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

• Cox Automotive predicts U.S. new light-vehicle sales in the first half of 2024 will reach a SAAR of 15.6 million units, representing an increase of nearly 3% year-over-year.  New-vehicle sales in June are projected to reach a SAAR near 16 million units.
• Product planning is expected to be “uncertain and volatile” over the next four years due to factors that include diverse electrification strategies, according to predictions in Bank of America’s annual Car Wars report.  The report also indicates the Detroit Three automakers should consider exiting China and focus on their most profitable markets to support investments in EVs and connected and automated driving technologies.
• Automotive News released its annual ranking of top global parts suppliers.
• Multiple cyberattacks last week at a software provider widely used in the auto retail sales sector affected operations for a number of dealerships.  
• Pitchbook analysis published on June 14 indicates global venture capital investment in mobility technology was “muted” in the first quarter of 2024, with 173 deals at an estimated value of $6 billion. Deal counts fell 24% from the previous quarter and 30% year-over-year, while deal value dropped 19% QoQ and rose 5.7% YoY.
• A McKinsey & Company survey of 30,000 consumers in 15 countries found 46% of U.S. EV owners would consider switching back to an internal combustion engine-powered vehicle due to issues that included inadequate charging infrastructure and a higher total cost of ownership for EVs. The survey also found a third of consumers would not purchase a vehicle without smartphone integration.
• In its annual Electric Vehicle Outlook, Bloomberg New Energy Finance predicts worldwide battery electric and plug-in hybrid electric vehicle sales will reach 30 million units by 2027, representing 33% of global passenger-vehicle sales.  The report notes that while EV sales continue to rise globally, growth has slowed in the U.S. and parts of Europe due to regulatory and political headwinds. In addition, overcapacity will be a key issue for battery makers in the near-term, as planned lithium-ion cell manufacturing capacity by the end of 2025 is projected to be over five times global battery demand that year.
• Lithium spot prices recently fell to the lowest level in nearly three years, amid rising inventory and slowing EV demand in certain markets.
• Bloomberg reports Chinese EV maker BYD is approaching a decision to establish a factory in Mexico that could create up to 10,000 jobs.  The automaker began construction on a manufacturing complex in Brazil earlier this year.
• Volkswagen will invest up to $5 billion into EV maker Rivian as part of a joint venture to develop electrical architecture and software technology.

OEMs/Suppliers  

• North American revenue for Hyundai and its affiliate Kia has more than doubled in the last five years, according to a report in The Wall Street Journal.
• As part of an effort to reduce recalls, Ford plans to hold newly redesigned models for up to six weeks to perform additional quality checks. Ford has been the most recalled automaker in the U.S. since 2020.

Electric Vehicles and Low Emissions Technology

• The UAW approved a local agreement with Ultium Cells, the GM and LG Energy Solution joint venture plant in Lordstown, Ohio.
• U.S. consumers have received over $1 billion in EV tax credits as part of the Inflation Reduction Act since January 2024, according to estimates from the Treasury Department.
• At least three new EV models with a base price below $30,000 will become available in the U.S. in the near future, according to a report in Bloomberg.
• The European Union and China will hold discussions to address the EU’s previously announced plans to impose additional tariffs of up to 38% on imported Chinese EVs. 
• GM lowered its 2024 EV production target to 200,000-250,000 units, from a previous goal of 300,000.
• Audi will invest approximately $1 billion in EV projects and add 500 jobs in the Mexican state of Puebla.  Audi has one plant in Mexico with 5,000 employees in the Puebla town of San Jose Chiapa.
• An EV charging network founded by a coalition of seven automakers, IONNA, will be headquartered in Durham, NC.
• Electric vehicle maker Fisker filed for Chapter 11 bankruptcy protection.
• Hyundai plans to begin producing IONIQ 5 electric SUVs at its new plant in Georgia this fall. 
• Ford will reopen EV sales to its entire retail network and cancel a previous program that established certain requirements for dealers to sell or service the automaker’s EVs.

Automated, Autonomous or Connected Vehicles Technologies

• A California lawmaker withdrew proposed legislation that could have allowed local municipalities within the state to regulate autonomous vehicle deployment.

Market Trends and Regulatory

• The Alliance for Automotive Innovation urged the National Highway Traffic Safety Administration (NHTSA) to reconsider a final rule that would require all passenger cars and light trucks to be equipped with automatic emergency braking (AEB) systems beginning in 2029.
• Falling numbers of leased vehicle turn-ins are expected to significantly reduce used-vehicle inventory in the near-term.
• Auto dealers may need to direct more attention to the rising number of counterfeit airbags that could be installed during post-crash vehicle repairs.
• Canadian border agents are expected to vote on a four-year labor contract in the coming weeks.
• A group of energy and agriculture industry associations, as well as several auto dealerships, filed a lawsuit against the Environmental Protection Agency over its final tailpipe emissions rule.  The suit alleges the EPA exceeded its authority under the Clean Air Act.