Foley Weekly Automotive Report – Transport


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Foley Weekly Automotive Report


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Foley & Lardner’s Weekly Automotive Report helps
automotive suppliers inform their complex legal and operational
decisions on market trends and regulatory matters, OEs and
suppliers, connected/autonomous vehicles and mobility services,
electric vehicles and low emission technology. Stay up to date and
ahead of the curve with our key publication addressing today’s
challenges and tomorrow’s opportunities. If you have any
questions about these topics, please contact your Foley
relationship partner, or John R. Trentacosta or Ann Marie Uetz.

Key Developments

  • Due to the semiconductor shortage, an unspecified volume of
    GM light-duty full-size pickups,
    Ford F-150 pickups and Edge crossovers, and
    Stellantis Ram pickups will be built without certain
    modules. 

  • Honda will reduce production at the majority of its North American plants this
    week due to supply chain issues attributed to the pandemic,
    port congestion, and the semiconductor shortage
    .

  • Toyota plants in Kentucky, West
    Virginia
    and Mexico experienced reduced production or shutdowns for
    “several days” due to a shortage of petrochemical
    products
    .

  • Chipmaker Renesas Electronics Corp. stated
    that production at its plant in Japan will be down for up to one month due to a
    fire; two-thirds of the impacted chips are for the automotive
    sector.

  • Toyota and Ford provided Senate
    testimony
    on the topics of supporting innovation
    in transportation technology
    and improvements to the
    U.S. tax code to aid the manufacturing sector,
    respectively.

  • In a recent letter, two California senators asked
    President Biden to set a date for ending the sale of
    internal combustion engine vehicles in the U.S.
     

  • Continental intends to create an
    Autonomous Mobility business unit next year, and
    received board approval to pursue a spinoff of
    its Vitesco powertrain division in the second half of this
    year.

  • Amazon is testing Rivian electric
    delivery vans in Los Angeles and San Francisco, with the intent to
    operate the fleets in 2022.

  • Beginning next year, SAIC Motor Corp.,
    China’s largest automaker, will use lidar sensors and software from
    California-based Luminar Technologies in its R
    brand vehicle line.

  • Electric vehicles and low emission
    technology:

    • Lordstown Motors stated it’s cooperating
      with an SEC inquiry following allegations the company
      misled investors on the quality of its electric truck preorders and
      the ability to start production.

    • Electronics manufacturer Foxconn Technology
      Group
      is reportedly pursuing partnerships with Japan-based
      electric motor supplier Nidec Corp., as well as Vietnam-based EV
      startup VinFast.

    • U.K.- based electric van startup Arrival will
      build its second U.S. plant in North Carolina;
      Canadian EV maker ElectraMeccanica Vehicles Corp.
      intends to establish a U.S. base of operations in
      Arizona.

    • China is reported to be restricting Tesla vehicles from
      entering the grounds of military complexes and certain agencies due
      to national security concerns arising from built-in vehicle
      cameras. 

Market Trends and Regulatory

  • Parts shortages and production cuts – Due to both
    a parts shortage caused by last month’s winter storms and the
    global semiconductor shortage, an unspecified amount in the
    “thousands” of Ford F-150 pickups and Edge
    crossovers
    will be built without certain electronic
    modules
    related to basic vehicle functions, and held “for
    a number of weeks” before shipping to dealers when the modules
    are available. Ram 1500 Classic trucks will
    be built and held for final assembly by
    Stellantis in Warren, Mich., and Saltillo, Mexico, due to the
    semiconductor shortage.  Earlier this month, it was revealed
    that GM will build and sell an undisclosed number of 2021
    light-duty full-size pickup trucks without a fuel management module, and affected
    models will have lower fuel economy by one mile per
    gallon. Planned shutdowns or reduced output have
    recently been announced by automakers, including Nissan, Volvo,
    Ford, Toyota and Honda.

    • Toyota reduced production at plants in
      Kentucky, West Virginia and
      Mexico for portions of last week due to
      shortages of petrochemicals, as numerous
      petrochemical plants in the U.S. Gulf Coast region remain offline due to complex startup periods
      following shutdowns caused by severe winter weather last
      month.    

    • Due to the semiconductor shortage and an unspecified parts
      shortage caused by last month’s winter storms,
      Ford will idle production for the week of March 22 at
      its Ohio Assembly Plant, and reduce output for an
      unspecified amount of time in Louisville, Ky., and
      Cologne, Germany.

    • Honda will reduce production at the majority of its North
      American plants the week of March 22 due to supply chain
      constraints attributed to the pandemic, port congestion,
      and the semiconductor shortage
      . Honda has 12
      plants in the U.S
      ., at locations in Alabama, Georgia, Indiana,
      North Carolina, Ohio and South Carolina; Honda manufactures at three facilities in Ontario, Canada

    • Nissan temporarily shut down production on select
      days at its plants in Smyrna, Tenn., Canton,
      Miss.
      , and Aguascalientes, Mexico, due to
      the semiconductor shortage.  

    • Volvo will implement temporary production cuts or
      shutdowns for “parts of March” in the
      U.S. and China due to the
      semiconductor shortage.  

  • Chipmaker Renesas Electronics Corp. stated
    that production at its plant in Hitachinaka, Japan, will be down for up to one month due to a
    fire; an estimated two-thirds of the affected production is
    automotive chips.  

  • Congressional hearings – In testimony submitted to the U.S. Senate
    Committee on Energy and Natural Resources on the topic of
    Driving Innovation in the Transportation Sector
    Forward
    , Toyota noted that while battery
    electric vehicles (BEVs) are an important part of the answer to
    reduce carbon emissions, multiple electrification pathways
    are needed
    , including technology-inclusive policies to
    support a variety of powertrains such as plug-in hybrids and
    hydrogen fuel cell vehicles. In testimony submitted to the Senate
    Committee on Finance
    on the topic of the Made in
    America: Effect of the U.S. Tax Code on Domestic Manufacturing,
    Ford
    noted that the success of the U.S. auto industry is
    dependent on federal support of “market-based consumer and
    manufacturing incentives, innovative new technologies, labor and
    plant transitions and supply chain security.”

  • In a recent letter, California Sens. Dianne Feinstein and
    Alex Padilla urged President Biden to “follow California’s
    lead and set a date by which all new cars and passenger trucks sold
    be zero-emission vehicles.”

OEs/Suppliers

  • Continental will pursue a spinoff of its Vitesco powertrain division in
    the second half of this year, after delaying previous plans for a
    spinoff due to the pandemic. The supplier also intends to create an
    Autonomous Mobility business unit in 2022.  

  • The global semiconductor shortage has thus far had less impact
    on Toyota compared to its competitors, according
    to unnamed sources in Reuters. As a result of the
    supply chain disruption caused by the 2011 Fukushima nuclear
    disaster, Toyota developed a business continuity
    plan requiring its suppliers to stock four to six months of
    chip inventories
    for the automaker.  Last month,
    Toyota indicated in its fiscal Q3 2021 earnings results that its
    production was not impacted in the near-term;
    however, the semiconductor shortage posed risks for the
    “mid-to-long term
    .”

  • Gerald Kariem, head of the UAW’s Ford department, has criticized Ford Motor Co. for a
    decision to move production of unnamed future electric
    vehicles
    from the automaker’s Ohio Assembly
    Plant to its Cuautitlan, Mexico, facility
    . Terms in a 2019
    UAW and Ford contract included a new product in 2023 and a $900
    million investment for Ohio assembly. According to data from IHS
    Markit, as quoted in the Detroit News, Ford assembled 1.7 million
    vehicles in the U.S. last year, which is higher than its key
    competitors.

  • Ford’s salaried employees will have
    schedules that will be a hybrid of on-site and remote work once the
    automaker begins a broader return of the workforce this
    summer. GM is reported to be holding internal discussions on
    the return to work of salaried employees, including the possibility
    of shifting Michigan-based employees to different sites in the
    state, but specific plans have not been announced. 

Connected/Autonomous Vehicles and Mobility Services

  • Amazon is expanding the testing of Rivian
    electric delivery vans
    to San Francisco, after beginning
    testing earlier this year in Los Angeles. Amazon has ordered
    100,000 Rivian vans and intends to operate the fleets beginning in
    2022.

  • Beginning next year, China’s SAIC Motor
    Corp
    . will use lidar sensors and software from
    California-based Luminar Technologies in its R
    brand vehicle line. SAIC, China’s largest automaker, has the
    eventual goal to install this equipment across all its
    vehicles.

  • Chinese autonomous driving startup Momenta received $500 million in Series C funding led
    by SAIC Motor, Toyota, and auto supplier
    Bosch. Beijing-based Momenta develops artificial
    intelligence systems for autonomous driving. 

Electric Vehicles and Low Emission Technology

  • Lordstown Motors is cooperating with an SEC inquiry, and the
    company has formed a committee to review allegations from short seller Hindenburg
    Research
    that the startup misled investors on the quality of
    its electric truck preorders and the ability to start production.
    Hindenburg holds a short position in Lordstown and will benefit if
    the stock price declines; the short seller published a report last year with allegations that EV
    startup Nikola was an “intricate fraud.”  

  • Commercial EV solutions company Electric Last Mile,
    Inc.
    (ELMS) announced it has over 45,000
    nonbinding preorders
    for its upcoming Urban Delivery class
    1 commercial EV, and it intends to start production in Indiana
    later this year. Last year, ELMS announced it will go public through a reverse merger with Forum
    Merger III. 

  • New plants – U.K.-based electric van startup
    Arrival selected a site for its second U.S. plant; the new
    facility in North Carolina will be dedicated to fulfilling
    an order of up to 10,000 vehicles for UPS
    , and is
    scheduled to begin production in the third quarter of 2022. This
    follows last year’s announcement that Arrival will build a plant
    in Rock Hill, S.C., that is scheduled to begin production in Q4
    2021. Canadian EV maker ElectraMeccanica Vehicles
    Corp
    intends to establish a U.S. base of operations in
    Arizona; at its upcoming plant in Mesa, the
    company will annually produce up to 20,000 of its three-wheeled,
    single-seat commuter cars for the U.S. market.

  • NHTSA has nearly two dozen open investigations into car
    accidents involving Tesla vehicles, including two separate Tesla crashes that occurred this
    month in Michigan. One of the incidents in
    Michigan involved a Tesla being driven on Autopilot that crashed
    into a stationary police car near Lansing on March 17, while the
    other crash, on March 11, was not believed to involve the Autopilot
    feature.

  • Japan-based electric motor supplier Nidec Corp. will partner with Foxconn-Yulon joint venture
    Foxtron Vehicle Technologies to supply
    electric powertrains
    , with more details on the initial
    results of the collaboration to come later this year. Foxtron is a
    recently formed joint venture between the automotive unit of
    electronics manufacturer Foxconn Technology Group
    and Taiwan-based diversified holding company Yulon
    Group
    . Foxconn is also reported to be exploring options for an EV
    partnership with Vietnam’s VinFast.

  • California-based Proterra will supply batteries for Colorado-based
    Lightning eMotors’ electric transit vans. Both
    companies recently announced SPAC deals to go public. 

  • China is reported to be restricting Tesla vehicles from
    entering the grounds of military complexes and certain agencies due
    to national security concerns arising from built-in vehicle
    cameras. The move is viewed as potential retaliation following a challenging meeting between government
    representatives of the U.S. and China in Alaska last week, as well
    as the recent FCC designation of China’s Huawei as a
    security threat. China represented 30% of Tesla’s total
    deliveries in 2020. 

  • The U.S. Department of Commerce is reported to be exploring ways to increase
    Canadian production of minerals critical to the EV supply
    chain
    . Mining represents 5% of GDP in Canada, compared to
    0.9% in the U.S., and Canada has at least a dozen of the 35
    minerals that are listed as critical to U.S. national
    security.

Prepared by Julie Dautermann, Competitive Intelligence
Analyst, Foley & Lardner LLP

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