Foley Automotive Update

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This update helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. Contact your Foley relationship partner, or Ann Marie Uetz, Vanessa L. Miller, or Nicholas J. Ellis, to follow up.

Key Developments

On October 24, UAW President Shawn Fain abruptly called for a strike at GM’s highly profitable full-size SUV plant in Arlington, Texas. Approximately 45,000 UAW members are now on strike across eight automotive assembly plants and 38 parts-distribution centers spanning the Detroit Three in the U.S.
The UAW expanded its strike on October 23 to Stellantis’ Sterling Heights Assembly plant in Michigan which affects approximately 6,800 workers. The plant produces the Ram 1500 pickup truck, which is among the automaker’s most profitable vehicles.
The UAW shifted to a strategy of calling unanticipated strikes with the October 11 walkout at Ford’s Kentucky Truck Plant in Louisville, which represents the automaker’s largest and most profitable plant.
Up to 80% of suppliers expect to begin layoffs in early November if the UAW strike persists, according to survey data from vehicle supplier association MEMA published on October 20.
The Detroit News reports that over 6,500 workers across the Detroit Three are temporarily laid off due to the UAW strike. The estimated number of supplier layoffs since the work stoppage began on September 15 can be found in this subscription article in Automotive News.
Consulting firm Anderson Economic Group estimates the UAW strike has resulted in approximately $7.7 billion in losses, according to analysis released on October 16.This figure includes $3.45 billion in losses for the Detroit Three, and supplier losses of $2.67 billion.
GM reported an $800 million loss attributed to the UAW strike in its third quarter earnings results. The automaker estimates the impact of ongoing walkouts will be $200 million per week based on the facilities impacted as of October 23.
The Detroit Three have each offered the UAW a 23% wage increase, and Ford indicated the percentage is the best it can do without hurting its business, according to reports in Reuters and Bloomberg.
Foley & Lardner supplied a summary of federal and state investment incentives in the U.S. and Mexico for USMCA manufacturers.
Foley & Lardner provided considerations to address the importance of risk audits for per- and polyfluoroalkyl substances (PFAS) in the automotive industry.
Stellantis will establish a second battery plant in Indiana with joint venture partner Samsung SDI. The StarPlus Energy facility is estimated to represent a $3.2 billion investment and it is expected to begin operations in 2027.
A Biden administration proposal to achieve a corporate average fuel economy of nearly 58 miles per gallon on average for cars and light-duty trucks by 2032 could increase new vehicle prices by an estimated $3,000, according to recent commentary from the Alliance for Automotive Innovation.

OEMs/Suppliers

The Wall Street Journal reports high UAW wages will cause automakers to remain overly dependent on U.S. demand for large vehicles with high profit margins.
Following the ratifications of contracts with Ford and GM, Canadian union Unifor set a strike deadline of October 29 at 11:59 p.m. for its negotiations with Stellantis.
GM delayed its fall Investor Day to early next year to enable its “leadership team to focus on UAW negotiations.”
To preserve capital amid the ongoing UAW strike, Stellantis will not attend the Specialty Equipment Market Association trade show later this month, the Los Angeles Auto Show (November 2023) or the Consumer Electronics Show (January 2024).
Mitsubishi Electric and Denso will each invest $500 million in Coherent, a U.S. supplier of materials used to make chips for the automotive industry.
GM’s Corvette plant in Bowling Green, Kentucky is reported to be experiencing “temporary parts supply issues” that are not related to the UAW strike.
GM workers in Brazil voted to go on strike after the automaker announced workforce reductions at three factories in the nation.

Electric Vehicles and Low Emissions Technology

Following the first wave of growth attributed to early adopters, U.S. EV demand among mainstream consumers could level off due to concerns including high retail prices and range anxiety.
Vehicle electrification could increasingly become the focus of polarizing politics in campaigns for the 2024 U.S. presidential election.
GM will delay the launch of electric truck production at its Orion Assembly plant in Michigan by one year to 2025 “to better manage capital investment while aligning with evolving EV demand.”
Beginning in January 2024, U.S. consumers can receive up to $7,500 off the purchase of a new EV as an immediate rebate at the point of sale, rather than wait months until filing their tax return to get the credit.
Utility Dive reports the deployment of EV fast chargers could be impeded due to unresolved questions over whether utilities should own and operate charging facilities.
China’s Contemporary Amperex Technology Co. (CATL) and BYD together represented more than half of the battery market for EVs, according to analysis featured in Bloomberg.
The Wall Street Journal reports a number of Chinese battery companies recently established joint ventures in nations that are U.S. free-trade partners in an effort to meet sourcing requirements and qualify for tax breaks in the Inflation Reduction Act.
Analysis in Bloomberg estimates China’s battery production capacity will be three times as much as the rest of the world combined by 2025.
Huawei-backed automotive brands in China such as the Aito M7 electric crossover have the potential to capture market share from other EV manufacturers in the nation. The Aito brand is produced by Huawei partner Seres Group.
Smartphone company Xiaomi is pursuing partnerships with established automakers in China to produce EVs, according to unnamed sources in Bloomberg.
Infineon announced a multi-year agreement to supply Hyundai and Kia with power semiconductors for the production of EVs.
Geely subsidiary Polestar hopes to raise up to $1 billion to support its business growth. Earlier this year, the company announced plans to begin U.S. production in South Carolina in 2024.

Automated, Autonomous Or Connected Vehicles Technologies

Waymo recently launched its driverless taxi service in Santa Monica and the company will expand to additional cities in Southern California in November. Waymo also offers driverless rides in San Francisco and Phoenix.
General Motors, Honda, and GM’s self-driving unit Cruise announced a joint venture to launch a driverless ridehail service in Japan in early 2026.

Market Trends and Regulatory

The California Trucking Association filed a lawsuit seeking to halt enforcement of the Advanced Clean Fleets regulation that requires a transition to zero-emissions vehicles in the state.
Bloomberg reports the percentage of subprime auto borrowers at least 60 days past due on their loans reached the highest percentage in nearly three decades.

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