Change In Management
Goodyear will settle with activist investor Elliott Investment Management, adding three new directors to its board. The tire maker will review its business to maximize shareholder value, possibly including asset sales. The settlement aims to enhance governance and focus on long-term shareholder value creation. The new directors include Joseph Hinrichs, CEO of CSX; Max Mitchell, CEO of Crane; and Roger Wood, former co-CEO of Tenneco.
Closing
Automotive seating supplier Forvia is closing its seating plant in Highland Park, Mich., and laying off 511 employees in a plant closure. The layoffs will be completed by September 23. The company previously eliminated 268 jobs at the plant in December 2022 after moving its metals division to Mexico. The plant supplied seats for the Jeep Wagoneer program, but a loss of business may have contributed to the closure. The Highland Park plant has also faced other troubles, including a shooting incident and declining employee morale.
Disaster
A cargo ship carrying nearly 3k vehicles, including about 350 Mercedes-Benz cars, caught fire off the Dutch coast. The fire resulted in the death of one crew member and several injuries. The cause of the fire is unknown, but it reportedly started near an EV on the ship. The incident follows a series of fires on car carriers, raising concerns about the safety of transporting electric vehicles on ships.
Earnings
Ford reported a Q2 net income of $1.9B and raised its 2023 profit forecast. However, due to pricing concerns, it expects to lose $1.5B more on EVs than previously projected. Ford scaled back EV output plans but aims for 8% EV margins in three years. Overall revenue rose 12% to $45 billion.
Expanding
Bollinger Motors, a Detroit electric truck startup, plans to invest $44M in its manufacturing plant and headquarters in an expansion project that would create 237 jobs. The company, acquired by Mullen Automotive last year, aims to launch production of its first vehicle, a Class 4 EV, next year. The Michigan Economic Development Corp. has approved a $3M grant to support the project.
Industry Directions
Reuters: Tesla created secret team to suppress thousands of driving range complaints
In earnings calls this week, Stellantis CEO, Carlos Tavares, stated that the "sweet spot" for affordable EVs is around $25k. He emphasized the importance of reaching this price point to ensure the middle class can access the EV market and protect the company's US manufacturing footprint. Tavares acknowledged that Jeep's sales have faced challenges but expressed excitement about upcoming EVs that will help boost market share and profitability for the brand.
Labor
During the discussions, Tavares stressed the importance of holding productive conversations with the UAW to create affordable EVs that generate profit in the US. He also expressed his apprehension towards labor strikes, stating that they harm everyone involved.
Tavares defended his decision not to attend the opening of contract negotiations with the UAW, arguing that he has a strong leadership team in North America that can lead the discussions. UAW President Shawn Fain criticized Tavares for not attending, but Tavares dismissed it as "posturing," claiming that it does not add value to the negotiations. He emphasized that his primary goal is to improve the quality of life for American employees and establish a deal that benefits both the company and its workers.
One crucial issue being addressed during the negotiations is the future of Stellantis' Belvidere Assembly Plant. Tavares stated that the potential return of the plant depends on several factors, including cost competitiveness and the development of new EVs.
Litigation
Lordstown Motors and Karma Automotive are in a legal battle over accusations of trade-secret theft related to the Endurance electric truck. The trial's outcome will determine who owns the assets Lordstown is attempting to sell in Chapter 11 bankruptcy. Karma is seeking $913M in damages. Expect a decision in September.
Mergers, Ventures, Acquisitions
Stellantis and Samsung have signed a memorandum of understanding to build a second EV battery plant in the US, part of the StarPlus Energy JV. The companies are already constructing a battery plant in Kokomo, Indiana, to begin production in 2025. The second facility will go online in early 2027, but its location is still under review.
Representatives from Tesla are set to meet with India's commerce minister to discuss plans for building a factory to produce a new $24k EV. Tesla has shown interest in establishing a manufacturing base in India to produce affordable EVs for the local market and export. The meeting would mark the highest-level discussions between Tesla and the Indian government since Elon Musk met India's Prime Minister Narendra Modi in June and expressed intentions to invest in the country. Tesla's proposed $24k EV would be 25% cheaper than its lowest-priced Model 3 sedan in China.
Taiwan's Foxconn will acquire a 50% stake in ZF Group's axle system assembly unit in a JV valued at $1.11B. The deal aims to expand the product offerings in the internal combustion engine and electric vehicle space. ZF's CEO, Holger Klein, mentioned that the JV is part of the company's strategy to grow specific business areas beyond current limits with external partners' support. The agreement is expected to become effective within six to nine months, pending regulatory approvals. ZF intends to use the proceeds to reduce debts.
Seven major automakers, including GM, Stellantis, Hyundai, Honda, BMW, and Mercedes Benz, have formed a new company to provide electric vehicle charging in the US. The joint venture aims to roll out 30k chargers across North America, challenging Tesla's charging network dominance. The automakers did not disclose the exact investment amount, but they see this as a cost-effective way to build charging infrastructure. The new venture will support both Tesla's North American Charging Standard and the Combined Charging System, aiming to compete with established charging companies in the market. The White House has praised the initiative, creating new union jobs and supporting the Biden administration's target of 500k chargers by 2030. However, there are potential antitrust concerns, and the deal is subject to regulatory approvals.
Magna International, a Canadian supplier, has entered into a 10-year contract with Onsemi, a semiconductor manufacturer, for silicon carbide microchips. Magna will incorporate Onsemi's Elite SiC products into its e-Drive systems, providing EVs with better cooling, faster acceleration, and quicker charging times. The companies intend to manufacture tens of millions of units as part of the agreement. Magna will also invest $40M in new silicon carbide equipment for Onsemi's facilities in New Hampshire and the Czech Republic. This decision comes as suppliers like Bosch, Vitesco, and BorgWarner search for sources of silicon carbide chips for electric vehicle components because of their superior performance.
As part of a newly finalized agreement to restructure their alliance, Nissan has committed to investing up to $663 million in Renault's electric vehicle spinoff, Ampere. The investment will make Nissan a strategic investor in Ampere, securing a board seat. After ten months of negotiations, the deal aims to strengthen the long-standing partnership between Renault and Nissan. Additionally, Renault and Nissan will adjust their cross-shareholdings to hold a 15% stake in each other, addressing any power dynamic imbalances.
Opening
China's Sunwoda Electronic plans to invest $274.7M in an EV battery factory in Hungary. Sunwoda supplies Xpeng, Mercedes, and Guangzhou Automobile Group. This move is part of the expansion of Chinese battery makers in the European market. CATL and EVE Energy have also set up battery plants in Hungary. Additionally, Sunwoda is planning a production base in Thailand with Energy Absolute.
Regulation
The US Senate Committee on Finance is investigating automotive seating supplier Lear over its leather supply chain practices, which may be linked to illegal deforestation in the Amazon. Lear sources 70% of the leather for its car seats from Brazil, working with companies known to source cattle from areas of the Amazon with weak oversight from the Brazilian government. The committee has been investigating forced labor and environmental abuses in Brazilian supply chains, and Lear's leather suppliers are under scrutiny for potential links to deforestation and human rights abuses. The committee has requested information from Lear about its leather supply chain management practices as part of the ongoing investigation.
Auto safety and consumer advocates oppose AV legislation proposed by Reps. Bob Latta and Debbie Dingell, citing concerns about safety and lack of regulation. The legislation aims to establish a national AV testing and deployment standard, but critics argue it needs more safeguards. Meanwhile, the Autonomous Vehicle Industry Association and the Alliance for Automotive Innovation urge federal lawmakers to pass AV legislation to compete with China and maintain America's leadership in AV technology. Efforts to pass AV legislation in Congress have faced challenges due to various legal and consumer concerns.
The Senate Commerce Committee advanced the "AM Radio for Every Vehicle Act," aiming to require automakers to include AM radio receivers in new vehicles. The bill seeks to ensure all cars can access critical alerts during emergencies. It faces opposition from automakers and industry groups who believe it would hinder progress and add weight (shielding) and cost to vehicles.