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 partner Ann Marie Uetz appeared on CNBC’s ‘Power Lunch’ to discuss the United Auto Workers (UAW) strike as it enters its fourth week.
Foley & Lardner shared a number of key impacts and strategies for suppliers affected by the ongoing UAW strike.
The seasonally adjusted annualized rate (SAAR) for total U.S. new-vehicle sales reached 15.7 million units in September, according to estimates from the National Automobile Dealers Association (NADA).
New light-vehicle inventory reached a 40 days’ supply at the end of September, representing an increase of approximately 25% compared to the same period last year. Inventory levels in October could experience broader impact if strike-related production shutdowns continue to mid-month.
Consulting firm Anderson Economic Group estimates the UAW strike has resulted in nearly $4 billion in losses, according to analysis released on October 2.
On October 11, UAW President Shawn Fain abruptly called for a strike at Ford’s Kentucky Truck Plant in Louisville which affects nearly 9,000 workers. This is Ford’s largest plant and it produces the F-Series Super Duty, the Ford Expedition and the Lincoln Navigator. Nearly 35,000 UAW members are currently on strike across six automotive assembly plants and 38 parts-distribution centers spanning the Detroit Three in the U.S.
In an October 6 update, the UAW did not announce additional walkouts for the first time since the strike began on September 15, with Shaw Fain citing a “major breakthrough” in negotiations over contract coverage for GM’s EV battery plants. GM did not comment directly on Fain’s update.
The Detroit Free Press reports that nearly 4,000 UAW members across three states began walkouts on October 9 after rejecting a tentative contract agreement with Mack Trucks.
The Wall Street Journal indicates that over 6,000 workers across the Detroit Three and their suppliers are laid off as a result of walkouts.
Approximately 30% of suppliers have conducted layoffs due to the UAW strike, according to survey data from MEMA featured in The Washington Post (subscription).In addition, more than 60% of MEMA members expect to begin layoffs by mid-October if the strikes continue.
LG Energy Solution announced plans to invest an additional $3 billion in its Michigan facility as part of a battery supply agreement with Toyota Motor North America.

OEMs/Suppliers

CNBC and Bloomberg report GM is taking steps to secure a $6 billion line of credit in preparation for the potential of prolonged UAW strikes. The automaker reported $200 million on strike-related costs in the third quarter.
Third-quarter 2023 U.S. vehicle sales increased by 21% for GM and 7.7% for Ford when compared to the same period last year.Stellantis reported its U.S. sales fell 1% year-over-year.
Daimler Truck North America subsidiary Freightliner will offer the new Cummins X15N natural gas engine in its heavy-duty Freightliner Cascadia trucks in 2025.
Schaeffler AG is offering to acquire Vitesco Technologies Group AG in a €3.64 billion ($3.8 billion) deal that is expected to increase capabilities in areas including electrification.

Electric Vehicles and Low Emissions Technology

U.S. sales of hybrid-electric vehicles could increase by up to 35% year-over-year in 2023, according to analysis from GlobalData featured in Kelley Blue Book.
Sales of Ford’s F-150 Lightning battery electric pickup dropped by 46% in the third quarter due to a production shutdown for planned upgrades, as well as delayed deliveries caused by unspecified quality checks. The automaker reported a 41% increase in sales of hybrid models in the third quarter.
Tesla delivered over 435,000 vehicles worldwide in the third quarter, representing a decline of over 6% from the preceding quarter. The company maintained its full-year 2023 volume target of 1.8 million vehicles and noted its Q3 2023 deliveries were impacted by factory downtime for planned upgrades.
Chinese automaker BYD sold over 431,000 fully-electric vehicles in the third quarter, representing an increase of 23% from the second quarter.
The European Union launched an anti-subsidy investigation into the imports of EVs manufactured in China. The investigation will examine issues including whether to establish tariffs on the imported vehicles to “remedy the effects of unfair trade practices.”
GM plans to begin deliveries of its battery-powered Cadillac Lyriq crossover in Switzerland in 2024.
Honda will begin delivering its first all-electric SUV, the 2024 Prologue, to U.S. customers early next year. The midsize SUV was co-developed with GM and shares the Ultium battery platform.
New analysis from RMI and the Bezos Earth Fund predicts EVs could represent at least 62% of global vehicle sales by 2030. The report also indicates that most major automakers are committing at least half of their capital expenditures and research and development budgets to EV development and digital technologies.
Swedish lithium-ion battery producer Northvolt announced plans to build its first factory outside of Europe in an area roughly 20 miles east of Montreal, Canada.
Prices of lithium carbonate in China recently fell to their lowest level in nearly two years, due to factors that include restrained customer demand and cautious restocking by vehicle and battery producers.
Nikola expects to begin delivering its hydrogen fuel cell electric trucks to customers in October.
A group of U.S. Senators led by Deb Fischer, R-Neb., recently introduced the “Stop EV Freeloading Act” to ensure electric vehicles contribute to a federal highway funding account.

Automated, Autonomous or Connected Vehicles Technologies

Consumer confidence in fully automated, self-driving vehicles declined for a second consecutive year, according to the J.D. Power 2023 U.S. Mobility Confidence Index (MCI) Study.
The trucking and logistics sectors indicate cyberthreats could expand as more operations become integrated with computers, according to views expressed in Transport Topics.

Market Trends and Regulatory

A new bill from Sens. Jerry Moran, R-Kan., and Joe Manchin, D-W.Va., would direct the U.S. Federal Trade Commission to “redo” its proposed Motor Vehicle Dealers Trade Regulation Rule, beginning with issuing an advanced notice of proposed rule-making for public input. The Center for Automotive Research estimated dealerships could face significant compliance costs if the rule were enacted. In an October 4 statement, the NADA praised the introduction of the “FTC REDO Act” and urged Congress to pass the legislation as quickly as possible.
The Detroit Three automakers could risk at least $10 billion in fines between 2027 and 2032 under stricter proposed Corporate Average Fuel Economy (CAFE) requirements, according to analysis featured in Bloomberg.

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