Foley Automotive Update

Analysis by Julie Dautermann, Competitive Intelligence Analyst

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Key Developments

• Foley & Lardner assessed certain supply chain ramifications of a U.S. Commerce Department proposed rule that would, if finalized, “prohibit the sale or import of certain automotive hardware and software, as well as ‘connected vehicles’ incorporating this technology, from or linked to the People’s Republic of China or Russia.”
• Foley & Lardner provided an overview of recent Stellantis lawsuits filed against the UAW and numerous local chapters over the unions’ threats to strike over investment delays in certain U.S. operations.
• U.S new light-vehicle sales in the first nine months of 2024 were less than 1% above volumes during the same period last year, according to data from Wards Intelligence. Third-quarter 2024 new-vehicle sales were down 1.9% year-over-year.
• Analysis from Cox Automotive indicates the average new-vehicle incentive package reached $3,522 in September, representing an increase of 49.4% YOY.
• Incentive levels as a percentage of new-vehicle average transaction price were estimated at 7.3% industrywide, and 12% for electrified vehicles. EVs represented 8.9% of third-quarter 2024 new-vehicle sales, compared to 7.8% in Q3 2023.
• During an October 10 speech at the Detroit Economic Club, former president Donald Trump said he will renegotiate the United States-Mexico-Canada Agreement (USMCA) over concerns that China is producing vehicles in Mexico to sell in the U.S. market. Trump also spoke of plans to impose higher tariffs, make interest on car loans tax deductible, and implement tax breaks to incentivize automakers to establish domestic operations.
• Crain’s Detroit reported on the potential impact of concerns over vehicle electrification and geopolitical tensions with China on the presidential and congressional November election campaigns in Michigan.  
• China’s BYD predicted it will sell 100,000 EVs in Mexico in 2025, up from 50,000 in 2024. The company could announce the site of its first factory in Mexico by the end of this year.
• The European Union voted on October 4 to finalize tariffs of up to 45% for the next five years on EVs imported from China. The EU and China could pursue negotiations to find an alternative to tariffs scheduled to take effect at the end of October. Chinese automakers’ EV sales in Europe recently fell to an 18-month low following provisional tariffs implemented in the bloc in July 2024.
• Battery electric vehicles manufactured in China represented over 20% of the EU’s EV sales in 2023, up from 3% in 2020, according to data from the European Automobile Manufacturers’ Association (ACEA). Chinese brands represented 7.6% of this market share in 2023.
• Automotive News provided commentary on the impact of Hurricane Helene and Hurricane Milton on the industry’s supply chains and dealerships.
• For the second time in a year, California Governor Gavin Newsom vetoed a bill (A.B. 2286) that would have required human operators to be physically present in autonomous trucks that operate in the state. Newsom also vetoed a bill (A.B. 3061) that would have required autonomous vehicle companies in California to publicly report vehicle collisions, disengagements, immobilizations or certain traffic violations involving their vehicles. Newsom signed a third bill into law (A.B. 1777) that will allow law enforcement officers to issue citations for autonomous vehicles that commit certain traffic violations.

OEMs/Suppliers 

• Third-quarter U.S. new light-vehicle sales rose 8% year-over-year for Honda, 5% for Hyundai, 0.7% for Ford, and declined by 20% for Stellantis, 8% for Toyota, and 2% for GM.
• Stellantis on October 10 announced leadership changes that include new chief operating officers for North America and Europe and a new chief financial officer. The leadership changes follow reports the automaker is taking steps to improve its position that include closer scrutiny on external spending, evaluating regional footprints, and requiring salaried workers to return to the office three days a week on average.
• Third-quarter new-vehicle sales in China declined by double digit percentages YOY for GM, Volkswagen, BMW and Mercedes-Benz, amid weakness in the luxury segment and increased competition from Chinese brands that include the nation’s top-ranked automaker by sales volume, BYD. German automakers are estimated to collectively hold a 15% market share of new-vehicle sales China, down from 25% pre-pandemic. 
• Ford ranked first among an assessment of the largest 250 publicly listed U.S. companies most at risk from exposure to China, according to data from consultancy Strategy Risks excerpted in Bloomberg. The rankings evaluate criteria that include revenue and partnerships in China, as well as risks pertaining to labor and supply chains.
• Hyundai hopes to raise up to $3.3 billion through an initial public offering of its Indian unit. 

Electric Vehicles and Low Emissions Technology

• Tesla delivered 462,890 vehicles globally in Q3 2024, up 6.4% from the same period last year.
• GM’s third-quarter U.S. EV sales rose 60% YOY to 32,095 units. Ford sold 23,509 EVs and 48,101 hybrid vehicles in the third quarter, for YOY increases of 12% and 38%, respectively.
• Toyota sold 710,000 electrified vehicles in the third quarter — hybrids, plug-in hybrids, fuel cell and battery-electric models — which represented 41% of its U.S. sales.
• The Wall Street Journal provided a summary of completed or announced Chinese-invested EV factories around the world.
• According to updates at its annual Investor Day, GM anticipates a “slower EV ramp” in 2025 compared to 2024, and an EV EBIT (earnings before interest and taxes) improvement in 2025 “in the $2 billion to $4 billion range.” The automaker said it is “on track” to produce approximately 200,000 GM-branded EVs in North America in 2024. GM also announced plans to build a $145 million battery cell development center at the site of its Global Technical Center in Warren, MI. While the automaker’s Ultium EV battery technologies will still be in use, the brand name will be discontinued, and retained only for certain joint venture manufacturing sites.
• Used-EV prices have sharply declined in recent months, according to a report in The Wall Street Journal.
• The U.S. Department of Energy on October 3 announced a conditional commitment to EVgo for a loan guarantee of up to $1.05 billion to expand public charging infrastructure across the country.
• Automotive News provided a summary of key themes discussed during The Battery Show held October 7-9 in Detroit.
• Oshkosh Corporation announced that Republic Services, Inc. placed an order for 100 McNeilus® Volterra™ ZSL™ electric refuse and recycling collection vehicles. 
• Toyota will delay U.S. production of its first electric SUV until 2026, from a previous target of 2025.
• Hyundai started producing electric SUVs this month at its new $7.6 billion factory in Georgia. 

Automated, Autonomous or Connected Vehicles Technologies

• Tesla debuted a “Cybercab” autonomous taxi with no steering wheel or pedals that could be in production by 2026.
• Waymo’s autonomous driving technology will be integrated into Hyundai’s all-electric IONIQ 5 SUV, and an undisclosed number of the vehicles will be purchased for the Waymo One fleet as part of a multi-year strategic partnership between the companies.
• Broader adoption of lidar sensors in automated driving systems faces market uncertainty, according to a report in Automotive News.

Market Trends and Regulatory

• Industry analysts expect backlogs of “a few weeks” but an overall “muted” impact to the auto industry following the three-day strike by U.S. East Coast and Gulf Coast dockworkers. The International Longshoremen’s Association and the U.S. Maritime Association extended their previous contract through January 15, 2025, following a tentative agreement announced on October 3. Up to 60% of containerized trade moves through the East Coast and Gulf Coast ports, which represented $588 billion of imports in 2023, according to data from S&P Global Market Intelligence featured in The Wall Street Journal.
• Effective October 22, Canada will impose tariffs of 25% on imports of certain Chinese steel and aluminum products.
• MOVE America, an annual conference of transportation innovators, automotive executives and government officials, will be held September 24-25, 2025 at Huntington Place in Detroit. The conference was previously held in Austin, Texas, and this marks the first time the event will be held in Detroit.