Elm Analytics - Automotive Supply Chain Risk Digest #289 - August 19 - 25, 2022
China's drought and record temperatures continue to impact the Yangtze river basin. Manufacturing in Chongqing and the Sichuan province ground to a halt as the reservoirs feeding hydropower plants dried up.
The government suspended production due to power rationing, as the area gets 80% of its electricity from hydroelectric dams. Toyota's plant was forced to run on an in-house generator. Although the weather forecasts show dropping temperatures, low river levels will continue to halt cargo shipments and affect hydropower.
Ford is pushing out dates for its new Spanish EV investments based on a "revised outlook for Europe."
Ford is cutting 3k jobs globally this week. The cuts will affect 2k salaried positions and 1k agency jobs across various roles.
US EV sales increased 41% in 2022 compared to 2021, with EVs now comprising 6.2% of all new vehicle sales.
An ongoing strike at Felixstowe, Britain's largest container port, will disrupt automotive parts imports and aluminum and copper exports. The port's 1.9k workers are looking for higher wages as inflation rises.
Yet another Hyundai supplier (SL Alabama LLC) has been accused of utilizing child labor at one of its US plants. SL Alabama admitted that children had worked at their plant in Alexander City, Alabama, and were hired by an unnamed labor recruitment firm.
A jury in Georgia returned a $1.7B verdict against Ford this week in a years-long civil case revolving around a Georgia couple killed in a crash. The case centered around the alleged lack of roof strength of the 2002 Ford F-250.
MERGERS, VENTURES, ACQUISITIONS
In 2024, Nissan will stop making cylinder heads for Renault. The alliance between the two companies is in question as Renault says they have found a more economical supplier.
Dana Thermal Products will open a $54.2M EV battery cooling plant in Auburn Hills, Michigan. The company plans to hire 200 people and start production of battery cooling plates in 2023.
China's Li Auto has started construction on a new semiconductor R&D and production plant in Suzhou, China. The plant is expected to reach full production by 2024.
Toyota reopened its assembly plant in Durban, South Africa, this week after having been closed since April due to flood damage.
Hyundai recalled over 245k Hyundai Palisade and over 36k Kia Telluride SUVs in the US due to a faulty circuit board that can cause a fire. There have been 25 reported fires or melting incidents in the US and Canada.
The US Inflation Reduction Act is reported to have Hyundai considering starting construction of its new EV/battery plant in Georgia as soon as 2023.
South Korea is looking to the EU for support with their US Inflation Reduction Act concerns. Imported vehicles from both areas are excluded from US EV tax credits by requirements on the percent of domestically made vehicle content and batteries.
China has extended its NEV purchase tax exemption until the end of 2023.
The Mexican government has started a state-owned Lithium mining company. Earlier this year, laws were implemented to only allow the state to explore, mine, and sell lithium. Currently, no lithium is mined in Mexico.
California will ban the sale of ICE vehicles by 2035. The legislation will likely speed the jump to EVs by influencing other states.
Covid lockdowns and US/China tensions have Honda reportedly looking to create an additional supply chain outside of China.
Despite semiconductor production optimism, Honda is cutting production in early September:
40% at Saitama, Japan assembly plant
30% at Suzuka, Japan, for two lines
Semiconductor shortages have shut down Stellantis' Sochaux, France assembly plant until this weekend.
Volkswagen and Mercedes have reportedly inked deals with Canadian suppliers to secure access to battery raw materials such as nickel, cobalt, and lithium.