Automotive Supply Chain Risk Digest #321
March 31 - April 6, 2023 by Elm Analytics
Bankruptcy
Detroit-based plastic parts supplier Unique Fabricating faces insolvency after failing to make loan payments and dealing with allegations of improperly reporting finances.
Cyber Security
Reuters reports that employees at Tesla circulated videos and images recorded by consumers' onboard cameras. These private clips and pictures were shared on internal messaging apps. The topics ranged from crashes to embarrassing situations and included geolocation. The privacy and security implications are far-reaching. Elon Musk reportedly plans to meet with China's Premier Li Qiang this month. Some areas of China have banned Tesla vehicles over concerns about data gathering. Musk said in 2021, "If Tesla used cars to spy in China or anywhere, we will get shut down."
Disaster
Goodyear's Cooper Tire plant in Tupelo, Mississippi, was damaged by a tornado last weekend. The plant took significant damage, especially to the roof. Goodyear is still assessing the damage.
Human Capital
NYT: In Ohio, Electric Cars Are Starting to Reshape Jobs and Companies
Industry Directions
According to CFO Nicolas Peter, BMW thinks efficient design and recycling, not investing in mines, will bring down EV battery costs. In an interview, Peter said, "We don't think it is right to invest in mines. We view it as more important to get back raw materials from cars and other products."
LMC: Are we seeing the end of the entry-level car?
Litigation
Late last week, the Fifth Circuit Court of Appeals ruled that a 2018 tweet from Elon Musk violated US labor laws. The tweet in question suggested that Tesla employees would lose stock options if they chose to unionize.
This week, a federal judge in Ohio reversed a $64M jury verdict against Goodyear over its alleged theft of trade secrets from Czech company Coda Development. US District Judge Sara Lioi said that most of the trade secrets Goodyear was accused of stealing were too vague to be legally protected.
Opening
Faurecia has opened a $147M seating and interiors plant in Nuevo Leon, Mexico. The plant will make more than 2M vehicles' worth of car seats a year by 2025.
China's Paslin will build a new automated assembly plant in Ramos Arizpe, Coahuila, Mexico. The company specializes in welding systems and will support the nearby Tesla plant under construction.
Chinese government-owned automaker Jetour will construct a $3B EV assembly plant in Mexico by 2024.
Raw Material Disruption
Lead times for high-grade electrical steel have risen to 50 to 52 weeks. The steel, made with silicon, is rolled into very thin layers of laminate used in EV motor cores. While new mills are being brought online, it will take years to bring them up to speed due to the precision required. Analysts expect demand to outpace supply for the foreseeable future.
Recalls
VW is recalling 143k vehicles in the US due to a faulty passenger-side weight sensor. The defect can cause the airbag to turn off when someone sits in the passenger seat.
Honda recalled around 564k CR-V compact crossovers due to vehicle frames that may be highly susceptible to corrosion from de-icing agents. The recall covers CR-V crossovers built from 2007-2011 and registered in salt-belt states.
Regulation
Next week, the EPA is expected to propose new emissions rules covering 2027 - 2032. Over 50% of US vehicles produced by 2030 are expected to be EVs or HEVs due to regulation changes.
Stellantis plans to build its 2025 Ram 1500 Rev EV in the US. Michigan and Illinois are ramping up campaigns to make the pickup at its Sterling Heights, Michigan, or its idled Belvidere, Illinois plant.
New, stricter EV tax credit rules in the US will go into effect on April 18. The new rules, aimed to reduce US reliance on China for EV battery supply chains, will see credits reduced or eliminated for some vehicles.
Electrek: Everything you need to know about the IRS's new EV tax credit guidance
Risk Analytics
Foley & Lardner: Structuring IP Licenses to Manage Supply Chain Risks in the Automotive Industry