This report helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. 

Key Developments

• LMC Automotive increased its 2021 U.S. light vehicle sales forecast to 17 million units following April sales results, which reached a SAAR of over 18 million units.

• New-vehicle inventories fell to 1.9 million units industrywide in April, down from 2.4 million units in March - this represents a 33 days’ supply, compared to 88 days one year ago.

• U.S. fleet sales were down by 16% for January - April compared to the same period last year, and 31% lower from the same period in 2019, according to Cox Automotive.

• Measured by global lost vehicle production, Ford and GM currently are the automakers most impacted by the semiconductor shortage, followed by Renault-Nissan-Mitsubishi, Volkswagen, and Stellantis.

• To conserve chips, automakers are temporarily eliminating or altering feature options related to navigation systems, digital displays, and “intelligent” rearview mirrors on certain models, according to Bloomberg.

• With its “New Era of Agility,” Stellantis will pilot a program allowing its salaried workforce in Auburn Hills, Mich., to work remotely about 70% of the time, and be on-site one to 1 1/2 days per week on average.

• U.S. Reps. Andy Levin and Alexandria Ocasio-Cortez revealed a revised version of their bill, the "Electric Vehicle Freedom Act," intended to create a nationwide EV charging network within five years.

• The Chicago Auto Show will return July 15-19 to McCormick Place, held for five days instead of the usual 10, and will be the first large convention held in Chicago since the start of the pandemic.

• Electric vehicles and low emissions technology:

   

  • Ford plans to reveal details of the upcoming all-electric F-150 Lightning pickup truck at a livestream event May 19; this vehicle goes into production next spring.

  • American Axle and Israel’s REE Automotive announced they will jointly develop an electric propulsion system for battery-powered vehicles.

  • GM favors restoring a $7,500 federal tax credit that is not available to automakers that have sold over 200,000 electric vehicles.

  • Establishing an EV charging infrastructure in the U.S. requires a steep investment to reach broader market penetration, and Bloomberg notes that many of the key players in this space have struggled to reach profitability.

Market Trends and Regulatory

• U.S. new light vehicle sales in April totaled 1.54 million units, representing the highest monthly total since 2005 and a SAAR above 18 million units for a second consecutive month.  LMC attributed the sales pace to stimulus checks, tax returns and increased consumer confidence.  Full-year 2021 U.S. light vehicle sales are now forecast to be at 17 million units, with uncertainty remaining in regards to the impact of parts shortages on “critically low inventory levels.”  Cox Automotive estimates that new light vehicle inventory is down by 42% industrywide from April 2020.

• Bank of America and KeyBanc Capital Markets predict that record high U.S. steel prices are the result of an unsustainable bubble that will eventually course correct, but neither bank provided a timetable for when prices may begin to decline.  U.S. benchmark hot-rolled coil steel prices are approximately $1,500 a ton, which is nearly triple the 20-year average.

• U.S. Reps. Andy Levin and Alexandria Ocasio-Cortez announced a revised version of their bill, the "Electric Vehicle Freedom Act,” during a House Energy and Commerce Committee panel hearing on legislation to boost electric vehicles and charging. A version of the EV Freedom Act was introduced in February 2020, but failed to gain traction.  It’s estimated there are slightly under 103,000 EV charging outlets nationwide, according to the U.S. Department of Energy. 

OEMs/Suppliers

• Production cuts caused by the semiconductor shortage – according to estimates by AutoForecast Solutions, global lost vehicle production year-to-date is more than: 362,000 units for Ford; 326,000 units for GM; 284,000 units for Renault-Nissan-Mitsubishi; 207,000 units for Volkswagen; 202,000 units for Stellantis; 113,000 units for Toyota, and 82,000 units for Honda. Within North America, the most impacted automakers for lost vehicle production are GM, Ford, Stellantis, Subaru and Honda.

   

  • Automakers, including Ford, GM and Stellantis, reported very profitable first quarters, but uncertainty remains for the potential full-year impact of the chip shortage.  In its first quarter financial results, Stellantis noted that it lost 11% of planned production globally in Q1, or 190,000 units, and the automaker indicated that number could double in Q2.   In its Q1 earnings call, Ford warned of a potential volume loss approaching 1.1 million vehicles for the full year’s planned production, at a financial impact of up to $2.5 billion. GM has thus far not disclosed lost production volumes, but estimated a financial impact of $1.5 billion to $2 billion for the full year.  Unverified sources have speculated that in order to keep production lines running, GM is relying more extensively on a “build-shy” strategy of manufacturing vehicles that are awaiting completion with certain modules.

  • Ford announced downtime for six North American plants: shutdowns were extended for a second time to include the weeks of May 17 and May 24 in Chicago; Flat Rock, Michigan; and both the F-150 and Transit van sides of Kansas City, Missouri; these plants initially began downtime the weeks of April 19; Michigan Assembly Plant in Wayne will be down the weeks of May 17 and May 24; Ohio Assembly Plant is operating with reduced output and will be down the week of May 24; Hermosillo Assembly Plant will be down through the week of May 10.

  • Stellantis extended downtime through mid-May for the Belvidere Assembly Plant in Illinois, impacting production of the Jeep Cherokee SUV, and Windsor Assembly Plant in Ontario, impacting Chrysler minivans. Warren Truck Assembly Plant is down through the rest of May, impacting the Ram 1500 Classic pickup, and output has been reduced at the Jefferson North Assembly Plant.

• In its most recent earnings call, BMW stated that higher raw material prices could result in an impact of 1 billion euros ($1.21 billion) in 2021.  The automaker indicated that higher costs for rhodium, palladium and steel were a particular concern, but noted that favorable currency exchange rates could reduce the impact down to 500 million euros.

• Stellantis expects to meet European carbon dioxide emission regulations as soon as this year without having to purchase CO2 credits, due to the electrification contributions of PSA Group.  In the two years prior to the merger, FCA spent approximately $2.4 billion to purchase CO2 credits from Tesla.

• Honda and Suzuki have temporarily suspended production in India due to surging case counts of COVID-19 in the country.  India recently reported over 2.7 million new cases in a seven-day period.

Connected/Autonomous Vehicles and Mobility Services

• Although Tesla last year launched a limited beta described as “full self-driving,” a memo to the California Department of Motor Vehicles indicates that the company currently has Level 2 autonomous capabilities.  Level 2 is defined as a semi-autonomous driving system that requires supervision by a human driver.  The memo also noted that Tesla may not achieve full self-driving by year-end, according to Reuters.

• Cupertino, California-based autonomous truck startup Plus announced a $3 billion SPAC deal with Hennessy Capital Investment Corp. V that is expected to close in the third quarter.  Plus intends to achieve Level 4 autonomous trucks by the end of 2024, which is defined as a vehicle that can operate itself under certain conditions without human interaction.

• Lidar - Argo AI and Volkswagen developed a lidar sensor with a range of 400 meters that will debut on Ford’s ride-hailing and delivery vehicles in 2022, and on VW models toward the middle of the decade; Ford and Volkswagen in 2019 announced an expanded collaboration to invest in autonomous driving and electrification.  Lidar maker Aeva Technologies announced it has developed a sensor capable of detecting other vehicles from over 500 meters, and pedestrians from a distance of over 350 meters.  Toyota-backed robotaxi company Pony.ai announced its next-generation fleet will use lidars from Luminar Technologies; Pony.ai currently offers its robotaxi service in five cities in the U.S. and China.

Electric Vehicles and Low Emissions Technology

• U.K.-based electric van maker Arrival will develop an electric vehicle for Uber that will go into production in Q3 2023.  Uber has committed to becoming fully electric by 2025 in London, and by 2030 across North America and Europe.

• In its 10-Q filing last week, Nikola disclosed that the SEC issued an additional subpoena in March related to 2021 projected cash flow and how the company will use the funds. The company reported a net loss of $120 million for the quarter, and also disclosed that it paid $3 million in legal fees for founder and former CEO Trevor Milton.

• As automakers plan to increase production of electric vehicles, interest is growing for finding new supplies of lithium to power EV batteries. The U.S. currently has one large-scale lithium mine located in Nevada; additional production sites are in various stages of exploration in California, Oregon, Tennessee, Arkansas and North Carolina.

Prepared by Julie Dautermann, Competitive Intelligence Analyst