Foley Automotive Update - November 2023

Analysis by Julie Dautermann, Competitive Intelligence Analyst

This update helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities.

Key Developments

• Foley & Lardner partner Vanessa Miller and retired partner John Trentacosta published a book titled Law of the Automotive and Manufacturing Supply Chain: A Handbook for Success, which examines the issues, strategies, and challenges brought on by globalization in the supply chain. In it, the authors provide tips and takeaways for companies navigating the growing complexities in this new era. To request a copy, click HERE.
• Foley & Lardner partner Nicholas Ellis is quoted in the Law360 article, “End Of UAW Strike Spotlights Supply Chain, EVs’ Future,” commenting on the labor contracts’ potential costs to automakers and their supply base.
• Foley & Lardner partner Ann Marie Uetz is quoted in the Crain’s Detroit article, “Auto Suppliers Might Be The Biggest Losers In UAW Strike,” commenting on certain financial and workforce ramifications of the strike.
• Foley & Lardner of counsel Mark Neuberger is quoted in the Law360 article, “Labor Deals With Big 3 Automakers Give UAW New Leverage,” commenting on the tentative agreements recently reached between the United Auto Workers (UAW) and the Big Three automakers.
• Consulting firm Anderson Economic Group estimates the UAW strike exceeded $10 billion in losses in its sixth and final full week, according to analysis featured in CBS News on November 2. This figure includes $4.3 billion in losses for the Detroit Three, and supplier losses of $3.3 billion.
• Crain’s Detroit reports certain auto suppliers intend to increase business diversification amid industry uncertainty following the costly UAW strike and delays in EV rollouts.
• The seasonally adjusted annualized rate (SAAR) for total U.S. new-vehicle sales reached 15.5 million units in October, reflecting 14 consecutive months of year-over-year SAAR increases, but falling short of expectations due to month-end weakness. Sales losses from the UAW strike are estimated at 35,000 units, according to preliminary analysis from Ward’s Intelligence.
• GM’s self-driving unit Cruise halted both its robotaxi operations across the U.S. and production of the Origin autonomous van in Michigan. The actions come after the California Department of Motor Vehicles suspended Cruise LLC's permits for testing and deploying driverless vehicles in the state.
• Toyota will invest an additional $8 billion in its upcoming hybrid and EV battery plant in North Carolina, which brings the automaker’s total investment in the site to approximately $13.9 billion.
• Battery-electric vehicles accounted for 21.5% of all new cars sold in California for the first nine months of 2023, according to the California New Car Dealers Association.
• Certain automakers and dealers are using incentives and price reductions for unsold EV inventory.

OEMs/Suppliers

• Tentative labor agreements with the UAW will result in higher labor costs for the Detroit Three and potentially raise new-vehicle prices, according to views in the Detroit Free Press and The Wall Street Journal.
• Ford estimated its tentative contract with the UAW will result in $850 to $900 in added labor costs per vehicle. The automaker expects to lose $1.3 billion in the third and fourth quarters of this year due to the strike.
• Stellantis reported €3 billion ($3.2 billion) in lost revenue and an operating profit loss of under €750 million ($800 million) due to the UAW strike.
• Denso will invest approximately $3.3 billion by 2030 to expand its capabilities in semiconductors.
• Orders for automotive semiconductors are beginning to slow, according to a report in The Wall Street Journal.
• Canadian union Unifor ratified a new three-year agreement with Stellantis.
• Ford will temporarily lay off workers at its Louisville Assembly plant for portions of November due to “parts related issues” which impact production.

Electric Vehicles and Low Emissions Technology

• Toyota expects to sell approximately 123,000 full EVs in the fiscal year ending March 31, 2024, down from a previous target of 202,000 EVs. The automaker raised its target for hybrids to 3.6 million worldwide, from a previous projection of 3.5 million.
• Certain EV models with bidirectional charging could be used in the event of power disruptions. However, consumers may pay a premium to integrate vehicle-to-home capabilities.
• Bloomberg reports a number of mobile charging startups are working to develop devices and solutions for EV fleets.
• Michigan-based Our Next Energy started pilot production of lithium iron phosphate batteries, and customer deliveries may begin the first half of 2024.
• China’s BYD sold 2.37 million plug-in hybrids and EVs worldwide in the first 10 months of this year.

Automated, Autonomous or Connected Vehicles Technologies

• A joint venture between Chinese carmaker Geely and search-engine provider Baidu began deliveries in China of an EV model equipped with Level 4 autonomous driving technology.
• A report by The Wall Street Journal examines Toyota’s challenges and revised strategies toward in-house software development.
• Ann Arbor-based autonomous vehicle company May Mobility closed a $105 million Series D funding round led by Japanese telecommunications company NTT Group.

Market Trends and Regulatory

• The National Association of Manufacturers provided an update on its policy actions pertaining to new fuel standards and regulations for light vehicles in areas including harmonizing standards and establishing realistic targets with reasonable timeframes. NAM noted that automakers are facing “multiple sets of standards” with varied compliance timelines from the Department of Energy, the Environmental Protection Agency, the National Highway Traffic Safety Administration, and separate standards from California.
• Transport Topics reports costs for aftermarket parts and labor fell slightly in the second quarter following a sustained period of rising prices. The analysis notes that rates for labor and parts are expected to remain above pre-pandemic levels until inflationary prices recede.