Key Developments

• According to estimates from LMC Automotive, first-quarter U.S. new light-vehicle sales reached 3.29 million units, reflecting a 16% decline from Q1 2021. An estimated 1.25 million units were sold in March, representing a SAAR of 13.4 million units and a 22% drop from March 2021.

• Major automakers reported double-digit sales declines for first-quarter U.S. new light-vehicle sales due to ongoing challenges including supply chain disruptions and limited inventory.

• LMC Automotive and Cox Automotive each reduced their full-year U.S. light-vehicle sales forecast to 15.3 million units, citing a slower pace to recovery from market constraints.

• Global vehicle production could lose up to 1.5 million units this year if China’s COVID-Zero policy is maintained, according to estimates from Fitch Solutions quoted in Bloomberg.

• Phased lockdowns beginning last week in Shanghai in response to COVID-19 outbreaks disrupted production for several major automakers and suppliers. 

• Recent production downtime due to the semiconductor shortage includes: Jeep production at Stellantis’ Mack Assembly plant in Detroit and Belvidere Assembly plant in Illinois; Chevrolet Silverado 1500 and GMC Sierra 1500 production at GM’s Fort Wayne Assembly plant; andMustang productionat Ford’s Flat Rock Assembly plant.

• German automakers may lose up to 150,000 units of production in March due to supply disruptions resulting from the war in Ukraine.

• The National Highway Traffic Safety Administration finalized fuel economy standards which increase fuel efficiency by 8% annually for model years 2024-25, and 10% annually for model year 2026.

• NHTSA plans to reinstate a 2016 regulation that more than doubled penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) requirements starting in the 2019 model year.

• Electric vehicles and low emissions technology:

  • President Biden's proposed $5.8 trillion budget for the 2023 fiscal year includes $757 million for “zero-emission fleet vehicles and supporting charging or fueling infrastructure.”

  • As part of its 2030 Emissions Reduction Plan, Canada could require at least 20% of new light-duty vehicle sales to be zero-emission vehicles by 2026, increasing to at least 60% by 2030 and 100% by 2035.

  • Foley & Lardner provided an overview of the market status of electromobility in Mexico.

  • President Biden will invoke the Defense Production Act to increase domestic production of critical minerals for uses that include large-capacity batteries in electric vehicles.

  • Tesla delivered 310,048 vehicles worldwide in thefirst quarter, narrowly above itsQ4 2021deliveries and up by approximately 68% fromQ1 2021.

Market Trends and Regulatory

• The Beijing auto show was postponed from late April to an undetermined future date due to rising COVID-19 cases in China.

• The U.S. Senate again passed its version of a bill intended to increase the nation’s competitiveness with China, including a proposal for $52 billion to boost domestic semiconductor manufacturing. The Senate and House first passed versions of the bill in June 2021 and February 2022, respectively, and the legislation will require negotiation between the chambers.

• According to Bloomberg, the Alliance for Automotive Innovation intends to file a motion in support of the EPA in a court case concerning the agency's greenhouse gas emission regulations.

OEMs/Suppliers

• First-quarter U.S. new light-vehicle sales were down by an estimated 23% for Honda; 20% for GM; 17% for Ford; 15% for Toyota; and 14% for Stellantis.

• Recent production shutdowns due to parts shortages that were largely unspecified but not attributed to semiconductors include:

  • GM idled its Lansing Grand River Assembly plant the week of April 8, affecting production of the Cadillac CT4 and CT5 and the Chevrolet Camaro.GM also idled its Corvette plant in Bowling Green, Kentucky the week of March 21.

  • Stellantis stopped production the week of March 28 at its minivan plant in Windsor, Ontario the week of March 28.

  • Mazda will stop production at its two Japanese plants for two days in April.

  • MAN Truck & Bus SE is experiencing production disruptions at its plants in Germany and Poland due to shortages of truck wire harnesses from Ukrainian suppliers.

• Stellantis plans to source more of its semiconductors from Europe and the U.S. within the next four years.

• Volkswagen intends to prioritize supply chain resilience, and increase its investment in the U.S. market as part of a strategy to respond to supply chain bottlenecks, geopolitical events and the COVID-19 pandemic.

• Plastic Omnium SA will acquire AMS-Osram AG's automotive-lighting business for 65 million euros ($72 million) in a deal that is expected to increase its portfolio of innovative lighting solutions.

Connected/Autonomous Vehicles and Mobility Services

• Aurora Innovation Inc. and Toyota are testing an autonomous ride-hailing test fleet of customized Sienna minivans in Texas.

• Waymo is offering its employees in San Francisco autonomous rides without a human safety driver behind the wheel.

• Several U.S. lawmakers will continue efforts to pursue autonomous vehicle legislation, noting the importance of a national regulatory framework for AVs while acknowledging there is no immediate movement in legislation.

• FedEx intends to reveal an “enormous effort” this summer with autonomous trucks on certain highways, while noting the initiative will not pertain to city deliveries.

Electric Vehicles and Low Emissions Technology

• Panasonic announced plans to invest 600 billion yen ($4.9 billion) from fiscal year 2023 to 2025 in areas including automotive batteries and hydrogen energy.

• Magna International will build a new facility in Chatham, Ontario to produce battery enclosures for the Ford F-150 Lightning.

• As part of a contract with Oshkosh Defense, the U.S. Postal Service announced it will increase its initial electric vehicle purchase from 5,000 to just over 10,000 new electric delivery trucks.

• Hertz plans to purchase up to 65,000 electric vehicles from Polestar over a five-year period, and some of the vehicles will be available in North America beginning in late 2022.

• Volkswagen will recall over 100,000 plug-in hybrids globally due to the risk of fire caused by an “insufficiently insulated high-voltage battery.”

• Vietnamese automaker VinFast plans to build EVs for the U.S. market at its first domestic plant in Chatham County, North Carolina beginning in 2024.

• Volvo Trucks in North America announced its largest commercial order to date after Maersk requested an additional 110 Volvo VNR electric trucks following an initial commitment of 16 units.

• Volkswagen will postpone the launch of its ID5 battery-electric vehicle by one month due to a lack of wire harnesses from Ukraine.