Foley Weekly Automotive Report – Transport

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This report helps automotive suppliers inform their legal and
operational decisions to help address challenges and opportunities.
Contact your Foley relationship partner, or John R.
Trentacosta or Ann Marie Uetz, to follow up.

Key Developments

  • U.S. new light-vehicle sales in July are
    forecast to reach a SAAR of 15.0 million to 15.2
    million units
    , according to estimates from J.D. Power and LMC Automotive, and Cox Automotive, respectively.

  • Ford, Volkswagen and Nissan increased full-year
    earnings guidance
     based on the strength of second
    quarter earnings reports.

  • GM  extended downtime at five
    North American plants
    in Michigan
     and Mexico due to
    the chip shortage.

  • Ford returned to a mandatory mask
     regardless of vaccination
     for its facilities in Missouri,
    and Kentucky  due
    to rising COVID-19 cases,  and the
    automaker will now require U.S. employees to be fully
    vaccinated for COVID-19 prior to international business
    Stellantis resumed a mask requirement for its
    in Illinois and Indiana.

  • The U.S. Senate revealed a bipartisan infrastructure bill that that
    would authorize roughly $1 trillion in spending over
    eight years
    ; the bill is headed for debate in the

  • The Biden administration could
    release updated fuel-efficiency
     for new light vehicles as soon as this

  • U.S. Rep. Debbie Dingell
     introduced a bill intended to address the effects of
    the microchip shortage on the auto industry by
    investing $2 billion on domestic semiconductor
    manufacturing for mature technology nodes

  • Companies including DisneyWalmartFacebook and Google have recently
    announced COVID-19 vaccine
     with varying timetables and impact on
    their workforces; most large manufacturers have thus far not
    mandated vaccines, according to The Wall Street Journal.

  • Uber, Twitter, Google,
     and Netflix are
    among the companies delaying planned returns to in-person
     due to the spread of the delta variant. Much of
    the San Francisco Bay Area will return to indoor mask mandates this week
    regardless of vaccination status.

  • Electric vehicles and low emissions

    • According to Bloomberg, the Biden administration is in the
      early stages of discussions with the UAW and automakers
      to commit to a 2030 sales target for
      no details have been confirmed, but unnamed
      sources speculate the target could be as high as 40%.

    • Ford COO Lisa Drake said its capital
      expenditures on electric vehicles will surpass internal combustion
      engine vehicles by 2023
      ; the automaker previously announced that EVs will represent 40% of
      its global sales by the end of the decade.

    • Tesla  produced over 206,000
      vehicles, exceeding a quarterly profit of $1 billion
      for the first time in the company’s history
      its Q2 2021 earnings results from April -

    • Hyundai and LG Energy
       announced plans to form
      50/50 joint venture that will
      invest $1.1 billion to build a battery cell plant in
      , with construction scheduled to be completed in
      the first half of 2023.

    • Ford selected Romulus, Michigan, as the site
      of its previously announced “Ion
      Park” global battery center. 
      The automaker
      will invest $100 million to refurbish an
      existing 270,000-square-foot facility that
      will employ up to 200 engineers. The site has
      received tax breaks through a
      “renaissance zone designation” from the Michigan Economic
      Development Corp.

Market Trends and Regulatory

  • J.D. Power and LMC Automotive forecast
    total new-vehicle sales in the U.S. to reach 1.31
    million units in July
    , representing a 2.7% increase from
    July 2020 and a 12.4% decrease from July 2019, with the decline
    attributed to weak fleet sales.  The seasonally adjusted
    annualized rate (SAAR) for total new-vehicle sales is projected to
    be 15.0 million units, representing an
    increase of 0.4 million units from July 2020, and a decrease of 1.9
    million units from July 2019.  The same forecast notes
    that inventory constraints have weakened
    the pace of U.S. retail sales, but persistent strong
    is expected to increase average
    transaction prices above $41,000 
    for the first
    time Cox Automotive predicts U.S. new light-vehicle
    sales will reach 1.33 million in
    , representing a SAAR of 15.2 million
    down from 15.4 million units in June.

  • The Biden administration issued a proposal to require
    higher level of American-made products in the
    “Buy American” program
     for government
    procurements. Under the proposal, products procured by federal
    agencies would increase to 60% from a current level of 55%
    American-made parts, with the requirement increasing to 65% by 2024
    and 75% by 2029.

  • report released last week by
    the American Automobile
     found that in-dash fuel economy displays
    in tested vehicles were off by an average of 2.3%, noting
    that drivers take an “unnecessary risk” if
    they overly rely on the “miles-to-empty”

  • According to the U.S. Energy Information Administration
    U.S. CO2 emissions from energy consumption
    decreased by 11% in 2020
    , reflecting the largest annual
    decrease on record, as the COVID-19 pandemic reduced mobility and
    economic activity. The EIA noted that CO2 emissions
    are forecast to increase by 7% in 2021.


  • Production impact of the semiconductor
     –  GM extended downtime into the week of August
    for Lansing Delta Township
     in Michigan
    Spring Hill
     in Tennessee and 
    Ramos Assembly 
    in Mexico, and
    through the week of August 16 for San Luis Potosi
     in Mexico; the four
    plants have been down since the week of July 19.The automaker also
    added four weeks of downtime to its Fairfax Assembly
    in Kansas; this plant
    will resume limited production the week of September 20, and has
    been down since the week of February 8.The automaker intends to
    resume pickup truck production the week of August 2
    at Flint Assembly
     in Michigan, Ft. Wayne Assembly
     in Indiana 
    and Silao Assembly
     in Mexico.

    • Stellantis  will stop production of the Jeep Gladiator
      pickup truck at its Toledo South Assembly
       in Ohio the week of
      August 2, marking the first time this vehicle has been impacted by
      the chip shortage.

  • Toyota  will suspend production at two Japanese plants
    for an unspecified number of days as rising COVID-19
    cases in Southeast Asia
     disrupt parts
    . Last month, the automaker stopped production for
    several days at three plants in Thailand due to the
    impact of COVID-19 cases on one of its local suppliers.

  • Ford, Volkswagen and 
     raised full-year earnings
     after reporting profitable second quarter
    financials: Ford reported a second quarter profit of $561
    million due to strong demand, lower incentives, and a favorable mix
    of more profitable vehicles; the automaker increased full-year
    earnings guidance to $9 billion to $10 billion, from a previous
    forecast of $5.5 billion to $6.5 billion. Volkswagen
     expects its adjusted operating
    return on sales to rise to between 6% and 7.5%, from a previous
    guidance of 5.5% to 7%; while noting that the impact of the
    semiconductor shortage is expected to be “more
    pronounced” in the third
    quarter. Nissan expects an operating profit of 150
    billion yen ($1.4 billion) for the fiscal year ending March 2022,
    up from a previous guidance that it would break

Connected/Autonomous Vehicles and Mobility Services

  • While progress is expected to continue in the development of
    autonomous vehicles, some in the industry are predicting the near-term
    focus will shift from full autonomy to advanced
    driver-assistance systems (ADAS).

  • U.K.-based autonomous vehicle
    company Arrival announced it has successfully completed a test run of its
    automated driving system at an unnamed parcel facility.

Electric Vehicles and Low Emissions Technology

  • In its most recent earnings
    results, Tesla suggested that production
    of its Cybertruck pickup could be delayed as a result of the chip
    shortage, noting that the global semiconductor
    shortage and port congestion 
    were key supply chain
    challenges in the second quarter.

  • The founder and former head of EV startup Nikola
    ., Trevor Milton, has been charged with two
    counts of securities fraud and one count of wire
     for misleading investors about the
    company’s products and capabilities.

  • Hyundai is planning two demonstration projects of more than 30 of
    its hydrogen fuel-cell electric heavy-duty trucks in
    . The vehicles are based on Hyundai’s Xcient
    Fuel Cell truck, which is scheduled to launch in the second quarter
    of 2023.

  • Tesla agreed to pay $1.5 million to settle
    claims that a software update  for over
    1,700 Model S vehicles that was intended to reduce the
    risk of battery fires also reduced the vehicles’ battery

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