Automotive Supply Chain Risk Digest #326
May 5 - 11, 2023 by Elm Analytics
Change In Management
Volkswagen has changed its software arm Cariad by replacing most of its leaders and assigning Bentley production chief Peter Bosch as the new head. The decision stems from delays and budget overruns at Cariad. Volkswagen aims to simplify its operations and focus on partnerships for its software plans.
Disaster
A man opened fire at a Mercedes-Benz plant in Sindelfingen, Germany, and killed two people. The factory, which employs 35k workers, halted production.
Earning Dip
The earnings calls for struggling EV startups have been quite dismal since the price war started. For instance, Lucid managed to make only 2.3k vehicles in Q1 but reportedly lost $554k for each car delivered. Due to certification and supply chain problems, Fisker has reduced its production targets from 42k to 32k. Despite beginning production only last November, the company incurred more considerable losses than expected. Although Nikola only produced 63 cars, it burned through a whopping $240M. On the other hand, Rivian exceeded revenue expectations and is still aiming to manufacture 50k electric vehicles this year.
Expanding
Albemarle will double the production capacity of its Kemerton plant in Western Australia to produce 100k tonnes of lithium hydroxide.
Fisher Dynamics will expand its factory in Matamoros, Mexico, where it produces automotive seating components.
Cruise is expanding its AV robotaxi rollout to Houston and Dallas, Texas. The company's limited trials are currently ongoing in San Francisco and Austin.
Industry Directions
LMC: The "Nokia" moment for China's auto market has arrived
Labor
On Monday morning, employees at Clarios, a company that produces low-voltage batteries, went on strike. The workers rejected a proposed contract that would have extended straight pay for overtime from 12 hours per day up from 8. The facility is located near Toledo, Ohio, and has a workforce of 650 people. It produces 150k batteries/week for Ford and GM.
Mergers, Ventures, Acquisitions
Foxconn intends on using its Ohio EV factory regardless of how things work out with cash-strapped Lordstown Motors. The contract manufacturer reportedly expects a 5% market share by 2025. "The next two years are a period of active courtship of new customers." - Chairman Young Liu
Australia's Allkem is merging with US-based Livent creating the world's 3rd largest lithium mining company. The combined production capacity of 248k tonnes of lithium carbonate is 7% of world production in 2023. Lithium prices (per tonne) have swung wildly from $10k in 2019 to $90k in 2022 to $24k in April, and now $26k.
Opening
Construction has begun on Tesla's new lithium refinery in Corpus Christi, Texas. This facility aims to generate sufficient battery-grade lithium to manufacture 1M EVs each year.
Linamar will break ground on a new 300k sq ft giga-casting plant in Welland, Ontario.
Visteon opened its first automotive display bonding facility in Maraimalai Nagar, Chennai, India. The 13k sq ft factory is an expansion to the current Visteon Electronics campus.
BorgWarner broke ground on expanding its Saltillo, Coahuila, Mexico plant. The facility manufactures starter coils, gas recirculation coolers, and thermostats for gasoline engines. Last December, the company announced plans to spin off the fuel systems divisions and focus on EVs.
Production Decrease
The mass production of Panasonic's 4680 battery cells has been delayed from the original target of April 2023 → March 2024. The new target date is between April 2024 → September 2024, as the company aims to enhance the batteries' performance. While Tesla already produces its own 4680 cells, it needs so many cells that it has turned to suppliers for additional manufacturing capacity.
Due to software production issues, the release of Volvo's flagship EX90 EV has been delayed. The vehicle is equipped with advanced technology and numerous safety features. The production schedule has been postponed from late 2023 to the first half of 2024.
Production Increase
Toyota is targeting 11% production growth worldwide in 2023 with a 5x increase in EV sales.
Tesla's Texas assembly plant reached a weekly production level of 5k Model Y EVs putting it on pace to produce 260k annually.
Regulation
The Alliance for Automotive Innovation (GM, Toyota, VW, Hyundai +) is pushing back on the EPA's proposed strict emissions reductions. The lobbying group is concerned that the proposed transition may be too rapid and could lead to supply chain and manufacturing challenges.