinyl took over and replaced it with softer chrome tanned upholstery leather for furniture. But, from the oil crisis of the 1970s, the return of leather to the automobile sector as a “differentiator” that consumers loved was dramatic.

After these decades of relentless growth, recent years have seen a wide range of uncertainties for the whole world of transport. Be it a systemic change away from the combustion engine, the pandemic stopping huge areas of movement or the war in Ukraine and the geopolitical battle arising from it, the automobile industry and the world of transportation is already changed forever.

Supply chain control

It is only a few years since we first heard of Tesla and Elon Musk, only for Tesla to be overtaken by BYD, founded and led by Wang Chuanfu, in the last few weeks. And what is the implication of China’s domination of the supply chain for lithium, which itself asks whether a high level of control like Tesla tries to have over its supply chain is not a better approach?

Earlier this year, Chinese state-owned automaker Chery announced it would build a plant making 50,000 EVs per annum in Argentina. Although the leather industry has been more interested in its possible involvement in Curtume CBR, more significant was probably that China has also expressed an interest in Argentina’s big lithium deposits.

The immediate tale with automobiles has been semiconductor supply problems. It appears that, as a result, many companies have focused on larger more profitable vehicles when they can get supplies, which has been good for the leather industry. Erratic supplies have meant tanners are being given chaotic ever-changing schedules, but at least there is work.

A strong rear-guard action from the leather industry appears to have fought back a good part of the onslaught against leather with some EV brands, who must surely be embarrassed by having embarked on such a brazen marketing ploy without the support of science or common sense.

Pandemic, oil prices and different travel patterns……to read the rest of this Redwood Comment, click on ILM –  Transport today, problems tomorrow

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