The Intersection 6-25-23

It’s the dawn of a new era for the automotive supply chain. Not only are the companies that populate it changing, but so are the products and the places.

This week we present the annual Automotive News Top Suppliers ranking, which orders parts makers by their global 2022 sales revenue to automakers. The list includes several new companies near the top this year, specifically major producers of batteries for electric vehicles.

The fast-growing Chinese EV battery giant CATL crashed this year’s Top 5, while companies such as Samsung SDI that have long had an automotive presence saw their position on the list rise now that automakers are buying more batteries.

This is all happening even though EVs still account for only a small, if quickly growing, portion of overall new-vehicle sales worldwide. So just imagine, as automakers roll out dozens of new EV models in the coming years and source even more batteries for them, how the suppliers we have traditionally thought of as the “world’s biggest” are likely to change.

Legacy suppliers aren’t going to have “the same voice that they had in the ICE world when they go into the BEV world,” we hear this week from Michael Robinet, executive director of automotive advisory services at S&P Global Mobility.

But traditional suppliers aren’t sitting idly by as the automotive world changes. Indeed, many of them are actively driving change in the industry.

This week, as part of our recurring Intelligence Report series, we shine a light on suppliers in all business segments and tell you that many of them are now investing significant resources in their North American manufacturing footprints, specifically to supply automakers with the various components they’ll need to build upcoming EV models.

The investments provide a glimpse into how the geographies of EV supply chains will differ from today’s. Suppliers are investing near massive EV assembly and battery plants, not just in their own backyards, but to support new projects such as Ford’s BlueOval City in Tennessee and Hyundai’s $5.54 billion “Metaplant” in Georgia.

It’s well-known that the auto industry is transforming.

But it’s still surprising to see how true that is for the supply base.

— John Irwin      

In Monday’s Automotive News:

Still waiting: Foxconn’s partnerships with electric vehicle startups once represented a realistic step toward production for companies with no manufacturing experience. Indeed, EV companies including Fisker, Lordstown Motors and Monarch Tractor all entered into production partnerships with Foxconn, the plan being to have the startups design the vehicles and Foxconn, known for manufacturing Apple’s iPhone, build them. But as this Automotive News story explains, none of those partnerships has yielded production at commercial scale and some have even punted production target dates. 

Rivian joins the team: Rivian is joining Ford and General Motors in an agreement to access Tesla’s Supercharger network starting next year and incorporate Tesla’s charging port design into its future EVs. Rivian said it will provide a charging adapter as early as spring 2024 for its current vehicles so they can access 12,000 Superchargers contemplated in the deal. Automotive News explains that Rivian’s charging network is still quite small and closed to outside users. Tesla’s network was closed to rival brands until a small pilot project was initiated this year using a built-in adapter at a handful of Supercharger stations.

Weekend headlines

Nissan investigates claims CEO put COO Gupta under surveillance: Nissan has started an investigation into claims by a senior adviser that CEO Makoto Uchida carried out surveillance of his deputy Ashwani Gupta. Gupta, who has resigned effective this week, was regarded as an obstacle to Nissan reaching a new deal with alliance partner Renault.

NHTSA probing Ford over Explorer recall for power loss: The U.S. regulator said it received two complaints alleging a loss of power or transmission torque of the rear wheels in Explorer vehicles that had received the recall fix.

Tesla is still king: When it comes to made-in-America vehicles, that is. In Cars.com’s 2023 American Made Index, an independent ranking of vehicles, Tesla claimed first and second place for the second year in a row in addition to nabbing third and fourth. The Model Y led the charge, followed by the Model 3, Model X and Model S. The ranking is based on a vehicle’s assembly location, parts content, engine and transmission origins and U.S. manufacturing work force. Tesla’s focus on regional supply lines helps it stand out from the pack, said Cars.com’s Jennifer Newman. The Honda Passport, Volkswagen ID4, Honda Odyssey, Acura MDX, Honda Ridgeline and Acura RDX rounded out the top 10.

Over their heads: A report has found that more Americans are entering into auto loans exceeding their cars’ worth after vehicle values declined in the wake of dramatic price increases during the pandemic. Used-car loan-to-value ratios increased to 125 in the first three months of this year from 104 for the same period in 2021, according to a study released by credit reporting firm TransUnion and market researcher J.D. Power. A ratio of 125 means that the borrower’s loan is worth 125 percent of the vehicle’s value.

Show him the money: Former Nissan Chairman Carlos Ghosn has sued the automaker for more than $1 billion in a lawsuit filed with Lebanon’s public prosecutor. The suit accuses Nissan along with two other companies and 12 named individuals of crimes including defamation, slander and libel, and fabricating material evidence. Ghosn, once among the global car industry’s leading lights, was arrested in Japan in 2018 and charged with financial misconduct. He denied the charge and said his detention, which ended after a dramatic escape, was part of a plot by Nissan executives to block a merger with alliance partner Renault, which Ghosn also led.

Hyundai’s profit push: Hyundai Motor Co. will launch a new EV platform to replace the one used in today’s Ioniq 5 and Ioniq 6, aiming to achieve double-digit profit margins on EVs by 2030. The profitability push, key to making EVs a sustainable business proposition, entails building more EVs in mixed production with internal combustion vehicles at existing assembly plants. The Hyundai and Genesis maker also will roll out next-generation batteries including lithium iron phosphate power packs from 2025 and improved nickel cobalt manganese ones. Lithium-metal and solid-state batteries are also under development with solid-state pilot production being prepared.

June 30, 2018: Tom Mignanelli died at 73. He was a former Lincoln-Mercury general sales manager and the first American given the CEO title at Nissan in the U.S., in 1990, breaking through a decades-old glass ceiling that had kept Japanese executives in charge. During a rocky three-year tenure as CEO, he pushed through changes in an aggressive style that he openly acknowledged. “I don’t get much stress,” he once told BusinessWeek, “I give it.”