Automotive Supply Chain Risk Digest #410
December 6 - 12, 2024, by Elm Analytics
Contents
BANKRUPTCY
Ji Yue faces backlash over unpaid wages
CHANGE IN MANAGEMENT
Nissan reshuffles leadership to address weaknesses
Stellantis restructures North American leadership
CLOSING
Audi to halt Brussels production
DISASTER
Fire shuts down Honda Indiana plant
How Linamar survived Hurricane Helene
EXPANDING
Toyota invests in new Kentucky paint facility
HUMAN CAPITAL
Bosch warns of job cuts in Germany
INDUSTRY DIRECTIONS
Cruise's end ushers risky AV phase
LABOR DISPUTE
VW workers demand more amid UAW negotiations
MERGERS, VENTURES, ACQUISITIONS
Continental plans Automotive spin-off by 2025
LeddarTech secures needed funding with Texas Instruments
Stellantis, CATL to build Spanish battery plant
OPENING
Autoliv inaugurates new factory in China
VinFast fast-tracks second EV plant in Vietnam
PRODUCTION DECREASE
BYD delays small EV production in Europe
VW considers moving ID. Buzz production to Poland
REGULATION
South Korean firms question US battery investments
SHUTDOWN
Stellantis extends Mirafiori plant stoppage
Bankruptcy
Ji Yue Auto, the EV venture between Baidu and Geely, is facing backlash after announcing the need for fresh funding and operational streamlining amid fierce market competition.
Employees and suppliers protested at Ji Yue’s Shanghai headquarters, demanding unpaid wages.
At the same time, livestreaming sales staff discovered that they would no longer receive salaries and asked the public for job-seeking advice while online.
The company plans to consolidate departments and reduce duplicative roles but has not addressed potential layoffs. Ji Yue has struggled to gain traction, with its two models selling just 9.7k units as of September. Analysts predict the turmoil could hasten the marginalization of smaller brands in China’s saturated EV market.
The challenges faced by Ji Yue highlight the intense competition and financial pressures in China’s EV market, where smaller players struggle to survive amid a price war and shifting consumer preferences.
Change In Management
Nissan’s management reshuffle $ reflects its attempt to stabilize its financial health and operational strategy amid declining sales, weak profit margins, and mounting competition.
Starting January 1, 2025, Jeremie Papin will replace Stephen Ma as Nissan’s global CFO. Currently head of North America, Papin will bring a US perspective and financial expertise to Nissan’s headquarters.
Stephen Ma, the outgoing CFO, will take over as chair of the management committee for Nissan’s struggling China operations.
Christian Meunier, a Nissan veteran and former Jeep CEO, will succeed Papin as leader of Nissan’s Americas business.
Asako Hoshino, the current head of Japan and Southeast Asia operations, will hand over this portfolio to Shohei Yamazaki, who is currently chairing the Chinese business. Hoshino will retain her role as Chief Brand and Customer Officer.
These changes aim to address operational weaknesses in key regions, including North America, China, and Japan. CEO Makoto Uchida plans further adjustments through April 2025, potentially targeting leadership in manufacturing and R&D. Critics argue the changes may not be enough without external leadership to reinvigorate the company.
Stellantis has reorganized its North American leadership $ following the abrupt departure of CEO Carlos Tavares.
Timothy Kuniskis, a veteran known for revitalizing the Dodge brand, returns from retirement to lead the struggling Ram truck division.
Chris Feuell will now oversee the Chrysler and Alfa Romeo brands, while Jeffrey Kommor resumes his role as US sales chief.
This shake-up, led by an interim management committee under Chairman John Elkann, aims to address declining US market share and dealer dissatisfaction over inventory and pricing issues. Stellantis’s North American head, Antonio Filosa, has emphasized reaching double-digit market share after recent modest gains.
Closing
Volkswagen’s Audi plant in Brussels will cease production by February 28 next year, as the company has found no alternatives to closure. Audi board member Gerd Walker described the decision as painfully difficult, especially after failing to find a buyer for the struggling facility, despite interest from Nio.
Disaster
A fire broke out in the welding area of the Honda plant in Greensburg, Indiana, around 11 am on Tuesday. Employees were evacuated, and production was shut down for the first shift. No injuries were reported, and the Greensburg Fire Department responded to the incident.
Hurricane Helene significantly disrupted Linamar’s Mills River casting plant in North Carolina. This plant is a critical supplier to Ford, Honda, and Volkswagen.
The storm forced an unprecedented plant shutdown, delaying production and shipments for over a week. Employees navigated flood-damaged roads and worked manually to fulfill customer needs.
The facility faced unique challenges, including solidified molten aluminum and halted magnesium operations, which required creative recovery efforts, such as using space heaters to unfreeze pipes.
Despite losing production time, Linamar resumed shipments within days and restored full operations by October 4, leaning on contingency plans and customer support.
The storm caused an estimated $53B in damage statewide, highlighting the growing risks of climate change to automotive supply chains.
Linamar’s experience underscores the increasing vulnerability of automotive supply chains to extreme weather and the importance of robust disaster recovery strategies to maintain operations.
→ More in Automotive News, deep dive: Flooded out: How Linamar navigated Hurricane Helene’s devastating impact in North Carolina $
Expanding
Toyota is investing $922M in a new 1M sq ft paint facility at its Georgetown, Kentucky, assembly plant, set to open in 2027. It is also committing an additional $1.3B for battery pack assembly operations.
Human Capital
Bosch’s deputy supervisory board chairman warned that recent staff reduction plans could put 8k-10k jobs at risk in Germany due to weakening demand and industry challenges, while labor representatives are preparing a potential action plan for 2025, which could include strikes.
Industry Directions
The Verge: The end of Cruise is the beginning of a risky new phase for autonomous vehicles
Labor
Volkswagen has offered its workers in Chattanooga, Tennessee, a 14% pay increase over the next four years. The workers recently joined the UAW union. VW also considers the proposal appealing, including profit sharing and improved healthcare benefits.
However, UAW representatives are unhappy with the offer. They point to the company’s record profits and shareholder dividends as reasons for demanding more.
Negotiations have been ongoing for several months. The UAW has asked for better pay, paid time off, health and safety improvements, and job security.
VW’s interim CEO, Gerrit Spengler, has stated that the company is committed to reaching a strong agreement. Meanwhile, the UAW is pushing for a contract to set new records.
Mergers, Ventures, Acquisitions
Continental plans to spin off its Automotive group sector by the end of 2025, following necessary approvals. Preparations are expected to be completed by the third quarter of that year.
LeddarTech has secured a $10M pre-paid royalty agreement with Texas Instruments as part of a licensing deal to co-develop AV technology.
The funds provide critical financing $ for LeddarTech, which has been facing cash constraints, burning $2.5M monthly and holding $5.7M in cash as of June 30.
The deal offers a four-month runway, complementing a $9M bridge loan, and plans to raise additional capital by selling shares.
This deal highlights LeddarTech’s financial fragility while showcasing its strategic pivot to scalable autonomous vehicle software solutions as it seeks to stabilize and expand its operations in a competitive market.
Stellantis and CATL are investing up to $4.4B to establish a 50:50 joint venture for an LFP battery cell production facility in Zaragoza, Spain, with a projected annual capacity of up to 50 GWh by the end of 2026. The joint venture aims to implement a dual-chemistry approach, continuing the use of NMC cells alongside the new LFP technology.
Opening
After 11 months of construction, Autoliv has inaugurated a new factory in Guangzhou, China, covering approximately 347k sq ft. This facility will enhance the production capacity of airbags and seat belts, better serving local clients in China.
VinFast plans to build a second EV manufacturing plant in Vietnam’s Ha Tinh province, doubling its domestic production capacity to 600k vehicles annually. The $287.5M facility, which is expected to create nearly 6k jobs initially, will focus on VF 3 and VF 5 models to meet growing demand in local and international markets. Operations are slated to begin in July 2025, just eight months after construction.
Despite this expansion, VinFast continues to underutilize its existing plant. Although it has a capacity of 300k vehicles, it delivered fewer than 45k cars globally in the first nine months of 2024. The company is also pursuing international growth with planned factories in India and Indonesia.
Production Decrease
BYD has postponed the launch of its small EV, the Seagull, in Europe. Instead, it will be the fourth model made at its factory in Hungary. Starting at the end of 2025, the factory will first focus on producing the Dolphin hatchback and the Atto 3 crossover SUV.
This move is part of BYD’s plan to reduce the effects of new EU tariffs by making cars locally. The company expects it will take two to three years to ramp up production in Hungary, where they will be able to make up to 12 different models, which will help decrease their dependence on imports from China. However, BYD is still facing difficulties in gaining a foothold in the European market, as there has been a 25.3% drop in car registrations in Germany this year.
Volkswagen is reportedly considering moving production of its ID. Buzz electric minivan from Hanover, Germany, to Poznan, Poland, following significant production shortfalls and ongoing labor strikes in Germany. The ID. Buzz has underperformed, delivering fewer than 15k units in the first half of the year against a target of 130k annually.
Meanwhile, strikes by over 100k German workers have disrupted operations as the company faces backlash over plans to cut thousands of jobs, close factories, and reduce pay by 10% to stay competitive. The potential relocation marks a shift in Volkswagen’s strategy, but it leaves uncertainty about the future of the German plant.
Regulation
South Korean firms are reconsidering their $54B EV battery investment in the US, citing uncertainty over President-elect Donald Trump’s stance on tax credits and subsidies under the IRA.
Companies like Samsung SDI, LG Energy Solution, and SK On have paused construction or expressed concerns about weakened EV demand, lower battery prices, and potential changes to the $7.5k EV tax credit.
The uncertainty also raises fears of increased competition if Trump allows Chinese battery makers into the US. Despite the concerns, some remain optimistic about the incentives continuing, as many facilities are in Republican-led states.
Shutdown
According to the head of the FIOM-Cgil trade union, Stellantis will extend the production shutdown at its Mirafiori plant in Italy until January 20, 2025, due to low demand for the Fiat 500 electric car and Maserati models. The company has not confirmed this decision and is still assessing its order books for January. Further announcements are expected next week.
