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

• Foley & Lardner partner Vanessa Miller is quoted in the Law360 article, “Mich. Supply Chain Ruling Shakes Up Auto Industry,” commenting on a recent Michigan Supreme Court decision that clarifies what qualifies as a requirements contract with a valid quantity term.
• Foley & Lardner provided an overview about proposed regulations from the Internal Revenue Service pertaining to Section 30D tax credits and EV manufacturing grants.
• Due to their joint venture status, EV battery plants are a “wild card issue” in labor negotiations between the UAW and the Detroit 3 automakers, according to a report by CNBC.
• UAW President Shawn Fain has not ruled out striking all three Detroit automakers, and the union is holding off on endorsing a presidential candidate for 2024 in an effort to win support in Washington.
• Groups representing automakers and independent auto repairers reached a new agreement on automotive right to repair which affirms a 2014 national Memorandum of Understanding and includes access to telematics data required to diagnose and repair vehicles.
• Bloomberg reports the U.S. Department of Energy has been slow to disburse funds from the Bipartisan Infrastructure Law and Inflation Reduction Act due to factors including increased political scrutiny and concerns over funding recipients’ potential ties to China.
• Automakers continue to experience uncertainty amid the wait for additional U.S. Treasury Department guidance for critical mineral and battery component requirements pertaining to eligibility for electric vehicle tax credits in the Inflation Reduction Act. According to a report in Bloomberg, the interpretation of foreign entities of concern and its potential impact on sourcing requirements is an area of particular concern.
• Stellantis and Samsung SDI announced an agreement to establish a second battery plant in the U.S. at an unspecified location. The companies’ StarPlus Energy joint venture is also building a battery plant in Kokomo, Indiana.

OEMs/Suppliers

• In an interview with Crain’s Detroit (subscription), the CEO of BorgWarner’s fuel parts and aftermarket spin-off, Phinia Inc., discussed priorities for growth including clean fuel alternatives and acquisition opportunities.
• Foxconn will acquire a 50% stake in ZF Chassis Modules GmbH, as part of a newly announced joint venture intended to expand automotive and supply chain opportunities in passenger car chassis systems.
• Stellantis announced it has formed direct agreements valued at $11.2 billion to secure various kinds of semiconductors through 2030.

Electric Vehicles and Low Emissions Technology

• A recent Cox Automotive survey of 1,024 consumers and 152 dealerships found that while interest in EVs is growing, the “gap between consideration and sales remains wide.” The survey also indicates 31% of U.S. dealers, “feel that EVs are the future and will largely replace gas engines over time,” compared to 53% of consumers, and 45% of dealers say EVs, “still need to prove themselves in the marketplace.”
• Preliminary studies suggest EV range and battery life may experience significant reductions due to exposure to high temperatures. Further analysis is expected amid concerns that heat waves could increase in frequency and intensity.
• Guidehouse Insights estimates nearly 667,000 plug-in EV batteries will be available for recycling in the U.S. by 2031, and up to 98% of key battery materials could be recoverable for new battery production. This analysis is assuming a minimum 10-year lifespan for batteries.[Full report requires purchase]
• Toyota hopes to begin using solid-state batteries in its next-generation EVs in 2027. Solid-state batteries could significantly improve safety, energy density, charging times and service life, however the technology has a number of challenges to overcome in order to achieve cost-effective production at scale.
• Bosch plans to invest nearly 2.5 billion euros in hydrogen fuel-cell technology by 2026.
• Toyota will begin producing integrated dual fuel-cell (FC) modules for use in hydrogen-powered heavy-duty commercial trucks later this year.
• Magna will invest $790 million to build three new factories in Tennessee, two of which will be located at Ford’s BlueOval City campus.
• Ford reduced the starting price on its electric F-150 Lightning pickup truck by $6,000 to nearly $10,000, depending on the model. The decision was attributed to improved production and lower raw materials costs.
• GM plans to resume production of BrightDrop electric vans at its CAMI Assembly plant the week of July 31, following two weeks of downtime resulting from an unspecified supply chain issue.
• Kia will invest over $200 million to produce the all-electric 2024 EV9 three-row SUV at its factory in Georgia. A number of automakers plan to launch seven-seater electric SUVs in the months ahead, in an effort to reach consumers that prefer large SUVs.
• Since last summer, Amazon has delivered over 150 million packages using Rivian’s electric vehicles in cities including Baltimore, Houston, Las Vegas, New York, Seattle and Miami.

Automated, Autonomous or Connected Vehicles Technologies

• The National Highway Traffic Safety Administration (NHTSA) is working toward publishing a notice of proposed rule-making on automated driving systems later this year. The proposal would fall under the ADS-Equipped Vehicle Safety, Transparency and Evaluation Program (AV STEP), and it could address caps on the maximum allowable number of vehicles with various forms of advanced driving systems.
• Transport Topics reports California state legislators are moving closer to a final vote on a bill (AB 316) that would prohibit heavy-duty autonomous trucks from operating without a safety driver in the vehicle.

Market Trends and Regulatory

• On July 13, the U.S. House Appropriations Committee passed a government spending bill containing a provision to prohibit the Federal Trade Commission from “implementing and enforcing” a proposal to expand certain disclosure requirements for dealerships.  Next steps for the proposal are unclear at this time.  If the Motor Vehicle Dealers Trade Regulation rule in enacted, the Center for Automotive Research estimates dealerships could face a median upfront cost of $46,950, and recurring annual compliance costs of up to $50,958 per location.