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

• Stellantis released a significant revision to its supplier terms and conditions, according to Foley & Lardner analysis found here.
• LMC Automotive forecasts global light vehicle sales of 86.2 million units in 2022, representing an increase of 6.2% compared to 2021.
• The National Automobile Dealers Association predicts U.S. new light vehicle sales will increase just 3.4% to 15.4 million units in 2022, with the semiconductor shortage expected to limit inventories into the second half of the year.
• U.S. new light vehicle prices increased 11.8% and used vehicle prices increased 37.3% in December 2021 compared with December 2020, according to the most recent Consumer Price Index.
• New-vehicle average transaction prices reached a record high of $47,077 in December 2021, according to data excerpted from Kelley Blue Book.
• New-vehicle inventory reached 1.09 million units at the end of December 2021, representing a 35 days’ supply industrywide.
• Due to the chip shortage, Ford’s Flat Rock Assembly plant in Michigan had downtime last week, affecting production of the Mustang. Stellantis extended downtime for its Chrysler minivan plant in Windsor, Ontario, and the automaker had previously stated that a number of its North American plants would have downtime in January to “align production with global sales.”
• China’s COVID-Zero policy of strict quarantines and mass testing led to production shutdowns ranging from several days to over a week at Volkswagen and Toyota plants in the port city of Tianjin.
• Rising COVID-19 cases in Japan have caused production shutdowns for Toyota and Honda.
• Aptiv acquired software firm Wind River for $4.3 billion, as part of an effort to capitalize on opportunities to provide automotive software solutions.
• The California Department of Motor Vehicles is examining whether Tesla’s “Full Self-Driving” and other driver-assistance software merits additional regulatory oversight in the state.
• Electric vehicles and low emissions technology:
  • EV charging infrastructure may be approaching an inflection point in the U.S., according to recent analysis by Foley & Lardner attorneys.
  • GM will invest $7 billion in EV projects at four manufacturing sites in Michigan. 
  • The draft MI Healthy Climate Plan includes a number of proposals to support reaching carbon neutrality in Michigan by 2050, such as constructing infrastructure that could accommodate 2 million electric vehicles on roads by 2030. Information on public listening sessions about the plan can be found here.
  • California Governor Gavin Newsom’s proposed $286 billion 2022-23 budget includes a $10 billion investment over the next six years to put more electric trucks, buses and passenger vehicles on the roads.
  • Foley & Lardner partner Steve Hilfinger shared a number of highlights from the OESA debrief of electric and autonomous vehicle content at CES.

Market Trends and Regulatory

• Intel CEO Pat Gelsinger urged the U.S. and Europe to provide government funding in support of increasing chip manufacturing in the regions, noting that supply disruptions caused by the pandemic support the need to diversify production locations. Intel recently announced plans to invest over $20 billion in two new leading-edge semiconductor manufacturing facilities in Ohio. Following this announcement, President Biden urged Congress to pass stalled legislation that would provide $52 billion to support domestic semiconductor research and manufacturing.
• Volkswagen predicts there will not be a significant improvement this year in the ongoing global semiconductor shortage. China’s Ministry of Industry and Information Technology expects tight semiconductor supplies for a “relatively long period of time.”
• The North American International Auto Show is confirmed to return to downtown Detroit September 14-25, 2022, according to The Detroit News.
• Canada plans to join Mexico in a disagreement with the U.S. over the interpretation of the USMCA’s rules of origin for vehicle components. Earlier this month, Mexico indicated that it will pursue an arbitration panel over auto content rules.
• Volkswagen will pay $3.5 million to settle claims that it broke state environmental laws in Ohio in relation to diesel emissions violations.

OEMs/Suppliers

• Toyota expects to miss its global production target of 9 million units for its fiscal year ending March 31 due to the ongoing effects of the pandemic and the chip shortage.
• Several luxury car brands experienced double digit sales increases last year, benefitting from consumer demand and automakers’ prioritized allocation of semiconductors to their most profitable models.
• Honda predicts that U.S. new vehicle prices may pull back from record highs, but will not return to pre-pandemic levels this year, as the global chip shortage will continue to limit inventory.
• Ford and ADT will invest $105 million over the next three years as part of a new joint venture offering AI-powered connected security cameras for both commercial and retail vehicle customers.
• GM plans to launch a used-vehicle selling website this spring that will be positioned to compete with platforms such as Carvana Co. and CarMax Inc. The automaker also recently launched an online parts store that allows customers to choose home delivery or pickup at participating GM dealers.
• Ford announced a five-year agreement with financial services startup Stripe Inc. to transform the automaker’s online payments infrastructure. Under the agreement, Stripe will be “a premier payment service provider” for Ford and its dealers across North America and Europe.
• Stellantis announced two new leadership development programs for its diverse employees – the Black Leaders Advancement Collective (BLAC) and Leaders Embracing All Diversity (LEAD). The training initiatives are intended to prepare employees for future advancement opportunities in the company.

Connected/Autonomous Vehicles and Mobility Services

• J.B. Hunt Transport and Waymo extended their partnership to commercialize autonomous driving technology, with the goal of achieving fully autonomous freight operations in Texas “in the next few years.”
• Magna acquired technology and IP assets of autonomous shuttle startup Optimus Ride and hired over 120 of the Boston-based company’s engineers.
• Stellantis will add headcount to its Free2move car-sharing service, citing increasing demand for short-term car rentals due to limited availability of retail and fleet vehicles resulting from the semiconductor shortage.
• Newly-launched vehicle subscription service Autonomy offers the Tesla Model 3 to consumers in California for a flat monthly fee. The Santa Monica-based startup is a rebrand of the company formerly known as NextCar.
• Honda participated in a $30 million Series B funding round in California-based artificial intelligence software startup Helm.ai. The companies began collaborating in 2019 as part of the automaker’s innovation program, Honda Xcelerator.
• The Insurance Institute for Highway Safety is developing a new rating program to evaluate vehicles with partial automation for safeguards that help drivers stay focused on the road. The rating program is expected to be issued at some point this year.

Electric Vehicles and Low Emissions Technology

• Guidehouse Insights recognized ChargePoint and Enel X as market leaders among EV charger networking companies. [Full report not publicly available]
• Bollinger Motors will indefinitely postpone production of its B1 and B2 electric pickup and SUV, and the company is pivoting from consumer vehicles to focus on its commercial EV fleet business.
• Alliance partners Renault, Nissan and Mitsubishi are expected to announce plans to invest over 20 billion euros ($23 billion) to jointly develop electric vehicles, with a goal to offer more than 30 new EVs by the end of the decade.
• Honda remains cautious about EV adoption in the U.S. and believes that sales will initially be very regional. The automaker plans to launch two EVs in the U.S. market in 2024 that will be co-developed with GM.
• Government subsidies and incentives will be a crucial tool to support broader EV adoption in the U.S., according to commentary in The Wall Street Journal.
• Honda announced a partnership with Boston-based battery research company SES Holdings to jointly develop lithium-metal batteries.
• Volkswagen and Bosch will explore a joint venture to provide integrated battery production systems in Europe.