Automotive Supply Chain Risk Digest #363

January 19 - 25, 2023, by Elm Analytics

Bankruptcy

Our Next Energy (ONE), an EV battery startup, has secured bridge financing to sustain operations ($) through the end of the year after a liquidity crisis and a failed Series C fundraising round.

The Detroit-based company faced financial difficulties due to a lack of firm customer agreements and excessive cash burn, which, in turn, halted production at its Piston Automotive assembly line.

The bridge financing, secured from existing investors, including Breakthrough Energy Ventures and BMW i Ventures, aims to stabilize the company as it restructures under its new CEO, Paul Humphries.

Closing

Adient is closing its factory in Kragujevac, Serbia, at the end of February following FCA Serbia's decision to produce seats for a new model internally.

Expanding

Tesla is progressing with the long-awaited expansion of its Gigafactory in Nevada, initially announced in January 2023, to accommodate the production of the Tesla Semi truck and the 4680 battery cells. Although the factory is only about 30% complete, recent drone footage indicates that groundwork has begun for the expansion.

AISIN announced plans to expand its manufacturing plant in Stratford, Ontario, with an additional 135k sq ft of manufacturing space to increase the production of panoramic sunroofs, a product supplied to Toyota's manufacturing plants in Canada.

Lucid has expanded its Casa Grande, Arizona, manufacturing facility, adding 3M sq ft to produce its new Gravity electric SUV. This expansion includes new assembly lines, quality centers, and a vertically integrated stamping facility, aiming to improve manufacturing efficiency and quality.

General Motors plans to invest $1.4B in Brazil through 2028, aiming to completely renew its vehicle portfolio and develop new technologies and businesses.

A few months ago, GM laid off 1,245 workers, prompting a strike at its factories in Sao Paulo, but a court ruling overturned the cuts.

Human Capital

Ford will reduce its workforce by 1.4k ($) at its Michigan Rouge Electric Vehicle Center as it halves the output of the F-150 Lightning.

Concurrently, Ford is adding a third production shift at its Michigan Assembly Plant to increase the Bronco SUV and Ranger pickup production, integrating 700 workers from the F-150 Lightning plant and hiring 900 additional workers.

Prominent German automotive suppliers, including ZF Friedrichshafen, Bosch, and Continental, are planning significant job cuts in response to the high costs and slow demand associated with transitioning to EVs.

ZF Friedrichshafen may cut up to 12k jobs by 2030, Bosch is planning to lay off 1.2k employees by 2026, and Continental also announced global job reductions to save costs.

Labor

Germany's six-day rail strike, primarily over pay and working hours, severely impacts Deutsche Bahn's freight services, with potential costs to the industry estimated at over $1B.

This disruption, affecting the transportation of automotive components and vehicles, exacerbates challenges in the already strained German rail system and economy.

Union workers at Audi's Mexico unit in Puebla, Mexico, have gone on strike following unsuccessful negotiations for a new contract. The union, declining Audi's 6.5% salary raise offer, demands a 15.5% increase.

Opening

FCSM, a JV between GM and Honda, has started producing hydrogen fuel cells at their 70k sq ft facility in Brownstown, Michigan.

Fortescue plans to establish its US Advanced Manufacturing Center in Detroit, Michigan. The center will focus on producing automotive and heavy industry batteries, hydrogen generators, fast chargers, and electrolyzers and will begin installing its battery line in 2025.

EcoG, a German EV charging company, is set to invest $14.4M to establish its North American headquarters in Detroit, adjacent to Ford Motor Co's Michigan Central project.

Nexteer broke ground on a new 968k sq ft manufacturing campus in Changshu, China. This campus, expected to open in 2025, will supplement steering system production from the company's nearby Suzhou Campus.

ProLogium inaugurated its Taoke factory in Taoyuan, Taiwan, which models production for the company's expansion in Dunkirk, France. The solid-state lithium ceramic battery facility will have an annual capacity of 2GWh, sufficient to supply batteries for up to 26k EVs.

Production Decrease

Ineos Olefins and Polymers USA has declared force majeure at its Chocolate Bayou plant in Texas, disrupting polypropylene supply, a crucial material for many interior and exterior automotive components.

This decision, triggered by mechanical failures and exacerbated by earlier production reductions due to cold weather, may significantly impact the availability of polypropylene for automotive manufacturing.

Nissan is reducing its US output by 10.2k vehicles ($) (6%) in the first quarter of 2024 to address high inventory levels and parts shortages.

The cuts primarily affect the compact Rogue crossover but will also impact the Pathfinder crossover and Frontier pickup production.

Volkswagen continues to produce ID.4, ID.5, and Audi Q4 e-tron at a reduced rate at its Zwickau, Germany, plant due to an ongoing shortage of electric motors.

VW's new component plant in Kassel has struggled to reach its targeted production capacity for the APP550 electric motor.

Volkswagen's subsidiary, Skoda, has reduced the production of its electric Enyaq SUV and increased the output of its combustion engine model Octavia. Despite these challenges, VW has yet to face a significant impact on delivery times for customers.

Luxeed, a joint EV brand by Huawei and Chery, faces significant delivery challenges with its model S7.

The brand currently produces fewer than 30 vehicles per day across two plants in Wuhu, Anhui province, leading to extended delivery times of 10-12 weeks and prompting customer complaints.