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

Key Developments

• In a revised forecast, consultancy AlixPartners predicts the global auto industry could lose up to $110 billion in revenue and 3.9 million production vehicles this year due to the semiconductor shortage.

• Ford announced shift reductions and additional downtime for two plants in Michigan and Kentucky for the week of May 24, impacting production of the F-150, and the Escape and Lincoln Corsair SUVs.

• A record 10% increase in used vehicle prices between March and April accounted for approximately one-third of the overall rise in the most recent Consumer Price Index.

• The Mexican Labor Ministry invalidated a union vote at a GM plant in Silao after United States Trade Representative Katherine Tai asked the Mexican government to examine allegations that employees’ rights were denied; this marks the first time the federal government initiated an action under the USMCA’s labor dispute enforcement tool.

• Lawmakers continue to deliberate over federal investment to support the domestic production of semiconductors in a proposal that could be attached to a bill intended to strengthen the competitive position of the U.S.

• Geely-owned Volvo Cars announced it is evaluating the possibility of an IPO that would list the company on the Nasdaq Stockholm exchange later this year.

• Stellantis and iPhone manufacturer Foxconn are scheduled to announce details on a strategic partnership this week; Foxconn also recently announced a deal to co-develop and build an electric vehicle under the Fisker brand name.

• Electric vehicles and low emissions technology:

  • Toyota estimates that over half of its North American light vehicle sales will be hybrids by 2030; 30% will be ICEs; and the remainder fully electric.

  • Hyundai will invest $7.4 billion in the U.S. by 2025 to pursue future mobility solutions, including vehicle electrification and hydrogen energy.

  • Five EV startups that were collectively valued at $60 billion near the time they went public in SPAC deals have lost over $40 billion of market capitalization.

  • President Biden will tour Ford’s Rouge Electric Vehicle Center in Dearborn, Mich., in advance of the automaker’s event to unveil the upcoming all-electric F-150 Lightning pickup.

  • LMC Automotive projects that almost 26% of vans produced in North America will be all-electric by 2028, compared to 11% for the combined category of SUVs and cars, and 3% for pickups.

Market Trends and Regulatory

• According to the Bureau of Labor Statistics’ Consumer Price Index, prices for used cars and trucks increased by 10% between March and April, representing the largest monthly increase since the series began in 1953. Average used vehicle price surpassed $25,000 for the first time last month, as strong consumer demand was met with low inventory amid the ongoing chip shortage.

• A joint meeting last week between the Alliance for Automotive Innovation and the Semiconductor Industry Association concerning the ongoing chip shortage emphasized the necessity of federal support: “To strengthen America’s chip supply chains over the long term, we believe it is critical for President Biden and Congress to fund the domestic semiconductor manufacturing incentives and research initiatives in the CHIPS for America Act. Federal investments in domestic chip production and innovation will strengthen America’s economy and global competitiveness.”

• U.S. senators could potentially announce a proposal to allocate funding towards the domestic production of semiconductors as part of a bipartisan bill intended to strengthen the nation’s competitive position. The Endless Frontier Act was originally intended to provide approximately $100 billion over five years for research, development and manufacturing of critical technology.

OEMs/Suppliers

• Production cuts caused by the semiconductor shortage –  Consultancy AlixPartners predicts the global auto industry could lose $110 billion in revenue this year due to the chip shortage, upward from a previously predicted loss of $60.6 billion. Global production loss could reach 3.9 million vehicles, upward from 2.2 million vehicles predicted earlier this year.[No access to full report]. Several new car dealerships quoted in The Wall Street Journal refer to critically low inventory levels as a result of the ongoing chip shortage, with limited insight as to when the situation will improve.

  • Ford announced reduced output and additional downtime for two plants in Michigan and Kentucky: Dearborn Truck will work one shift the week of May 24, instead of the usual three; this plant produces the F-150 pickup truck. Louisville Assembly will be down the week of May 24, impacting production of the Ford Escape and Lincoln Corsair SUVs.

  • Stellantis will eliminate one shift at its Belvidere Assembly Plant in Illinois by July 26, affecting over 1,600 employees. The automaker cited a need to “balance sales with production,” and noted the situation was “further exacerbated by the unprecedented global microchip shortage. ”This plant produces the Jeep Cherokee, and sales for this vehicle declined by 29% in 2020, compared to a 14% drop for the Jeep brand overall.

  • Nissan expects to be impacted by a production loss of approximately 500,000 vehicles this year due to the semiconductor shortage, as well as higher raw material costs.

• American Axle & Manufacturing will be the sole supplier of front and rear pickup axles for production at General Motor’s Oshawa, Canada, facility. American Axle also supplies front and rear axles to GM’s full-size pickup plants in Indiana, Michigan and Mexico.

• Hyundai will invest $7.4 billion in the U.S. by 2025 to build battery EVs, advance its hydrogen ecosystem in the U.S., and pursue capabilities in autonomous driving, robotics, and urban air mobility. Plans for specific facilities were not indicated, and Hyundai and Kia will “monitor the market conditions and U.S. government EV policy to finalize its plan to enhance its U.S. production facilities and gradually expand its local EV production.”

• Toyota Canada resumed production last week at its plants in Ontario after its supplier, Toyotetsu, resumed operations following a COVID-19 outbreak among its employees. Toyotetsu had voluntarily halted operations April 26 after eight employees tested positive for COVID-19, noting that “the vast majority of these cases have not been linked to on-site transmission” at its facility.

Connected/Autonomous Vehicles and Mobility Services

• Cruise LLC’s autonomous shuttle, Origin, will begin production in 2023 at GM's Factory Zero at Detroit-Hamtramck Assembly Center. The Origin is designed to operate without a driver in the vehicle. Cruise, along with its competitor Waymo, recently applied for permits from the California Department of Motor Vehicles to charge a fee for rides and deliveries using autonomous vehicles in San Francisco.

• Ford will provide wireless software updates for features including an embedded, hands-free version of Amazon’s Alexa on the Mustang Mach-E electric SUV and the redesigned 2021 F-150 pickup truck. The automaker has the eventual goal to use its “Power-Up” over-the-air technology across its vehicle portfolio.

• Volkswagen Group is developing an electric and highly automated ID.Buzz microbus with Argo AI for commercial applications by 2025.VW intends for the vehicle to have Level 4 autonomy, which is defined as a vehicle that can operate itself under certain conditions without human interaction.

• The National Highway Traffic Safety Administration is investigating a fatal crash involving a Tesla that occurred in Southern California on May 5; the vehicle was reported to be operating on Autopilot at the time of the crash.

Electric Vehicles and Low Emissions Technology

• GM – LG Chem joint venture Ultium Cells will partner with Li-Cycle to recycle materials produced during the battery cell manufacturing process at Ultium’s Lordstown facility. Li-Cycle indicated that it works with over a dozen automotive and battery manufacturers to accept and process spent lithium-ion batteries.

• Electric bus and truck maker Lion Electric will build its first U.S. plant in Joliet, Illinois; the facility will have an annual production capacity of up to 20,000 vehicles and will begin operations in the second half of 2022.

• GM will invest $40 million to prepare its Pontiac Stamping plant in Michigan for future electric vehicle production; this facility supports Factory Zero at Detroit-Hamtramck Assembly Center and Orion Assembly in Orion Township.

• BMW intends to produce a hydrogen fuel cell-powered X5 crossover in limited numbers next year. Toyota, Honda and Hyundai offer fuel cell electric vehicles (FCEVs) with the Mirai, Clarity and NEXO SUV.

Prepared by Julie Dautermann, Competitive Intelligence Analyst