Foley Automotive Update, Feb 2023

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This update helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. Contact your Foley relationship partner, or Ann Marie Uetz, Vanessa L. Miller, or Nicholas J. Ellis, to follow up.

Key Developments

Foley & Lardner LLP’s automotive thought leaders and the Society of Automotive Analysts (SAA) are hosting a 2023 Automotive EV Outlook at the Detroit Athletic Club on March 21, 2023 at 4:00 p.m. Please RSVP to attend the discussion and reception focused on resiliency and other key issues in the electric vehicle supply chain.
Foley & Lardner announced the launch of its Auto Trends 2023 Series, which includes an ongoing discussion on topics including electric vehicles, cybersecurity developments, product liability, intellectual property, and more. Click HERE to subscribe to the series.
The average price for a new vehicle increased 30% since 2019, and households with an annual income above $150,000 represent nearly 30% of new vehicle purchases, according to analysis from JPMorgan and AlixPartners excerpted in Bloomberg.
The Biden Administration released final standards for a national electric vehicle charging network intended to receive funding through the Bipartisan Infrastructure Law. The standards include the immediate requirement that the “final assembly and all manufacturing processes for any iron or steel charger enclosures or housing” occur in the U.S. In addition, at least 55% of the cost of all components must be manufactured domestically by July 2024.
Tesla will open a portion of its proprietary U.S. charging network to non-Tesla vehicles, and the company plans to significantly increase its nationwide network of Superchargers.
Ford will invest $3.5 billion to build a battery plant in Marshall, Michigan in partnership with China’s Contemporary Amperex Technology Co. Ltd. (CATL).The site will add a second battery chemistry, LFP, to Ford’s offerings, and production is expected to begin in 2026.This represents the automaker’s fourth U.S. production site being built with battery manufacturers, following locations in Kentucky and Tennessee.
Ford temporarily halted output at two plants due to a battery issue with the F-150 Lightning electric pickup and a quality issue with the 2023 Escape.
The European Parliament approved a law to require new passenger cars sold in the bloc to be zero-emission vehicles beginning in 2035.
PwC projects U.S. EV sales could reach up to 14% of new light-vehicle sales by 2025, and 35% of sales by 2030, according to analysis excerpted in Utility Dive this month. The analysis also indicates EV sales in California reached 16% of total new vehicle sales in 2022, and EV sales are approaching double-digit percentages in a number of other states.
Bloomberg reports cobalt prices have fallen 50% since May 2022, and its recent volatility demonstrates one of the challenges in establishing contracts for battery metals. The decline was attributed to reduced demand from the electronics sector, as well as a potential shift by some EV battery manufacturers to chemistries which do not require cobalt.
Industry analysts quoted in CNBC predict a copper shortage will impact global markets this year, due to factors that include increased demand and supply constraints in certain copper-producing nations.

OEMs/Suppliers

According to a report in The Detroit News, CEO Jim Farley said Ford requires “fundamental change” regarding how its vehicles are engineered, sourced and built, in order to address a $7 billion to $8 billion cost disadvantage the automaker has compared to certain competitors. The cost disadvantage was attributed to a number of issues that include higher material and warranty costs.
GM and New-York based GlobalFoundries announced a long-term supply agreement intended to establish a “dedicated capacity corridor exclusively for GM’s chip supply.”
BorgWarner expects its 2023 EV revenue to increase to $1.5 billion to $1.8 billion, from $870 million in 2022.In December, the company announced plans to spin off its fuel systems and aftermarket segments into a separate, publicly traded company, to help advance its electrification goals and optimize its combustion portfolio.
GM will temporarily stop production the week of February 20 at its Corvette plant in Bowling Green, Kentucky, due to an unspecified parts shortage unrelated to semiconductors.

Electric Vehicles and Low Emissions Technology

BloombergNEF estimates the cumulative value of global electric vehicle sales over the last ten years reached $1 trillion, with 50% of total EV spending occurring in the last 18 months.
PwC estimates the EV supply equipment market will be valued at $100 billion by 2040, and companies that install, operate or maintain charging stations will represent 65% of the market.
Redwood Materials received a conditional $2 billion loan commitment from the U.S. Department of Energy for the expansion of the company’s battery recycling and remanufacturing facility in Nevada. The funding is part of the Advanced Technology Vehicle Manufacturing Loan Program.
A new report from Polestar, Rivian and consulting firm Kearney predicts the transportation industry will fall short of decarbonization targets outlined in the Paris Agreement unless supply chain and manufacturing emissions decrease significantly and battery electric vehicles (BEVs) are adopted aggressively and charged entirely on renewable power.
Bank of America will offer consumers the option of financing residential electric vehicle chargers as part of a new option for auto loans.
Bloomberg reports GM is considering acquiring a stake in Brazilian miner Vale’s base metals unit, which was created to pursue growth opportunities in metals such as copper and nickel. Last year, GM announced an agreement with subsidiary Vale Canada for the long-term supply of battery-grade nickel sulfate.
Hyundai launched a short-term EV subscription program in the U.S. starting at $699 per month. The Evolve+ program is intended to introduce consumers to the automaker’s EV brands without the commitment of a purchase or longer-term lease.
CALSTART estimates 5,480 new full-size zero-emission transit buses were on the road, on order or funded in the U.S. in 2022, representing a 66% increase over the previous year. The clean transportation advocacy nonprofit indicates battery-electric buses remain more common than fuel cell electric buses due to factors that include cost, infrastructure, and owner or operator preference. The top five states for adoption of zero-emission buses are California, New York, Florida, Texas and Massachusetts.
ChargePoint Holdings and Stem will use AI-supported energy management to lower operating costs and improve resiliency for highway corridor fast-charging networks.
Specialty vehicle manufacturer The Shyft Group intends to invest $16 million to produce all-electric delivery vehicles at its facilities in Charlotte, Michigan.
GM’s Cadillac brand intends to begin production of three new EV models during calendar year 2024, and more details will be announced later this year. The brand currently produces the electric Lyriq crossover, and the ultra-luxury “hand-built” Celestiq will launch toward the end of 2023.
Stellantis is accepting reservations for the upcoming Ram 1500 REV battery-electric truck, and the vehicle will begin sales in 2024.

Automated, Autonomous or Connected Vehicles Technologies

Amazon’s Zoox began operating autonomous shuttles on public roads for the first time by offering its employees rides on a route between its Foster City offices during business hours.
Uber established cloud services agreements with Google and Oracle, as part of an effort by the rideshare company to focus on core initiatives and shift away from using its own data centers.
Two U.S. senators are urging the Federal Communications Commission to approve pending waiver requests to enable the deployment of cellular vehicle-to-everything (C-V2X) technology in the 5.9 GHz spectrum band, according to a report in Transport Topics. In 2020, the FCC reassigned a portion of the 5.9 GHz spectrum for unlicensed uses such as Wi-Fi content providers.

Market Trends and Regulatory

President Biden announced plans to nominate Ann Carlson to lead the National Highway Traffic Safety Administration. Carlson has been acting administrator since the departure of Steven Cliff last year.
The annual J.D. Power Vehicle Dependability Study ranked Lexus highest overall, and Kia held the top position for the highest performing mass-market brand.
Consumer Reports’ annual ranking of top automotive brands listed the top ten as BMW, Subaru, Mini, Lexus, Honda, Toyota, Genesis, Mazda, Audi and Kia, according to The Detroit News.