Closing
Timken has announced the gradual shutdown of its belt production plant in Fort Scott, Kansas, with closure expected by 2025. The company cited the need to streamline operations and restructure its manufacturing footprint for global market competitiveness.
Expanding
BMW is investing $711M to transform its main factory in Munich, Germany, for exclusive EV production by the end of 2027.
The Munich plant will be BMW's first existing factory converted entirely for EVs, with plans to move production of the upcoming Neue Klasse sedan and other next-gen models there.
BMW's all-electric i4 is currently produced in Munich, and the company has recently shifted ICE production from Munich to the UK and Austria.
US-based silicon anode startup GDI will expand production at its facility in Lower Saxony, Germany, with $22M in funding from the European Investment Bank.
Human Capital
The shift to electric vehicles poses a challenge to Central European regions like Dolny Kubin in Slovakia, which rely heavily on automotive manufacturing networks honed to produce ICE vehicles.
This transition may result in potential job losses of up to 85k. Volkswagen Group and Volvo are investing in EV production in Slovakia, but the change poses risks to the vast network of local suppliers.
The Czech Republic and Slovakia are lagging behind Hungary and Poland in attracting battery plant investors, raising concerns about their competitiveness in the evolving automotive sector.
Labor
Tesla has announced a pay increase for production workers in the United States.
This decision aligns with moves by other automakers like Volkswagen and Toyota, who have raised wages for their non-unionized US workers amidst efforts by the UAW to organize them.
The UAW has made significant progress in its efforts to unionize the automotive sector in the South, with 30% of workers at a Mercedes factory in Alabama signing cards endorsing unionization.
This move follows similar efforts at a Volkswagen factory in Chattanooga, Tennessee. The UAW's push in the South comes on the heels of successful contract negotiations with major automakers in the Midwest.
The Alabama factory, crucial in Mercedes' EV production, is part of a larger UAW strategy to expand unionization in traditionally non-union regions despite challenges and historical declines in union membership.
Mergers, Ventures, Acquisitions
International Battery Metals (IBAT) has leased its portable direct lithium extraction (DLE) plant, aimed at commencing lithium production for EV batteries within the US in six months.
This move could position IBAT as the first company to commercially produce lithium using DLE technology, a significant advancement in lithium extraction methods.
DLE technology, which can extract about 90% of lithium from brines, contrasts with traditional water-intensive evaporation ponds or open-pit mining methods.
The leased plant aims to initially produce 4k metric tons of lithium, with plans to expand to 8k, making it the most significant US lithium project.
This development represents a critical step in the evolution of lithium production technologies, potentially reducing environmental impact and accelerating the supply of lithium for the burgeoning EV market.
Opening
Honda is reportedly contemplating building a $14B EV plant in Canada, potentially its second in North America, following one in Ohio.
The proposed facility, which may include in-house battery production, is being considered for Ontario, aligning with Canada's renewable energy resources and its plan to end sales of ICE vehicles by 2035.
This plan is in response to the growing EV market and government incentives in the US, despite current market challenges such as rising interest rates affecting EV sales.
Maruti Suzuki plans to invest $4.2B in constructing a second car plant in Gujarat, India.
This investment will increase the company's annual production capacity in the state to 2M vehicles, up from the current 750k.
The new production line will begin operations in the 2027 financial year, and the new plant is expected to be operational in 2029.
BYD broke ground on a sodium-ion battery cell and pack production facility in Xuzhou, Jiangsu province, China. The facility aims for an annual capacity of 30 GWh.
Subaru is boldly moving into the EV market by opening a new global R&D and design center in Ota, Japan.
This facility, which started operations on January 8 with about 2k personnel, is part of Subaru's strategy ($) to drastically enhance its EV production. The Innovation Hub, featuring advanced engineering and design tools, aims to halve development time and cost, and reduce parts and production processes.
Subaru, which currently has limited EV offerings, plans to introduce four new electric crossovers by 2026 and four additional EVs by 2028, with a target of 400k EV sales in the US by 2028 and 600k globally by 2030.
EuroTranciatura Laminaciones EuroGroup inaugurated its third plant in Querétaro, Mexico, which will produce lamination packages for EV traction motors.
Production Decrease
Lucid Group reported a decline in its deliveries and production for Q4-2023 compared to the previous year.
The decrease, about 10% in deliveries and 31% of output, is attributed to high interest rates impacting EV demand and a price war initiated by Tesla.
Despite this, Lucid's annual production reached its revised target of 8.4k vehicles.
The company, backed by Saudi Arabia's Public Investment Fund, has experienced a 38% fall in its shares last year, raising concerns about its financial sustainability.
Production Increase
Toyota restarted its vehicle production in Japan on Monday after a pause due to the New Year's Day earthquake.
The magnitude of the 7.6 earthquake significantly affected Japan's western coast, including key Toyota suppliers like Aisin and Sumitomo Electric.
Despite ongoing aftershocks, Toyota will utilize parts from stocks outside the earthquake-impacted areas to resume operations.
Raw Material Costs
Automakers and suppliers, anticipating increased global EV sales and consequent pressure on critical battery raw materials like cobalt, nickel, and lithium, are focusing on alternative sources such as battery production scrap and recyclable metals from end-of-life batteries.
With forecasts showing a lithium deficit by 2027, companies seek to mitigate supply bottlenecks and maintain cost-effectiveness through battery recycling.
The geopolitical and humanitarian concerns over sourcing materials, especially from regions like the Democratic Republic of the Congo and mainland China's control over refining, drive this shift.
Analysts estimate a significant increase in recovered nickel and cobalt from recycled sources by 2032.
The sector faces challenges, including differing regional policies and the technical complexities of battery recycling.
This shift towards battery recycling and the utilization of production scrap is pivotal in addressing the sustainability and supply challenges in the EV industry, illustrating how environmental concerns are increasingly influencing automotive supply chain strategies.
Risk Analytics
KPMG: 24th Annual Global Automotive Executive Survey
The Houthi militia attacks in the Red Sea are forcing shipping companies to face tough decisions around the route through the Suez Canal.
Companies can risk these attacks or opt for a longer, more expensive journey around Africa, adding about ten days and significant fuel costs.
This dilemma raises operational costs, potentially affecting consumer prices. Major shippers like MSC and Maersk have already altered their routes.
The impact is particularly severe for car-carrying vessels, as evidenced by the hijacking of the Galaxy Leader.
The Panama Canal's reduced capacity due to drought exacerbates the situation, forcing additional rerouting.
Insurance costs for ships entering the Red Sea have spiked, reflecting the increased danger.
These disruptions in one of the world's busiest trade routes spotlight the vulnerability of global supply chains to geopolitical conflicts, potentially leading to broader economic impacts and shifts in logistics strategies in the maritime industry.
Yesterday, the US, with its allies, conducted military strikes against over a dozen targets in Yemen associated with the Houthi militia.
The strikes targeted radars, missile and drone launch sites, and weapon storage areas, aiming to impair the Houthis' capability to target Red Sea commerce.
These strikes underscore the escalating tensions and the potential impact on global shipping and trade, highlighting the delicate balance in addressing regional conflicts while protecting critical international trade routes.
Shutdown
Tesla will temporarily halt most production at its Berlin Gigafactory from January 29 to February 11, 2024.
Parts needed for production have been rerouted and delayed due to transport route changes caused by attacks on vessels in the Red Sea, with Tesla being the first to report production interruptions.
Analysts highlight automakers' vulnerability in relying on Asian components, particularly Tesla's dependence on China for battery components.