Foley Automotive Report

08 February 2022 Blog
Author(s): John R. Trentacosta Ann Marie Uetz
Published To: Dashboard Insights Coronavirus Resource Center:Back to Business

Foley Automotive Report

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This report helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. Contact your Foley relationship partner, or John R. Trentacosta or Ann Marie Uetz, to follow up.

Key Developments

  • Foley & Lardner LLP Partners Nicholas Ellis and Vanessa Miller are quoted in the article, "Stellantis Imposes Changes That Could Raise Suppliers' Costs, Cause 'a Lot of Friction'," which was published in Crain's Detroit Business and Automotive News and covers the key changes Stellantis made to its purchase order terms and conditions that are addressed in this blog post.

  • U.S. new light-vehicle sales in January reached a SAAR of 15.0 to 15.2 million units, according to estimates from NADA and LMC Automotive. This represents the strongest SAAR since June 2021; however, sales were down by approximately 10% compared to January 2021.

  • Due to the semiconductor shortage Ford will reduce or halt production at eight North American plants this week, affecting models including the F-150, Ranger, Bronco, Explorer and Mustang Mach-E.

  • IHS Markit predicts that analog chips used in vehicle production are likely to face significant supply constraints over the next three years.

  • Aluminum prices are nearing a decade high after rising by 24% over the last six months.

  • “Right to Repair” legislation was introduced last week in support of allowing consumers to seek vehicle, device and equipment repairs by independent providers. U.S. Rep. Bobby Rush (D-IL) introduced the Right to Equitable and Professional Auto Industry Repair (REPAIR) Act (H.R. 6570), and U.S. Reps. Mondaire Jones (D-NY) and Victoria Spartz (R-IN) introduced the Freedom to Repair Act.

  • Faurecia announced the close of its $6 billion acquisition of Hella, in a deal that is expected to expand opportunities in areas including electric mobility and autonomous driving. The combined company will be known as Forvia.

  • SoftBank Group’s Vision Fund recently agreed to invest an additional $1.35 billion in Cruise, GM’s autonomous technology business unit. Cruise launched its driverless taxi service to the public in San Francisco, initially operating during limited hours in select neighborhoods.

  • According to Forbes, three key areas of impact for automated mobility in 2022 are trucking and shipping, contactless delivery, and vehicle safety.

  • Electric vehicles and low emissions technology:

    • Kelley Blue Book estimates the combined category of battery-electric, hybrids and plug-in hybrids reached 9.7% of U.S. light-vehicle sales in 2021.

    • Electreon has been awarded a contract to build a public, wireless EV-charging road system near Michigan Central Station in Detroit. Electreon will work with NextEnergy and Jacobs Engineering Group, and the project is expected to be complete in 2023.

    • Governor Whitmer announced a proposal for a combined $2,500 electric vehicle rebate for Michigan consumers, with $2,000 going toward the cost of the vehicle and $500 for installation of an in-home battery charger.

    • Zero emissions vehicles (ZEVs) increased to 5.6% of Canadian light-vehicle sales in 2021, up from 3.8% in 2020.

    • Fleet sales and consumer interest in EV pickup trucks are expected to lead to broader electric vehicle market penetration, according to a panel discussion at the BloombergNEF Summit in San Francisco.

Market Trends and Regulatory

  • Auto loan balances at U.S. banks increased by 12% over the course of 2021, as consumers pursued bigger loans amid elevated prices for new and used vehicles.

  • The U.S. Department of Transportation revealed a National Roadway Safety Strategy intended to reduce serious and fatal injuries on U.S. roads. The National Highway Traffic Safety Administration estimates U.S. traffic fatalities increased 12% in the first nine months of 2021 to 31,720, representing the highest number of fatalities since 2006.

  • Michigan Senators Gary Peters and Debbie Stabenow, and Senator Bill Hagerty (R-TN), re-introduced the Vehicle Innovation Act (S.3543), which would invest $1.7 billion over five years for research and development of fuel-efficient technology. The Motor & Equipment Manufacturers Association (MEMA) indicated the legislation is an important aspect of the goal to achieve a net-zero carbon transportation future.

  • U.S. Representative Brenda L. Lawrence (MI-14) introduced H.R. 6546, the Wireless Electric Vehicle (EV) Charging Grant Program Act of 2022, which would create a $50 million grant program in the Department of Transportation.

  • The U.S. House passed the America COMPETES Act (H.R. 4521), a $350 billion proposal to increase federal support for technology and scientific research, which includes $52 billion to support the domestic semiconductor industry. The package is a response to the Senate’s $250 billion U.S. Innovation and Competition Act. The bills have different approaches in areas such as trade policy, which could lead to partisan debate.

  • The Insurance Institute for Highway Safety plans to release a new nighttime test and rating system for automatic emergency braking systems, after a recent study found that AEB systems did not perform well unless operating in daylight or well-lit conditions.

  • Business leaders, including the CEOs of Ford and GM, met with President Biden to discuss the benefits of the Build Back Better legislation. This social spending bill, which has thus far failed to receive enough support in Congress, includes a provision that would offer consumer tax credits for electric vehicles that are union-made in the U.S.

  • During a recent House subcommittee hearing, representatives from a number of entities provided testimony in support of a national framework to facilitate the deployment of autonomous vehicles, The Road Ahead for Automated Vehicles.

OEMs/Suppliers

  • Several automakers predict the semiconductor shortage will ease beginning in the second half of 2022, while others such as Volkswagen and a number of chipmakers have cautioned that supplies will remain limited for a longer duration.

  • In its most recent earnings call, GM predicted it would increase its global production volumes by 25% to 30% year-over-year, the majority of which will occur in the second half of 2022.The automaker reported net income of $10 billion for 2021, an increase of 56% compared to 2020.

  • Ford reported net income of $17.9 billion for 2021, and estimates its global deliveries will increase by 10% to 15% this year.

  • Stellantis suspended the implementation of a COVID-19 vaccine mandate for its salaried, non-union U.S. workforce. The automaker estimates that 97% or more of the affected 14,000 employees have received the vaccine or a medical or religious exemption.

  • Aptiv and Audi will invest a combined $285 million in Vienna-based automotive safety software company TTTech Auto.

  • Google will provide workforce development training and cloud-based technology services for Ford’s mobility innovation campus, Michigan Central.

  • GM plans to hire 8,000 technology employees this year, as the automaker increases its capabilities in developing vehicle software, fuel cells, and advanced electric batteries.

Connected/Autonomous Vehicles and Mobility Services

  • Autonomous shuttle startup May Mobility raised $83 million in a Series C funding round led by SPARX Group Company. Toyota Ventures and BMW i Ventures were among the investors participating in the round.

  • Robert Bosch and Volkswagen Group's software unit Cariad will partner to develop advanced driver-assistance and autonomous-driving systems for consumer vehicles.

  • Autonomous technology company TuSimple will begin driverless freight runs for Union Pacific Railroad on a route between Tuscon and Phoenix this spring.

  • A new study by AAA found that driver-facing cameras are more effective for monitoring driver behavior than steering-wheel based systems.

Electric Vehicles and Low Emissions Technology

  • Daimler Truck North America, NextEra Energy Resources, and BlackRock Renewable Power will jointly develop and deploy a nationwide charging network for medium- and heavy-duty battery electric vehicles and hydrogen fuel cell vehicles.

  • Bloomberg reports that Ford could spend up to $20 billion over the next five to ten years to align its operations in support of an enhanced focus on EVs. Ford did not comment for this article.

  • Recycling battery materials such as lithium, copper, nickel, cobalt and manganese has the potential to help the U.S. to strengthen its own electric-vehicle supply chain. Battery recycling companies Redwood Materials, Battery Resourcers and Li-Cycle have each made recent announcements related to expansion or new partnerships.

  • Rising prices for battery materials have begun to cast doubt on previous projections that lithium-ion battery prices would reach $100 a kilowatt-hour by 2024.

  • Lithium-metal battery technology startup Soelect raised $11 million in Series A funding from Lotte Ventures, GM Ventures and KTB Network.

  • A new report from Calstart estimates that sales of zero-emission commercial trucks could increase from less than 1% today, to 30% by the end of the decade. There are currently 140,000 pending orders for commercial EVs, the bulk of which are by Amazon, followed by Walmart and FedEx. Calstart is a Pasadena, Calif.-based coalition that promotes zero-emission trucks.

  • Colorado-based Lightning eMotors announced a deal to fully electrify a number of GM’s medium-duty truck platforms for applications including school buses, shuttle buses, delivery and work trucks. 

  • There are approximately 50 public hydrogen refueling stations operating in the U.S. today, and nearly all locations are in California. Private networks of hydrogen refueling stations are a potential area of opportunity, if government action is taken to support third-party access through incentives, capacity credits, or other measures.

  • China’s Baidu and Geely will invest nearly $400 million into their EV joint venture, Jidu, to fund research and development and mass production. Jidu launched last year, and is majority-owned by Baidu.
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