Automotive Supply Chain Risk Digest #327

May 12 - 18, 2023 by Elm Analytics

Earning Dip

VW's CFO said the company won't have equal EV and ICE profit margins until 2025 due to rising battery material costs.

Expanding

Kia will spend $1B on upgrading its Nuevo León, Mexico plant to build two new EVs.

Human Capital

Volvo is looking to hire around 1.3k people to build EVs at its Ridgeville, South Carolina plant. Production of its new EX90 SUV will begin in the first half of 2024.

Industry Directions

Crains Detroit: Automakers relinquish control to suppliers in race to EVs

Labor

Labor negotiations continue this week as workers strike at Constellium's plant in Van Buren, Michigan, and Clarios's plant in Toledo, Ohio. Constellium workers are striking over pay and safety issues, while Clarios workers cite overtime pay and schedule changes as crucial.

Litigation

Hyundai and Kia have agreed to settle a consumer class-action lawsuit over rampant car thefts for $200M. In February, the automakers offered software upgrades for 8.3M US vehicles without anti-theft immobilizers to curb increasing thefts using a method popularized on social media.

Mergers, Ventures, Acquisitions

China's Geely is doubling its stake in Aston Martin, making it the third largest shareholder at 17%. Aston Martin has struggled with cash and scale as it transitions to EV sports cars. Geely agreed to hold off until August 2024 to buy shares that would put its ownership over 22%.

Opening

Panasonic plans to open two new EV battery plants in North America by 2030. The new plants aim to quadruple Pansonic's battery production to 200GWh annually by 2031.

EV battery materials supplier Piedmont Lithium is building a $600M lithium hydroxide plant in Etowah, Tennessee.

Raw Materials

Toyota's leading scientist, Gill Pratt, told reporters that relying solely on BEVs to fight climate change is not workable due to limited resources. He warns that this approach may also lead some drivers to continue using polluting vehicles.

NYT: Can the World Make an Electric Car Battery Without China?

Recalls

GM recalled over 668k vehicles in the US and Canada due to potentially defective child seat anchors.

Ford recalled 422k SUVs in the US due to an issue that can cause the rear backup camera to stop displaying an image. This is the second recall for the affected vehicles for the same problem.

Regulation

Construction of the Stellantis / LGES EV battery facility in Windsor, Ontario, has stopped due to subsidy disagreements between the province's Premier and Canada's Prime Minister.

The UK wants the EU to delay local content rules, warning the 10% tariff would lead to closed factories. Stellantis and Nissan warn that rising raw materials costs make manufacturing in the UK unsustainable.

The EU is working with Argentina and Chile on an agreement to secure better access to EV raw materials outside of China.

Risk Analytics

Tesla's "Unboxed Process" of modular assembly vs. Toyota's Production System of lean management? Experts weigh in.

High EV weights burn through tires 50% faster. Tire manufacturers will need to innovate to cut the number of tiny particles and toxic chemicals such as 6PPD. New regulations from Califonia and the EU are expected to accelerate these changes.

Automotive News: LinkedIn Live with S&Ps Michael Robinet

LMC: Will the EU's 2035 ban on ICE light vehicles impact total vehicle sales?