Key Developments

• Due to the semiconductor shortage, Stellantis will reduce shifts through the end of May at its Jefferson North Assembly plant in Detroit; Ford extended shutdowns for two additional weeks in Chicago, Flat Rock, Michigan, and Kansas City, Missouri;Subaru’s Indiana plant is down from April 19-30.

• Volkswagen has experienced a production loss of 100,000 vehicles globally as a result of the chip shortage, and the automaker said it will not be able to make up for the loss in 2021.

• IHS Markit estimates up to 3% of medium and heavy commercial vehicle production in certain regions could be impacted by the semiconductor shortage in the first half of 2021.

• Stellantis, in partnership with Rite Aid, began offering COVID-19 vaccines at select UAW union halls in Metro Detroit April 23 for employees and their families.

• GM’s new “Work Appropriately” flexible working concept was described by CEO Mary Barra as “where the work permits, employees will have the flexibility to work where they can have the greatest impact on achieving our goals. It is up to leaders to focus on the work, not the where, and we will provide the tools and resources needed to make the right decisions to support our teams."

• The U.S. Transportation Department is expected to reverse actions by the Trump administration that challenged California’s authority to set its own fuel economy standards.

• Governors from 12 states requested a commitment to national standards ensuring that “all new passenger cars and light-duty trucks sold are zero-emission no later than 2035.”

• During last week’s Leaders Summit on Climate, President Biden pledged to reduce U.S. greenhouse gas emissions by roughly 50% from 2005 levels by 2030.

• Republicans in the U.S. Senate have countered President Biden’s $2.3 trillion infrastructure plan with a $568 billion proposal that focuses on surface transportation and broadband connectivity improvements.

• Two U.S. senators are reported to be drafting legislation that would allow exemptions for 15,000 autonomous vehicles per manufacturer from federal safety standards.

• Electric vehicles and low emissions technology:

  • One in four new light vehicle sales globally will be fully electric by 2030, according to a new whitepaper from IHS Markit.

  • Boston Consulting Group predicts electrified vehicles will represent over 50% of new light vehicle sales globally by 2026, up from 12% of global market share in 2020.

  • Honda announced a goal to sell only battery-electric and fuel cell electric vehicles in North America by 2040.

  • Goals to phase out gasoline-powered vehicles according to a specific timetable have recently been announced by automakers, including General Motors, Jaguar, Volvo and Bentley; Stellantis announced the majority of its U.S. brands will have electrified options by 2025 with fully battery-electric options by 2030; Ford intends to phase out gas-powered cars in Europe by 2030.

Market Trends and Regulatory

• Emissions standards - President Biden pledged to cut U.S. greenhouse gas emissions by roughly 50% from 2005 levels by 2030, a goal that received support in the form of an open letter from businesses, including GM and Ford. The announcement was made during a two-day virtual Leaders Summit on Climate, which had participants from 40 nations.  Achieving a 50% reduction by the end of the decade would require significant federal support: in 2020, U.S. GHG emissions were just 10% below 2005 levels, according to the Environmental Protection Agency.

• The U.S. Transportation Department is expected to reverse actions by the Trump administration that challenged California’s authority to set its own fuel economy standards, according to The Wall Street Journal.

• Governors from 12 states requested in a letter that the Biden administration commit to national standards ensuring that “all new passenger cars and light-duty trucks sold are zero-emission no later than 2035.”  The states are California, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, and Washington. Numerous Democratic lawmakers have recently urged federal commitments to zero-emission vehicles, although Transportation Secretary Pete Buttigieg commented last month that he’s unaware of support by the Biden administration to pursue a federal ban on gas-powered vehicles by a specific date. California and Massachusetts have committed to phasing out sales of gasoline-powered new light vehicles by 2035, while Washington last week announced a similar commitment by 2030. 

• Infrastructure package – Republicans in the U.S. Senate have countered President Biden’s $2.3 trillion infrastructure plan with a $568 billion proposal that focuses on surface transportation and broadband connectivity improvements, with Senate Minority Leader Mitch McConnell stating: “We’re open to a more modest and targeted infrastructure bill. It’s one thing to run up the national debt when you have a 100-year pandemic. But just to keep routinely adding trillions of dollars to the national debt — I think it’s ill-advised to the future of the country.” The Republican proposal would prioritize funding for roads, bridges, transit, airports, ports, broadband and waterways.

• During a Senate hearing related to President Biden’s infrastructure package, Commerce Secretary Gina Raimondo described the lack of domestic chip manufacturing as “a national security risk and an economic security risk,” noting that the U.S. is entirely dependent on Taiwan and China for semiconductors. On a global basis, the U.S. manufactures 12% of semiconductors, compared to 37% in 1990.

• The Alliance for Automotive Innovation recommends revising the federal crash test ratings to evaluate modern safety technologies such as forward collision warnings, automatic emergency braking, and lane departure warnings. The Alliance noted that the New Car Assessment Program should not only focus on crashworthiness, but on new technologies related to crash avoidance. 

• Democratic lawmakers introduced a bill last week that would provide $25 billion in federal grant money over a 10-year period to facilitate transitioning the nation’s gasoline- and diesel-powered school buses to electric powertrains. The legislation was sponsored by Sen. Alex Padilla (D-Calif.), and co-sponsored by Sen. Raphael Warnock (D-Ga.), and Reps. Tony Cardenas (D-Calif.), and Jahana Hayes (D-Conn.).

OEMs/Suppliers

• Production cuts caused by the semiconductor shortage - Ford extended shutdowns to include the weeks of May 3 and May 10 in Chicago; Flat Rock, Michigan; and both the F-150 and Transit van sides of Kansas City, Missouri; previously these plants were also down the weeks of April 19 and 26. Ford’s Oakville Assembly plant in Ontario will be down the week of May 3, adding one more week to a previously announced three-week shutdown. Ford’s Kentucky Truck plant is scheduled to resume production the week of May 10. Ford is also reducing output at its Ohio Assembly Plant, and will implement downtime for a number of plants in Europe. 

• Stellantis will reduce shifts through the end of May at its Jefferson North Assembly plant in Detroit; this site produces the Jeep Grand Cherokee and Dodge Durango SUVs. Subaru announced a shutdown for its Indiana plant from April 19 through April 30, resulting in a production loss of 15,000 vehicles. Jaguar Land Rover announced production shutdowns of a “limited period” for two U.K. plants due to both the semiconductor shortage and supply chain disruptions attributed to the pandemic. Daimler will reduce hours for up to 18,500 workers and stop production at two plants in Germany for one week, beginning April 23.  Mitsubishi will eliminate 16,000 units globally next month as a result of the chip shortage.

• Volkswagen described the chip shortage as the “biggest challenge” it is experiencing, and the automaker said it does not have visibility into the full-year impact of the ongoing shortage.

• Stellantis, in partnership with Rite Aid, will offer COVID-19 vaccines for employees and their families at select UAW union halls in Metro Detroit beginning April 23; the automaker had previously announced vaccine distribution programs at locations in Belvidere, Illinois; Kokomo, Indiana, Toledo, Ohio, and Detroit. Ford recently announced on-site COVID-19 vaccinations would become available to employees at certain plants in Southeastern Michigan, Lima, Ohio, and Kansas City, Missouri.

• The 2021 Tokyo Motor Show has been canceled due to the pandemic and a revised date has not been announced.  Show organizers intend to rebrand the annual event as the Tokyo Mobility Show to counteract years of falling attendance.  

Connected/Autonomous Vehicles and Mobility Services

• Sen. John Thune (R-SD) and Sen. Gary Peters (D-Mich.) are reported to be creating a draft amendment that would allow NHTSA the authority to exempt 15,000 autonomous vehicles per manufacturer from safety standards that apply to human drivers, with the goal to increase the exemption to 80,000 within three years. Sens. Thune and Peters were previously the sponsor and a co-sponsor, respectively, of the AV START Act, which failed to pass the Senate in 2018.

• Consumer Reports engineers conducting a test were able to “trick” a Tesla Model Y SUV to drive on Autopilot without anyone in the driver’s seat; the vehicle did not display a warning that the driver’s seat was empty.    Several industry experts have commented that partially automated systems such as Tesla’s Autopilot could potentially become a focal point for federal regulation.

Electric Vehicles and Low Emissions Technology

• A new whitepaper from IHS Markit predicts 2027 will become the “tipping point” after which greater EV adoption will accelerate due to factors including declining battery costs, increased battery range, and stricter emissions standards. A new forecast from BCG predicts that electrified vehicles will account for over 50% of global new light vehicle sales by 2026, which is four years sooner than anticipated in a report published last year.  China and Europe are expected to lead the growth toward zero-emissions vehicles.  Gasoline-powered new light vehicles are projected to have a 53% market share in the U.S. by 2025, down from 88% in 2020.  BCG also projects that zero-emission vehicles will replace internal combustion engines (ICEs) as “the dominant powertrain” for global new light vehicle sales “just after 2035.”

• Honda intends to have zero-emissions vehicles represent 40% of North American sales by 2030, and 80% by 2035. The automaker currently has one plug-in hybrid model in the U.S. market, with new EVs scheduled for the 2024 model year.

• The Wall Street Journal featured an essay last weekend describing how the auto industry will be transformed by electrification, self-driving, and mobility as a service.

• Electric delivery vehicle company Arrival is pursuing a strategy of low-volume production in “microfactories” that are less capital-intensive than traditional assembly lines, and rely heavily on multitasking robots. Backed by UPS, Arrival is headquartered in the U.K., and has announced plans for two plants in the U.S.

• Joint ventures - Canadian supplier Martinrea International announced a joint venture, VoltaXplore Inc., with Montreal-based graphene company NanoXplore for the purpose of developing EV batteries enhanced with graphene. Graphene could potentially improve lithium-ion battery performance by increasing charging speed and capacity. Baidu Inc. and Zhejiang Geely Holding Group formed a joint venture, Jidu Auto, for the purpose of developing “smart car technology.” The JV intends to invest $7.7 billion over the next five years, with the goal to launch an EV within the next three years.