Foley Automotive Report - June 2022 - 3

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Foley 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.

Key Developments

  • U.S. new light-vehicle sales in June are forecast to reach a SAAR of 13.1 million units, representing a decline of 2.3 million units from the same period last year, according to projections by J.D. Power and LMC Automotive.
  • AlixPartners predicts automotive supply constraints will persist through 2024, leading to operating inefficiencies and straining supplier profitability amid the continuation of strong consumer demand.
  • Automotive News (subscription) released its annual ranking of top global suppliers.
  • According to PwC’s 2022 Deals Midyear Outlook, global automotive M&A in the 2022 YTD period reached 245 deals and a deal value of $28 billion, representing declines of 55% and 62%, respectively.
  • A Foley & Lardner blog post indicates auto industry representatives are expressing renewed attention to certain funding and tax provisions within President Biden’s Build Back Better proposal.
  • U.S. new-vehicle inventory remained at consistent levels and reached 1.13 million units at the end of last month, reflecting a 34 days’ supply, according to estimates from Cox Automotive.
  • Proponents of autonomous trucking indicate the pace of adoption in the U.S. may develop more rapidly than autonomous passenger vehicles, while noting the technology may be best suited for specific circumstances such as highway driving in good weather conditions.
  • Electric vehicles and low emissions technology:
    • The Alliance for Automotive Innovation estimates nearly 200,000 EVs were sold in the U.S. in the first quarter of 2022, reflecting an increase of 54% from the same period last year and accounting for 5.9% of overall light-vehicle sales in the quarter. EVs continue to represent under 1% of all vehicles operating on U.S. roads, at just over 2.35 million units.
    • Edison Electric Institute predicts EVs will represent nearly 10% of light-duty vehicles operating on U.S. roads by 2030, reaching a total of approximately 26.4 million units.
    • Automakers including Ford, GM and Tesla are raising prices for electric vehicles amid rising costs for raw materials and increased consumer interest in EVs.
    • Foley & Lardner addressed key points of the U.S. Department of Transportation proposal to establish minimum standards for federally funded EV charging infrastructure projects.
    • According to Sen. Debbie Stabenow (D-MI) quoted in The Detroit News, a proposed tax credit for union-made electric vehicles will not be included in an upcoming Senate climate package due to insufficient support among lawmakers.
    • A new report by Securing America's Future Energy (SAFE) and the Electrification Coalition emphasizes the need to increase electric grid resilience and pursue technologies such as vehicle-to-grid (V2G) in preparation for growing adoption of electrified transportation.

Market Trends and Regulatory

  • The National Highway Traffic Safety Administration released new data on crashes involving vehicles using automated driving systems (ADS) and Level 2 advanced driver assistance systems (ADAS).Since July 2021, 130 crashes involved ADS-equipped vehicles, and 367 cars involved Level 2 ADAS-equipped vehicles. However, the agency cautioned that more analysis is needed to understand the role of the technologies in vehicle crashes.
  • The National Association of Manufacturers expressed concerns with President Biden’s proposal to suspend federal gasoline and diesel taxes for three months, noting the taxes are an important funding source for the Bipartisan Infrastructure Law. NAM also indicated more effective approaches include strengthening and expanding domestic energy production.
  • Gasoline sales at U.S. stations declined 8.2% in the first week of June compared to the same period last year, indicating consumers may alter certain driving behaviors in response to average prices that are nearly $2 per gallon higher than last year.

OEMs/Suppliers

  • Toyota reduced its July global production plan by 50,000 vehicles in response to semiconductor shortages and COVID-related supply disruptions.
  • Japan’s major automakers are taking steps to absorb some of the burden of rising raw materials costs to reduce the strain on suppliers, according to a report in Reuters.
  • The COVID-19 Joint Task Force, comprised of the UAW, Ford, General Motors and Stellantis, announced face masks will be optional at their respective U.S. facilities.
  • An arbitrator determined Stellantis must end its COVID-19 vaccine mandate for Canadian employees after determining the policy was unreasonable due to reduced efficacy against the omicron variant. In a separate announcement, GM will also end its vaccine requirement for Canadian operations.

Connected/Autonomous Vehicles and Mobility Services

  • A new survey on select partial automation systems by the Insurance Institute for Highway Safety found consumers had a strong interest in lane centering, automated lane changing and driver monitoring technologies, but preferred features that require the driver to remain engaged over “hands-free” versions.
  • Valeo will supply Stellantis with its third-generation LiDAR to enable SAE Level 3 autonomous driving for multiple models beginning in 2024.

Electric Vehicles and Low Emissions Technology

  • In a recent interview with Transport Topics, Cummins indicated the transportation industry is at a “tipping point” with decarbonization efforts, and noted high fuel prices may contribute to increased interest in hydrogen and electric-powered vehicles.
  • Ford plans to focus on speed to market and offering electric models of its most popular vehicles, while GM intends to introduce a wide range of EV models across price points, according to a report in The Wall Street Journal assessing the automakers’ electrification strategies.
  • Lithium-ion battery recycling startup Redwood Materials announced a new collaboration with Toyota to collect, refurbish and recycle batteries and battery materials.
  • Circular Energy Research and Consulting estimates 1.7 million EV batteries will be available for reuse in 2030, at a combined market value of $5.1 billion.
  • Ford announced a recall for certain 2021-2022 Mustang Mach-E vehicles due to battery contactors that may overheat and cause a loss of power.
  • Blink Charging completed its $200 million acquisition of Maryland-based SemaConnect Inc., in a deal that will expand its geographic reach by adding nearly 13,000 chargers and 3,800 site host locations.
  • Contract manufacturer Foxconn started building its first EV battery plant in Taiwan, and the company intends to start test production in early 2024.
  • Swedish electric-vehicle maker Polestar began trading on the Nasdaq following the completion of a merger with a special-purpose acquisition company.
  • Volvo began testing hydrogen fuel cell semi-trucks, and customer pilots are planned “in a few years” with commercialization to follow in the second half of this decade.
  • A loss prevention specialist quoted in Lloyd’s List indicated new vessel types may be needed to transport electric vehicles on the water due to the flammability of lithium-ion batteries.
  • In a recent interview, Tesla CEO Elon Musk said the company’s manufacturing sites in Berlin, Germany and Austin, Texas are “losing billions of dollars right now” as supply chain challenges limit the ability to increase production.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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