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
- The fourth installment of Foley &
Lardner LLP's Auto Trends 2023 Series provides context on
how certain IP license structures can
proactively mitigate supply chain risks. Click HERE to subscribe to the series.
- U.S. new light-vehicle sales reached 1.37 million units
in March, representing a SAAR of 14.8 million
units and a 8.6% increase year-over-year, according to preliminary estimates from LMC
Automotive.
- A number of automakers reported double-digit percentage
increases for first-quarter U.S. new light-vehicle
sales, including GM, Hyundai,
Nissan, Ford and Tesla.
- The average interest rate on loans for new
vehicles approached 9% in March, compared to less than 6%
one year ago, according to data from Cox Automotive excerpted in Bloomberg.
- Treasury Department guidance pertaining to electric vehicle
mineral and battery component sourcing
requirements is expected to reduce the number of EVs
eligible for tax credits provided through the Inflation
Reduction Act in the near-term, according to commentary from the Alliance for
Automotive Innovation. A list of tax-credit-eligible EVs
will be posted to FuelEconomy.gov on April 18.
- Foley & Lardner shared a number of key strategies to mitigate the risk of
illegal child labor by vendors in the supply chain.
- Foley Forward: Trends 2023 includes insights into likely disruptors and
opportunities for manufacturers this year. Click HERE to access the full series.
- South Korea's LG Energy Solution will invest $5.5 billion to build a new battery
manufacturing complex in Arizona.
- The Alliance for Automotive Innovation estimates nearly 935,000 battery
electric (BEV), plug-in hybrid electric (PHEV), and fuel cell
electric (FCEV) vehicles were sold in the
U.S. in 2022, representing a market share of 7% and an increase of
44% from 2021.The report indicates there were 91 models available
as of Q4 2022, comprised of 47 BEV models, 42 PHEV models and 2
FCEV models.
- The U.S. Environmental Protection Agency approved California Clean Air Act waivers allowing the state to pursue regulations that will require heavy-duty truck manufacturers to sell a rising number of zero-emission vehicles in the coming years.
OEMs/Suppliers
- Cummins will invest more than $1 billion across its
U.S. engine manufacturing network to support the development of
fuel agnostic engine platforms intended to run on low carbon fuels
including natural gas, diesel and hydrogen.
- BorgWarner will invest $20.6 million across multiple
sites in metro Detroit in order to support increased production in
areas including EV chargers and battery packs.
- The Detroit News reports Magna is considering investing up to $100 million in a new seating plant in Auburn Hills, Michigan.
Electric Vehicles and Low Emissions Technology
- The combined category of battery electric and hybrid
electric vehicles reached 4.7% of domestic auto
sales in Mexico in 2022, according to data from the Auto
Industry Association (AMIA) excerpted in Reuters. The Mexican government
intends for zero-emission vehicles to represent half of all cars
sold in the country by the end of the decade.
- The Wall Street Journal reports
certain types of electrical steel needed in
applications including electric vehicle motors are expected to
experience supply constraints.
- S&P Global Commodity Insights estimates lithium iron
phosphate (LiFePO4 or LFP) batteries
could reach nearly 50% of global demand for electric
vehicle batteries by 2027.The growth is attributed to
efforts to reduce the use of cobalt and lower the costs of raw
materials.
- As part of guidance for its new reporting
structure, Ford projected a 2023 loss of $3
billion for its Model e electric vehicle business
unit, but profitability is expected to be reached
beginning in 2026.The automaker intends to manufacture two
million EVs annually by 2026, including a production target of 500,000 electric pickup
trucks at its upcoming facility in Tennessee.
- GM expects power-grid
security to increase in importance as the industry shifts
to vehicle electrification and automakers are involved in
establishing access to infrastructure.
- A number of battery makers are exploring the potential for sodium-ion
batteries to power future electric vehicles. The
technology currently has higher costs and lower energy density
compared to other technologies, but its advantages include
performance at low temperatures, a diverse distribution of raw
materials, and reduced potential for flammability.
- Lithium-ion battery solutions provider Microvast
Holdings will invest $504 million to establish its
first polyaramid separator plant in Hopkinsville, Kentucky.
- Ford will partner with PT Vale Indonesia and
China's Zhejiang Huayou Cobalt to build a $4.5 billion
nickel processing plant in Indonesia, and commercial
operations are expected to begin in 2026.
- On March 28, the U.S. and Japan reached a trade agreement intended to strengthen supply chains of critical minerals used in electric vehicle battery production.
Automated, Autonomous or Connected Vehicles Technologies
- PwC estimates automotive software is a $20
billion market, with a compound annual growth rate
of 13%.Three trends contributing to the growth of the
automotive software market are vehicle connectivity, cybersecurity
and the emergence of new business models.
- GM plans to shift away from Apple CarPlay and Android Auto in its future electric vehicles, and will instead use navigation and infotainment systems developed with Alphabet's Google.
Market Trends and Regulatory
- Over two dozen state attorneys general urged Congress to pass "expansive"
right-to-repair legislation pertaining to
automobiles, agricultural equipment and consumer electronics.
- The U.S. Transportation Department announced $94.8 million in
grants to 59 innovative mobility projects in 33 states.
This represents the first round of funding from the Bipartisan
Infrastructure Law's Strengthening Mobility and
Revolutionizing Transportation (SMART) Grants Program,
which will allocate $500 million over five years to applications
that include connected vehicles, smart traffic signals, delivery
logistics and automation.
- Germany dropped its opposition to a European Union proposal which would require new passenger cars sold in the bloc to be zero-emission vehicles beginning in 2035, following a plan to incorporate provisions for vehicles running solely on e-fuels.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.