Contents
NDR Auto Components expanding operations
Lucid Motors laying off 400 employees
Ford, GM revise EV factory plans
UAW seeks new vote at Mercedes
Webasto workers secure 51% pay raise
Hyundai sued over child labor
MERGERS, VENTURES, ACQUISITIONS
Magna Steyr considers Chinese automakers
Tesla Gigafactory in Mexico proceeding
Volkswagen fails to reach partnership with Renault
Hyundai Mobis building EV factory in Korea
QSM opens silicon wafer plant in Mexico
Blue Solutions plans French gigafactory
Tesla reduces Model Y production
US EV sales slowdown seen as temporary
Eramet's nickel plant needs urgent supply
Automakers rethinking production strategies
EV shift burdens auto suppliers
Expanding
NDR Auto Components, which supplies seat frames and trims to automakers like Maruti Suzuki, Toyota, and Kia, plans to expand its operations after nearing capacity at its existing plants in Haryana, Bangalore, and Gujarat, India.
Human Capital
Menlo Park-based Lucid Motors is laying off 400 employees, approximately 6% of its workforce, as part of a restructuring plan. The layoffs will affect various levels, including leadership and mid-level management, and will extend to Lucid's manufacturing plant in Arizona. Despite these cuts, Lucid remains focused on future projects like the Gravity SUV, which will begin production by the end of 2024.
Ford and General Motors have revised plans for their EV factories in Michigan, leading to reduced investments and job creation $. Ford scaled back its Marshall EV battery plant from $3.5 billion and 2,500 jobs to $2.2 billion and 1,700 jobs. GM delayed the launch of electric pickups at its Orion Assembly plant, impacting the initial commitment of 2,300 new jobs.
One example of a significant change in GM's site plan is a 40% reduction in parking spaces. The local planning commission approved a waiver for the parking space requirement but expressed disappointment.
"Because we're talking about parking spaces and continuing to dwindle the numbers down because we're now finding out that machinery is going to be able to eliminate the need for employees, I just really kind of need to say that part of the reason we were excited to have GM come here is they were bringing jobs."
- Kim Urbanowski, Orion Township Treasurer and Commissioner.
Despite these setbacks, both companies continue to pursue EV production, with Ford planning additional facilities and GM expanding its assembly areas.
The adjustments in these high-profile projects highlight the uncertainties and evolving nature of the EV industry, affecting job creation and the return on investment for state-funded incentives.
Labor
Webasto workers in Plymouth, Michigan, ratified their first UAW contract, securing a 51% pay raise over three years. The contract comes after a six-week strike and includes significant improvements in wages and working conditions, with 96% of the 200 workers voting in favor.
After workers at two Mercedes-Benz factories in Alabama voted against unionizing, the UAW has asked federal officials for a new vote, claiming that the automaker broke labor laws.
The UAW alleged that Mercedes engaged in an aggressive anti-union campaign, which included firing employees who supported the union and showing anti-union videos. The workers at the Tuscaloosa plants, producing SUVs and battery packs, voted 56% to 44% against unionizing.
Mercedes denied any wrongdoing and stated that they followed the National Labor Relations Board (NLRB) guidelines. The NLRB has the authority to order a new election if it determines that the company's actions influenced the outcome of the vote.
Litigation
The US Labor Department has filed a lawsuit against Hyundai, one of its suppliers, Smart Alabama, and Best Practice Service, a staffing company, for employing a 13-year-old on an auto parts assembly line in Alabama.
From July 2021 to February 2022, the child worked up to 60 hours weekly making car parts at Smart Alabama's plant in Luverne. Hyundai has denied direct responsibility, stating that the Labor Department's legal theory unfairly holds it accountable for its suppliers' actions. Best Practice Service, which is now out of business, was accused of recruiting child workers.
This lawsuit underscores the significant risk of labor violations in the automotive supply chain, which can lead to legal and reputational damages for major manufacturers.
Mergers, Ventures, Acquisitions
Magna Steyr is discussing with Chinese automakers the possibility of manufacturing their vehicles $ at its Graz, Austria, factory as they seek to expand in Europe. Magna Steyr President Roland Prettner confirmed the interest from Chinese OEMs and noted that capacity constraints would not be an issue. However, potential EU tariffs on Chinese EVs could impact these plans. Companies like BYD and Chery are already moving to establish European production to stay competitive.
Nuevo León officials are confident that Tesla's Gigafactory will be built despite recent delays due to global economic concerns. Tesla has secured necessary permits and $135 million in incentives, with ongoing infrastructure investments to support the project, although the start date remains uncertain.
Volkswagen has announced that it will develop and produce entry-level BEVs priced at $21.8k in Europe. This decision comes after the company failed to reach a partnership with Renault. The project will focus on localizing European production to reduce costs and emissions. VW plans to introduce four affordable BEV models by the end of 2025, including the ID1 hatchback and models from its Cupra and Skoda brands, all of which will be built in Spain.
Opening
Blue Solutions, a unit of Bolloré, plans to construct a $2.4B gigafactory in eastern France. The facility aims to produce solid-state batteries with a 20-minute charging time and a range of 1,000 km. Production is expected to commence in 2030, with a target capacity of 25 GWh. The gigafactory will support French and German automakers and may involve collaborations with companies such as BMW and Volkswagen.
Hyundai Mobis plans to finish building a new factory in Ulsan, South Korea, by the second half of 2025. The factory will produce components for chassis modules, including suspension, steering, and braking, as well as components for cockpit modules, such as infotainment systems and airbags, all specifically designed for EV platforms.
QSM has invested $12M to build the first silicon wafer manufacturing plant in Mexico, which is expected to enhance North America's semiconductor manufacturing capabilities. The plant in Querétaro will produce 10,000 silicon wafers per year.
Production Decrease
Tesla has reduced production of its Model Y at its Shanghai plant by at least 20% from March to June. This decision was made in response to weakening demand in China, which can be attributed to the ongoing economic slowdown and intense price competition in the market.
Production data revealed a significant drop, with March output at 49k units and April at 36k units, down 17% and 33% year-on-year, respectively. Despite these cuts, Tesla remains optimistic and plans to sell 600k to 700k cars in China by 2024. The company has also shifted its strategic focus to robotaxis and AI, as evidenced by the omission of its previous goal of 20M vehicle deliveries by 2030 from its latest impact report.
Production Increase
Bloomberg: The Slowdown in US Electric Vehicle Sales Looks More Like a Blip
"Automakers are probably freaking out too much, as usual, but there is a bit of a Tesla issue... If they want to start taking market share, or even just perform at a high level, they need to start producing EVs at mass volume."
- Corey Cantor, EV analyst at BloombergNEF
Raw Material Disruption
Eramet CEO Christel Bories announced that the SLN nickel plant in New Caledonia, France, needs urgent ore supplies within ten days to avoid furnace shutdowns. Recent riots triggered by an electoral reform have disrupted mining. The French government is trying to support the nickel sector in New Caledonia, which is facing financial difficulties. Eramet has stopped funding SLN and is focusing on its profitable nickel operations in Indonesia. The disruption in nickel supply from New Caledonia could impact the global nickel market and strain Eramet's operations.
Risk Analytics
Higher labor costs, tariffs, and uncertainty about EV sales are driving automakers to rethink production strategies $. Due to geopolitical pressures, logistics issues, and inflation, companies are reducing overseas sourcing while increasing mechanization and regional content.
"Automation has become even more critical," said Laurie Harbour of Wipfli, adding that skilled workers are essential for advanced manufacturing and AI, with battery-electric vehicles likely requiring more labor, not less.
Martin Fischer of ZF Group emphasized adapting to fast-paced changes, and Lear Corp. is acquiring automation firms to enhance manufacturing efficiency. Bosch's Paul Thomas noted a shift to multi-supplier strategies for stability.
Supply Chain
Stellantis CEO Carlos Tavares warned that shifting to EVs imposes a "significant burden" on auto suppliers, with production costs 40% to 50% higher than ICE models. Automakers must cut expenses across operations to compete, pushing sourcing to cost-effective countries.
Tavares emphasized the need for government incentives to make EVs affordable for consumers and highlighted Stellantis' strategy of using multi-energy platforms to maintain market flexibility.
The company plans to launch affordable models, including a Jeep in the US for under $25k and the Citroen e-C3 in Europe for $21.6k.
This transition stresses the intense cost pressures and supply chain adjustments necessary for the automotive industry to remain competitive in the EV market.
Good points, Mark. While long-term estimates suggest EV production costs will be lower than ICE vehicles, the transition period is uncertain and labor costs remain significant. Labor costs are often targeted first because they represent a large portion of overall production costs, adding to the interim uncertainty as new processes are discovered and refined. Ideally, this would result in more accessible pricing, but the path is far from clear.
Additionally, it's crucial to consider the broader economic and social implications, as reducing the workforce can impact local economies and future sales. A balanced approach that weighs these factors may be more sustainable in the long run.
Just a thought: a lot of talk about automation, AI, low labour cost supplier locations, etc, etc.
On the whole it appears, to me at least, when the automotive industry across the Americas & Europe reduces its plant workforce and supply chain workforce in reasonably paid countries it could be argued they may well be cannibalising their own future sales, as less people are in reasonably paid employment and able to afford the industries products, EV, BEV, or not.
The impact of low cost automation et al on the bottom line looks great to shareholders, I'm sure. Perhaps an impact and risk analysis of the goal of a lower volume of well paid employees and their wealth spread of wage spend into their local communities needs a little more thought.