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 reached 1.3
million units in July, representing a SAAR of 15.8 million units,
according to estimates from GlobalData featured in Just Auto. New vehicle sales are projected to
hit 15.4 million units for full-year 2023, and 16 million units for
2024.
- Foley & Lardner provided an overview of recent actions in the U.S. House
to revive legislation regulating autonomous
vehicles. Proposals in recent years have stalled due to
differing viewpoints in areas including AV liability, as well as
the roles of federal, state, and local governments in regulating
emerging automotive technologies.
- Foley & Lardner shared a number of recent developments pertaining to
smart manufacturing uses in the auto industry,
including digital twins, machine learning and artificial
intelligence applications for the supply chain and customer
experiences.
- As contract negotiations continue with the Detroit Three
automakers, UAW President Shawn
Fain shared ten key demands from union members
which included the elimination of wage tiers, substantial wage
increases, limits on the use of temporary workers, restoring cost
of living increases, and reestablishing retiree benefits.
- Automotive suppliers are preparing for a
potential UAW strike next month, which could result in
"devastating losses" to the supply chain, according to a
report in Crain's Detroit
(subscription).
- Automotive OEMs' profit margins were 2.5
percentage points higher than that of automotive
suppliers on average in the first quarter of 2023,
according to analysis by Bain & Company published last
month. The analysis also predicts "an increasing number of
suppliers are expected to face liquidity challenges that will
likely require special support."
- The National Highway Traffic Safety
Administration released a proposal to revise current
Corporate Average Fuel Economy standards for
passenger cars and light trucks to a fleet average
of roughly 58 miles per gallon by model year 2032. This plan calls
for fuel efficiency to increase 2% annually for passenger cars and
4% for light-duty trucks beginning in model year 2027, with
improvements for commercial pickups and work vans beginning in
model year 2030.
- Ford expects to lose $4.5 billion on electric vehicles in 2023, up from a previous projection of $3 billion. The automaker will also delay plans to reach an annual production target of 600,000 EVs to year-end 2024, from an original goal of year-end 2023, due to factors including the EV pricing environment.
OEMs/Suppliers
- GM reported net income of $4.9 billion on total
revenue of $84.7 billion in the first half of 2023, reflecting an
increase of 7% and 18%, respectively, compared to the same period
last year. The automaker's second quarter net income increased
52% year-over-year, and guidance for full-year 2023 net income was
raised to a range of $9.3 billion to $10.7 billion, from a previous
range of $8.4 billion to $9.9 billion.
- Ford reported net income of $3.7 billion on revenue
of $86.4 billion in the first half of 2023, representing increases
of 6% and 7.8% year-over-year. Second quarter 2023 net income was
$1.9 billion, compared to $700 million in the second quarter of
2022.
- Stellantis reported its net income increased 37% to $12.1
billion in the first half of 2023, and revenue rose 12% to $109
billion, compared to the same period last year.
- Volkswagen intends to deliver between 9 million and 9.5
million vehicles this year, down from a previous projection of 9.5
million vehicles, due to increased delays in transportation
and logistics.
- Bloomberg reports a number of European auto suppliers are accumulating debt due to experiencing higher labor and materials costs amid long-term, fixed-price contracts. The article notes that certain companies will need solutions ahead of debt maturities occurring between 2024 and 2026.
Electric Vehicles and Low Emissions Technology
- Analysis from Ernst & Young suggests that
certain auto suppliers hoping to successfully
transition to EVs may benefit from emulating
private equity firms' decision-making culture and emphasis on
enterprise value.
- Upward trajectories in EV range and battery-pack sizes may
pressure battery supply chains in
the years ahead, particularly for the U.S. market, due to consumer
preferences for larger vehicles such as pickup trucks and
SUVs.
- On August 3 the U.S. Joint Office of Energy and
Transportation announced the members and initiatives of an
Electric Vehicle Working Group previously
established to help guide the nation's EV adoption. Members
include representatives from the Alliance for Automotive
Innovation, the National Automobile Dealers Association, the UAW,
LG Energy Solution, Daimler Truck North America, charging
companies, electric utilities, federal agencies and other industry
groups. The Joint Office was created through the Bipartisan
Infrastructure Law (BIL) to facilitate collaboration between the
U.S. Department of Energy and the U.S. Department of
Transportation.
- GM, Stellantis, Hyundai and its affiliate Kia, Honda, BMW and
Mercedes-Benz Group intend to form a joint venture to
install 30,000 or more chargers along highways and in
cities beginning in the U.S. next summer.
- GM plans to develop a
next-generation electric Chevrolet
Bolt on its Ultium battery platform, reversing an earlier
decision to discontinue the vehicle. The automaker sold over 33,000
Bolt EVs and EUVs in the first half of 2023.
- Electric commercial vehicle company Bollinger
Motors received final approval from the State of
Michigan for a $3 million grant which will be distributed over the
next five years. The funding supports plans to add jobs and expand
investment in its Oak Park and Livonia, Michigan facilities.
- Bloomberg reports a number of
Chinese companies recently invested in
South Korea's battery plants and established joint
ventures in an effort to utilize the U.S. – Korea Free Trade
Agreement to qualify for tax breaks in the Inflation
Reduction Act.
- The first 2024 electric Chevrolet Blazer SUVs started shipping from GM's factory in
Ramos Arizpe, Mexico. The vehicle's starting price will be
roughly $12,000 higher than the automaker's original
estimate.
- Ford resumed production of the F-150
Lightning electric pickup truck following a six-week
shutdown to retool and expand capacity at its Rouge Electric
Vehicle Center in Dearborn, Michigan.
- In a milestone achieved in the second quarter of
2023, one in four new vehicles sold in California
were zero-emission vehicles (ZEVs).
- Federal agencies preparing to transition to ZEVs identified a number of upcoming challenges, including the cost of charging equipment installation and inadequate supplies of suitable vehicles, according to a recent report from the Government Accountability Office. The Biden Administration issued an Executive Order in December 2021 which calls for most federal vehicle acquisitions to be ZEVs by 2035.
Automated, Autonomous or Connected Vehicles Technologies
- Alphabet's Waymo announced it will push back the timeline and
scale back the development of autonomous truck
technology, and will instead focus efforts and investments
on ride-hailing.
- The California Public Utilities Commission
(CPUC) is scheduled to vote in the coming days on whether to allow
Waymo and GM business unit Cruise
to expand autonomous ride-hailing fleets in San Francisco.
- The California Privacy Protection Agency's Enforcement Division will review the data protection policies of connected vehicle (CV) manufacturers and related CV technologies to understand how companies are complying with the California Consumer Privacy Act (CCPA).
Market Trends and Regulatory
- The average monthly new car payment reached a record high $733 in the second quarter of 2023, and the average interest rate on a new car loan was 7.2% in June 2023, according to data from Edmunds excerpted in CNBC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.