Automotive Supply Chain Risk Digest #365

February 2 - 8, 2024, by Elm Analytics

Change In Management

GM has recruited Kurt Kelty, a former Tesla battery expert, as vice president of Batteries to spearhead its strategy for developing low-cost EVs.

Earning Dip

Ford is recalibrating its EV strategy as it anticipates losing $5B to $5.5B on EVs this year, up from 2023.

The recalculation has led Ford to reconsider the feasibility of its 8% EV margin target by 2026, prompting potential delays in upcoming EV launches and reevaluating its battery sourcing.

Despite these challenges, Ford remains committed to expanding its EV portfolio, including a next-generation electric F-Series pickup and more affordable models on a new platform.

Expanding

Toyota is investing $1.3B in its Georgetown, Kentucky factory to produce a new three-row electric SUV and add a battery cell assembly line.

Additionally, the company is investing $8 billion in a North Carolina battery factory that will supply the Kentucky factory with components for the company's first US-made EVs.

ZF's planned $500M investment in its Gray Court, South Carolina facility will expand its product lines to produce new ICE, EV, and PHEV vehicle transmissions for customers like BMW.

Human Capital

Ford and IG Metall union have agreed to cut about 3.5k jobs at the Saarlouis, Germany plant after Ford Focus production ends next year, retaining 1k positions. The decision follows Ford's shift to EV production in Spain.

Bosch warns of potential job cuts in its mobility sector and delays its 7 percent margin goal by up to two years due to a challenging economic forecast for 2024.

The company, facing a tough road ahead, plans substantial investments in staff re-skilling and foresees reducing 1.2k software development positions by 2026 amidst slow AV growth.

The auto industry increasingly turns to automation to address labor shortages and rising wages as it struggles to maintain competitiveness and efficiency.

Despite record robot acquisitions to mitigate these issues, the sector needs help finding enough skilled integrators $ to implement these technologies fully.

The rapid push towards electric vehicle production further complicates this automation drive, requiring more flexible and adaptable manufacturing systems.

Meanwhile, companies like Aptiv, Continental, and Lear are moving towards higher automation levels to reduce labor dependency and adapt to wage inflation, expecting to reach significant automation milestones by 2030.

However, the industry's reliance on automation highlights the persistent challenge of balancing technological innovation with the workforce's capabilities and needs.

Labor

The UAW announced that a majority of employees at Volkswagen's Chattanooga, Tennessee, plant have expressed interest in joining the union, marking a noteworthy step in the UAW's ongoing efforts.

It also announced a significant victory at the Antolin Interiors plant in Howell, Michigan, with hourly employees voting to unionize the facility $, which produces instrument and door panels for Ford, General Motors, and Stellantis.

Mergers, Ventures, Acquisitions

General Motors has finalized a $18.8B agreement with LG Chem for over 500k tons of cathode material from 2026 to 2035, enough to provision 5M EVs.

The supply will come from LG Chem's upcoming Clarksville, Tennessee plant, the largest in the US, ensuring GM's EVs qualify for subsidies under the IRA.

Opening

Canada Nickel will invest $1B in constructing North America's largest nickel processing plant in Timmins, Ontario, Canada, aiming to produce over 80k tons of nickel annually for EV batteries starting in 2027.

This initiative, alongside a planned $2 billion stainless steel and alloy production facility, seeks to establish a domestic source for nickel, aligning with efforts to build a self-reliant EV supply chain in North America.

Spain's Gestamp will build a 460k sq ft facility $ in Chesterfield Township, Michigan, to support EV production at GM's Orion with welded steel blanks in early 2025.

FAW-FinDreams, the JV between BYD's FinDreams and FAW has started production at its facility in Changchun, Jilin, China.

The blade battery facility has a planned capacity of 45 GWh, enough to equip nearly 600k vehicles, and has initiated production with a capacity of 15 GWh.

South Korea's LS e-Mobility Solutions inaugurated a 377k sq ft plant in Durango, Mexico, to produce EV relays and battery disconnect units (BDUs).

Its annual production capacity aims to supply 5M EV relays and 4M BDUs for major automakers like Ford and Stellantis.

Production Decrease

Audi has temporarily decreased production at its Brussels facility in Belgium, which manufactures the Q8 E-Tron electric SUV, due to a shortage of components. The company is evaluating when to restore full production capacity weekly.

Amidst reorganizing its global production network to address overcapacity, Audi is contemplating relocating the Q8 E-tron's production to Mexico and China by 2027.

Currently, the Q8 E-tron is the sole model produced at the Brussels site, with future plans for the plant's production lineup under reconsideration.

Stellantis will reduce operations at its Mirafiori plant in Turin, Italy, affecting the production of the fully-electric Fiat 500 and Maserati models due to low market demand and impacting around 2.3k workers.

This adjustment will extend previously planned furloughs, operating on a reduced shift until March 30, with the potential for a complete halt if demand decreases further.

Raw Material Costs

Palladium prices dropped to $869.6 per troy ounce, falling below platinum for the first time since April 2018. The automotive sector's shift towards EVs, which do not require catalytic converters made with palladium, drove the 39% price drop in 2023.

Shutdown

Tesla plans to resume production at its Gigafactory Berlin next week, following a temporary halt due to supply chain disruptions affecting cargo ships in the Red Sea.