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

Full-year 2023 U.S. new light-vehicle sales are expected to reach 15.5 million units, and increase to 15.9 million units in 2024, according to projections from S&P Global Mobility. Global light-vehicle sales are forecast to reach almost 86 million units in 2023, and 88.3 million units in 2024.
U.S. new light-vehicle inventory reached 2.56 million units, representing a 71 days’ supply industrywide as of December 6, according to Cox Automotive. The analysis indicates new electric-vehicle supply at the end of November was at approximately 114 days.
Automakers are expected to increase their focus on reducing costs in areas including supply agreements, due to issues that include competition with lower-cost EVs made in China, according to a report in Reuters.
The U.S. Treasury Department released Section 45X advanced manufacturing production tax credit guidance for companies investing in clean energy production, such as qualifying battery components and applicable critical minerals.
This month China implemented previously announced export restrictions on certain graphite products, including forms which are used to manufacture lithium-ion batteries.
A report in The Wall Street Journal provides an overview of the potential strategic impact of recent challenges GM has experienced with driverless technology and EVs.
Ford will reduce by roughly half planned production of its all-electric F-150 Lightning pickup in 2024, in an effort to “match production to customer demand.” Between January and November 2023, Ford sold over 62,000 all-electric vehicles in the U.S., led by the Mustang Mach-E (35,000+ units) and the F-150 Lightning (20,000+ units).
The U.S. Federal Trade Commission finalized a rule with a number of new requirements for auto dealerships pertaining to the vehicle advertising and sales process. The FTC’s Combating Auto Retail Scams (CARS) Rule will be effective July 30, 2024.
Beginning January 1, 2024, a new law in California (SB 55) will prohibit California motor vehicle dealers and resellers from selling new and used automobiles unless the catalytic converter has been permanently marked with the vehicle’s identification number(VIN). Certain exceptions such as collector cars are noted in the bill text. In addition, “the bill would, until January 1, 2025, exempt from this prohibition a vehicle purchased from a dealer licensed in this state who is also licensed in another state and does not have a warranty service facility in this state.”
Nippon Steel will acquire U.S. Steel for an estimated $14.9 billion. U.S. Steel is expected to retain its name and headquarters in Pittsburgh, PA.

OEMs/Suppliers

GM will indefinitely lay off over 1,300 employees at two plants in Michigan due to the end-of-model-year production of the Bolt EV and Chevrolet Camaro.
Stellantis plans to cut one shift each at two Jeep plants in Toledo and Detroit, and the reductions could result in layoffs. The automaker attributed the decision to, in part, producing less gasoline-powered vehicles to comply with strict emissions standards adopted by California and over a dozen other states.
The UAW filed unfair labor practice charges with the National Labor Relations Board against Honda, Hyundai and Volkswagen for alleged union-busting activities amid organization drives.
GM will halt production the week of December 18 at its midsize truck plant in Wentzville, Missouri, due to an unspecified parts issue.

Electric Vehicles and Low Emissions Technology

The Wall Street Journal reports consumers may experience higher costs and longer repair waits for battery EVs compared to gasoline-powered vehicles, due to issues that include fewer workers qualified to perform the repairs.
GM established separate agreements with Komatsu and Alabama-based Autocar Industries to develop hydrogen fuel cells for commercial trucks.
Toyota will expand its battery recycling network by partnering with Wixom, Michigan-based battery recycling services provider Cirba Solutions.
Ford and Xcel Energy will partner to install up to 30,000 EV charging ports for commercial fleet customers by 2030.
Stellantis plans to integrate modular battery swapping solutions for its EVs through a new partnership with San Francisco-based Ample Inc.
Volkswagen-backed electric truck producer Scout Motors plans to establish a new research and development center in Novi, Michigan.
Rivian will supply electric commercial vans and R1 vehicles to AT&T beginning in 2024.
Australia-based iron ore producer Fortescue Metals Group plans to invest an estimated $35 million in a new EV battery systems plant in Detroit.
Slowing EV demand in many U.S. states is leading to “questions in the industry about whether car companies face a temporary hurdle or a longer-term demand challenge,” according to views from dealerships in The Wall Street Journal.
On December 5, Michigan Governor Gretchen Whitmer signed an executive directive to convert the state government fleet to zero emission vehicles by 2033 for light-duty vehicles, and by 2040 for medium- and heavy-duty vehicles. The state fleet is estimated to have over 8,000 vehicles, and currently only a handful of them are ZEVs, according to commentary in The Detroit News.
New federal employee travel guidelines from the Biden administration direct the use of sustainable transportation such as EV car rentals, mass transit, and trains during business trips, whenever possible.

Automated, Autonomous or Connected Vehicles Technologies

Associations including the Alliance for Automotive Innovation urged the U.S. Department of Transportation to increase support for autonomous vehicle technology, and noted the industry risks losing ground to competitors in other nations.
Aurora Innovation is moving toward deploying up to 20 autonomous trucks to haul loads without operators on board in 2024.
Autonomous trucking company TuSimple plans to wind down U.S. operations, but it will continue to operate in China.
Ann Arbor, Michigan-based May Mobility will launch driverless rides on select public roads in Arizona for participants in the company’s Early Rider program.

Market Trends and Regulatory

The National Highway Traffic Safety Administration (NHTSA) began the rulemaking process to require technology in vehicles that prevents drunken or impaired driving.
The acting administrator of NHTSA, Ann Carlson, will step down on December 26 due to limitations on how long the role can be held on a temporary basis. NHTSA Deputy Administrator Sophie Shulman will serve as acting administrator.
A study commissioned by the National Association of Manufacturers (NAM) indicates “right-to-repair” laws can have a wide range of consequences, including the potential to compromise intellectual property as well as higher compliance costs for manufacturers.

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