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. 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 April are forecast to reach a SAAR of 14.3 million units to 14.5 million units, representing a decline of approximately 20% from the same period last year according to projections from Cox Automotive, and J.D. Power and LMC Automotive, respectively.
• S&P Global Mobility (formerly the automotive team at IHS Markit) lowered its 2022 global light-vehicle forecast to 80.6 million units, due to factors including higher raw material prices, ongoing parts shortages and COVID lockdowns in China. Guidance in December projected 2022 global sales of 82.4 million units.
• Due to the chip shortage, Ford temporarily stopped production at its Mustang plant in Flat Rock, Michigan the week of May 2, and Transit van production was halted at its Kansas City, Missouri plant through the previous weekend.
• GM resumed production this week at its Corvette plant in Bowling Green, Kentucky following a shutdown last week due to a parts shortage unrelated to semiconductors.
• Plastic Omnium will acquire the European and North American automotive lighting units of Varroc Engineering for 600 million euros ($634 million).
• GM asked its suppliers to sign an ESG pledge pertaining to carbon neutrality, development of social responsibility programs and implementation of sustainable procurement practices in their supply chain operations.
• Electric vehicles and low emissions technology:
• • The U.S. Department of Energy announced $3.1 billion in funding to increase domestic output of batteries used in EVs and energy storage.
  • In a recent blog post, Foley & Lardner highlighted some of the potential impacts of rising lithium prices on EV batteries, while noting it's not yet clear if pricing trends will affect EV demand.
  • Stellantis will invest $2.8 billion to retool assembly plants and expand R&D operations in Canada in support of the company's electrification plans.
  • GM intends to produce an electrified Corvette next year, with an all-electric version to follow at some point in the future.

Market Trends and Regulatory

• Senator Joe Manchin (D-WV) has questioned the need for expanding EV tax credits amid high fuel prices, strong consumer demand and inventory shortages.
• The CEO of Intel expects the global semiconductor shortage "will last into 2024."

OEMs/Suppliers

• Semiconductor supplier Wolfspeed opened a plant in Marcy, New York that will produce 200mm wafer fabs as part of an effort to localize supply for clients in sectors including automotive.
• Honda will extend production cuts at one of its factories in Japan in May due to the semiconductor shortage and COVID-19 lockdowns.
• GM reported net income of $2.9 billion in the first quarter, down by 3% compared to the same period last year. The automaker maintained its 2022 earnings forecast, and noted it experienced strong pricing but higher commodity and logistics costs.
• Fordreported a net loss of $3.1 billion in the first quarter, compared to a net profit of $3.3 billion in the first quarter of 2021, but maintained its full-year profit guidance.
• Renault is reported to be considering selling its operations in Russia to a state-owned entity for the symbolic sum of one ruble.

Connected/Autonomous Vehicles and Mobility Services

• Beginning in 2026, Volkswagen will use Qualcomm chips developed specifically for autonomous functions across its global brands.
• A group of 12 U.S. Senate Democrats, including Sens. Gary Peters and Debbie Stabenow, urged Transportation Secretary Pete Buttigieg to develop a comprehensive federal framework for autonomous vehicles.

Electric Vehicles and Low Emissions Technology

• A recent blog post by Foley & Lardner explains some of the ways EV fleets may provide alternative revenue streams to fleet operators during times the vehicles are non-operational, such as supplying power when grids are unstable.
• The U.S. Department of Energy formed an agreement with national laboratories, state and local governments, utility companies, automakers and others to explore the feasibility of widespread bidirectional charging involving EVs and the nation's electrical grid.
• Volkswagen is considering expanding its plant in Chattanooga to build EVs as part of a strategy to increase U.S. market share, according to an unconfirmed report in Reuters.
• GM started the process of retooling its CAMI plant in Ingersoll, Ontario for electric vehicle production, which will begin with the Zevo 600 electric van in the fourth quarter.

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.