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China is reported to be restricting Tesla vehicles from entering the grounds of military complexes and certain agencies due to national security concerns arising from built-in vehicle cameras.
Market Trends and Regulatory
Parts shortages and production cuts – Due to both a parts shortage caused by last month’s winter storms and the global semiconductor shortage, an unspecified amount in the “thousands” of Ford F-150 pickups and Edge crossoverswill be built without certain electronic modules related to basic vehicle functions, and held “for a number of weeks” before shipping to dealers when the modules are available. Ram 1500 Classic trucks will be built and held for final assembly by Stellantis in Warren, Mich., and Saltillo, Mexico, due to the semiconductor shortage. Earlier this month, it was revealed that GM will build and sell an undisclosed number of 2021 light-duty full-size pickup trucks without a fuel management module, and affected models will have lower fuel economy by one mile per gallon. Planned shutdowns or reduced output have recently been announced by automakers, including Nissan, Volvo, Ford, Toyota and Honda.
Toyotareduced production at plants in Kentucky, West Virginia and Mexico for portions of last week due to shortages of petrochemicals, as numerous petrochemical plants in the U.S. Gulf Coast region remain offline due to complex startup periods following shutdowns caused by severe winter weather last month.
Due to the semiconductor shortage and an unspecified parts shortage caused by last month’s winter storms, Ford will idle production for the week of March 22 at its Ohio Assembly Plant, and reduce output for an unspecified amount of time in Louisville, Ky., and Cologne, Germany.
Honda will reduce production at the majority of its North American plants the week of March 22 due to supply chain constraints attributed to the pandemic, port congestion, and the semiconductor shortage. Honda has 12 plants in the U.S., at locations in Alabama, Georgia, Indiana, North Carolina, Ohio and South Carolina; Honda manufactures at three facilities in Ontario, Canada.
Nissantemporarily shut down production on select days at its plants in Smyrna, Tenn., Canton, Miss., and Aguascalientes, Mexico, due to the semiconductor shortage.
Volvowill implement temporary production cuts or shutdowns for “parts of March” in the U.S. and China due to the semiconductor shortage.
Congressional hearings – In testimony submitted to the U.S. Senate Committee on Energy and Natural Resources on the topic of Driving Innovation in the Transportation Sector Forward, Toyota noted that while battery electric vehicles (BEVs) are an important part of the answer to reduce carbon emissions, multiple electrification pathways are needed, including technology-inclusive policies to support a variety of powertrains such as plug-in hybrids and hydrogen fuel cell vehicles. In testimony submitted to the Senate Committee on Finance on the topic of the Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing, Ford noted that the success of the U.S. auto industry is dependent on federal support of “market-based consumer and manufacturing incentives, innovative new technologies, labor and plant transitions and supply chain security.”
In a recent letter, California Sens. Dianne Feinstein and Alex Padilla urged President Biden to “follow California’s lead and set a date by which all new cars and passenger trucks sold be zero-emission vehicles."
Continental will pursue a spinoff of its Vitesco powertrain division in the second half of this year, after delaying previous plans for a spinoff due to the pandemic. The supplier also intends to create an Autonomous Mobility business unit in 2022.
The global semiconductor shortage has thus far had less impact on Toyota compared to its competitors, according to unnamed sources in Reuters. As a result of the supply chain disruption caused by the 2011 Fukushima nuclear disaster, Toyota developed a business continuity plan requiring its suppliers to stock four to six months of chip inventories for the automaker. Last month, Toyota indicated in its fiscal Q3 2021 earnings results that its production was not impacted in the near-term; however, the semiconductor shortage posed risks for the “mid-to-long term.”
Gerald Kariem, head of the UAW’s Ford department, has criticized Ford Motor Co. for a decision to move production of unnamed future electric vehicles from the automaker’s Ohio Assembly Plant to its Cuautitlan, Mexico, facility. Terms in a 2019 UAW and Ford contract included a new product in 2023 and a $900 million investment for Ohio assembly. According to data from IHS Markit, as quoted in the Detroit News, Ford assembled 1.7 million vehicles in the U.S. last year, which is higher than its key competitors.
Ford’s salaried employees will have schedules that will be a hybrid of on-site and remote work once the automaker begins a broader return of the workforce this summer. GM is reported to be holding internal discussions on the return to work of salaried employees, including the possibility of shifting Michigan-based employees to different sites in the state, but specific plans have not been announced.
Connected/Autonomous Vehicles and Mobility Services
Amazon is expanding the testing of Rivian electric delivery vans to San Francisco, after beginning testing earlier this year in Los Angeles. Amazon has ordered 100,000 Rivian vans and intends to operate the fleets beginning in 2022.
Beginning next year, China’s SAIC Motor Corp. will use lidar sensors and software from California-based Luminar Technologies in its R brand vehicle line. SAIC, China’s largest automaker, has the eventual goal to install this equipment across all its vehicles.
Chinese autonomous driving startup Momentareceived $500 million in Series C funding led by SAIC Motor, Toyota, and auto supplier Bosch. Beijing-based Momenta develops artificial intelligence systems for autonomous driving.
Electric Vehicles and Low Emission Technology
Lordstown Motorsis cooperating with an SEC inquiry, and the company has formed a committee to review allegations from short seller Hindenburg Research that the startup misled investors on the quality of its electric truck preorders and the ability to start production. Hindenburg holds a short position in Lordstown and will benefit if the stock price declines; the short seller published a report last year with allegations that EV startup Nikola was an “intricate fraud.”
Commercial EV solutions company Electric Last Mile, Inc. (ELMS) announced it has over 45,000 nonbinding preorders for its upcoming Urban Delivery class 1 commercial EV, and it intends to start production in Indiana later this year. Last year, ELMS announced it will go public through a reverse merger with Forum Merger III.
New plants – U.K.-based electric van startup Arrival selected a site for its second U.S. plant; the new facility in North Carolina will be dedicated to fulfilling an order of up to 10,000 vehicles for UPS, and is scheduled to begin production in the third quarter of 2022. This follows last year’s announcement that Arrival will build a plant in Rock Hill, S.C., that is scheduled to begin production in Q4 2021. Canadian EV maker ElectraMeccanica Vehicles Corp intends to establish a U.S. base of operations in Arizona; at its upcoming plant in Mesa, the company will annually produce up to 20,000 of its three-wheeled, single-seat commuter cars for the U.S. market.
NHTSA has nearly two dozen open investigations into car accidents involving Tesla vehicles, including two separate Tesla crashes that occurred this month in Michigan. One of the incidents in Michigan involved a Tesla being driven on Autopilot that crashed into a stationary police car near Lansing on March 17, while the other crash, on March 11, was not believed to involve the Autopilot feature.
Japan-based electric motor supplier Nidec Corp. will partner with Foxconn–Yulon joint venture Foxtron Vehicle Technologies to supply electric powertrains, with more details on the initial results of the collaboration to come later this year. Foxtron is a recently formed joint venture between the automotive unit of electronics manufacturer Foxconn Technology Group and Taiwan-based diversified holding company Yulon Group. Foxconn is also reported to be exploring options for an EV partnership with Vietnam’s VinFast.
California-based Proterrawill supply batteries for Colorado-based Lightning eMotors’ electric transit vans. Both companies recently announced SPAC deals to go public.
China is reported to be restricting Tesla vehicles from entering the grounds of military complexes and certain agencies due to national security concerns arising from built-in vehicle cameras. The move is viewed as potential retaliation following a challenging meeting between government representatives of the U.S. and China in Alaska last week, as well as the recent FCC designation of China’s Huawei as a security threat. China represented 30% of Tesla’s total deliveries in 2020.
The U.S. Department of Commerce is reported to be exploring ways to increase Canadian production of minerals critical to the EV supply chain. Mining represents 5% of GDP in Canada, compared to 0.9% in the U.S., and Canada has at least a dozen of the 35 minerals that are listed as critical to U.S. national security.
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