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 LLP provided a recap of critical business and legal issues discussed during its annual Automotive Forum, including alternative powertrain technology, planning for the EV transition, the potential impacts of labor strikes, and more.
Foley & Lardner partner Vanessa Miller appeared on the SupplyChainBrain podcast episode, “Betting on Electric Vehicles: A Realistic Appraisal,” discussing the factors that will influence the future of electric vehicles.
On September 22, the United Auto Workers (UAW) expanded its strike against the Detroit automakers to include 38 GM and Stellantis parts distribution centers across 20 states. The Detroit Free Press provided a list of the striking locations.
Foley & Lardner partner Ann Marie Uetz offered her insight across several publications on the UAW strike against Detroit automakers, including the Corporate Counsel article, “Auto Suppliers Aim to Avoid Legal, Financial Mayhem as UAW Strike Looms.” Her comments also appeared in Automotive News and Crain’s Detroit Business. In addition, The Wall Street Journal included her comments about weakness in parts of the supply chain that will be negatively impacted if the strike is prolonged.
Foley & Lardner partner Jeffrey Kopp is quoted in the CNBC article, “Everything you need to know about UAW’s targeted strike plans – and possible lockouts,” commenting on the targeted strikes against Detroit automakers and the possibility of lockouts by the companies.
Foley & Lardner partner Nicholas Ellis is quoted in the Law360 article, “UAW Strike Roils Auto Industry Supply Chain,” explaining how the unpredictability of the autoworkers’ walkouts has made it difficult to measure the potential impact to suppliers.
Anderson Economic Group estimates the first week of the UAW strike resulted in $1.6 billion in economic losses, according to an update in Automotive News (subscription).
Auto parts suppliers with significant exposure to the Detroit Three automakers could have over $38 billion of revenue at risk as UAW strikes expand, according to analysis in Bloomberg.
Nearly 355,000 battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) were sold in the U.S. in the second quarter of 2023, representing a market share of 9% and an increase of 58% from the same period in 2022, according to a report released on September 25 by the Alliance for Automotive Innovation. Nine states and the District of Columbia had an EV market share above 10% for the first half of 2023.
The Society of Automotive Analysts (SAA) will be hosting a webinar on October 3 from 9 – 10:30 AM (ET) titled, “An Industry in Transition,” that will feature several of the industry’s leading analysts and Foley & Lardner partner Ann Marie Uetz. Contact your Foley relationship partner for more information.
On September 24, Canadian autoworkers narrowly ratified a three-year contract with Ford that includes wage gains and pension improvements. Unifor selected GM as its next bargaining target in Canada.
President Biden is scheduled to visit Michigan on September 26 to “join the picket line and stand in solidarity” with the UAW. Former President Donald Trump plans to speak to autoworkers in the state on September 27.

OEMs/Suppliers

The UAW strikes at parts distribution centers have the potential to significantly impact dealership service departments, according to a report in The Wall Street Journal.
GM indefinitely idled its Fairfax Assembly plant in Kansas City, Kansas on September 20, due to a parts shortage of stampings produced at a striking plant in Wentzville, Missouri.
Stellantis temporarily laid off nearly 70 employees at its Toledo Machining plant in Perrysburg, Ohio, due to “storage constraints” caused by the strike at the nearby Jeep Gladiator and Wrangler assembly plant. The automaker indicated similar layoffs could affect roughly 300 workers at its plants in Kokomo, Indiana.
Certain steelmakers could be vulnerable to production shutdowns in the wake of broader strikes by the UAW.

Electric Vehicles and Low Emissions Technology

Reuters reports Ford will pause construction of its $3.5 billion EV battery plant in Marshall, Michigan and a final decision has not been made about the planned investment.
Due to delays in obtaining battery modules, GM will halt production of BrightDrop electric commercial vans at its CAMI Assembly plant in Ontario from October until next spring.
Ford plans to double production of gasoline-electric hybrid F-150 pickups next year, in response to factors that include slower-than-expected sales of its all-electric vehicles.
Government officials in India indicate Tesla could source up to $1.9 billion worth of auto components from the nation this year.
Vitesco Technologies is reported to be considering Michigan for a new electric vehicle parts factory.
Japanese public and private entities plan to develop supply chains in Canada to support EV and battery production.
BMW, Ford and Honda announced a joint venture called ChargeScape to develop vehicle-to-grid technology and services.
Hyundai and Georgia Tech signed a memorandum of understanding to collaborate on research and development of hydrogen-fueled engines for large trucks and EV batteries.

Automated, Autonomous or Connected Vehicles Technologies

California Gov. Gavin Newsom vetoed legislation that sought to prohibit autonomous heavy-duty trucks in the state from operating on public roads without a safety driver physically present in the vehicle.
On September 13, the U.S. House Transportation and Infrastructure Committee held a hearing to discuss automated commercial vehicles and their potential impact to the U.S. supply chain. Key themes included how to balance the potential productivity benefits of the technology with safety and regulatory concerns.

Market Trends and Regulatory

A number of cases challenging the U.S. Environmental Protection Agency’s Renewable Fuel Standard (RFS) final rule were recently consolidated in the D.C. Circuit, according to a report by Bloomberg Law. The rule became effective on September 11, and it establishes “biofuel volume requirements and associated percentage standards for cellulosic biofuel, biomass-based diesel (BBD), advanced biofuel, and total renewable fuel for 2023–2025.”
A new report by the EPA’s Office of the Inspector General concluded the agency must improve oversight of the RFS program due to the potential for fraud, and an absence of “reasonable assurance that the program is achieving its goals of reducing greenhouse gas emissions and expanding the nation’s renewable fuels sector.”
The Biden administration will adopt categorial exclusions under the National Environmental Policy Act for the purpose of accelerating reviews of certain EV charging projects.
On September 14, the U.S. House passed the Preserving Choice in Vehicle Purchases Act (H.R. 1435), which would amend federal law to prohibit states from directly or indirectly limiting the sale of vehicles with internal combustion engines, according to a report in the Washington Examiner. The bill is expected to face significant opposition in the Senate, and President Biden has indicated he would veto the bill.

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