Automotive Supply Chain Risk Digest #357

December 8 - 14, 2023, by Elm Analytics

Change In Management

GM's Cruise robotaxi unit has dismissed nine key executives, including Chief Operating Officer Gil West, amid an ongoing safety investigation. The investigation is related to an incident on October 2, in which a woman was struck and dragged by a Cruise vehicle in San Francisco.

The move follows a series of leadership changes, including the resignation of CEO Kyle Vogt and co-founder Dan Kan. Cruise had to suspend its testing operations for a safety review after the accident. The investigation is expected to last until January.

Doug Parks, who leads GM's global product development team, will retire after four decades at the company. Ken Morris and Josh Tavel will assume new leadership roles in its product development team, now under its president, Mark Reuss.

Rory Harvey will fill a newly created role ($) as president of global markets. Marissa West succeeds Harvey as president of North America.

Our Next Energy (ONE), a Michigan-based EV battery startup, has named current board member Paul Humphries its new CEO, replacing founder and former Apple exec Mujeeb Ijaz, who will now serve as vice-chairman of the board and CTO.

This leadership change comes after a 25% workforce reduction at ONE amidst efforts to establish a gigafactory and develop a North American battery supply chain.

Expanding

Volkswagen is increasing its operations in China, building a team of nearly 3k Chinese engineers to design EVs. This shift is part of VW's "In China, for China" strategy, driven by China's lead in electric vehicles and the need for cost-efficient production. Volkswagen's new assembly line in Hefei will initially produce 350k EVs annually, with plans for future expansion.

Human Capital

China's EV industry, the world's largest and fastest-growing, needs more skilled technicians and engineers. The rapid expansion of electric vehicle production has led to a high demand for specialists.

Still, there is a shortfall in vocational training and a surplus of young university graduates not interested in factory work. This labor shortage is rooted in Chinese economic planners' failure to anticipate the electric car boom and train enough workers for the industry.

As electric vehicle companies continue to grow and expand their factories, they increasingly turn to automation to address the shortage of skilled labor.

General Motors is laying off 1.3k employees ($) at two manufacturing plants in Michigan.

The layoffs include 945 jobs at the Orion Assembly subsystems plant due to the end of Chevrolet Bolt EV and EUV production and the plant's transition to electric truck production.

Starting January 1, the Lansing Grand River Assembly/Stamping plant will reduce an additional 369 positions related to the Camaro's end of production. Affected employees are being offered positions elsewhere in the company.

Cruise will also reduce its workforce by 24% (900 employees) as part of a restructuring effort. The layoffs primarily affect commercial operations and corporate functions. The company is working to rebuild its operations and reestablish trust with regulators and the public.

Bosch plans to cut up to 1.5k jobs by 2025 at its Feuerbach and Schwieberdingen sites in Germany in response to changing demand and technologies in the automotive sector.

The company aims to manage this reduction through staff reassignments, early retirements, and voluntary redundancies while avoiding compulsory redundancies at its German mobility locations until the end of 2027.

German automotive structural components supplier Gedia Automotive has sold its North American headquarters and technical center in Orion Township, Michigan.

The sale has resulted in the layoff of 92 employees ($), including machine operators, technicians, and office staff, with the potential for some to be hired by the buyer of the operations.

However, the identity of the buyer remains unclear. Gedia Automotive, which supplies components to VW, BMW, and Mercedes-Benz, expanded into Michigan in 2017 with the help of a $500k grant from the state.

Mergers, Ventures, Acquisitions

Toshiba and Rohm are teaming up to manufacture power semiconductors for EVs, with the support of the Japanese government subsidizing a portion of their investment. The production will occur at their factories in Ishikawa and Miyazaki prefectures in Japan.

Opening

Australian iron ore company Fortescue Metals Group is venturing into green energy by planning a $35M EV battery systems and components plant in Detroit. This investment underscores the growing trend of traditional resource companies diversifying into renewable energy sectors, impacting the automotive supply chain by introducing new players and resources in the EV battery market.

Germany's IMS Gear will invest $6.6M in a new gear and transmission production plant in Osijek, Croatia. The new plant is expected to begin operations in 2025, hiring between 250 and 300 workers.

Volkswagen's battery subsidiary, PowerCo, has completed site preparations for its 90 GWh battery cell factory in St. Thomas, Ontario, Canada, and is ready to break ground next year.

Hindalco Industries is setting up a new plant near Sambalpur, Odisha, India, to manufacture aluminum foil used in EV batteries, with an initial production capacity of 25k tonnes. The facility is scheduled to start operations in July 2025.

Production Decrease

Ford is reducing its planned electric F-150 Lightning pickup production by half ($) in response to "changing market demand."

The company informed suppliers that it expects to produce an average of around 1.6k F-150 Lightnings per week at its Rouge Electric Vehicle Center in Dearborn, Michigan, starting in January, down from the previously planned average of 3.2k per week.

This move comes amid an industrywide pullback in electric vehicle investment due to slower-than-expected sales growth. Ford has revised their plans for EV investments, delaying around $12B and pushing back some of their production targets.

GM has postponed the production of EV drives at its Toledo Propulsion Systems plant in Toledo, Ohio, by nine months, affecting around 75 temporary employees. The delay, announced during an all-employees meeting, resulted from GM's decision to delay the launch of its Chevrolet Silverado EV and GMC Sierra EV to late 2025 due to lower-than-expected consumer demand for EVs.

Originally planned to start in Q1 2024, the EV drive production is now rescheduled for Q4 2024. This decision aligns with the delayed conversion of the Orion Assembly plant in Michigan to EV production.

The Toledo plant, which received a $760M investment from GM for this transition, had laid off about 100 temporary workers in April due to the discontinuation of the 6-speed transmission line.

Production Increase

After facing initial challenges with its Ariya EV crossover, Nissan is focusing on increasing production ($) at its Intelligent Factory in Tochigi, Japan. Despite the high-tech facility operating at only two-thirds capacity, Nissan is exploring options like gigacasting to enhance efficiency.

The factory, which started producing the Ariya in October 2021, only managed to make 27.6k vehicles in its first fiscal year. However, production improved significantly from April to October, with 26.9k cars produced.

The Intelligent Factory, part of a $232M investment, is a model for its future global factory overhauls, featuring advanced production techniques for a 10% cost reduction. Nissan plans to deploy these systems to five plants worldwide by 2030.

Gotion High-tech's joint venture in Thailand, NV Gotion Co Ltd, has produced its first locally-made battery pack. Based on lithium iron phosphate chemistry, the pack has a capacity of 38 kWh and is expected to support EV production for partners like Neta Auto. Based on market demand, the plant plans to expand its battery pack production capacity from 2 GWh per year to 8 GWh.

Recalls

Tesla has issued a recall for nearly 2M vehicles in the US due to a software defect related to monitoring drivers' attention while using the Autopilot feature.

The recall responds to increased scrutiny and investigations by US safety regulators into collisions involving Tesla's Autopilot technology. NHTSA has identified Tesla vehicles as being involved in a significant percentage of crashes related to advanced driver assistance systems.

The recall covers all Tesla models Y, S, 3, and X produced between October 2012 and December 2023. Tesla plans to release a free software update to limit the use of the Autosteer feature if drivers fail to demonstrate they are in control of the vehicle while using it.

Regulation

The European Union Parliament is moving forward on the "Critical Raw Materials Act," aimed at securing critical and strategic raw materials, including those needed for EV batteries. The law emphasizes local quotas for extracting, processing, and recycling these materials, with targets for 2030.

Notably, the recycling quota was increased to 45% compared to the initial draft. The EU views this act as crucial for ensuring a sustainable supply of materials for EVs and reducing the EU's dependency on single countries like China.

Shutdown

Earlier in the week, GM extended the downtime ($) at several of its North American assembly plants for maintenance and product changeovers. The automaker announced that all plants will be shut down for the week of December 25 for the contractual holiday break.

Additionally, several plants, including Fort Wayne Assembly, Factory Zero, Spring Hill Manufacturing, and Oshawa Assembly, will remain offline for an additional week for maintenance and are scheduled to resume production on January 8.