Blog - Volkswagen and EV Supply Chain
Paul Young
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VW and China
Volkswagen has confirmed it is in talks with its partner in China about the future business direction after a German newspaper reported alleged evidence of forced labour.
As is required by all non-Chinese carmakers who wish to operate in the country, Volkswagen has a joint venture with a local company to produce vehicles. Its partnership is with SAIC, which also owns the MG and Maxus marques, along with many Chinese car brands.
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The resulting SAIC Volkswagen joint venture is not under full control of Volkswagen Group. However, any claims of slavery or other practices that go against its own corporate responsibility pledges would be of concern to the German carmaker.
Its discussions with SAIC follow a report in Handelsblatt, a business newspaper in Germany, which said that independent researcher Adrian Zenz had found evidence of the use of forced labour in the construction of SAIC Volkswagen’s test track in Turpan, Xinjiang.
Zenz told Reuters that he had found photos and statements online, including on the website of an engineering company hired by Volkswagen and SAIC in Xinjiang, which indicated that Uyghurs were employed to construct the test track under poverty alleviation programmes that United Nations experts have said often involve forced labour.
HR, Corporate Governance and Human Rights
There is increasing focus from consumers, activist shareholders, investors, and the public sector on labor practices including HR policies as part of Scope 3 emissions along with stronger oversight of human rights issues as part of the overall supply chain management.
China and EV Supply Chain
hina is set to consolidate its position as the dominant country in the automotive industry as a result of developing cutting-edge battery technology for use in electric vehicles (EVs).
The country is already the leader in EV production, with GlobalData’s Global Light Vehicle Hybrid and EV database indicating an EV and hybrid sales volume of 11.42 million for 2023, nearly three and a half times more that of the next nearest country, the US with 3.35 million.
The EV industry remains relatively nascent, however, and sales figures are expected to grow rapidly at a compound rate of 16.1% between 2023 and 2028, reaching 53.9 million, according to GlobalData’s Automotive Predictions 2024 report.
During this period, battery electric vehicle (BEV) production is expected to overtake that of hybrids (HEVs), and China is already well placed to take advantage of this due to its scale, its plentiful supply of the critical minerals required for battery production and the strategic efforts of the country’s government in encouraging collaboration between companies.
United States EV content rules and challenges:
The big picture: The entire industry is worried about the magnitude of what Stellantis CEO Carlos Tavares calls "the China offensive."
Catch up fast: China is the world's largest and fastest-growing automobile market.
Yes, but: Chinese automakers built too many factories, forcing them to look to foreign markets like Europe for continued growth.
Driving the news: 福特 , GM and others see the writing on the wall, and are reassessing their strategies and cutting budgets to stay competitive.
Zoom in: Ford is forecasting continued heavy losses in its EV division — one analyst figures it will lose a whopping $55,000 on every EV it sells this year.
Meanwhile: After boasting for years that it's "all-in on EVs," GM now plans to launch plug-in hybrid vehicles in North America to meet emissions targets while fully-electric sales slowly ramp up.
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The intrigue: Legacy automakers' belt-tightening will also affect their traditional gas vehicles.
What to watch: Chinese cars are already being exported to Mexico, and BYD, Chery and at least one other Chinese carmaker are scouting plants there, the Financial Times reported — meaning Mexico could become a backdoor for selling Chinese cars in the U.S.
The bottom line: Detroit has seen this movie before with Japanese and Korean rivals, which filled a need for affordable, efficient cars — and consumers eventually embraced them.
Source: https://www.autonews.com/regulation-safety/bidens-drive-evs-collides-detroits-profit-machines or https://www.axios.com/2024/02/14/chinese-ev-electric-vehicles-sold-america
Source - https://www.monacoforfinance.mc/en/articles/other-topics/1668-why-investors-need-to-pay-attention-to-biodiversity.html or https://www.allens.com.au/insights-news/insights/2024/02/what-is-on-the-horizon-for-business-and-human-rights-2024/
What needs to happen:
Paul Young CPA CGA is a former IBM Customer Success Manager that has deployed over 300 data and AI solutions across geographies and industries for the past 8 years. Paul is also a lecturer and Consultant in many areas like ESG, Financial Close, Emerging Technologies, IoT, Emergency Planning, Crisis and Risk Management, and transforming the board of directors.
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Blog – Automotive Sector Analysis and Commentary – January 2024 - https://www.dhirubhai.net/pulse/global-automotive-sector-analysis-commentary-january-paul-young-n7hxc/
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