Foley & Lardner Briefs Mexican Auto Suppliers on U.S. EV Developments

10 March 2023 Dashboard Insights Blog
Author(s): Alejandro N Gomez-Strozzi Steven H. Hilfinger

Foley & Lardner attorneys were honored this week to present an update on EV developments in the U.S. to members of Mexico´s National Autopart Industry Association [Industria Nacional de Autopartes, INA).  INA´s Director General, Alberto Bustamante, served as host for a panel led by Alejandro Gomez, a partner in Foley’s Mexico City Office and a member of Foley’s automotive team.

Chris Grigorian, a partner in Foley’s D.C. Office, led off the discussion with an overview of the basic regulatory framework in the U.S. that is administered by the National Highway Traffic Safety Administration (NHTSA).  Chris reviewed the various ways in which NHTSA exercises its authority, including developing and enforcing safety standards, conducting defect investigations, managing recalls, and conducting vehicle safety research.  He went on to review Federal Motor Vehicle Safety Standard (FMVSS) 305, governing batteries and electrolyte spillage.  Chris noted that a proposed amendment to FMVSS 305 is in the works at NHTSA and is expected to be released for public comment soon. The amendments are expected to more comprehensively cover batteries and other aspects of EVs than the current regulation. Chris also reviewed some of the EV-related research activities currently underway at NHTSA. Finally, Chris noted the roles played by EPA and the California Air Resource Board in regulating EVs.

Steve Hilfinger, a partner in Foley’s Detroit Office, then led a review of the various U.S. federal, state and local programs, tax credits and incentives that are catalyzing the development, production and sale of EVs, batteries, EV chargers and other clean energy equipment.  This included a review of the $7.5 billion NEVI program under the Bipartisan Infrastructure Law, the opportunities posed by the Inflation Reduction Act of 2022 (IRA) and complying with related “Buy America” provisions, the Chips Act and the myriad of state and local incentives for EV development.  This included the substantial incentives being granted to battery plants, such as the recently announced/planned $3.5 billion Ford battery plant near Marshall, Michigan.  Opportunities exist for bringing final assembly and sourcing to the U.S., to comply with the various requirements of the IRA and to take advantage of expected market opportunities in the U.S.

Jon Gabriel, a partner in Foley’s Boston Office, reviewed strategies that companies are employing to use M&A, joint ventures and other investment activities to accelerate their development of EV technologies.  These included venture capital-style investments in early stage technologies, which are often accompanied by a joint development agreement (JDA), some of the structuring considerations for joint venture agreements (JVAs), and a number of the due diligence and structuring issues applicable to M&A transactions in the EV space.  Jon noted that each of these techniques can be considered as an alternative path or supplement to self-funded capital investments, which are often substantial in the EV space.

Nicholas Ellis, a partner in Foley’s Detroit Office, wrapped up the panel by discussing the various supply chain opportunities and challenges that the transition from ICE powertrains to EVs presents for suppliers.  These included the upsides and risks associated with dealing with new technologies, new companies in the industry and new relationships that must be forged in the face of substantial uncertainties and risks. Nicholas encouraged the auto suppliers present to evaluate their EV strategies and related supply chain issues as early as possible, to best navigate the migration to EVs or to inform companies on alternative paths they may take (including sale if that is consistent with the company’s prospects and strategy).

The session wrapped up with a Q&A session, which revealed the intense interest of Mexican suppliers in the migration to EVs, that is being led in the U.S. and other places but which will have significant impacts on the Mexican automotive industry.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services