Foley Automotive Update

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

U.S. new light-vehicle sales are projected to reach 7.68 million units for the first half of 2023, representing an increase of 13.6% from the same period in 2022, according to a joint forecast from J.D. Power and GlobalData.
U.S. new light-vehicle sales could approach 15.4 million units this year, up from a previous forecast of 14.3 million units, according to analysis from Bank of America’s annual “Car Wars” report featured in The Detroit News. The report also notes that inventory remains constrained at 1.8 million units, but improved from a pandemic low of 1 million units.
A number of electric vehicle battery makers were included in the Automotive News annual ranking of top suppliers for the first time (subscription).
Michigan became the 26^th state to adopt some form of distracted driving/hands-free driving legislation, according to an update from Foley & Lardner.
Chinese automakers are expected to capture 65% of their domestic market by the end of the decade, according to highlights from AlixPartners’ 2023 Global Automotive Outlook excerpted in The Detroit News. The analysis also predicts that Chinese brands will increase market share in a number of nations around the world, and act as key disruptors to global automakers in the years ahead.
The U.S. Department of Energy announced a conditional loan of up to $9.2 billion to Ford and SK On’s upcoming joint venture battery plants in Kentucky and Tennessee.
GM and joint venture partner Samsung SDI will invest over $3 billion in a new battery cell plant in St. Joseph County, Indiana. The facility is expected to begin production in 2026.

OEMs/Suppliers

The Detroit Free Press (subscription) reports a railcar shortage is delaying the shipment of new vehicles to dealerships.
BorgWarner announced the anticipated spinoff of its fuel parts and aftermarket business, PHINIA, is scheduled to be completed by July 3.
Ford may be planning additional layoffs to its North American salaried workforce in the coming weeks, according to unconfirmed reports in several publications, including the Detroit Free Press.
Stellantis and Foxconn formed a joint venture to design and sell semiconductors for the automotive industry.

Electric Vehicles and Low Emissions Technology

J.D. Power’s 2023 U.S. Electric Vehicle Consideration Study found that 26% of consumers are “very likely” to consider purchasing an EV, up from 24% one year ago. The survey indicates the availability of public chargers is the “biggest friction point” impacting consumers’ purchase decisions, noting “the growth of public charging isn’t keeping pace with the rising number of EVs on the road.”
Washington state intends to require electric vehicle charging companies to include the North American Charging Standard (NACS) favored by Tesla as a condition for inclusion in electrification projects which use government funding.
Equipment constraints and permit delays are impeding efforts to establish charging infrastructure in the U.S. for heavy-duty electric trucks.
Challenges including delays in mine permitting, staffing shortages and inflation are contributing to concerns that the global lithium supply may not be adequate to meet projected demand, according to key takeaways from the Fastmarkets Lithium and Battery Raw Materials conference excerpted in Reuters.
As part of a new supply agreement, GM will provide an $85 million loan to Element 25 Limited to partially fund an upcoming facility in Louisiana for the production of battery-grade manganese sulfate.
Eaton Corp. announced plans to establish a new electric vehicle research lab in Michigan, as part of a $20 million investment to expand its facilities in the state.

Automated, Autonomous or Connected Vehicles Technologies

A recent consumer survey from S&P Global Mobility found the top five advanced driver assistance systems (ADAS) features preferred by consumers are blind spot warning, forward collision warning, rear mirror cameras, automatic emergency braking (AEB), and night vision.

Market Trends and Regulatory

The J.D. Power 2023 U.S. Initial Quality Study found new-vehicle owners reported 192 problems per 100 vehicles industrywide, up from 180 in 2022 and 162 in 2021. The decline in quality was attributed to factors that include greater usage and penetration of technology, and the continued integration of problematic systems into additional models.
The Alliance for Automotive Innovation, MEMA and the Automotive Anti-Counterfeiting Council asked the FTC for “prompt enforcement” when the Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) takes effect this month, as part of an effort to prevent counterfeit automotive parts from being sold online.
On June 21, the U.S. Environmental Protection Agency released its Final Renewable Fuels Standards Rule for 2023-2025 to establish “biofuel volume requirements and associated percentage standards for cellulosic biofuel, biomass-based diesel (BBD), advanced biofuel, and total renewable fuel.”
Car insurance premiums have increased by double-digit percentages in a number of states over the last twelve months, according to a report in The Wall Street Journal.

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