United States: Foley Automotive Update

Analysisby Julie Dautermann, Competitive Intelligence Analyst

This update helps automotive suppliers inform their legal and operational decisions to help address challenges and opportunities. Contact your Foley relationship partner, orAnn Marie Uetz,Vanessa L. Miller, orNicholas J. Ellis, to follow up.

Key Developments

• Foley & Lardner LLPpartner Nicholas Ellis is quoted in theSupply Chain Divearticle, "How auto supply chain managers can navigate the Baltimore port stoppages," discussing the recent tragic collapse of the Francis Scott Key Bridge and what the subsequent stoppage at the Port of Baltimore means for automotive supply chains.
• U.S. new light-vehicle salesare projected to reach a SAAR of 16.4 million units in March, according to ajoint forecastfrom J.D. Power and GlobalData. First quarter 2024 new-vehicle total salesare expected to reach 3.83 million units, representing an increase of 4.5% compared to the same period last year when adjusted for selling days.
• A report inAutomotive Newsprovided a summary of near-term expectations fornew-vehicle inventory levelsanddealer profitability.
• The U.S. Environmental Protection Agency on March 20announcedfinal emissions standardsfor2027-2032 model year light-duty and medium-duty vehicles. Once fully adopted,projected fleetwide average emissionslevels are expected to decline by 44% for medium-duty vehicles, and by nearly 50% for light-duty vehicles relative to the existing standards for the 2026 model year. According to the accompanying EPAfact sheet,battery-electric vehicles (BEVs)are expected to represent30% to 56% of new light-duty vehicle sales in the 2030 to 2032 model years, down from a previous projection of 67% by 2032.
• The EPA on March 29announcedfinal emissions standardsforheavy-duty trucks, buses and other large vehicles. The standards vary according to vehicle type, and average emissions reductions range from 25% to 60% by MY 2032.
• The U.S.Department of Energyon March 19announceda revision to itspetroleum equivalent fuel calculationthat is expected to improve the assessment of EV efficiency.
• Astudyby Boston Consulting Group estimates most automakerslose an average of $6,000 on each EV they sellfor $50,000, after accounting for consumer tax credits.
• Tesladelivered 386,810 vehicles in thefirst quarter of 2024, compared to 422,875 vehicles in thefirst quarter of 2023.
• China'sBYDsold 300,114 fully electric vehicles in thefirst quarter of 2024, up from 264,647 during the same periodlast year.

OEMs/Suppliers

• Stellantislaid offapproximately 400 salaried U.S. employees in its engineering, technology and software units, due to factors that included "heightened competitive pressures." The automaker also reached agreements in Italy for voluntary layoffs that willaffectover 3,000 union employees.
• UAW membershipfell 3.3% in 2023 to just over 370,000, according to afilingwith the Department of Labor. This represents the UAW'slowestmembership level since 2009.
• Plastic Omniumchanged its nametoOPMobilityto reflect the expansion of its client base in sustainable mobility, as well as increased capabilities in areas that include lighting and software.
• Nvidiaannounceda number of partnerships with Chinese automakers to support increased use ofartificial intelligence-enabled in-vehicle technologysuch as voice assistants and driver-assist features.
• Two executivesdepartedGMamid a software division reorganization following quality issues that resulted in stop-sales of certain vehicles.

Electric Vehicles and Low Emissions Technology

• Hyundaiand its affiliateKiawill recallover 147,000 EVs in the U.S. due to a possible defect in a charging unit that could cause vehicles to lose power while operating.
• Beginning this month,Fordwill cuttwo-thirds of the roughly 2,100 hourly workers at itsF-150 Lightning EV plantin Dearborn, Michigan. The headcount reductions were first announced in January 2024.
• Chinafiled aWorld Trade Organizationcomplaint against the U.S. over what itdescribedas discriminatory requirements pertaining toEV subsidiesin the Inflation Reduction Act.
• Chinese battery makerContemporary Amperex Technology Co. (CATL)intends to expand in spite of a slowdown in EV sales in certain markets, according to a report inBloomberg.
• A number of EV owners are uninformed about the increased prevalence oftire wearthat results from greater vehicle weight and higher torque, according to theJ.D. Power2024 U.S. Original Equipment Tire Customer Satisfaction Study.
• NissanandMitsubishiplan tojointly developEVs for the U.S. market. Nissan intends to launch 16 new electrified models globally by fiscal year 2026 in support of its newbusiness plan.
• Lucid Motorsreached an agreement toraise$1 billion in funding from an affiliate of Saudi Arabia's sovereign wealth fund.
• Hyundaiwill invest68 trillion won ($51 billion) over three years in areas that include EVs, battery technology and software-defined vehicles. Separately, the automakerindicatedit may manufacturehybrid or plug-in hybrid EVsat a future $7.5 billion plant inGeorgiathat was previously expected to exclusively produce all-electric vehicles.
• U.S. EV and plug-in hybrid owners reported greater satisfaction withhome charging, according to theJ.D. Power 2024 U.S. Electric Vehicle Experience Home Charging Study.
• EVs represented at least 5% of new car sales in 31 countriesat the end 2023; and according toBloomberganalysis, this is a threshold that marks the start of mass adoption.
• Michigan's chief mobility officer, Justine Johnson, provided an overview of some of the state's goals for clean energy transportation and EVs inAutomotive News.

Automated, Autonomous or Connected Vehicles Technologies

• Automated driving features and software-defined vehicles are among theagenda topicsforSAE International's WCX conferenceinDetroiton April 16-18.
• Anautonomous vehicle shuttle servicewill operatethis summerin Detroit on a 10-mile route between Michigan Central Station and the city's east riverfront. The pilot project represents a collaboration with the city, Bedrock, Michigan Central and the State Office of Future Mobility and Electrification.

Market Trends and Regulatory

• TheFederal Communications Commissionrejectedtwo auto industry groups' requests to reassess a 2020 revision of FCC rules in the5.9 gigahertz bandthat shifted part of the spectrum to unlicensed wireless use.
• According topreliminary estimatesfrom theNational Highway Traffic Safety Administration, there were 40,990traffic fatalitiesin 2023, representing a 3.6% decline from 2022 but remaining significantly elevated compared to pre-pandemic levels.

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