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

• Foley & Lardner LLP partnered with OESA to present the webinar, Export Controls on Russia and the Impact on Automotive Suppliers. Foley partners Ann Marie Uetz, Christopher Swift, and Mike Walsh discussed how Russia’s invasion on Ukraine is impacting the global automotive supply chain, export controls, and government-imposed sanctions, and how suppliers can assess the potential risks before conducting any commercial and financial transactions with Russian parties.

• According to the Center for Automotive Research, the crisis in Ukraine may result in shortages and price increases for neon gas, palladium, aluminum and nickel.

• Numerous automakers suspended business activities in Russia, and several European auto plants reduced or stopped production due to the inability of getting parts from suppliers in Ukraine.

• U.S. new light-vehicle sales in February reached a SAAR of 14 million units, representing a decline of approximately 12% from the same period last year according to estimates from LMC Automotive.

• Carvana announced plans to acquire ADESA’s U.S. physical auction business for $2.2 billion, in a deal that could have significant impact on the competitive landscape for the nation’s used-vehicle market.

• Subaru and Kia disabled wireless telematics systems from their new models in Massachusetts due to uncertainty over legal challenges to the implementation of the state’s “right to repair” law.

• Ford is idling production at plants in Kentucky and Ohio this week due to the chip shortage, affecting models including Super Duty Trucks, the Expedition SUV and Lincoln Navigator SUV. Last week Ford also shut down F-150 pickup truck production at its Kansas City Assembly Plant in Missouri and reduced production at Kentucky Truck.

• The U.S. EPA proposed new standards to lower nitrogen-oxide emissions from heavy-duty vehicles and engines and update greenhouse gas (GHG) standards for certain commercial vehicle categories.

• Intel’s self-driving car business Mobileye has filed confidentially for an initial public offering.

Electric vehicles and low emissions technology:

• Ford will reorganize into separate business units for its EV and ICE vehicles, and the automaker will increase its EV investment to $50 billion between 2022 and 2026.CEO Jim Farley recently stated the company does not plan to spin off its electric vehicle business, but it will require different talent and less structural complexity in order to ramp up EV and software sales.

• Honda and Sony will establish a joint venture to develop and design an electric vehicle that Honda will manufacture, with the goal to begin sales by 2025.

• Jeep is planning a line of battery-powered SUVs with its first model due next year, and additional models by 2025. Parent company Stellantis recently announced the goal to become carbon neutral by 2038.

Market Trends and Regulatory

• NHTSA announced proposed updates to its New Car Assessment Program (NCAP), which include adding four ADAS technologies, as well as changes to the test procedure and performance criteria for ADAS technologies.

• Revisions to the federal government’s Buy American program will raise the domestic content requirement from its current level of 55% to 60% this year. The final rule will increase the threshold to 65% in 2024 and 75% in 2029.

• Texas and over a dozen other states filed suit against the U.S. EPA in an effort to review the agency’s recently finalized rule applying to federal greenhouse gas (GHG) emissions standards for passenger cars and light trucks. 

• Sixty-five models received the Top Safety Pick+ award in the Insurance Institute of Highway Safety’s initial ranking of 2022 model year vehicles, compared to 49 models one year ago.

• In January, over 80% of new vehicle consumers in the U.S. paid more than the manufacturer’s suggested retail price.

• A recent blog post from Foley & Lardner Partner Jeffrey A. Soble comments on factors contributing to the ongoing microchip shortage, including signs that significant sources of new supply may not be available in the immediate future.

• LMC Automotive indicated that nearshoring chip production may be part of a longer-term strategy for North American automakers, while noting there is no “quick-fix solution” to increasing access to microchip supplies.

OEMs/Suppliers

• Tenneco Inc. will be acquired by affiliates of Apollo Global Management Inc. in a deal that has an enterprise value of $7.1 billion, including debt.

• Magna announced a joint venture with LAN Manufacturing to assemble seats for Ford trucks and SUVs at a leased facility in Detroit beginning in the second quarter of 2023.

• Bosch will invest an additional €250 million to expand chip production capabilities at its Reutlingen plant in Germany.

• In its first year after the merger of Fiat Chrysler Automobiles and PSA Group, Stellantis reported a net profit of €13.4 billion and net revenue of €152 billion.Double-digit margin growth is forecast in FY 2022 guidance.

• Toyota resumed production after a suspected cyberattack at a supplier resulted in a temporary shutdown of the automaker’s plants in Japan.

• A COVID-19 Joint Task Force, consisting of the UAW, Ford, GM and Stellantis, will adopt new guidance from the Centers for Disease Control and Prevention to make mask wearing optional at facilities located in counties that are not at high risk for COVID-19.

• Ford postponed its return-to-office plans to April for many of its salaried employees who are not site-dependent, reflecting a delay of approximately one month.

Connected/Autonomous Vehicles and Mobility Services

• Aptiv – Hyundai joint venture Motional and ride services company Via announced the launch of a free autonomous taxi service in Las Vegas.

• Bosch will acquire 3D-mapping company Atlatec GmbH in a deal that is expected to enhance the supplier’s development of autonomous driving systems.

• Audi partnered with Verizon to add 5g connectivity to the automaker’s vehicles by 2024.This represents Verizon’s first 5g automotive deal.

• Autonomous technology developer Embark Trucks partnered with real estate investor Alterra Property Group to enhance its access to transfer points in key freight markets.

• The California Public Utilities Commission (CPUC) issued permits to GM unit Cruise and Alphabet’s Waymo to allow passenger service in autonomous vehicles with a safety driver present.

• Ford will sell its electric bike and scooter division, Spin, to Berlin-based Tier Mobility for an undisclosed sum.

Electric Vehicles and Low Emissions Technology

• Dana Inc. plans to open a $9 million electric vehicle tech center in Novi, Michigan, where it will add up to 150 engineers and supporting positions.

• Hyundai announced plans to invest 19.4 trillion won ($16 billion) in electrification, introduce 17 new battery electric vehicle models and reach annual BEV sales of 1.87 million units by 2030.

• Polestar announced it will collaborate with suppliers including Autoliv and ZF to develop a climate-neutral vehicle by 2030.

• Lucid reduced its 2022 electric vehicle production target by at least 30% due to logistical and supply chain challenges.

• Tesla received conditional approval to begin production at its new plant in Germany, subject to inspections and a public objection period.

• Volkswagen will begin construction next year at a new €2 billion EV plant in Wolfsburg, located in proximity to its global headquarters.

• GM and POSCO Chemical will begin construction this year of a $400 million battery materials plant in Quebec.