Contents
Germany sees 41% rise in insolvencies
VW may close Belgian factory
Honda ceasing Thai plant production
Ships rerouting face severe weather
Gestamp investing $390M in Michigan
Minth announces $57M Aguascalientes expansion
CATL becomes fourth-largest automotive supplier
MERGERS, VENTURES, ACQUISITIONS
QuantumScape, VW Group's PowerCo partnership
ENTEK receives $1.2B loan for Indiana plant
BYD signs $1B deal for Turkey plant
Desay SV constructing Spanish factory
Tesla's US EV market share drops
IBAT starts lithium extraction in Utah
Global lithium sector eyes Argentina's salt flats
JP Morgan forecasts BYD's growth to 6M deliveries
Biden administration announces $1.7B grants
Bankruptcy
In the first half of 2024, Germany saw a 41% increase in insolvencies among medium-sized and large companies compared to last year, significantly exceeding the expected 30% rise.
According to Handelsblatt, which cited restructuring consultants Falkensteg, 162 companies with turnovers over $11.8M filed for insolvency.
Key sectors affected include automotive suppliers and mechanical engineering. Factors contributing to this surge include inflation, rising energy and material costs, weakening demand, and global crises.
The sharp increase in insolvencies underscores the ongoing economic challenges in Germany, highlighting vulnerabilities in critical sectors and the impact of international financial conditions on Europe's largest economy.
Closing
Volkswagen has warned that it may close its Belgian factory $ due to slow sales of the Audi Q8 e-tron. This potential closure marks a significant shift, as it would be VW's first car plant shutdown in Europe.
The decision comes amid broader restructuring efforts, including canceling a $2.3B EV factory and layoffs in Germany. The Brussels factory, facing high labor costs and stringent EU emission regulations, symbolizes the challenges in the transition to EVs.
European carmakers face significant hurdles in closing factories, including strong resistance from governments and unions and high severance costs due to stringent labor laws.
Despite these challenges, manufacturers like VW and Stellantis are increasingly considering such measures to address market realities.
The potential closure of the plant, which employs around 3k workers, could be a significant indicator of broader restructuring actions across the European automotive industry in the coming years. A final decision is expected by the end of the year, and analysts are closely watching VW's move for potential insights into the industry's future.
Honda announced it will cease vehicle production at its Ayutthaya plant in Thailand by 2025 and consolidate operations at its newer Prachinburi facility to enhance capacity utilization and efficiency.
This move aligns with similar decisions by Japanese automakers Suzuki, Subaru, and Kia, who have also reduced their production in Thailand amidst increasing competition from Chinese automakers like BYD.
As ICE vehicle sales decline, Honda will shift its focus to electrified vehicles, including EVs and hybrids. The Ayutthaya plant will transition to producing automotive components post-2025.
Disaster
Ships rerouting around the southern tip of Africa to avoid attacks by Yemen's Houthi militants are encountering severe weather, causing significant disruptions.
CMA CGM SA reported that its ship, CMA CGM Benjamin Franklin, lost 44 containers and damaged another 30 due to intense weather off South Africa's coast. One vessel ran aground northwest of Cape Town and is awaiting salvage.
Clarkson Research Services noted the number of deep-sea cargo vessels arriving at the Cape of Good Hope hit a low of 18, the fewest since October, due to the storms.
Expanding
Span's Gestamp plans to invest $390M and create up to 580 new jobs in Michigan, including a new 450k sq ft plant in Chesterfield Township $ to support General Motors, which will create 390 jobs.
Additionally, Gestamp will renovate and expand neighboring plants in Chelsea, Mason, and Lapeer. Supported by a $5M performance-based grant and a 15-year tax exemption, the new plant will weld steel blanks to make assemblies for EVs at GM's Orion Assembly. The project is part of a strategic move to maintain competitiveness against southern US locations.
Minth has announced a new expansion plan in Aguascalientes, Mexico. The $57M investment includes constructing three new plants between 2024 and 2027 to bolster Minth's metals division.
Industry Directions
Chinese EV battery giant CATL has emerged as the fourth-largest global automotive supplier $, generating $41.4B in sales to automakers.
Its aggressive international expansion strategy involves forming partnerships and establishing new manufacturing plants in Germany and Hungary to supply major automakers like Tesla and BMW.
Despite facing challenges in North America due to US tariffs and potential import bans, CATL's market share in China and Europe is projected to grow significantly. By 2030, S&P Global estimates that 12.8M vehicles worldwide will be equipped with CATL batteries, highlighting the company's influential position in the EV battery market.
CATL's dominance reflects the evolving dynamics of global automotive supply chains and the impact of geopolitical factors on market strategies and growth prospects, underscoring the importance of its technological advancements in meeting the rising demand for EV batteries.
Mergers, Ventures, Acquisitions
QuantumScape has signed a non-exclusive licensing agreement with Volkswagen Group's battery division, PowerCo, to mass-produce its next-generation solid-state lithium-metal battery technology.
This deal aims to accelerate the industrialization of QuantumScape's innovative batteries, which promise better range and reduced degradation for EVs.
PowerCo is authorized to produce up to 40 GWh annually, with potential expansion to 80 GWh, enough to equip approximately one million EVs annually.
This agreement marks a significant step in QuantumScape's strategy to scale up globally and reinforces Volkswagen Group's commitment to advancing electric mobility.
Opening
The US DOE has issued ENTEK a conditional loan of up to $1.2B to construct a lithium-ion battery separator plant in Terre Haute, Indiana. This plant, crucial for EV battery performance and safety, is expected to support around 1.9M mid-size EVs or 1.3M electric SUVs.
China's largest electric car manufacturer, BYD, has signed a $1 billion deal to establish a manufacturing plant in Turkey. This strategic move is expected to produce up to 150k vehicles annually and create approximately 5k jobs by the end of 2026.
The Turkish plant benefits from the EU's Customs Union, which allows tariff-free exports to the EU. This counters the recent 17.4% tariff imposed on Chinese EVs.
This expansion arrives amidst increasing trade tensions with the EU and the US, which have raised tariffs on Chinese-made electric vehicles.
BYD's establishment of a manufacturing plant in Turkey underscores its strategic efforts to circumvent trade barriers and expand its global footprint, reinforcing its position in the competitive EV market.
China's Desay SV began constructing its new smart factory in Linares, Andalusia, Spain. Expected to be completed by the end of 2025, the factory will initially focus on in-car display products in 2026.
Production Decrease
According to Cox Automotive, Tesla's share of the US EV market fell to 49.7% in the second quarter of 2024, down from 59.3% a year earlier.
This marks the first time Tesla's market share has dropped below 50%, as it faces increasing competition from General Motors, Ford, Hyundai, and Kia.
Overall, US EV sales rose 11.3% year-over-year, with more than 330k electric cars and light trucks sold in the quarter, representing 8% of all new vehicle sales.
The decline in Tesla's dominance is attributed to an aging vehicle lineup and the rise of competitive models with comparable range and performance from established automakers.
Production Increase
International Battery Metals (IBAT) has begun operations at its new lithium extraction facility near Salt Lake City, Utah.
This plant, the first of its kind in North America, employs IBAT's proprietary Direct Lithium Extraction (DLE) technology, which boasts a high lithium recovery rate of up to 95% and a 98% water recovery rate via a closed-loop system.
The facility extracts lithium from magnesium chloride/lithium chloride brine, marking a significant milestone in sustainable lithium production. The DLE process offers several advantages, including rapid deployment, low cost, scalability, and high-quality lithium output.
The commencement of operations at IBAT's DLE facility represents a significant advancement in environmentally sustainable lithium extraction, potentially reshaping the industry and bolstering the supply of essential materials for EV batteries and large-scale energy storage.
The simultaneous advancements by IBAT in the US and Eramet in Argentina signal a transformative period for the global lithium sector. Both projects showcase the potential of DLE to revolutionize lithium production by offering more efficient, cost-effective, and environmentally friendly methods than traditional evaporation ponds.
JP Morgan forecasts BYD will achieve 6M global vehicle deliveries by 2026, with around 1.5M units sold overseas. This growth will expand BYD's share of the global light-vehicle market from 3% in 2023 to 7% in 2026, maintaining a 22% share in the EV market.
BYD's expansion includes new production facilities in Thailand, Indonesia, Brazil, Hungary, and Turkey, with a significant milestone expected as these plants ramp up production. Despite potential challenges in establishing its brand abroad, BYD is poised for strong growth and excellent margins in Southeast Asia, Latin America, and the European Union.
BYD's aggressive global expansion and substantial increase in production capacity highlight its strategic ambition to become a leading player in the global automotive market, particularly in the burgeoning EV sector.
Regulation
The Biden administration announced $1.7B in federal grants to support car and auto parts factories in eight states transitioning to EV and clean energy technology production.
Among the 11 recipients is a Jeep factory in Belvidere, Illinois, which will reopen to produce EVs, restoring nearly 1.4k jobs. Other beneficiaries include Georgia, Michigan, and Pennsylvania factories producing electric school buses, EVs, and electric motorcycles.
These grants aim to protect jobs and promote clean energy, addressing concerns about the shift from gasoline-powered vehicles. Recipients must meet investment and employment targets, ensuring that the grants are used effectively. They are also expected to prioritize community uplift and high-wage jobs, thereby contributing to local economic development.