Foley Weekly 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
- U.S. new light-vehicle sales in October are forecast to reach a SAAR ranging from 11.8 million to 13.5 million units, according to estimates from Cox Automotive, Ward’s Intelligence and J.D. Power and LMC Automotive.
- North America lost nearly 830,000 units of light-vehicle production in the third quarter of 2021, representing an increase of 60,000 units from the second quarter.
- GM and Ford reported double-digit profit declines for the third quarter, and Stellantis reported a 30% production loss. However, none of the three automakers reduced full-year guidance, signaling their optimism for a potential easing of the most severe impacts of the chip shortage.
- Lead times for semiconductor orders can be up to 38 weeks for scarce parts such as automotive microcontrollers, and are at an average of 22 weeks industrywide, according to an assessment of the ongoing effects of the global chip shortage in The Wall Street Journal.
- Bosch plans to invest over €400 million to expand its semiconductor manufacturing facilities next year, with the focus on its fabrication sites in Dresden and Reutlingen, Germany, as well as a new test center in Malaysia.
- Subaru will disable its StarLink system for Massachusetts-delivered vehicles in order to comply with the state’s right-to-repair law, which requires that automakers make their telematics data easily accessible by third-party repair shops.
- Lear will acquire substantially all of Konsberg Automotive’s comfort seating business unit for $202 million, in a deal that is expected to increase product offerings and enhance vehicle performance and packaging.
- According to unnamed sources in Reuters, Mexico wants a panel of experts to resolve a disagreement with the U.S. over how to apply automotive-sector content requirements under the USMCA.
- Average daily confirmed COVID-19 cases in Malaysia, Vietnam, Indonesia and the Philippines are now at less than half the level that they were at the start of September, indicating a potential easing of supply chain bottlenecks resulting from pandemic-related factory closures.
- Electric vehicles and low emissions technology:
- IHS Markit estimates that new EV sales in the U.S. – EVs, fuel cell EVs, hybrid EVs, and plug-in hybrids – reached 170,085 units in the second quarter of 2021, up by nearly 33% from the first quarter. IHS notes that much of the growth is due to Tesla.
- Amazon holds a 20% stake in Rivian, according to a securities filing last week.
- Lucid Motors began deliveries of its Air Dream Edition all-electric sedans; the initial production run is limited to 520 units.
- A $1.75 trillion spending proposal unveiled by the White House last week would support consumer tax credits for electric vehicles that are union-made in the U.S. The tax credits have been met with opposition by eleven Republican governors, the Canadian government, and a dozen international automakers including Toyota and Volkswagen. The House bill is subject to further negotiation.
- Solid state cells could eventually become a less expensive alternative to lithium ion cells, but currently there are no commercially viable light-vehicle options.
Market Trends and Regulatory
- The European Automobile Manufacturers’ Association expects the global chip shortage to persist into 2022, noting that “supply will not be in line with demand,” and light vehicle production will be “substantially lower than expected this year and next.”
- The Federal Trade Commission updated its Safeguards Rule, which includes requirements for non-banking financial institutions — including auto dealerships — to “develop, implement, and maintain a comprehensive security system to keep their customers’ information safe.” The update was motivated by the increase of data breaches and cyberattacks.
- U.S. GDP growth slowed to 2% in the third quarter, as the nation’s economy was impacted by supply chain constraints.
- NHTSA estimates there were 20,160 motor vehicle traffic fatalities in the first six months of 2021 in the U.S., representing an increase of 18.4% compared to the same period last year when many areas were experiencing pandemic lockdowns. This also represents the highest number of fatalities during the first half of the year since 2006.
- The U.S. and EU agreed to end a dispute over steel and aluminum tariffs imposed during the Trump administration.
- The Michigan Department of Environment, Great Lakes and Energy issued a second air quality violation notice for Stellantis’ new Jeep assembly plant in Detroit.
- The U.S. National Transportation Safety Board is advising Tesla to act on the agency’s 2017 recommendations to limit where its Autopilot driver-assist system can operate.
OEMs/Suppliers
- Production impact of the semiconductor shortage –
- GM will resume overtime shifts at six North American plants in November, which impacts vehicles including light-duty Chevrolet Silverado and GMC Sierra trucks, midsize GMC Canyon and Chevrolet Colorado trucks, and full-size SUVs such as the GMC Yukon and Cadillac Escalade.
- Toyota reported that its global production fell by more than a third in September from a year earlier, and global sales declined by 16%, due to shortages of semiconductors and other key components.
- GM will resume overtime shifts at six North American plants in November, which impacts vehicles including light-duty Chevrolet Silverado and GMC Sierra trucks, midsize GMC Canyon and Chevrolet Colorado trucks, and full-size SUVs such as the GMC Yukon and Cadillac Escalade.
- Eberspaecher, a German supplier of automotive exhaust and thermal management systems, experienced an “organized cyberattack” that affected its IT infrastructure.
- Shyft Group Inc. announced a $53 million contract from the U.S. Postal Service to supply it with 447 Utilimaster truck bodies to be used for bulk mail delivery.
- Volvo Cars shares closed at 23% above offering price after making their Stockholm market debut on Friday.This was below the top of the company’s initial target range for the offering.
- Navistar will pay a $52 million civil penalty as part of a settlement with the U.S. Justice Department over emissions violations.
- Toyota will invest $461 million in its Georgetown, Kentucky plant to expand its engine offerings, upgrade the plant with advanced manufacturing technologies, and broaden the site’s “ability to produce new products, including future electrification.”
Connected/Autonomous Vehicles and Mobility Services
- Apple may introduce a vehicle crash-detection feature for iPhones and Apple Watches next year, according to The Wall Street Journal.
Electric Vehicles and Low Emissions Technology
- A group of 28 businesses and nonprofits are urging Michigan’s state legislature to invest $600 million for electric-vehicle and alternative fuel infrastructure, as well as workforce training, and site preparation.
- GM will partner with dealers to install up to 40,000 Level 2 chargers beginning in 2022 through a newly announced Dealer Community Charging Program. The automaker is also providing a new line of three Ultium-branded Level 2 smart charging stations for customers to purchase online or through dealerships.
- GM resumed limited Chevrolet Bolt production November 1, following a shutdown that began in August due to an expanded recall for the vehicles’ risk of battery fire.
- Stellantis announced that its four new electrified platforms will ultimately each support the production of up to 2 million vehicles annually.
- According to Bloomberg, small auto suppliers in Japan may be particularly at risk for business continuity as the industry transitions to electric vehicles.
- Hertz intends to make 50,000 Teslas available in Uber’s ride-sharing network by 2023. The vehicles will be part of the rental car company’s initial order of 100,000 vehicles.
- Tesla will launch a pilot program at 10 locations in the Netherlands that will open its Supercharger network for the first time to non-Tesla EVs.
