Foley Automotive Report

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This report 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

• The most recent article in Foley & Lardner’s Supply Chain Disruption Series shares a number of ways Foley Equipped, an artificial intelligence tool powered by ThoughtRiver, can add efficiency to the processes for contract review, revision and negotiation. Click here to subscribe to the article series.
• S&P Global Mobility predicts U.S. new light-vehicle sales will reach 1.13 million units in October, representing a SAAR of 14.7 million units. Inventory is described as a key impediment to sales in the immediate term, but the analysis cautions “deteriorating economic conditions are becoming more prevalent.”
• U.S. new light-vehicle inventory reached 1.32 million units at the end of September, representing a 42 days’ supply and the highest level since June 2021, according to estimates from Cox Automotive.
• Boston Consulting Group estimates automotive dealerships are currently undersupplied by approximately 3.5 million vehicles. The analysis notes pent-up consumer demand has acted as a buffer from economic headwinds thus far, but sales are projected to slow beginning in late 2023.
• GM reported a third quarter profit of $3.3 billion on revenue of $41.9 billion, representing an increase of 37% and 56%, respectively, compared to the same period last year. The automaker indicated improved levels of production contributed to its performance, noting that its U.S. dealers had 359,000 vehicles in inventory at the end of Q3 2022, compared to 129,000 vehicles in inventory for Q3 2021.
• Hyundai announced plans to invest 18 trillion South Korean won ($12.5 billion) by 2030 as part of a strategy to develop “software defined vehicles” across all its brands. The automaker intends for all of its vehicles to be over-the-air (OTA) capable by 2025.
• A new report from Guidehouse Insights assesses which companies are best positioned to lead in the development of automated driving systems for medium- and heavy-duty trucks.[Full report not publicly available]
• Boston Consulting Group projects the automotive semiconductor market will increase by more than 9% annually through 2030, citing the need for higher chip content to support advanced driver assistance systems (ADAS) and vehicle electrification. BCG also predicts supply imbalances for certain types of automotive semiconductors may persist through late 2026.
• Electric vehicles and low emissions technology:
  • More than 200,000 EVs were sold in the third quarter of 2022, representing the highest quarterly volumes to date in the U.S., according to estimates from Cox Automotive’s Kelley Blue Book.The analysis also notes EV prices were 9.7% higher in September 2022 compared to the same period one year ago.
  • The U.S. Department of Energy announced $2.8 billion in grants for 20 battery manufacturing and materials processing companies with projects across 12 states. The grants are funded through the Bipartisan Infrastructure Law. The Biden Administration also announced the launch of the American Battery Materials Initiative as part of an effort to align federal resources toward growing an “end-to-end” domestic battery supply chain.
  • Battery materials and technology company NOVONIX was selected to enter into negotiations to receive $150 million in U.S. DOE grant funding, which will support expanded production of synthetic graphite at the company’s facility in Chattanooga, Tennessee.
  • Collaborations and investments with Australian mineral exploration and production companies involving battery raw materials such as lithium and nickel were recently announced by GM, Stellantis, and battery maker SK On.
  • A report by the Washington Post indicates the origins of certain components for EV supply chains could increase risks in areas including human rights violations, the environmental impact of extraction and processing, and sourcing requirements necessary for certain EV tax incentives.
  • Reuters reports global automakers could spend nearly $1.2 trillion through 2030 to develop and produce electric vehicles, as well as EV batteries and raw materials.

Market Trends and Regulatory

• A report in The Wall Street Journal assesses if pent-up demand for new retail and fleet vehicles can persist in the U.S. amid economic headwinds.
• The role of maritime ports in the automotive supply chain is expected to “notably evolve” as automakers begin to produce hybrid and battery electric vehicles in higher volumes.

OEMs/Suppliers

• Based on registration data for the first eight months of this year featured in S&P Global Mobility, Hyundai Motor Group is ranked third in U.S. automotive market share rankings. According to the analysis, strengths of the Hyundai, Kia and Genesis brands include robust customer loyalty and the “freshness and timeliness” of U.S. product portfolios.
• Reuters reports Toyota expects to reduce its production forecast for the fiscal year ending March 31, but a new target has not yet been provided.
• Bloomberg reports Stellantis may stop manufacturing vehicles in China due to factors including the pursuit of an “asset-light” strategy in certain markets, and the challenge of maintaining market share amid the growing strength of Chinese automakers.
• GM temporarily stopped production of the 2023 Corvette Stingray and Corvette Z06 at its Bowling Green, Kentucky plant last week due to an unspecific parts shortage unrelated to semiconductors.
• Ford will establish a new research center in Atlanta, Georgia, as part of an effort to attract diverse pools of talent in areas including digitally connected vehicles and artificial intelligence.

Connected/Autonomous Vehicles and Mobility Services

• Toyota announced an expanded partnership with Google Cloud to increase capabilities in artificial intelligence-based speech services in vehicle infotainment systems.
• Volkswagen will invest €2.4 billion to form a joint venture with China’s Horizon Robotics in a deal that is expected to support advanced driver assistance systems and autonomous driving systems for the Chinese market.
• Waymo plans to launch its autonomous ride-hailing service in Los Angeles at an unspecified future date. This will be Waymo’s third U.S. location for ride-hailing services following Phoenix and San Francisco.

Electric Vehicles and Low Emissions Technology

• Bloomberg provided an overview of incentives offered by states such as Michigan, Tennessee, Kentucky and Georgia to attract electric vehicle and battery plants. The analysis indicates automotive and battery manufacturers have announced plans to invest at least $50 billion to build EV assembly and battery plants since the start of 2021, while states have committed at least $10.8 billion to attract the investments.
• Honda announced its $3.5 billion electric vehicle battery plant with joint venture partner LG Energy Solution will be located in Ohio, and the facility is expected to be completed by the end of 2024.The automaker also announced plans to invest $700 million to re-tool three plants in Ohio for EV production, as part of a goal to create an “EV hub” in the state.
• BMW announced plans to invest $1 billion to prepare its existing facility in Spartanburg, South Carolina for EV production, and $700 million to build a new battery assembly facility in the state.The automaker expects to produce at least six battery-electric vehicle models in the U.S. by 2030.
• GM established a new division, GM Energy, comprised of Ultium Home, Ultium Commercial and Ultium Charge 360, as part of a strategy to create an ecosystem of energy management products and services for residential and commercial customers. The automaker is working with a number of companies to enhance its energy solutions, including SunPower, Pacific Gas and Electric Company and Con Edison.
• Analysis from McKinsey & Company predicts the market for electric three- or four-wheeled minimobility vehicles could reach $100 billion annually across China, North America and Europe by 2030.The analysis describes electric minimobility vehicles as having an average weight between 100 and 500 kilograms when unoccupied, and the segment will be distinct from electric micromobility vehicles such as bicycles, mopeds and scooters.
• The Sony Honda Mobility joint venture plans to produce its first electric vehicle at an unnamed Honda facility in North America, and deliveries for the U.S. market will begin 2026.
• Chinese EV maker BYD is estimated to have sold over one million plug-in hybrid and battery electric vehicles worldwide between January and September of this year. Tesla delivered over 900,000 battery electric vehicles during the same time period.
• BloombergNEF estimates the Tesla Model Y could be among the top five best-selling vehicles in the world this year.
• Foxconn revealed two EV prototypes at an event in Taipei last week – the Model B crossover SUV and Model V pickup – in support of its plans to produce EVs for clients in countries including Taiwan, Thailand and the U.S.