Foley Weekly Automotive Report
Analysis by Julie Dautermann, Competitive Intelligence Analyst
Foley & Lardner’s Weekly Automotive Report helps automotive suppliers inform their complex legal and operational decisions on market trends and regulatory matters, OEs and suppliers, connected/autonomous vehicles and mobility services, electric vehicles and low emission technology.
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Key developments
- Recent production cuts caused by the semiconductor shortage include a two-week shutdown at GM’s Wentzville, Mo. midsize pickup plant; a three-day shutdown of Ford’s Dearborn Truck Plant impacting the F-150 pickup; and downtime of “several weeks” for five Stellantis plants in North America impacting models including the Jeep Cherokee SUV and Ram Classic pickup.
- OEs including Volkswagen, Volvo, and Scania announced production reductions or shutdowns in Brazil due to the nation’s elevated COVID-19 cases, as well as the semiconductor shortage.
- Two groups of U.S. House and Senate Democrats are urging regulations that would require new cars and passenger trucks to be zero-emission vehicles by a specific timeline.
- U.S. Transportation Secretary Pete Buttigieg stated that he is unaware of support by the Biden administration to ban sales of gas-powered vehicles at the national level after 2035.
- The Trade Security Act (2021) introduced in the U.S. Senate earlier this month seeks to reform the national security tariff process pertaining to Section 232 of the Trade Expansion Act of 1962.
- U.S. Trade Representative Katherine Tai indicated the U.S. will not lift tariffs on Chinese imports in the near future, but may be open to negotiations, according to the Wall Street Journal.
- The U.S. Supreme Court ruled that accident victims can sue Ford in state courts; this decision could have repercussions for businesses hoping to limit exposure to certain types of liability suits.
- Consumer Reports raised privacy concerns over driver-facing cameras in certain Tesla models that record and transmit video</strong>; numerous automakers instead use “closed-loop” monitoring systems.
- Electric vehicles and low emission technology:
- BorgWarner intends to receive about 45% of its revenue from electric vehicles by 2030, up from less than 3% currently, by focusing on commercial electric vehicles, strategic divestments, and profitably scaling electric light vehicles.
- Rivian plans to build a fast-charging network for its upcoming vehicles that will consist of 600 stations offering 3,500 chargers across the U.S. and Canada by 2023.
- Visteon and GM partnered to develop a wireless battery management system that will debut on the 2022 GMC Hummer electric pickup.
- China’s leading pickup truck manufacturer, Great Wall Motor, announced it will invest ~$450 million in hydrogen-related technologies over the next three years.
Market Trends and Regulatory
- Parts shortages and production cuts – Due to the semiconductor shortage: GM will idle its Wentzville, Mo., plant the weeks of March 29 and April 5; this site produces Chevrolet Colorado and GMC Canyon midsize trucks. According to the Detroit News, GM also extended downtime through the week of April 12 at its Lansing Grand River plant</strong>; this plant has been down since March 15 and manufactures the Chevrolet Camaro and Cadillac CT4 and CT5. Ford’s Dearborn Truck Plant had a production shutdown March 26-28 impacting the automaker’s highly profitable F-150 pickup truck. Stellantis will stop production or reduce output for “several weeks,” beginning this week in Warren, Mich.; Windsor, Ont.; Belvidere, Ill.; Brampton, Ont.; and Toluca, Mexico. Chinese EV maker NIO will temporarily idle production for five days, beginning March 29, at its plant in Hefei, resulting in an estimated production loss of 500 to 1,000 vehicles for the company’s first quarter results.
- Brazil – IHS Markit currently predicts no impact to full-year volumes from the temporary production reductions or shutdowns recently announced by several major truck manufacturers in Brazil, including Volkswagen, Mercedes-Benz, Volvo and Scania, as a result of the chip shortage and elevated COVID-19 cases in the nation. On a global basis, Brazil currently accounts for approximately one-third of daily fatalities from COVID-19, surpassed only by the U.S.
- Brazil – IHS Markit currently predicts no impact to full-year volumes from the temporary production reductions or shutdowns recently announced by several major truck manufacturers in Brazil, including Volkswagen, Mercedes-Benz, Volvo and Scania, as a result of the chip shortage and elevated COVID-19 cases in the nation. On a global basis, Brazil currently accounts for approximately one-third of daily fatalities from COVID-19, surpassed only by the U.S.
- Traffic in the Suez Canal has resumed after container ship Ever Given was dislodged on March 29, however supply chain disruptions could be experienced for weeks as the resulting changes to ships’ arrival and departure times contribute to port congestion. “The effect on vehicle production can’t be measured at this point,” according to Sam Fiorani, vice president of global forecasting for AutoForecast Solution LLC, as quoted in the Detroit News.
- Tariffs – In her first interview since taking office, U.S. Trade Representative Katherine Tai indicated that while negotiations are an option, the U.S. is not ready to lift tariffs on Chinese imports in the near future. Reintroduced in the Senate earlier this month, the Trade Security Act seeks to provide limitations on presidential authority over section 232 of the Trade Expansion Act of 1962 by amending it to “require the Secretary of Defense to initiate investigations and to provide for congressional disapproval of certain actions.” Related legislation was previously introduced in 2019, but failed to make it past the Committee on Finance. According to Automotive News, the Tariff Reform Coalition, an industry group that includes automakers and dealerships, is urging lawmakers to “remove Section 232 tariffs on imported steel and aluminum and reevaluate Section 301 tariffs on imports from China.” The Economic Policy Institute, which has organized labor executives among its board members, separately published a report in favor of Section 232 import tariffs to protect the health of the U.S. steel industry amid “global excess steel capacity.”
- After numerous Democratic lawmakers took steps to urge federal commitments to zero-emission vehicles, Transportation Secretary Pete Buttigieg commented that he’s unaware of support by the Biden administration to pursue a federal ban on gas-powered vehicles after 2035.According to unpublished letters reported on by Reuters last week, two groups of U.S. House and Senate Democrats led by Rep. Doris Matsui (D-Calif.) and Sen. Edward Markey (D-Mass.) are advocating for regulations targeting that “60% of the new passenger cars and trucks sold are zero-emission by 2030,” as well as committing to a date that would require that “all new cars and passenger trucks sold be zero-emission vehicles.”
OEs/SUPPLIERS
- The U.S. Supreme Court, in a unanimous decision, ruled that Ford is subject to product liability suits involving car accidents in Montana and Minnesota, rejecting the automaker’s position that the jurisdictions were not relevant since the used vehicles were manufactured and sold in other states. This ruling could have repercussions for businesses hoping to limit exposure to certain types of liability suits in state courts.
- A Michigan federal judge dismissed an antitrust suit that affiliates of supplier Prevent Group had filed against Volkswagen due to the case being a “continuation of an ongoing dispute currently being litigated in German courts.”
- Powertrain and electronics supplier Marelli announced the appointment of Joachim Fetzer to the newly created position of chief technology and innovation officer; the new role is in line with the company’s Ambition 2024 strategy to shift towards technologies related to connected, autonomous, shared and electric mobility. Robert Bosch CEO Volkmar Denner added the position of chief technical officer as well as responsibility for the chief digital office, effective July 1, due to the upcoming departure of executives Uwe Raschke and Dr. Michael Bolle.
- Toyota and its truck unit Hino Motors will partner with Isuzu to collaborate on the development of commercial trucks, with a focus on battery electric vehicles, fuel cell electric vehicles, and autonomous driving technologies. Toyota and Isuzu in 2018 ended a 12-year partnership involving diesel technologies.
Connected/Autonomous Vehicles and Mobility Services
- Autonomous truck startup TuSimple’s recent IPO filing revealed that the company has lost over $300 million in the last three years, and that the Committee on Foreign Investment in the U.S. (CFIUS) is reviewing the company’s ties to China-based investors and shareholders. TuSimple was founded in 2015, is headquartered in San Diego, and has partnerships including Volkswagen AG’s trucking subsidiary Traton SE.
- Silicon Valley-based autonomous truck startup Kodiak Robotics, Inc. will integrate lidar sensors from China’s Hesai Technology Co. onto its “mirror pods” located on the sides of its trucks. Kodiak also uses forward-facing lidar sensors from U.S. lidar maker Luminar Technologies. Earlier this month, it was announced that China’s largest automaker SAIC Motor Corp. will use lidar sensors and software from California-based Luminar Technologies beginning next year in its R brand vehicle line.
- Consumer Reports raised privacy concerns over driver-facing cameras in certain Tesla models that record and transmit video. The automaker indicated it uses footage captured before a crash or automatic emergency braking activation to research self-driving technology. Driver-facing cameras in Model 3 and Model Y vehicles are turned off by default, but can be enabled by the vehicle driver.According to Consumer Reports, numerous automakers instead use “closed-loop” driver monitoring systems with infrared technology that does not record, save or transmit video.
Electric Vehicles and Low Emission Technology
- BorgWarner intends to receive about 45% of its revenue from electric vehicles by 2030, up from less than 3% currently. Key aspects of the supplier’s strategy include an expansion into electric commercial vehicles, profitably scaling electric light vehicles, and strategic divestments. BorgWarner also has the goal to reach carbon neutrality by 2035.
- Continental’s upcoming powertrain spinoff, Vitesco Technologies, announced that it was awarded a contract valued in the “triple-digit million Euro amount” to supply 800-volt inverters for Hyundai‘s new E-GMP modular electric platform.
- Rivian plans to build a fast-charging network for its upcoming vehicles that will consist of 600 stations across the U.S. and Canada by 2023; the Rivian Adventure Network will be exclusive to Rivian owners, while a secondary network is planned for the general public at various business sites.
- Visteon and GM partnered to develop a wireless Ultium battery management system that will debut on the 2022 GMC Hummer EV later this year. The system is reported to be modular so it can eventually be used in other Ultium-powered GM vehicles.
- China’s Great Wall Motor Co. intends to launch its first hydrogen-powered SUV this year, and the company will invest three billion yuan ($450 million) in hydrogen-related technologies over the next three years. Great Wall is the leading pickup truck manufacturer in China.
