Automotive Supply Chain Risk Digest #347
September 29 - October 5, 2023 by Elm Analytics
Change In Management
Rolls-Royce CEO Torsten Müller-Ötvös will retire after 14 years ($) leading the ultraluxury automaker and will be replaced by Christopher Brownridge, the head of BMW's UK and Irish operations.
Jeep has promoted Antonio Filosa to its new CEO, succeeding Christian Meunier, who is departing from the automaker. Filosa currently serves as the COO for Stellantis South America. Emanuele Cappellano, the former Stellantis South America CFO, has been appointed COO, replacing Filosa.
Renault named Anne-Helene Andersen its new Renault Brand CFO, taking over from Vincent Piquet, who has been in the role since March 2022. Andersen currently serves as CFO of Nikon-Essilor, a joint venture of EssilorLuxottica and Nikon based in Japan.
Polestar has appointed Lutz Stiegler as its new CTO, replacing Joerg Brandscheid. Stiegler was most recently the head of electric propulsion at Volvo.
Bernard Schäferbarthold, who has been the CFO of Hella since 2016, will be taking over as CEO, replacing Michel Favre. Favre had been positioned at the helm of Hella since February 2022 after his tenure as CFO at Faurecia.
Closing
WR Grace & Co will close its chemical plant in Albany, Oregon, at the end of the year. The facility makes specialized chemicals used in auto belts and hoses.
Marelli has delayed closing its Crevalcore plant in Italy and appointed an advisor to look for potential buyers instead. The plant employs around 230 people and produces components for internal combustion engines, but was scheduled to close due to sustainability concerns amid the shift to electric mobility. Concerns have been raised over the impact on jobs in Italy's automotive supply sector.
Ford's Saarlouis plant in Germany, which produces the Focus compact car, is on the verge of closure after negotiations with a potential investor (suspected to be a Chinese company) did not succeed. Although 15 possible investors had shown initial interest in taking over the factory, the talks for a binding agreement slated to be sealed by September 30th fell apart.
Ford intended to save some of the jobs by converting the site into a technology center, but the specifics remain unknown. The Saarlouis facility has been under threat since 2022 when Ford selected its Valencia, Spain location over Saarlouis for its next-generation EVs in Europe.
Cyber Security
Last week, Volkswagen faced a significant IT disruption, which caused a halt in vehicle production worldwide and shut down its entire trading network. This issue affected various plants, including those for Audi and Porsche.
Production restarted the following morning after the malfunction was addressed. The company has indicated that it's improbable an external attack caused this problem.
This incident underscores the vulnerability of the automotive sector to IT-related issues, as evidenced by past issues faced by other companies, including recent shutdowns at Toyota and Volkswagen itself.
Industry Directions
NYTimes: China's EV Threat: A Carmaker That Loses $35,000 a Car (gift)
Labor
Negotiators from the UAW and Ford Motor have made progress in resolving their differences over wage increases following a new proposal by Ford. While Ford has proposed a wage increase of over 20%, combined with prior offers, the total wage increase could approach 30%. Still, there are unresolved issues, such as pay and union representation at future battery plants and retirement plans.
In anticipating a prolonged battle, General Motors secured a $6B credit line and reported a strike-related cost of $200M for Q3.
General Motors extended its 6th counteroffer to the United Auto Workers in hopes of concluding the ongoing strike against the US automaker.
The UAW's President, Shawn Fain, is set to provide an update on the status of discussions with the Detroit Three automakers today at 2 pm EDT. Significant gaps persist between the UAW's demands and GM's offers, though there has been movement in critical areas.
The Washington Post estimates that more than 3k supplier employees have been affected by the strike.
In a MEMA member survey last week, 30% indicated that they had already laid off workers due to the strike's ripple effects, and 60% expected to begin layoffs mid-October.
→ Foley: Key Impacts and Strategies for Suppliers Affected by the Ongoing UAW Strike
1k laid-off General Motors India employees are hunger striking for reinstatement at the Talegaon, India, facility purchased by Hyundai but excluded from Hyundai's Asset Purchase Agreement. The General Motors Employees Union is contesting this and seeking intervention from the Maharashtra government, but workers claim their concerns still need to be addressed.
Mergers, Ventures, Acquisitions
Toyota is partnering with LG Energy Solution to supply 20 GWh/year of lithium-ion batteries, supporting the release of 30 US BEV models by 2030. LG Energy Solution plans to invest $3B in its Holland, Michigan, campus with specialized production lines for Toyota's battery cells and modules by 2025.
StoreDot, which creates high-speed charging battery technology for EVs, has entered a strategic partnership with Flex|N|Gate. The alliance focuses on commercializing StoreDot's 100 miles in 5-minute cells at Flex|N| Gate's "Flex-lon" lithium-ion pilot factory in Windsor, Ontario.
Opening
Novo Energy, a collaboration between Volvo Cars and Northvolt, has broken ground on its gigafactory in Gothenburg, Sweden. The new facility near Volvo's Torslanda factory will produce up to 50 GWh of battery cells annually, sufficient for approximately 500k EVs. The first phase involves a 1.4M sq ft building that will house the initial production line, expected to be operational by the end of 2026.
Canada's Martinrea inaugurated its seventh plant in Coahuila, Mexico, marking the company's second stamping facility in the state. The new plant will focus on producing complex stampings and assemblies.
Tesla is close to finalizing permits for an electric vehicle factory in Nuevo Leon, Mexico. The company is considering a larger facility than initially planned, and production may start sooner than anticipated. Nuevo Leon has already begun preparing infrastructure and will provide essential services like power, natural gas, and water.
Production Decrease
Audi has retracted its initial plan ($) to manufacture its flagship EV at the Volkswagen Commercial Vehicles factory in Hanover, Germany, in 2026. Instead, the production will shift to Audi's plant in Neckarsulm.
Initially, this model was a part of Audi's Artemis project, which included three vehicles from Audi, Porsche, and Bentley. However, the production schedule faced numerous delays, leading Porsche and Bentley to change their production plans. To utilize the Hanover capacity, VWN will create a new vehicle family titled "Space."
Meanwhile, other changes are underway in VW plants in Lower Saxony, including the Trinity vehicle project shifting to Zwickau and an electric Golf set for Wolfsburg.
Production Increase
Earlier this week, automakers posted US Q3 sales ($), which rose 17% and 15% year to date.
Here are the Q3% change (YTD% change):
7.8% (10.9%) - BMW North America
7.7% (9.2%) - Ford Motor Company
21.2% (19.4%) - General Motors
52.7% (33.3%) - American Honda
11.9% (15.0%) - Hyundai/Kia
22.4% (26.6%) - Mazda North America
39.9% (26.7%) - Nissan/Mitsubishi
0.0% (26.0%) - Polestar Automotive USA
218.0% (273.2%) - Rivian
-1.3% (-1.3%) - Stellantis
18.8% (16.5%) - Subaru of America
27.0% (42.0%) - Tesla Motors
12.2% (3.6%) - Toyota Motor North America
6.5% (0.2%) - VW Group
49.7% (27.6%) - Volvo Car USA
Due to strong demand and increased fleet shipments, the US light-vehicle market continues to recover from pandemic setbacks and the microchip shortage. However, rising vehicle prices and interest rates limit retail demand.
Stellantis faces challenges with its Jeep and Ram brands, which have had sales fall for nine consecutive quarters.