Key Developments

• Fitch Ratings and AutoForecast Solutions estimate a global production loss of 3.8 million units in 2021 due to the semiconductor shortage, of which 33% is attributed to North America.

• Due to the chip shortage, Ford announced downtime and reduced output for eight plants in North America in May and June, including two plants in Dearborn, Michigan, and Kansas City, Missouri, that produce the F-150 pickup. Recently confirmed downtime also includes three Stellantis plants in Illinois, Ontario and Mexico, and two Volkswagen plants in Chattanooga, Tennessee, and Puebla, Mexico.

• Senate Democrats revealed a proposal to allocate $52 billion toward domestic research and manufacturing of semiconductors as part of a bill intended to strengthen the nation’s competitive position.

• The UAW, Ford, GM, and Stellantis announced the continuation of mask requirements at work sites while awaiting updated guidance from OSHA addressing the CDC’s recent change in COVID-19 workplace standards.

• Stellantis and iPhone manufacturer Foxconn announced a 50-50 joint venture, Mobile Drive, which will operate as a Tier 1 supplier and focus on technologies related to in-vehicle software and services.

• The Wall Street Journal predicts automakers increasingly will pursue joint ventures and partnerships to develop expertise with in-vehicle software, as well as for EV components, including batteries.

• Piston Group LLC filed suit against the Michigan Minority Supplier Development Council over its decision to revoke the auto supplier’s minority business enterprise certification.

• Electric vehicles and low emissions technology:

  • Ford intends to establish a battery joint venture with SK Innovation named BlueOvalSK, with the goal to manufacture EV batteries and related components in the U.S. by mid-decade.

  • The California Air Resources Board unanimously approved the Clean Miles Standard, which will require 90% of ride-hailing fleet miles traveled in the state to be electric by 2030.

  • New EV retail registrations in March surpassed 3% of the U.S. market for the first time, reaching 42,591 registrations for a 3.1% share, according to IHS Markit.

  • China controls the majority of the global supply of processed manganese, which has potential implications for battery-electric vehicle supply chains. 

Market Trends and Regulatory

• Following a CEO Roundtable event hosted by the U.S. Department of Commerce, the U.S. and South Korea announced a deal to deepen cooperation in a range of sectors, including the manufacturing of EV batteries, semiconductors, and COVID-19 vaccines.  Commerce Secretary Gina Raimondo noted, “The importance of this bilateral relationship for both nations cannot be overstated.”

• The chairman of the National Transportation Safety Board, Robert Sumwalt, will depart his position at the end of June; fellow board member Jennifer Homendy has been nominated by President Joe Biden to step into the role.

• The Biden administration and Senate Republicans continue to negotiate in an attempt to reach a deal for the president’s $2.3 trillion infrastructure plan, with the most recent proposal from the White House reducing the potential package to $1.7 trillion, but ultimately failing to receive support.   Brett Smith, director of technology at the Center for Automotive Research, commented that President Biden’s infrastructure plan hopes to shift industrial policy in the U.S. from a focus on low-cost energy to carbon-free energy, and the transition to electrification in the auto industry will require significant support from the federal government.

• Testimony before a House subcommittee by the Center for Auto Safety and the AFL-CIO emphasized the need for federal regulation of advanced driver assistance systems and autonomous vehicle technologies, and noted that the nation currently lacks federal oversight to ensure “safety before AVs are allowed on our streets.” The hearing, "Promises and Perils: The Potential of Automobile Technologies," was held May 18 before the Subcommittee on Consumer Protection and Commerce of the Committee on Energy and Commerce.

  • Separately, in a recent interview with The Associated Press, Ford CEO Jim Farley urged the federal government to develop standards regulating autonomous and partially automated vehicles. Farley noted that the current regulatory environment is on a state-by-state basis, and focused on technology development, as opposed to widespread deployment. 

OEMs/Suppliers

• Production cuts caused by the semiconductor shortage –  A forecast published last week by Fitch Ratings estimates 5% of global auto sales will be lost in 2021 and, according to AutoForecast Solutions, the worldwide production loss is estimated at 3.8 million units. Fitch indicates the semiconductor shortage is expected to “gradually ease” in the second half of 2021 and 2022, and the impact on cash flow is being offset by strong consumer demand, as well as automakers’ production prioritization of the most lucrative models.

  • Ford announced shutdowns the weeks of May 31 and June 7, and reduced output the week of June 14, for its Dearborn Truck Plant in Michigan, and the truck side of Kansas City Assembly Plant in Missouri, both of which impact production of the F-150.  Downtime and reduced output were also announced for Chicago Assembly; Flat Rock Assembly in Michigan; Hermosillo Assembly in Mexico; Louisville Assembly; Oakville Assembly in Ontario; and Ohio Assembly.  In a recent interview, CEO Jim Farley indicated the second quarter will experience the most significant impact from the chip shortage, and predicted that Ford will potentially have a production loss of “a couple of hundred thousand units” in the second half of the year.

  • Stellantis announced its Belvidere Assembly Plant in Illinois will be down through Memorial Day, impacting production of the Jeep Cherokee; the shutdown of Windsor Assembly Plant in Ontario was extended to include the week of May 24, impacting production of Chrysler minivans; both plants will have partial shifts operating during the week of May 31.  The automaker’s Jeep Compass plant in Toluca, Mexico, will have a two-week shutdown beginning the week of May 24.

  • Volkswagen’s plant in Puebla, Mexico, will have downtime of an unspecified duration in June due to the chip shortage.  Volkswagen also confirmed a two-week shutdown beginning June 7 for its Chattanooga, Tennessee, facility, impacting production of the Atlas and Atlas Cross Sport crossovers, and the Passat sedan.

• GM temporarily will stop production at its Corvette plant in Bowling Green, Kentucky, the week of May 24 due to a supply chain issue that is not related to semiconductors. The automaker did not provide details on the parts issue. This plant was also idled twice earlier this year because of supply chain constraints.

• A COVID-19 Joint Task Force consisting of the UAW, Ford, GM, and Stellantis announced the continuation of mask requirements at work sites “out of an abundance of caution” until the Occupational Safety and Health Administration (OSHA) provides guidelines that address the Centers for Disease Control and Prevention’s (CDC) recent change in COVID-19 workplace standards. The task force will reconvene in two weeks with an update.

• Piston Group LLC filed suit in Wayne County Circuit Court against the Michigan Minority Supplier Development Council over its decision to revoke the supplier’s minority business enterprise certification. To be certified, a company must be majority-owned by a person of color; actively managed in the day-to-day operations by a person of color; and operate independently. Piston Group is 100 percent owned by former Detroit Pistons guard Vinnie Johnson; it’s not apparent how the MMSDC assessed Johnson’s involvement in daily operations.

• ZF and Intel’s Mobileye will jointly develop advanced safety systems for Toyota.  ZF will integrate Mobileye’s camera-based system-on-a-chip with its automotive radar system; the systems will become available “over the next few years.”

Connected/Autonomous Vehicles and Mobility Services

• Waymo is reported to be in discussions with outside investors to raise up to $4 billion in funding. The business unit of Alphabet has lost six executives in the last four months, including its CEO and CFO.

• Denso and Honeywell announced a 10-year partnership to develop electric motors, with the initial focus on air taxis and delivery vehicles for the urban air mobility market.    

Electric Vehicles and Low Emissions Technology

• According to IHS Markit, new EV registrations reached 3.1% of the U.S. market in March.  The top five most popular EV models are Tesla’s Model Y and Model 3, followed by the Chevrolet Bolt, Audi’s e-tron, and Ford’s Mustang Mach-E.

• Daimler Truck intends to focus the majority of its development resources on battery and hydrogen vehicles by 2025. Chief Technology Officer Andreas Gorbach predicts battery electric and hydrogen fuel cell vehicles will reach parity with diesels toward the end of the decade, while noting that infrastructure remains a key impediment to widespread adoption.  Daimler previously announced plans to spin off its truck and bus business unit later this year.

• The SEC is conducting an investigation into EV startup Canoo, according to a recent regulatory filing.  The broad investigation covers a number of areas, including “operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the Company’s officers.” Los Angeles-based Canoo began trading on the Nasdaq in December after a reverse merger with Hennessy Capital Acquisition Corp.

• Korean supplier Duckyang Industrial will enter the U.S. EV battery market by investing $10 million to open a facility in Georgia.  The facility will manufacture battery modules and energy storage systems for SK Innovation; the supplier did not indicate a timeline for when it will begin production.

Prepared by Julie Dautermann, Competitive Intelligence Analyst